Question for those who know the online gambling biz

[Alpha13]

Ok I've asked about and read here that to have any chance of success, a new casino needs a few hundred thousand $ in startup capital. Well I don't have that kind of change but I can't stop thinking about the idea so I'd like to understand why so much money is needed. Can someone breakdown the costs for a new startup? For simplicity's sake lets assume we are opening a casino without player vs player games (no poker, only BJ, roulette, etc) and the aim is only to make a decent income, not muscle out partycasino.

Thanks

[Pokeraddict]

The licensing from a decent, reputable software company is going to be most of your startup. Then also consider the reserves needed for a big win, paying support, paying security teams, advertising, gaming commisions in the licensing jurisdiction, royalties and chargebacks/fraud all come to mind. Fraud is a staggering amount of losses for online casinos.

Also keep in mind you will not get to keep all of the net. You will be paying affiliates a good chunk of your win, if you do not noone will promote you. There are also processing costs that run anywhere from 2%-9% of the deposit. So if a player deposits $100 by Instacash you only get $91 in your Neteller. If he loses $100 you only net $91 but owe the affiliate and the software company their share of $100.

Although well run and established casinos will make money it can be hard to make it off the ground, especially without a massive advertising campaign and a reputable software.

[Alpha13]

Thanks for the input. I have some experience in marketing with some other ventures and know that I could find a small base of customers for almost no money through local advertising. (signs, flyers etc) This would also minimize the cost of security and fraud (since no online advertising) But of course it would not eliminate it and there is no getting around software licensing, regulation fees and reserves for the big payouts.

Damn complications. why can't I just flash some pretty lights at people and have them give me their money [img]/images/graemlins/mad.gif[/img]

[ubercuber]

Do you have multi colored lights? I might go for this.

[Benholio]

[ QUOTE ]
I have some experience in marketing with some other ventures and know that I could find a small base of customers for almost no money through local advertising. (signs, flyers etc)

[/ QUOTE ]

You aren't in the US are you?

[WhoIam]

There are probably some useful responses in a similar thread I started a while back.