Six ways casinos can avoid bankruptcy in 2021
Running a gambling business seems like a safe bet — it’s the players who are taking the risk, not the operators. But the truth is, even online casinos can go under if they’re not properly managed. Below we offer a rundown of six ways online casinos can avoid bankruptcy.
You need a good head for numbers to run an online gambling business.
There’s a long list of key performance indicators you need to track and analyze in order to see if your online casino is bringing in revenues or heading towards bankruptcy.
Your gross gaming revenue (GGR) and your net gaming revenue (NGR) give you an overall picture of how you’re doing — these are basically how much money you’re generating from gaming activities before you account for all the costs of running a business.
If those numbers aren’t where you want them to be, it’s time to zoom in on other performance indicators. Bets-to-deposits and NGR-to-deposits measure how much of your players’ deposits they’re wagering and how much they’re losing, respectively. You should also look at your number of conversions, retention and churn rates, daily active users, monthly active users, player lifetime value, and average revenue per user.
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Getting into the nitty-gritty of all that granular data can point you towards the cracks in the ship you need to patch up.
But in the end, whether an online gambling business succeeds or fails depends on its ability to balance a single equation: money coming in vs. money going out. Tip to one side, you’re sailing in an ocean of profit; lean to the other, you’re going under administration and kissing your yacht goodbye.
Below, we break down 6 different ways of avoiding bankruptcy in the gambling business.
1. Get your players to love you
In an industry rife with competition, the businesses that rise above the pack are those that find ways to keep players coming back for years on end. Brands have to fight tooth and nail to keep their players from migrating to other platforms, and those without an adequate marketing and player retention strategy.
Players are less likely to abandon you for a competitor if your site’s value increases over time in their eyes. The best way to do that is with a loyalty or VIP program.
When your users can join a loyalty program, every deposit, spin, and bet takes them one step closer to the next tier of the VIP hierarchy. As their deposits get bigger, offer them bigger rewards and better, more personalized customer service.
The more time and money they spend on your online casino, the less likely they are to be tempted away by another platform. Why start over and lose your investment when you could keep building instead?
2. Keep up with the times — and stay ahead of your competition
Demographics can fluctuate over time, and player tastes can change along with them. Player preferences should (obviously) be first and foremost on your mind when selecting your game portfolio.
On the one hand, some things don’t change. The old-fashioned, the tried-and-true, the classics — game developers pump out fruit slots for a reason: there have always been, and always will be, players that love them. That’s why nearly every developer in the iGaming space has a line of fruit slots where each game has a slight variation, like adding fire or diamonds into the mix.
Other themes that enjoy perennial popularity in the slot space, like mythology, are also subject to constant twists. Game developers almost seem to compete with each other to see who can come up with the most creative take on Viking warriors or Egyptian gods.
But not every player dreams of seeing a row of cherries.
There’s always a new innovation to incorporate into your portfolio, and if you don’t bother, your competitors will. Slots are a reliable standby, but more and more game developers are coming up with innovative new forms of gaming — shooting games, new forms of lotteries and scratch-offs, hybrids between slots and wheels of fortune, live dealer versions of everything imaginable, branded partnerships with well-known board games — the list gets longer every day.
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Many of these new forms of gaming are based on incorporating cryptocurrencies.
Football betting will never go away, but operators who offer virtual sports betting have a leg up on those who don’t — and before too long, everyone who doesn’t offer esports betting will be left in the dust. It’s never too early to plan ahead and make sure you integrate not just the popular titles of today, but game content that players will be looking for in the future.
Casinos that fail to take the industry’s rapid pace of change into account will find themselves left in the dust, wondering where all their players have gone.
3. Hang on to your license
Losing a license can put your business in jeopardy.
Casinos that have their license revoked by their jurisdiction of operation can find themselves suddenly shoved into very uncertain territory. Operating without a license can have severe legal consequences, and in regulated markets losing a license means losing access to your target audience.
Avoid losing your license by adhering to its terms and conditions as well as all local regulations, including those pertaining to advertising. Pay special attention to KYC and AML requirements and make your ID verification process as stringent as possible while still maintaining a speedy sign-up process.
Regulatory authorities often pay attention to how well casinos handle customer complaints and whether they uphold technical standards.
Overall, it’s in your best interest to be proactive and make sure you’re always in line with regulators’ expectations. Be responsive and stay on top of any changes to regulations in your jurisdiction of operation.
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4. Build on firm ground
Adhering to regulations is crucial. But that can be tricky in markets with unstable economic or political situations. It’s not unheard of for governments to suddenly crack down on sportsbooks, and send tax rates through the roof overnight.
That’s why it could be best to make sure your feet are firmly planted in a reliable jurisdiction before expanding into more volatile markets.
Research a market before you go into it. Look at the stability of the government. If they have a track record of changing their policies on a whim, of raising tax rates without warning — they might be too unstable to run a business in.
5. Don’t let bonuses break the bank
Casinos offer bonuses to get players to sign up and to prolong their time on the platform. Bonuses are particularly enticing for new players, as they can test out the casino’s sports betting odds or casino games, as well as the overall quality of the platform, without having to risk much of their own money.
A bonus is an opportunity to get a feel for the casino, not a free handout.
However, bonus abuse is rampant — bonus hunters scroll through player forums looking for hints on which casinos have weak bonus policies.
It’s not unheard of for casinos to lose millions after players found a loophole in their bonus policy and headed straight to a player forum to let the rest of the community know.
To avoid exploitation, casino operators should make sure that their bonuses have ironclad terms and conditions. Specifically, bonuses should come with a rollover requirement, meaning that players must wager the amount of the bonus a certain number of times before withdrawing their winnings. It’s also common for casinos to allow players to withdraw the winnings, but not the original bonus amount.
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6. Smart marketing
Control the costs you can. When it comes to marketing, people often say that half of your marketing budget is wasted, you just don’t know which half; avoid throwing money away by using performance-based marketing strategies, such as cooperating with affiliates.
Performance-based marketing ensures you only pay for successful conversions — the affiliates who drive traffic to your site only receive a commission when players sign up. Over time, you’ll be able to see whether or not your affiliate partners are pulling their weight.
However, be choosy about which affiliates you cooperate with. New operators who sign up for as many affiliate programs as possible find themselves paying out an unsustainable amount of their revenues.
Bonus tip: Integrate great games
Players come to you for thrills. If you let them down, they’ll leave you behind; if you reward their trust, they might keep coming back forever.
Make sure players always find what they need by integrating a variety of top-quality games from the industry’s leading providers. With our APIgrator solution, you can integrate over 5000 games from some of the best game developers in the industry. Get in touch with our Sales Managers today for a free consultation on how to expand your iGaming business.