The online gaming business has grown exponentially since the first gambling website went online in the early 90s. Since then, the business has transformed into a billion-dollar industry with its ecosystem, key players, and an ever-growing number of international markets. The international triumph of online casinos can be attributed to a straightforward and remarkably efficient business model.

Overview

Similar to all commercial business models, the approach adopted by online casinos aims to generate consistent revenue and demonstrate sustainability. With online gambling emerging as one of the most successful global industries, an increasing number of startups are venturing into this field.

The online casino business model consists of four major points: product, market, audience, and costs. Of course, many more details are related to this model, but we will only get into some of them.

Product

Every online casino business must decide what they would offer to the general audience. Building casino games and apps provides greater flexibility and autonomy but requires specific expertise and considerable investment. Because of that, many online casinos use the services of various industry providers.

White label

White-label is a third-party application with all the necessary functionalities to run a successful online casino business. The white-label approach entails renting an established platform from a software provider, enabling operators to swiftly and affordably launch their online casino.

Essentially, a company acquires an already-built platform from a software provider and rebrands it as its own. This approach enables quick entry into the iGaming industry with limited initial expenses, as there’s no need to develop a platform from the ground up.

Nonetheless, white-label casinos might need more distinctiveness and personalised features, potentially falling short of the control and adaptability found in alternative models.

Turnkey

The turnkey solution model is another popular business approach within iGaming. This method involves purchasing a thoroughly prepared and operational online casino platform from a software provider, allowing for a faster launch, requiring minimal technical know-how.

Yet, turnkey solutions have the same degree of control, adaptability, and customization usually found in proprietary platforms. Turnkey solutions are associated with a higher cost compared to other models, as they involve purchasing a pre-built platform instead of constructing one from the ground up.

In-house

Some online casino operators choose to build their own platforms. This approach delivers unparalleled control and flexibility, offering a unique tailor-made solution. Proprietary platforms also give operators enhanced security and stability. Building an in-house casino platform requires substantial investments, and the maintenance and enhancements over time can significantly increase costs.

Market

iGaming is an ever-growing industry that caters to the specific gaming needs of players around the world. Each market has different dynamics, regulations, and product penetration.

Therefore, online casino operators cannot afford to apply a singular business strategy to all targeted markets, as this might prove ineffective and costly. Instead, it’s preferable to employ a tailor-made approach to each market, which will potentially generate much better results.

The online casino sector has undergone notable expansion in recent years, driven by technological advancements and a rising internet user base. As high-speed internet access becomes more widespread and digital entertainment gains popularity, online casinos have seized the opportunity to provide a diverse array of games and services to cater to various player preferences.

The incorporation of live dealer games, virtual reality, and mobile gaming has supplemented the immersive nature of the online casino experience, attracting an even larger player base.

The dynamic shifts in regulations have also significantly shaped the online casino landscape. Governments worldwide are progressively acknowledging the economic advantages of legalising online gambling and are enacting favourable laws to facilitate its growth. This has led to an influx of new operators, increased competition, and improved consumer safeguards.

Audience

Audience refers to the specific group that online gambling companies aim to engage. Within the iGaming industry, the typical player profile remains fairly uniform: predominantly male players leaning more toward the younger age bracket. However, a significant player base of more senior and experienced customers still exists.

Costs

Despite the increasing profitability of the iGaming industry, this business comes with significant running costs. The expenses vary from licensing expenses, website and software development to game content, payment service integration, and advertising.

Firstly, anyone looking to establish an online casino must register a legal entity in any well-known jurisdiction. This will allow any iGaming organisation to launch a gambling website, enter into partnerships with software providers and affiliates, and secure various payment processing options.

More information on the costs of launching and operating an online casino can be found in our recent article.

Revenue and profitability

Casinos generate revenue not based on a player’s initial deposit but when a player makes an unsuccessful bet. The amount a player bets and loses represents the casino’s “profit”, while the “net win” represents the difference between the funds spent on a player’s unsuccessful bets and the casino’s payout for successful bets.

Net profit represents the revenue that a casino generates to maintain its gaming operations. In terms of statistics, the long-term net win of online casinos is assuredly positive.

Games that rely on a random number generator (RNG), such as online slots and solitary editions of table games like roulette, blackjack, or poker, come with a predetermined return to player (RTP). Occasionally, the game provider establishes the RTP, while at other times, it is directly determined by the casino.

