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In fact, the online gaming market in the US alone is predicted to reach $31 billion by 2027 – with an annual growth rate of 12.9% according to Statista.
In this step-by-step guide, you will get a clear breakdown on how to start an online betting business, the options available to you, and the process you should follow.
Step 1: Constructing a Business Plan
As with any ambitious objective, it needs to be followed up with a plan. The purpose of the business plan is to help you prepare for the business launch and to be one step ahead of the financial requirements.
In fact, a business plan is often seen as a form of passport in the online gambling world, with many licensing authorities only willing to accept approval if a business plan has been presented to them.
Even to secure partnerships, investments and sponsorships, a business plan is a prerequisite for anyone to take you and your online betting venture seriously.
There are many business plan templates, tools and resources you can find free online with a simple Google search. Tools like Microsoft Word, or Google Docs even have relevant templates that you can use.
However, when constructing a business plan, two key things that you need to address in particular are market analysis and budgeting.
Market analysis
Starting with market analysis, the purpose of the research process is to aid you in identifying your competition and target audience.
There are multiple insights you’ll gain through your research. One in particular is to highlight how competitors tap into the market, and help you find opportunities to capitalise on.
Some key components to market analysis include:
- Spotting your ideal target demographics and customer preferences
- A critical insight into competitor strategies and systems
- Pinpointing the strengths and weaknesses of your competitors
Budgeting
When constructing your budget, you should assess the following and have the results laid out in your plan:
- What are the initial costs of launching your business?
- When operations are up and running, what recurring expenses will need to be addressed?
- What revenue figures do you project for the business?
Step 2: Register a Sports Betting Company
Online betting businesses all over the globe can only run legally if they have an online gambling licence. Many regions and jurisdictions offer their own licenses that carry their distinct limitations and perks.
There are also different types of gambling licenses regulators can offer, so finding the right one that aligns with your business plan is critical.
However, in order to gain a gambling licence, you must register as a company first. On a positive note, no matter which country you plan on registering the company, most governments provide straightforward steps to register, usually found on their official websites.
However, many law firms can also offer assistance in this matter, further simplifying the registration process at an extra cost that’s more than reasonable – especially if planning to operate an online betting business in a foreign nation.
It’s important to think carefully when selecting a legal structure for your company. Recommended and popular options include:
- Limited Liability Companies (LLC)
- Limited Company (Ltd)
Not only is it necessary from a legal standpoint to pick a legal structure for your company, but the choice of legal structure will impact liability protection, tax efficiency and operational complexity, so it is important to carefully research and pick the most relevant and beneficial legal structure.
Some jurisdictions do, in fact, require a local physical presence for operations such as office space and resident directors. This is usually known as the ‘economic substance’ requirement and can be the most complicated part of setting up an online betting business, and unfortunately, it is growing increasingly common in reputable licensing jurisdictions.
Step 3: Gain a Gambling Licence
Once you register your iGaming company, you must obtain a gambling licence to operate as an online betting business.
During your competitor analysis, you’ll discover four common licensing jurisdictions: Malta, Curacao, Gibraltar and the UK.
These licensing jurisdictions have become the go-to for licensing, each offering their distinct advantages, cost structures and requirements over the other:
- Malta is known for its reasonable fees and lenient requirements for licensing, with a short consideration window of only 12 to 16 weeks. The country’s gaming regulator is the Malta Gaming Authority (MGA).
- Curacao is historically known to be the most cost-effective option, although the pricing has been increasing after recent reforms. The application process is known to take several weeks and includes separate steps for company registration and licence application.
- Gibraltar on the other hand, maintains a selective licensing policy which mostly benefits established companies with a track record in the gaming industry and can prove strong financial backing. To top it all off, they require a local physical presence which includes offices and directors – making it an unattractive option for new online betting businesses.
- The UK and its Gambling Commission (UKGC), provide online betting businesses with access to the world’s largest regulated markets, but it comes at a catch – a lengthy 16-week betting process.
The UK Gambling Commission is known to have the highest standards for player protection. Therefore, if you choose to operate within this jurisdiction, you will need the following:
- Make sure to prepare the required documentation
- Submit the application and pay the necessary fees
- Undergo the background checks
- Prove financial stability
| Jurisdiction | Application Fee | Annual Fee | Processing Time | Key Advantages |
|---|---|---|---|---|
| Malta (MGA) | €5,000+ | €25,000+ | ~6 months | EU access, Reputable |
| Curacao | ~€4,600 | ~€24,530 | Weeks/Months | Cost-effective, Crypto-friendly |
| Gibraltar | £10,000 | £100,000 | 5-6 months | Strong reputation, UK access |
| UK (UKGC) | £370+ | GGY-based (£4,000+) | ~16 weeks | Large market, High trust |
Step 4: Select The Right Sports Betting Software
Picking the right sports betting platform is an important part of the decision-making process. Your business will live or die based on the quality of your product, so this is a step you need to consider carefully.
