While it seems like online casinos are like a license to print money, they do incur a good amount of expenses.
License Fees
In order for an online casino to be reputable and offer real money games in certain jurisdictions, they need to be licensed. These licenses aren’t cheap either, and the more reputable a license you want, the higher the cost will be.
For example, getting a license in Gibraltar (one of the more reputable gambling commissions) will set an online casino back between $30,000 and $70,000 depending on the company type and structure. This license is good for five years and also requires an annual extending cost of $2,800 – not the kind of thing you can start up from your bedroom!
Hosting Fees
The website an online casino operates from is the equivalent of a storefront. A slick, eye-catching site will draw players in and convince them that this is the right site to spend their money, whereas a dodgy, half-finished site will immediately make players click off and find another.
There are a lot of costs that go into setting up a site as they’ve got the design, front-end development, backend development, software integration, and web hosting fees to worry about. The online casino wants their site to look, the more it costs them – but they consider it a worthwhile investment.
Software Fees
As well as developing and hosting a website, the online casino needs to think about its software platforms. They need to be able to host a wide range of games in order to entice players, they need to look appealing to play on for long periods of time and they need to be able to accept various payment methods.
Some companies will design their software from scratch, some will buy the framework of the software and then add their themes on top, and others will buy what’s called “turn-key” software which is ready to deploy immediately.
The choice that online casinos make in this regard will have a big impact on the cost but it also impacts how much they’re able to change the software.
Salaries
While it seems like a lot of these online casinos run themselves once they’re set up, they require a large amount of manpower to keep ticking over. They need to have software developers on hand in case there are any major bugs/glitches with the site, technical support to assist players if they have any queries, marketers, management, accountants, and many more!
Some of these jobs are highly skilled and require large salaries to attract the best employees, and if they want to become one of the most popular sites they can’t afford to skimp in any of these areas.
Taxes
The amount that an online casino will outlay in taxes depends on the jurisdiction it operates from. Different countries have different attitudes to gambling tax and corporation tax and that difference can add up to tens of millions of dollars for an online casino.
For example, the Isle of Man has a very attractive 0% corporation tax rate but will require the casino to pay the gambling duty which can be between 0.1-1.5% depending on the gross profit made that year. Malta also has an attractive tax law. Operators who are running their business within this jurisdiction can look forward to a small 5% gaming tax.
However, in the UK, online casinos currently have to pay 21% of their gross profits as tax (as of 1st October 2019).
As you can see this is a huge difference so casino operators need to consider whether it’s worth the added income of the UK market before offering real money games there. 온라인카지노
Marketing
Marketing an online casino may not be as easy as you think. A lot of websites/TV channels refuse to host ads for gambling companies on moral grounds, meaning that a large number of online casinos are forced to compete in a smaller space. Therefore being able to outspend your competition can make a big difference in how recognized your brand name is.
Online casinos can market through regular advertisements, sponsorship of sporting events/teams, or affiliate marketing. The more eyes that they want to see their product, the more it will cost them with some online casinos paying millions of dollars in sponsorship every year.
The answer to the question “how do online casinos make money” is by offering games that give them a small, but discernible edge that is magnified by large volume.