If you have a passion for sports betting and the determination to succeed as a modern entrepreneur, 2022 is the perfect year to launch an online betting business.
Why this year? The online betting sector has steadily grown over the past couple of decades, and COVID-19’s impact on land-based betting shops and casinos, has kicked iGaming investments into high gear. The increase in the number of players betting online has boosted bookmakers’ revenue growth. In turn, this means the incomes of entrepreneurs who’ve successfully invested in the online sportsbook business are also increasing.
Just how much is the industry worth? Online sports betting is a multi-billion-dollar industry that shows no signs of slowing down. Every year the industry grows, with more markets around the globe legalizing the activity and more betting businesses popping up for a chance to score their piece of this lucrative pie. According to Zion Market Research, the global sports betting market is expected to be worth US$179.3 billion by 2028 with CAGR of 8.33% during 2021 to 2028.
This prediction is no surprise as the sports betting industry is exploding in several markets around the world today. Take the US for instance. The legalized US sports betting market doubled in size in 2021, with Americans betting more than $52.7 billion on sports throughout the year. This is up 165% from 2020, resulting in $4.29 billion in revenue. Considering sports betting is currently legal in just 11 out of the country’s 50 states, and more states are considering legalizing it, both the market and revenue size are only likely to increase.
Across the pond in Europe, sports betting continues to be the most popular online gambling activity, accounting for 41% share of the continent’s online revenue, and was worth €10 billion in gross gaming revenue (GGR) in 2019. In the UK alone – Europe’s biggest online market – the GGR for remote betting reached a total of £2.6 billion between April 2020 – March 2021. Moreover, Europe’s market share of online gambling is steadily growing and is expected to reach 33.6% of its GGR by 2025.
Outside of North America and Europe, online sports betting is a growing industry in Africa. Several markets within the continent have legalized online wagers, with South Africa accounting for over 80% of Africa’s gambling industry. In South Africa, the sports industry accounted for more than 51% of gambling revenue in 2020 and generated $2.5 billion in GGR in 2021.
Beyond the emergence of new markets and the COVID-19 pandemic, more modern entrepreneurs are opting to invest in the online gambling sector due to the major benefit of being able to cover several markets at once.
Of course, running a sportsbook requires a practical approach. Although most of the available services and target markets are relatively fixed, the real-time odds and real-time marketing that is also paramount to a successful operation are not. Although some bookies have the desire and skill to handle the non-stop decision making that is part and parcel to the real time aspects of a betting business, others rely on industry experts to provide them with effective solutions, such as turnkey, API, and software for white label sportsbook solutions.
Not sure if you want to build your operation from the ground up or if you would rather choose a more cost-effective and quicker approach with the help of industry professionals? The experts at Casinnovate have put together a useful step-by-step mini guide on how to start an online betting business, to help you discover the fundamentals of launching an online sportsbooks in today’s competitive market.
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Step 1 – Choose Your Target Market & Localize
Knowing your target market is another major aspect when you’re planning to start an online betting site. You need to determine who your primary audience will be and build your sportsbook to suit that particular market(s). In other words, you must understand the local market and adapt to it by finding the answers to questions like:
- What type of online betting experience do your customers like?
- What do they expect from the experience?
- What are common gambling trends in the country?
- What are the top sports/leagues, non-sports betting markets in the country?
- What is the primary currency used?
- What is the primary language(s) used?
- What are the local and most popular payments?
- How are betting odds typically displayed in the market (e.g. factional odds (British), decimal odds (European), moneyline odds (American), etc.)?
- What type of license or regulatory requirements do you need to legally operate in that particular market?
Localization is key to success.
One of the most important things to avoid when starting an online sports betting business is marketing your brand on a global scale.
You need to narrow your competition by localizing your sportsbook and targeting bettors from a specific jurisdiction. Once you’ve found steady success in your primary markets, only then should you think about expanding your reach.
Ultimately, when it comes to choosing a market, it is important to consider its size, level of competition, and potential growth opportunities. For instance, if you’re a novice, it may be in your best interest to open up digital shop in emerging and less popular markets. Doing so will help you to avoid high licensing costs, high competition, and even high marketing expenses.
