How to Start an Online Bingo or Casino
There are many things to consider before you take the plunge and start an online casino, poker or bingo website. The multi-billion dollar online gaming industry is one of the fastest growing segments of internet commerce, but to achieve significant profitability a casino owner must overcome several obstacles such as security holes, inadequate payment systems, player distrust, and legal issues.
There are several different ways for an internet entrepreneur to make money with online games. Each has its own unique challenges, risks and rewards. The pay site business model can be the most lucrative, but it can also be very expensive to launch and risky to operate. Conversely, a perfectly legal ‘free site’ can be launched quickly on a small budget, but the potential revenue isn’t always as great.
Casino Gaming for Money
The legality of offering online casino gaming for money is gray, at best. It is regulated to some degree by almost every country. In the United States many politicians would like to ban it completely.
By its legal definition, gambling is any activity that involves a prize, consideration, and chance. The prize can be anything of value including but not limited to cash. Consideration is what the player must pay to enter, and chance refers to a random (versus skill-based) outcome. Since playing online casino games for money has all 3 elements, it is clearly gambling. To operate legally, an online casino should be operated and hosted offshore, and it should not take bets from jurisdictions where it is prohibited. Usually this means focusing on the large and growing international market.
The amount you spend on incorporation, server hosting and licensing depends on several factors. You can incorporate in a Caribbean country for less than US$3,000 plus roughly US$400 annually. For hosting, a good colocated or dedicated server with a reasonable amount of bandwidth can be found for around US$500 per month.
In Canada, a gambling license can also be obtained from the Mohawk Council of Kahnawake, and hosting can be found in Kahnawake as well. Licensing costs roughly US$20k up front plus an additional US$10k annually. At time of writing there are over 240 online casinos licensed by Kahnawake, including the 7 Sultans casino.
Sites which do not accept real money wagers from players typically do not require licensing or offshore hosting. So if you plan to start a prize site, an affiliate portal or skill based site, dedicated hosting should only cost around $350 per month plus bandwidth. There is no need for licensing or offshore incorporation either!
Play for Free Websites
Free-play websites do not accept real money wagers from players. Thus, player activity is not gambling because the element of consideration is missing. This means that you can secure affordable hosting in the United States, and you don’t need to worry about offshore licensing and incorporation. Best of all, you can still earn substantial revenues as an affiliate, meaning that you earn commissions for driving traffic to pay casinos or other non-gambling sponsors.
Compelling games do not merely attract visitors to a website, but they entice them to stay there and become emotionally invested in the product or services of your sponsors. The click-thru rate (CTR) of on-screen game advertisements has proven to be much higher than the average for traditional banner advertising.
Each affiliate program is different, but you can generally earn 20% to 50% of the lifetime profits from any player you send your sponsors. According to the Gambling Webmaster School: “The average player loses over $500 per month. Up to half of that could be paid to you! Over a one-year period, each of the casinos could pay you approximately $3000 per player. That is your commission! If you get just 20 people a year, that’s approximately $60,000 annually to you!”
The Internet Gambling Report states that casino and bingo sites could all benefit greatly from targeting “free-only” players. Many savvy pay casino operators are now launching free-play websites to drive traffic to their pay websites. In essence, they are becoming their own affiliates because there is so much money to be made!
Websites that do not accept real money wagers but instead charge a monthly membership fee, may or may not be considered gambling sites from a legal point of view. The deciding factor appears to be whether paying the membership fee gives the player an increased probability of winning. A website could therefore have an optional membership fee that gives members certain perks and conveniences that don’t affect the outcome of the games.
There are many sites that charge monthly membership fees to players, including Pogo. An optional Club Pogo membership gives players access to more games and other features. Players at Pogo redeem the points they win for raffle tickets in prize drawings. Other sites offer cash prizes to free players, and have an optional Club Membership as well. Membership fees at such sites are typically paid on a monthly basis with discounts offered for quarterly or annual subscriptions.
Most entrepreneurs don’t have millions of dollars and several years to develop their own software. Fortunately, it is possible to license or purchase a ready-made casino software package for far less. Unfortunately, most of these publicly-listed suppliers want anywhere from US$100,000 to $500,000 plus a hefty monthly royalty payment. If you have this much money to burn, such providers can provide you with a complete turn-key solution including payment processing, hosting, and a customer support staff. But you would probably be better off launching your casino for $15,000, finding your own payment processors, and keeping all of your profits for yourself.
Pro Wager Systems caters to the ‘do-it-yourself’ webmaster and those with smaller startup budgets. Bingo and poker are our flagship product, and can be found on many popular free and pay sites on the web. In spite of our low prices, we have frequently been told that our product is superior to software costing ten times as much due to its customizability and sophisticated backoffice administration.
Take a moment to try our games, and then contact us them to discuss your needs in more detail.