How to start an online casino business for Australians in 2020
Australians have a well-documented love of gambling. The country is among the world’s leaders in gambling participation — and revenues — with Australian adults spending more per year on gambling than residents of any other country. But the online sector is very tightly controlled, with most forms of online gambling prohibited. Keep reading to find out what Australian investors and entrepreneurs can do to break into the iGaming industry — and how Slotegrator can help.
The rate of gambling participation in Australia is one of the highest in the world. Most forms of gambling are widely available to Australian players, except for one — online gambling, which is almost entirely prohibited. However, that doesn’t mean Australian investors and entrepreneurs interested in the iGaming industry are completely out of luck; established and emerging markets around the world offer great opportunities for offshore casino and sports betting businesses. Keep reading for an overview of the Australian market, a look at other markets around the world, and a breakdown of everything Slotegrator can do to help start your online casino business.
Overview of the gambling and betting market in Australia
If any country has a national passion for gambling and betting, it’s Australia. You can see the country’s love of gambling in the staggering amounts of money spent on the activity every year — and also by the high levels of regulation.
For 2017-2018, the last year for which figures are available from the Victorian Responsible Gambling Foundation, total gambling expenditure across the country was nearly AUS$25 billion, a 5% increase from 2016-2017. Levels of spending increased for every sector of the regulated industry when compared to the previous year. While gambling participation may seem to be declining, Australians still gamble at a rate that’s simply incomparable with many other countries; according to a 2018 Roy Morgan survey, a staggering 47.9% of Australian adults regularly engaged in some kind of gambling. Australians are also world leaders in gambling losses; the country’s gambling losses per adult for 2017 were AUS$1325, far more than any other country.
However, despite (or perhaps because of) the widespread interest, the Australian market is heavily regulated at both the state and the federal level. Most regulations are at the state level — each state has its own gambling commission or other authority — but states must stay within the confines of federal law. Perhaps the most wide-sweeping federal law is the Interactive Gambling Act 2001, which prohibits companies and individuals from offering online gambling services to Australian citizens. Some activities, such as lotteries, bingo, and sports betting, are exempt from the law and regulated by relevant authorities in each state and territory, but online poker and casino games are banned across the country.
The fines for breaking Australian regulations can be massive. Ladbrokes Australia was recently slapped with a fine of AUS$207,500 (US$139,526) for advertisements offering bonus deposits that regulators in New South Wales deemed to be “inducement to gamble.”
Australian investors and entrepreneurs are unable to offer online gambling services to Australian players (who often visit offshore casinos regardless of the ban). But sometimes, when one door closes, several more open; Australia is far from the only gambling market in the world. Investing in offshore gambling operations that target other markets is a perfectly viable option, as is starting an offshore casino platform. In fact, the Northern Territory even issues Internet Gaming Licenses to Australia-based operations that face foreign markets. Licenses are issued through the Department of Industry, Tourism, and Trade instead of a separate gambling commission, and applicants must satisfy a range of requirements pertaining to reputation and business ability. To remain compliant, operators must ensure they do not accept players from Australia or a list of “designated countries” which have specifically requested Australian operations do not target their citizens (to date, the designated countries list is empty).
How can entrepreneurs based in Australia get into the online casino and sports betting industry?
The first — and perhaps most important — thing that Australian investors and entrepreneurs have to keep in mind is that they are prohibited from targeting or accepting Australian players, regardless of the jurisdiction where their casino is licensed and registered. However, they are not specifically prohibited by law from offering gambling services to audiences in foreign markets, as long as the country in question has not requested the Australian government to place it on a list of excluded markets.
One option for getting involved in the iGaming industry is investment. Whether they’re just getting started or entering a new phase of development, online casino and sports betting projects often need injections of cash. Investing in an existing project can get you started on learning the ropes of the industry — and bring in revenues, provided the project is run well.
For a more hands-on approach, entrepreneurs can start their own online casino or sportsbook. There are a number of established and emerging markets around the globe that offer good opportunities for online casino and sportsbook businesses.
Gambling is massively popular throughout Asia. The overall value of the online gambling market in Asia is estimated to be $72 million. There are several countries, like China, Japan, and South Korea, where players face the same restrictions as those in Australia, and come to the same solution — offshore, black market casinos. India is regarded as one of the world’s most exciting emerging markets. The regulatory situation is complicated, with the legal status of different forms of gambling varying from region to region, but the market’s overall value is attracting lots of attention; the country’s yearly gambling turnover is estimated to be around $60 billion. The Philipine Amusement and Gaming Corporation (PAGCOR) has become a hub for licensing offshore iGaming operations; revenues reached $1.5 billion in 2019.