Examples of attractive emerging markets include those in Latin America and Africa. If you have your eyes set on Europe however, consider eastern European markets or the Balkans over well-established sectors like the UK, Germany and France.
Step 2 – Consider Your License Options
Although some bookies target countries where online gambling is banned, if you want to run a long-term successful operation that will more than return on your investment, taking the legal route is always your best option.
To operate a legitimate online sportsbook, you will need the appropriate license for your operation. You can either apply for the license you need on your own from the appropriate governing body (e.g. UK Gambling Commission, Malta Gaming Authority, and more) or you can find a white label sportsbook supplier who provides the license as part of their solution.
Sports betting is legal in many European, North American, South American, African, and Asian countries. For instance, popular markets where the activity is currently legal include:
- Europe – United Kingdom, Ireland, Sweden, Denmark, Italy, Russia, etc.
- North America – United States, Canada, Mexico, Costa Rica, etc.
- South America – Brazil, Argentina, Peru, Columbia, etc.
- Africa – South America, Nigeria, Kenya, Ghana, etc.
- Asia – China, India, etc.
- Oceania – Australia and New Zealand
Regulated vs unregulated markets
Simply because sports betting is legal within a continent does not mean that it is legal in every country or in every part of a nation. It is important to know the difference between regulated and unregulated markets.
Regulated sports betting markets
Regulated markets are jurisdictions where specific rules and laws have been put into place by a government-approved body, often referred to as a gaming control board. Any company that wishes to advertise and provide sportsbook products or services to residents that are protected by a regulated jurisdiction, must obtain a local license from the official licensing authority and comply with the regulator’s specific rules and laws.
Examples of regulated markets include: the UK, Malta, Sweden, France, Italy, Denmark, Romania, etc. What’s more, some regulated jurisdictions are not nation wide. For instance, in the USA and Canada, gambling is regulated by individual states and provinces. Unlike the UK, there is no single regulator that governs all of the United States or Canada.
Unregulated sports betting markets
Unregulated markets – also known as grey markets – are where offshore online betting is not restricted but also not officially approved. As there is no specific legislation dedicated to the iGaming within these regions, bookmakers can operate from an offshore territory.
Examples of offshore markets include some Canadian provinces, New Zealand, India, Japan, etc.
Many sportsbook operators who target unregulated markets hold licenses with Malta, Gibraltar, Alderney, or the Isle of Man, all of which are well-known reputable jurisdictions. These regulators provide a company with a respected reputation and are trusted by bettors. That being said, it is important to take care when operating in grey markets as they can be volatile. At any moment, formal regulation or a ban on gambling can be imposed, which could land your operation in hot water. In unregulated markets, you need to be ever vigilant of changing laws.
Avoid making assumptions about gambling laws
Every country has its own rules and regulations regarding gambling activities, including regulations that apply specifically to sports betting. Therefore, do not assume that if you already hold an iGaming license for an online casino that this license covers sports betting as well. It is important to gather all the pertinent information about the countries and their states/provinces where you are planning to start your own sportsbook.
Regulations vary from one regulated market to the next. That said, they often include: Player protection measures (e.g., responsible gambling rules, technical specifications, security, fraud prevention and anti-money laundering protocols, marketing guidelines, etc.
Additionally, in regulated markets, the types of bets and events allowed may differ. For instance, even if sports betting in general is legal, horse racing is often subject to a government monopoly. Moreover, there may be different restrictions for less traditional types of betting, such as eSports and virtual sports.
Never risk getting into trouble with the law. Always run a fully compliant and responsible gambling operation by ensuring you are partnered with regulated and reputable sportsbook suppliers. It is also a good idea to consult with knowledgeable local professionals (e.g. lawyers) to understand the region’s gambling laws pertaining to betting on sports.
Additionally, keep in mind that a white label solution can be the quickest, cheapest, and most convenient licensing option.