The market analysis part of your business plan can be beneficial for this step and help you determine which platform suits your business needs.
To begin with, you could develop your own proprietary betting platform in-house if you have the skill, team or resources to do so.
This is the most complex option, but it offers a greater degree of customisability. However, it’s only possible if you or a team have the time and skill to create a platform.
When it comes to purchasing off-the-shelf betting platforms, they can be customised and tailor-made, falling into two main categories: White Label and Turnkey solutions:
- White label sportsbook solutions are typically operated on a revenue share model, which would impact long-term expenses as the business grows, but they provide the fastest solution to get started.
- Turnkey solutions give users greater customisation over their platforms, and the operator maintains full ownership and control, unlike the rev share model offered by White Label providers.
| Jurisdiction | Application Fee | Annual Fee | Processing Time | Key Advantages |
|---|---|---|---|---|
| Malta (MGA) | €5,000+ | €25,000+ | ~6 months | EU access, Reputable |
| Curacao | ~€4,600 | ~€24,530 | Weeks/Months | Cost-effective, Crypto-friendly |
| Gibraltar | £10,000 | £100,000 | 5-6 months | Strong reputation, UK access |
| UK (UKGC) | £370+ | GGY-based (£4,000+) | ~16 weeks | Large market, High trust |
Step 5: Increase Maximum Bettor Attraction and Retention
Once you’ve made a decision on which betting platform to use, it needs to be optimised to ensure it converts and retains players. This is where a user-friendly interface is crucial, as it simplifies navigation, and gambling operators tend to get this wrong a lot of the time due to poor planning and execution.
With a user-friendly interface where design is intuitive and account management is hassle-free, you will already be one step ahead of most of your competitors in the market.
Another big selling point, that’ll help you attract and retain players, is secure and fast payment processing. If this is executed poorly, you could fail consumers who want to make deposits on your platform. Or you could lose customers who become frustrated with withdrawal delays.
Security measures should be deployed to protect financial transaction data and user privacy. Key security elements that should be considered are the following:
- SSL/TLS Encryption: Creates a secure connection between users and the platform
- Multi-Factor Authentication (MFA): Requires users to verify identity using multiple factors
- Regulator security audits: Spot and address potential vulnerabilities
You should also consider implementing marketing and promotional strategies to drive traffic to your platform. Some effective approaches include:
- Affiliate Marketing: Partners promote your platform in exchange for commission
- Search Engine Optimisation (SEO): Supports your site to rank higher in search results
- Referral Programs: Incentivise users to invite friends to your platform
- Loyalty Programs: Rewards users for their continued use of your platform
- Brand marketing: Raising awareness of your brand through ad channels, and brand ambassadors, is an important but often overlooked part of the marketing mix.
Customer service is another key element to many successful online betting businesses, since consumers spend hours on your platform and trust you to deal with their money safely. Therefore, high-quality assistance is key to a good gambling business to make consumers feel safe spending money on your platform at any time of the day.
Important Operational Considerations
There are some key operational pillars you should keep in the back of your mind at all times:
- Risk management is one of the essential pillars. It involves monitoring betting patterns and adjusting odds to avoid excessive liability on any single outcome. An effective system will track wagers in real-time and alert you to suspicious activity that could indicate fraud taking place.
- AML/KYC compliance (Anti-Money Laundering/Know Your Customer) is mandatory in all reputable jurisdictions. The purpose of these protocols is to verify customer identities and monitor transactions to prevent illegal activities such as money laundering or fraud.
- Responsible gambling tools should also be deployed to protect vulnerable players from developing unhealthy habits with gambling. This can be achieved by using features such as deposit limits, time restrictions, self-exclusion options and reality checks.
Ready to Start an Online Betting Business?
With in-depth market analysis and clear budgeting, choosing the most beneficial licensing and platform options and having a strategy for consumer engagement, you will be more than ready to step into the online betting business, where many competitors are struggling to get started simply because they lack the essential guidance needed.
It’s important to remember that each step in the process builds on the previous ones, so follow the steps diligently to increase your chance of success in this challenging yet rewarding industry.