Driven by increasing internet access and mobile usage, as well as a widespread passion for football, several markets in Africa are experiencing a sports betting boom. In South Africa, the continent’s biggest gambling market, GGR was $1.9 billion in 2018, though the complicated regulatory situation could pose some difficulties; the only legal form of online gambling across the country is online branches of land-based sportsbook operations. It’s estimated that in Uganda, players’ yearly gambling expenditure is $42 million. In Nigeria, Africa’s most powerful economy, 30% of the population place bets every day, and yearly turnover in the country is estimated to be $2 billion. In Kenya, 79% of youths regularly bet on football; before a government crackdown on sports betting operators, market-wide turnover for sports betting was estimated to be nearly $281 million in May 2019. Government attempts to increase taxes have resulted in an extended standoff between regulators and operators. The Gaming Board of Tanzania reported that the gaming and betting sector contributed $41 million in tax revenues in 2018-2019.
Latin America is home to several countries with very promising prospects. The trend throughout the continent is increasing liberalization; Colombia, for example, became the first country in Latin America to regulate online gambling in 2016. Coljuegos, the Colombian regulator, reported $19.6 million in tax revenues for the year ending in October 2019. In Mexico, the region’s largest market, authorized providers reportedly generate $50 million in revenues per year, but according to some estimates, the unregulated sector could be worth up to $400 million. In Argentina, gambling is regulated on a province-by-province basis; many provinces have yet to enact gambling regulations, but online gambling in the country is reported to be worth $2.4 billion. The sleeping giant of Latin America is Brazil, where the recent decision to regulate sports betting will allow the government to tax roughly 95% of Brazil’s currently unlicensed market, estimated to generate over $450 million in gross win by 2024.
The European market, where several different jurisdictions offer licenses for gambling businesses, is stable, clearly regulated, and very valuable. The Gross Gaming Revenue (GGR) of the European online market is predicted to reach €29.3 billion by 2022.
The UK, which accounted for over 30% of European gambling activity in 2018, is a particularly attractive market. A study released in December of 2019 revealed that 47% of participants had taken part in some form of gambling in the past four weeks (half of them gambling at least once a week on average), and 21% of them had gambled online. Between October 2018 and September 2019, the country’s Gross Gambling Yield (GGY) from online casino gaming was over £5.5 billion.
Why invest in online gambling?
Part of what makes iGaming such a good investment is that gambling is one industry that will never go out of style. Between gambling’s enduring popularity and rapid advances in technology, the industry’s overall value is exploding; worldwide iGaming revenues hit $58 billion in 2018, and they’re expected to keep rocketing upwards for the foreseeable future, rising above $117 billion within the next five years.
Part of what’s driving iGaming revenue growth could be the changes rippling through modern society. Between social media, streaming services, and online gaming, it’s hard to think of a form of social interaction or entertainment that hasn’t moved online.
Another of the industry’s strengths is its flexibility. Online gambling is a natural home for innovation, and this drive towards creative solutions enabled the industry to handle the unpredictable events of 2020 better than many other sectors. While land-based casinos were closed and sporting events were cancelled, online casino games, live dealer games, and betting on virtual sports saw huge increases in activity.
With its consistent demand and constant technological innovations, iGaming promises to be a solid choice for investment.
How can Australian entrepreneurs start an online casino in an offshore jurisdiction?
Registering a company and acquiring a license
Having a license has a few benefits for an online casino project. Many game content and software providers won’t cooperate with unlicensed operators, and players look for proof of a license when choosing a casino to play on, as it signals the platform is trustworthy. There are jurisdictions around the globe that issue licenses to gambling operations. Curacao, Malta, The Isle of Man, and the Mohawk Territory of Kahnawake are all well-regarded licensing jurisdictions, with operators frequently choosing Curacao due to its lower taxes and fees and comparatively simpler application process.
Curacao, an island in the Caribbean, is the world’s oldest licensing authority for online gambling businesses. Potential operators apply for a sub-license from one of the jurisdiction’s four master license holders. One of the biggest advantages of the Curacao sub-license is that a single sub-license allows the holder to organize all forms of gambling. That, combined with a net gains tax of only 2%, the lack of a gaming tax, and the comparative ease of the licensing process make Curacao a very popular choice for first-time operators.
The Mediterranean island of Malta has become one of the world’s major iGaming centers. Licenses issued by the Malta Gaming Authority (MGA) are widely viewed as a mark of quality and accepted throughout the EU. Malta has higher taxes than Curacao, as well as a mandatory compliance contribution and several other requirements. Also, while Curacao sub-licensees can offer any time of gambling activity they want, MGA licensees require a separate license for each activity. Often, operators first get a license from Curacao, and then another one from the MGA when they’re looking to expand into the European market.
Another licensing jurisdiction for operators facing Europe is the Isle of Man, which is a British crown dependency between the UK and Ireland. The Isle of Man Gambling Supervision Commission offers separate categories of license based on the type of business the licensee will run. A full license holder can organize all types of gambling activities, and can also offer White Label solutions to sub-license holders.
The Mohawk Territory of Kahnawake, a first nations reserve near Quebec, is home to the Kahnawake Gaming Commission, which has been licensing land-based and online gambling businesses since 1999. With comparatively low licensing fees, 0% corporate tax rates, and no gaming tax, KGC licenses are highly sought-after by operators.