Step 3 – Create Your Business Strategy
First things first, you need a solid business plan for the online sportsbook brand you intend to operate. Diving in headfirst without a sound strategy is one of the fastest ways to fail. When creating a business plan, here’s what to consider:
- What is your total budget?
- What software provider will you choose?
- If you have existing capabilities, how will you leverage them?
- How will you compete?
- What will be your company’s positioning?
- Is a fast launch important to you?
- Do you need a license?
- What margins do you expect your operation to deliver?
Creating a realistic strategy is essential and it begins with understanding your budget. You need to know how much capital you need to operate the business you have in mind and how much capital you actually have to work with to get your sportsbook off the ground.
It is also about knowing what sports betting products you want to offer customers as well as other important aspects such as payments, marketing, third-party suppliers, trading strategy, data feeds, etc.
Risk analysis and assessment
The amount of seed investment you require to launch an online betting business will vary depending on the market you choose. The market determines the costs of the license and guarantees you provide to the authorities. Likewise, market size and your marketing budgets will affect the amount of capital that will be required.
Additionally, authorities will expect you to have a certain amount of capital reserves available at all times to cover any player winnings. You will also need to keep in mind that the risk of bonus abuse and player fraud increases as more bettors register on your platform.
In other words, once you’ve selected a market and purchased a license, you must anticipate financial risks and allocate a budget to cover these risks. In some gambling jurisdictions this amount is determined by law. Regardless of whether it is determined by law or not, anticipating financial risks and having a budget to cover them will help avoid initial hesitation and possible bankruptcy.
From budgets and costs to customer acquisition targets, margins, and unit economics, every element of your betting business plan needs to be meticulously, accurately, and logically thought out. You need to determine precisely what will be required to operate a fast, secure, smooth, and seamless omnichannel sportsbook.
Step 4 – Choose a Reliable Software Provider
When it comes to the software that will power your sportsbook, you essentially have to options:
- You can purchase a ready-made solution from a supplier
- You can develop your own platform
Purchasing a ready-made solution
When selecting a reliable and reputable sportsbook software provider it is important to do your research because not all platforms are created equally.
Some of the aspects you need to consider when choosing an ideal betting software provider include:
- Regulation requirements
- Customer registration
- Product portfolio
- Payments
- Localization potential
- Risk management
- KYC (Know Your Customer)
- Responsible gaming
- Bonus systems
- Marketing
- CRM (Customer Relationship Management) systems
- Data feeds
- Trading tools
- Flexible and customizable front end
- Strong back office with reporting tools
- Technical customer support and/or consultation services
In essence, you need to think about what your business will need from the platform provider. For instance, do you have an existing iGaming platform and want to add only a sportsbook product? Or do you need a full turnkey iGaming solution to accompany the sportsbook product you’d like?
Knowing what you want and require (a full solution or a sportsbook API that can be quickly integrated into an existing platform) can help you decide which sports betting software solution is best suited to your business goals.
Additionally, think about the type of platform supplier with whom you’d like to partner. Do you want to be able to influence development priorities or are you happy to let another company take the reins?
Know the third-party companies involved
Keep in mind that if you do choose to opt for a platform supplier, many of these providers have third-party partners that may provide payment systems, statistics, analytics, data feed, KYC, CRM, Affiliate programs, etc.
While this certainly isn’t a disadvantage, just make sure that you learn about who these third-party providers are and their terms and conditions. Always have a complete understanding of all individuals and companies involved in your sports betting business.
Developing your own platform
It is possible to develop your own bookmaker platform. The advantage of building and owning your own technology is that you have the freedom to innovate, differentiate from the competition, and create a flexible product that works specifically for your operation. That being said, the major downside to building your own sportsbook platform from scratch is that it will take a lot of time, be very expensive, and also carries a great deal of risk.
To independently develop an effective platform, you require sufficient experience in running an iGaming business to be able to understand the requirements for online gambling software. Moreover, you will not be able to run the entire operation on your own. You will require a full team of experts including, but certainly not limited to:
- Managers
- Engineers
- Analysts
- Marketers
- Other specialists
Developing your own platform isn’t merely about knowing what you’re doing and having a solid understanding of the industry and the regulations that apply to the markets you’re targeting. It also requires significant investment of financial and human resources, knowing how to find the professionals with the expertise you need, and carries with it an incredible amount of responsibility and a high level of risk.
