The global online gambling industry has been moving towards regulation and licensing at pace over the past few years with no signs of this shift slowing down. Despite this, getting in on the action and launching successful operator and supplier businesses is still relatively easy.
While regulation and licensing bring challenges, especially in markets such as Europe and the USA where rules are incredibly stringent, it sets out the standards businesses are expected to follow while also ensuring that players are protected at all times.
This provides a very strong foundation for companies to launch successful businesses that are sustainable in the long term. Of course, there are some markets that have embraced regulation and licensing but are far more welcoming of new businesses than others.
These jurisdictions, such as Latin America, Africa and India, understand the need to bring in regulatory frameworks to protect players while balancing this with providing an environment where companies can enter the market and thrive.
Regulation-lite markets that provide big opportunities
Latin America has the potential to be one of the largest online gambling markets in the world. The regulatory status of online gambling varies across the region, with some countries such as Ecuador currently banning all forms of gambling.
Other countries like Brazil and Mexico have proposed legislation to legalize online gambling under consideration, while Argentina (Buenos Aires) and Colombia are already live with regulated, licensed online gambling.
These are both large markets, with Argentina’s online gaming and betting sector estimated to generate $2.4bn in revenues each year. In Colombia, online gross gaming revenue has increased gradually from when the market opened in 2018 to around $300m today.
Africa is another continent with plenty of potential. Again, there is a real mix of countries that have regulated, those that are regulating and those that are currently somewhere in the middle. All eyes are currently on markets including Congo Brazzaville and Chad.
India is another market worth mentioning. Broadly, there are no laws that prohibit online gambling in India, however, there are a few states that have brought in specific laws to ban it. This should not deter companies from targeting India, with the market set to be worth around $2bn by 2026.
To license or not to license
One of the most important aspects companies will have to consider is whether to focus on regulated markets where they will need to obtain a license in order to operate, or whether they focus on regulating or yet to regulate (grey) markets that do not require a license.
So long as there are no laws in place that specifically prohibit online gambling, operating in grey markets is not illegal. For example, there are many big-name brands from Europe that are already accepting players in Mexico and India.
This allows operators to drive brand awareness among players in the country, build sizable, active audiences and generate revenues. If and when the country then adopts regulation and licensing, they can apply for a license to continue to operate in the market.
This does come with a word of warning, however. Take the Netherlands, for example. This was a grey market for a long time until the country embraced regulation for online gambling.
Operators that had been active in the market were told to withdraw ahead of the regulatory framework coming into force and were also hit with a cooling-off period of two years and nine months before they could apply for a license.
This meant that some of the biggest brands that had been in the market had to wait to apply for a permit to continue accepting players from the Netherlands while other brands were able to secure a license and go live as soon as the regulated market opened.
What it takes to get up and running in the iGaming industry
Launching a successful online gambling business requires research, knowledge, experience, investment and a powerful platform from which to run your sportsbook and/or casino.
The best way to get started is to attend industry conferences and meet with experts, technology providers, regulators and industry insiders. There are a huge number of expos on the calendar, with many focusing on specific regions and even individual markets.
While at these conferences, it is worth sitting in on some of the presentations and panels that take place. They often include industry thought leaders who share their experiences and lessons learned – this is invaluable insight and advice that you can use as a guide for your business.
Once you have identified a country you wish to target, it is vital to gain a comprehensive understanding of that market. This includes legal, cultural, and infrastructural as well as player preferences and unique market quirks.
The best way to do this is to put boots on the ground in that country and sit down with those that have experience in the market. Third-party technology companies such as a turnkey gambling software provider are ideal for this.
Initial investments and ongoing costs
There are several key areas of investment required when launching an iGaming business. These can be broken down into:
Market research: you will need to invest resources and time into understanding the market or markets you wish to target.
Legal advice: it’s always best to have an expert help you understand the laws and rules in each jurisdiction to ensure your activity complies with any national or local laws.
Building your team: assembling a team of experts to run the business will be a vital part of your success. Local knowledge and experience will be vital.
Technology: whether you chose to develop your own proprietary platform or white label a solution, a significant investment in technology will be required.
Marketing: driving brand awareness is a complex undertaking and will be one of the biggest costs moving forwards. There are options for all budgets, from expensive above-the-line campaigns to cost-effective performance marketing and paid media.
Once the initial investment has been made in establishing the business, building the team, accessing a platform and technology stack and launching your brand, ongoing costs drop and investment is more focused on developing your product and growing your brand value.
Do it yourself or outsource
The biggest decision for someone investing in the iGaming industry for the first time will be just how much they do in-house and just how much they outsource.
Some of the world’s biggest gambling brands own their own platforms, technologies and game studios, but in reality, these are multi-billion-dollar, publicly listed companies with almost unlimited resources available to them.
For smaller organizations entering the fray, outsourcing key areas of operation such as platform, trading, payments, CRM and even performance marketing can streamline costs while still allowing you to build a sizeable and successful business.
Some of the most popular online gambling brands in the world are run from white-label platforms. This includes PlayOJO and Fitzdares.
What you can do with a lot of money
Online gambling is a multi-billion-dollar industry, and some companies have frankly massive budgets to play with. This allows them to develop their own platforms and technologies, and push boundaries by bringing new innovations to market.
Those with deep pockets can also buy instead of build, allowing them to acquire bolt-on companies to drive scale and continue to improve the product and experience they offer players. It is these businesses that are able to attract top talent (and pay them the big bucks).
Those with a lot of money can advertise extensively, including via costly TV and radio campaigns. Again, it is often these brands that dominate the airways, billboards, websites and magazine pages in the markets they target. Many also sign celebrity endorsement and ambassador deals.
That said, this is an industry where spending smart and not necessarily spending big allows even smaller companies to grow and succeed in the long term.
With any business, it is important to set goals and define success. This will be different for each company and depend on the extent of its ambitions and the investment it is willing or able to make in order to meet these targets.
As mentioned, it is easier to succeed in some markets than in others, and newly regulated/regulation jurisdictions in Latin America, Africa and Asia should be a focus for new players entering the sector.
The possibilities are endless
The global iGaming industry is one that offers no end of possibilities and that is why it continues to attract new companies and investment. The move to regulation and licensing is a good thing, growing the scale and scope of the entire sector.
This transition period is one that investors and new businesses should look to capitalise on now. It really doesn’t take much to learn about a market, find a technology partner, launch and brand and begin marketing it to players.
Those that seize the opportunities on the table now will undoubtedly be the ones cashing in their chips having won big a few years down the road.