These are just a few of the jurisdictions that issue licenses to conduct online gambling activities. To find out more about the licensing process, get in touch with our experienced legal team.
We offer consultancy services and complete package solutions for gambling license acquisition that include:
- Gambling jurisdiction and business advisory
- Gambling business corporate structure incorporation
- Opening bank accounts
- Gambling license application
Target market analysis
Potential operators should carefully research their target markets. First, they should look at regulations — whether gambling is regulated, unregulated, or prohibited. In fully regulated markets, authorities provide clear rules and requirements for operators, so they always know where they stand in relation to the law. Countries with no gambling legislation, or with different laws in each region, can seem tempting, as operators may not be forced to pay taxes; however, sometimes a government which has long tolerated offshore operators decides to crack down by introducing high taxes or even blocking gambling sites.
Population size is important, as is the state of the overall economy. Levels of disposable income will give you an idea of how much players will be able to spend on gaming. Social factors matter, too — countries with a well-documented love of sports (and betting on them) probably have more potential players than countries where gambling is viewed as a social ill and repressed.
Demographic research will help you form a picture of who your players are, which will in turn help you choose what gambling products to offer. In addition to age and gender, find out the average income and education levels of the target audience, as well as which forms of gambling are preferred by each group of people.
One effective research method is competitor analysis. Studying your competitor’s platforms will help you make decisions about how to calibrate your own. You can examine established platforms to get an idea of common minimum and maximum bet limits, as well as which games are the most popular. Does the target audience like slots? Poker? Baccarat? Sic Bo? When it comes to sports betting, do they like to wager on football, basketball, cricket, or something else? You can also see what payment methods, such as credit cards, bank transfers, and e-wallets, that players expect to be able to use. After carefully studying your competitors, you’ll see why the target audience goes to their site — as well as how you might bring them to yours.
Premium-quality casino platform software is an absolute must for an online gambling project. Entertaining and innovative games from the industry’s leading developers will keep players engaged, and payment systems from certified providers will ensure smooth and secure deposits and withdrawals. New operators would benefit by planning ahead and choosing a powerful and flexible platform capable of future adaptations; what starts out as just an online casino might benefit from the addition of a sports betting module in the future.
A customizable frontend will give you control over your website’s design so you can tailor it to your players’ tastes. If you’re planning on facing more than one market — a definite possibility — there’s a great benefit in casino software that can create a separate page for each target audience, in their own language and according to their preferences.
An online casino or sportsbook will need to quickly build a base of loyal players — and then keep them happy as long as possible. Affiliate programs are a common choice. Affiliate partners run blogs or other websites and direct their followers towards a gambling project in exchange for a fee, which is very often a portion of the revenue the players generate. Once players are on the platform, operators need to keep them coming back, so they frequently employ loyalty or VIP programs. These offer increasing rewards for players the longer they stay on the platform.
How can Slotegrator help?
There are a lot of different bases to cover when starting an online casino business. From registering the company and acquiring a license to setting up a platform and filling it with quality game content, experienced help can prove invaluable — and Slotegrator has plenty of experience. We offer a range of services and solutions for every aspect of your online casino business.
Licensing and jurisdictional services
Our legal team’s expertise in the world of gambling licenses extends to jurisdictions around the world. Instead of trying to navigate a complicated bureaucratic process yourself (and risking the rejection of your application) let us handle the paperwork while you focus on developing your business model.
There’s no substitute for premium-quality online casino platform software. As the engine that drives your business, you need a powerful, reliable platform that will give your players the experience they need. Trying to build one from the ground up will turn into a waste of time and money — as well as creating more technical problems than you can handle — but with readymade solutions, you can get a high-performing, versatile platform up and running fast. Our Turnkey and Casino Kit solutions offer customizable frontend designs and effective management tools. Our White Label solution lets established businesses operate under our license.
For potential sportsbook operators, our Sportegrator solution offers a complete bundle for an online sports betting business. Our sportsbook software has a wide range of sports betting data feeds and a bespoke design.
Online casinos need an endless variety of gaming content to keep players engaged. Aside from slots, roulette, and baccarat, there are live dealer versions of almost every game imaginable — not to mention the innovative new forms of gaming that developers are constantly releasing. Our APIgrator solution can equip your platform with over 5000 gaming titles from the industry’s leading game developers, as well as regularly updating your game selection.
Payment system integration
Deposits and withdrawals need to be fast and secure in order to ensure smooth operations and a good reputation. To maximize your player base, you’ll also need to support transactions in a variety of different fiat and cryptocurrencies. Our Moneygrator solution bundles together over 140 payment methods from more than 20 certified payment service providers, ensuring your players can always make their deposits and withdrawals.
The online casino and sportsbook industry is full of opportunities — and it’s growing every day. If you’re an investor or entrepreneur based in Australia (or anywhere else) and you want to break into one of the world’s most exciting businesses, get in touch with us for a free consultation; we’ll find the option that best fits your business needs.
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