Due to the cost and serious level of skill required, purchasing a ready-made platform with the products you need from a trusted sportsbook software supplier is almost always in your best interests.
Casinnovate makes it easy for you to research and compare premium and reputable sportsbook platform suppliers with our comprehensive sports betting platform reviews.
Step 5 – Choose Products for Your Betting Site
Not all betting sites are the same. Some offer more than just sports betting and include other gambling products as well, such as virtual sports and casino games. You need to decide what content and features will be included in the bookie business you start. Knowing what products you want as well as what products are available can also be useful in helping you find the ideal sportsbook software supplier.
With that said, here are some products and features to consider:
- Wide range of sports markets – There is a vast array of sports markets. It’s often best to cover the most popular major sporting events and leagues (e.g. football/soccer, horse racing, tennis, golf, baseball, basketball, American football, hocket, cricket, etc.) as well as popular local sports and leagues that appeal to your target market.
- Non-sports markets – Beyond sports, you can offer other betting markets, including politics, celebrities, reality TV series, awards ceremonies, etc.
- Live betting – In addition to having an extensive range of pre-match odds and betting, live odds and in-play betting is an absolute must if you want to be competitive.
- eSports – This form of modern betting continues to gain in popularity, particularly for bettors who fall into the Millennial category. Examples of popular eSports include Starcraft 2, Dota-2, League of Legends (LOL) and Call of Duty.
- Virtual sports – This is a type of wagering that is made on computer-simulated sports events (e.g. football, horse racing, etc.). The events are very short, with new ones starting every few minutes.
- Data feed – Delivers betting odds, scores and real-time settlements for all major sports events.
- Betting features – There are many different types of bet features that can be added to provide bettors with a more thrilling, engaging and easy betting experience. Popular features include cash out & partial cash out, bet building, bet editing, multi-bet type support, speech-based betting, scheduling tools, pools betting, etc.
- Casino products – Slots, table and card games, and a live dealer casino are commonly offered at bookmarker sites. One of the benefits of having other gambling products is that you can offer cross-product promotions.
Whatever products or features you decide to include with your brand, keep in mind that typically the most successful online sportsbook usually offer a wide range of sports markets with tens of thousands of pre-match and live-match events across an array of sports daily.
Be mobile first
Be mobile first
Nearly half of all bets are placed via mobile phones and this number is only likely to grow in the coming years. As such, it is imperative that you take a mobile-first approach when it comes to betting as a business online if you want to reach the greatest number of customers.
Consider native app development (apps for iOS and Android) when you launch. Even if you do not have apps for your launch, it is worth thinking about adding them at a later time.
Regardless of whether you launch an app immediately or in the future, ensure that your site is 100% mobile compatible. The mobile web version should be fast, easy to navigate as well as have simple and quick tap and bet features. It should also have all the main functionality that is available on the desktop web version.
23+
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iGAMING
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20+
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SOLUTIONS
30+
REVIEWED
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Step 6 – Integrate a Payment Provider
No real money online sportsbook is complete without payment processing solutions. There are essentially two ways that you can acquire the payment processor and gateway that you need:
- Independently partner with verified payment systems
- Obtain a flexible and secure payment system platform from a sportsbook platform supplier
No matter the path you choose to take, it is essential that your payments system features popular and local online payment systems as well as supports multiple currencies. Fraud detection and fast processing of payments (depositing, betting, and withdrawing) is another must.
- Examples of popular types of payments include:
- Credit/Debit Cards – Visa, Mastercard, Maestro, etc.
- Bank transfers – Trustly, Sofort, etc.
- eWallets – PayPal, Neteller, Skrill, etc.
- Prepaid cards – Paysafecard, ecoVoucher, etc.
- Mobile payments – Apple Pay, Google Pay, Much Better, etc.
- Cryptocurrencies – Bitcoin, Litecoin, Ethereum, etc.