While generating revenue from games is guaranteed, the challenge lies in increasing the earnings volume. Online casinos can accomplish this in three ways: new player acquisition, returning player conversion, and player retention. Affiliate marketing is among the instruments that play a significant role in achieving the above three goals.

Game portfolio

The typical online casino provides an astonishing array of games for its players.

These include a wide variety of video slots and casino classics like:

• poker

• roulette

• blackjack

• baccarat, and more

Moreover, online casinos consistently try to enhance the fundamental mechanics of traditional gaming options. Nowadays, slots come in hundreds of variations, many featuring distinct elements like a varying number of reels, multiple paylines, multipliers, cascading mechanisms, free spin bonus rounds, and an array of other innovations.

Game design and mobile playing

Every major online casino grant has developed a mobile application where their customers bet on games and execute successful transactions. The greatest advantage of these mobile apps is that they enable players to engage in gaming from any location and anytime. This accessibility ensures that a maximum number of customers can access the platforms throughout a 24-hour timeframe.

Good gameplay is crucial when we talk about online casinos, as easy-to-play games with regular payouts and attractive bonus features grab the attention of new players and keep existing ones returning for more.

In addition, visual aesthetics significantly influence player engagement, particularly within the realm of online casino games. The game’s visual elements substantially influence players’ perceptions and enjoyment of the gameplay experience.

Part of that is why the “spin” button is often represented in a different colour, made larger than other visual elements. Other symbols are intentionally made to look more straightforward and are placed in particular areas within the game screen where it’s easier to get noticed. In this context, the design’s objective is to convey button functions.

Graphic design and technology synergize in various ways, encompassing buttons, symbols, and game mechanics. By harmonising these elements, designers and developers can create slot games with heightened immersion and engagement. This approach ensures that designs are thoughtfully tailored to the supporting technology, resulting in optimised gameplay experiences.

Marketing

Marketing is a broad term, and in the context of iGaming, several strategies have proved to be efficient.

Affiliate

We have already touched on affiliate marketing as an essential way to attract new players. Affiliates span a diverse spectrum of entities, varying from large media agencies to modest webmasters and bloggers, all with the capacity to drive players to their websites and earn a commission for each new player referred.

Through affiliate marketing integration, casinos can expand their reach and attract fresh players, all without the costs associated with potentially ineffective advertising campaigns.

Content

Among the most important strategies for drawing players to online casinos is content marketing. This content can be presented in various formats, including gaming news, evaluations, suggestions for tactics, captivating insights into gambling, and many others. The central objective of content marketing revolves around giving players valuable information to enhance their game proficiency and accomplishments.

Social

Social media stands as a vital instrument, not only for producing content and sustaining current players but also for attracting new customers. The core techniques for player attraction encompass social media advertising, organising contests, unveiling bonuses and promotions, and fostering direct communication with players.

SEO

Search Engine Optimization (SEO) stands as an essential instrument enabling casinos to enhance their positions on search engines such as Google. This action increases the likelihood of users encountering the casino’s website while seeking information about iGaming or online games.

Performance

Under the performance marketing model, advertisers are rewarded solely for well-defined user actions that yield measurable outcomes, like registration or initial deposits.

This approach offers casinos a cost-effective and efficient strategy for attracting new players. By directing efforts toward specific audiences and compensating solely for actual results, casinos can avoid wasting resources on unproductive advertising activities and focus on campaigns with greater conversion potential.

Conclusion

Understanding the various online casino models holds significance for operators. When operators comprehend the diverse business structures and their implications on player experience, customer service, and profitability, they can make informed choices.

Therefore, the number of online casino operators is constantly rising, and emerging businesses must make the most efficient decisions based on their budgets and objectives. iGaming companies like EGT Digital can help operators launch and sustain a successful online casino business by giving them all the necessary tools to manage their casino operations.

FAQ

What is the casino business model?

Like all commercial businesses, online casinos strive for consistent revenue and sustainability. As online gambling becomes a highly successful global industry, more startups are entering the field. The online casino business model focuses on four key areas: product, market, audience, and costs.

How does online casinos make money?

Casinos generate revenue when players make unsuccessful bets. The casino’s “profit” comes from the amount players bet and lose, while the “net win” is the difference between the funds from losing bets and the payouts for winning bets. This net profit supports the casino’s gaming operations, and over time, it is statistically positive for online casinos.

What algorithm do online casinos use?

Games using random number generators (RNG), like online slots and solo table games (roulette, blackjack, poker), have a set return to player (RTP). The RTP may be set by the game provider or the casino.