Nov 12
Online Casino Business Models: What Keeps the Games Running?
READ TIME: 3 MIN.
Online casinos have grown fast in the last two decades. Unlike other industries that hit a snag after such fast growth, the online casino world is set to get better with the coming of virtual reality, cryptocurrencies, and blockchain technology. As such, more investors are looking into how they can also rank their sites as some of the best online casinos in the industry. It all comes down to choosing the right business model and following through with your strategic plans. We look at how online casinos run and ways that investors can optimize their profitability.
The Key Stakeholders.
We all know that players are essential in the online casino industry. But besides the players and the casino operators, who else is part of this exciting world?
a. The software providers. Casinos do not actually create the games on their sites. Instead, they get these games from software providers who are responsible for ensuring the games work as advertised.
b. The regulators. Every casino must operate within the confines of the law. Regulators, like the UKGC, step in to assess a casino and determine if it meets the operating standards to get a license to offer its services in a region.
c. The payment service providers. Casinos rely on payment gateways to process deposits and withdrawals. For example, these gateways allow casinos to receive money from players paying by cards, e-wallets, and bank transfers.
d. The financiers. Most casinos have strong backing from financial institutions that provide them with the funds to run their business. These financiers can also offer vital advice on how best to use the revenue.
Other important stakeholders include the casino's departments, ranging from legal to marketing to sales. So, while players may only see the casino, there is a lot of work that goes on in the background to keep the site running.
The Key Activities.
For a casino to make money, it must offer value to its target audience. So, how do operators do this?
a. They curate game selections that match their audience's needs. These can be games of chance, games of skill, or a combination of the two. They often seek unique titles that set them apart from other platforms offering such services.
b. They market their games to their audience. There are many ways to do this. These include the following:
c. They offer incentives to new players. Marketing unique games is no longer enough to attract players. Instead, casinos must be willing to go a step further and offer bonuses to new players, e.g., loyalty bonuses.
d. They meet their audience's needs through support. Players want to know they can get help in real time, and this has become a core aspect of casino gaming. Most sites offer live customer support to interact with players as they are gaming. They also offer phone and email support.
In recent years, casinos have also focused on the overall user experience and have been optimizing their sites through technologies such as augmented reality.
The Key Revenue Streams.
Finally, we get to how casinos make money from all their partnerships and activities. An operator can turn a profit from any or all of the following means:
a. Winnings from wagers. All games have a return-to-player percentage as well as a share that the casino gets to keep. An operator that hinges on these transactions makes money from each wager.
b. In-game purchases. Some casinos offer free games to players while giving them the option to upgrade for more features. In such a case, as seen in social casinos, the operator makes money from the subscriptions rather than the wagers.
c. Advertising. An operator can allow other organizations to advertise their products on its site in exchange for money. Often, this revenue stream works best for free casinos as a way for the operator to get a return on their investment.
Some casinos also charge subscriptions such that players pay a small fee to enjoy the games.