Step 7 – Build a Strong Team with Exceptional Customer Service
Take the time to build a team composed of the best people for the job. Recruit, train and develop a team that will not only ensure a smooth and secure bookie operation but will also offer incredible customer service.
Remember, you will have thousands of competitors, all of whom offer many of or exactly the same products and features that you do. What separates you from the competition is the type of experience you provide your customers.
Localized site features (language, currency, payments, etc.), marketing, promotions, and a quick and speedy user interface only go so far. The other major component of keeping customers happy and returning is providing them with fast, reliable, responsive, knowledgeable, and professional-yet-friendly customer service.
Optimal customer service can be achieved through:
- 24/7 support (multilingual support if applicable)
- Multiple communication channels – Live chat, email, telephone, social media, etc.
- Fast response times
- Quick resolutions
Maximize player LTV – Employ CRM
Customer relationship management is a type of technology used for managing your company’s relationships and interactions with customers and potential customers. It collects data on players, tracks interactions and shares this information with your customer support team. This helps your team to create a customized experience for each player to maximize player lifetime value (LTV).
CRM delivers key advantages, such as:
- Segmenting players into groups
- Creating a tailored experience that best suits the player’s preferences and motivates them to return and spend
- Knowing which contact communication channel the customer prefers
- Providing the right customer with the right bonus at the right time
Step 8 – Employ Clever Acquisition and Retention Marketing Strategies
The last step of how to start an online sports betting site is to create a digital marketing strategy, which includes both plans for acquiring new players and – more importantly – retaining the players you have.
There are several ways that you can market your business successfully. Among these include:
- Social media marketing
- Affiliated marketing
- Email marketing
- SEO marketing
- PPC advertising
- Newsletter/blog
- Welcome bonus/bonus systems
- Loyalty/VIP programs
- Refer and earn programs
Ultimately, your goal should be to devise a marketing strategy that focuses on drawing in new customers to your site, converting these customers into active players and then retaining these players. Maintaining a loyal player base costs less than acquiring new players and, when done effectively, will turn a higher profit in the long run.
Helpful Online Sportsbook Business Tips
With the basics covered on how to start a sports betting business, here are a few helpful tips to keep in mind before you begin your journey toward achieving success:
- Know your competitors – Find out who your primary competition is so that you can discover what they do that is effective and so that you can identify and avoid their mistakes. The objective is to do what they do better and, when possible, offer something they don’t have.
- Give your brand focus – Choose a target market then focus and localize your brand to appeal to this market. You won’t be able to appeal to everyone, so deliver the best to the market you choose.
- Choose a supplier that suits your needs – Make sure the sportsbook platform supplier, etc. you choose is the right fit for the audience your targeting, and offers an array of sports, markets and live betting. Don’t settle for second best.
- Anticipate challenges and deal with them – Losing customers, negative reviews, and hackers are only some of the challenges you’re likely to face as an online bookie. Expect these challenges and partner with the appropriate professionals to help you avoid them when possible, improve, and stay ahead of the game.
- Be ready to adapt – From new technologies and changing laws to the demands of seasoned players and the expectations of a new generation of bettors, the gambling industry is ever-evolving. Long-term survival is dependent on you keeping up with the latest sports betting trends and regulations.
- Consider the cost of future development – In addition to knowing the size of your initial budget and working within it, you also need to consider budgeting for future further developments of your sportsbook, such as competing in new markets when the opportunity arises.
The Bottom Line
Anyone can learn how to start a bookie business, but operating a long-term, lucrative online sportsbook operation is a different story. If you are serious about achieving success, you need to be prepared to invest plenty of money, time, hard work and market research into this endeavor.
Though an experienced online gambling operator might be able to develop a betting platform on their own, if this will be your first sportsbook, it is better to opt for a complete solution readily available from a reputable supplier.
Whether it’s a white-label or turnkey platform you seek or API integration, Casinnovate has the experience to help you make your dream to succeed a reality. We can provide you with a personalized approach and assist you in finding the best partner that offers the most ideal solution for your betting business goals.
