According to a report from Research & Markets the value of the global online gambling industry is over $88bn.  Furthermore, there aren’t any projections that this industry is about to plateau. On the contrary, all estimates claim it will double in value over the next decade.

Truth be told, new markets are gradually opening up. What’s more governments around the world are becoming more proficient in navigating and regulating this landscape. There are even trusted and regulated brands that aren’t even managed by local businesses. If you were to look at irishcasinosites.com you see there are many brands with attractive promos that are managed by tech companies in offshore jurisdictions.

It should be said that these numbers and developments only paint a positive picture. The reality is somewhat different. As in any other industry, many gambling startups fail, or businesses get acquired by bigger ones. So, let’s see what are what are the odds of success in this market and what is the fail rate.

Overview of the Gambling Industry

There are over 70 countries that have virtually no restrictions on online gambling businesses. What this means is that online gambling activities aren’t regulated there and that citizens have access to foreign online casinos and sportsbooks. In other words, there are economies out there with untapped growth wells.

Economists speculate that the industry will grow at a rate of 10.7% per year and $252 billion in 2033. Because of these prospects, more governments are likely to change their stance on gambling and start to regulate it. One example is Uzbekistan which will open up its licensing body in 2025.

One thing that regulators around the world seem to agree on, is that there is a necessity to categorise or create a gambling content taxonomy. The idea is that certain forms or formates are safer, easier to regulate, and should have different licensing criteria. Currently there 4 main gambling categories:

• Casino games – Slots, scratch cards, mini-games, crash games, etc.
• Card games and roulette – Games where players have greater control over the odds
• Sports/race betting – Wagering on outcomes of sport matches and races
• Lottery – Daily/weekly games of chance often used to raise money

What’s more, there are sweepstake gambling sites that don’t use the same reward structure and are deemed safer for players.

Factors Contributing to Successful Gambling Platforms

On top of new markets, there are other factors that significantly contribute to the growth of iGaming companies.

Tech infrastructure has drastically changed. We have new trends like VR, AI, and blockchain, that can all be leveraged to improve the online gambling experience. This is especially true for blockchain, as crypto or bitcoin casinos are slowly becoming a new norm. They are safer, cheaper, faster, and incredibly useful if you are playing on foreign sites where cross-border bank transfers are the only cash-out alternative. 

Casino and sportsbooks have also perfected the art of branding and marketing. First off there are big bonuses for new players that are structured in a way not to incur losses on the operator. Basically, players get a big boost on their initial payment but must meet playthrough terms to qualify for the withdrawal of winnings achieved through the bonus. Then there are gamified promotions through free spins, and there are affiliate programs.

Through affiliate programs, brands can easily mobilize other marketers and content creators to promote their sites.

Other factors are reg-tech developments and general regulatory experience that led to increased safety of all parties. Basically, governments are more confident they monitor iGaming companies and have functioning regulatory models they can copy. Finally, online payments have been streamlined thanks to API integrations of BaaS and information sharing. So, that made these casinos and sportsbooks more accessible. 

Case Studies of Successful Gambling Platforms

When it comes to gambling sites it’s somewhat difficult to find from rags to riches stories. Most big brands already had a strong retail presence. As a result, they had the necessary experience and capital to digitally expand their operation.  That being said offshore platforms do have success stories, and one example is stake.com.

This platform went after the niche market from the get-go. More specifically they targeted crypto enthusiasts. Because the regulations in Curacao aren’t as strict as in the EU and US, Stake was able to offer crypto deposits and withdrawals. What they did next was invest heavily in marketing. They partnered up with every imaginable slot Twitch streamer, to get noticed by young gamblers and gamers, who are more likely to use crypto. This put them on the map, and now they are the most visited online casinos (over 150 million visits).

Challenges and Failures in the Gambling Industry

As an industry, iGaming can be very profitable, but there are certain hurdles that aren’t startup-friendly.

First off there are many regulatory challenges that are manageable with bigger teams. Failing to comply can be expensive, and some of these hiccups can cause big problems for smaller companies. So, it’s incredibly important for startups to manage compliance risks in this field. Bigger brands get fined all the time, but they can afford those fines. After all, when you are working with a big user base, something always slips through the cracks.

Licensing costs, audits, and taxes for gambling businesses can be very high in certain regions, so getting started is virtually impossible. Not only that, but you also need a revenue-sharing agreement with software providers, affiliate marketers, and enough capital to cover player payouts. To offset some of these costs casinos might add terms that require players to playthrough their deposit 2 or 3 times. This only results in a lack of trust, or in them being called scams, because users never read the terms. 

Additionally, the market is oversaturated and the competition isn’t always local. As mentioned many offshore sites have expanded to EU, US, Australian and African markets. So, it’s difficult for potential users to notice new sites.

Case Studies of Failed Gambling Platforms

It’s really difficult to find an honest gambling business that was performing well and then failed. Sure there are dozens of blacklisted sites, but many of them were indeed scams. So, it’s not right to categorize them as failures if they never intended to be a legitimate provider in the first place.

Another thing we might perceive as a failure is when a site closes down. This doesn’t mean they are out of business though, it usually indicates they are leaving certain markets and focusing on other geographies. Why? Many different reasons actually. It can be a shift in licensing policies, an increase in tax revenue costs, legal changes that ban operators from that region etc.

Now there are examples of failure and they result from overspending and underspending.

• MoPlay – The company was established by Addison Global and went on a spending spree by sponsoring Manchester and Watford. Not only that they also had incredibly high sign-up promos, and even then they didn’t get the expected growth. They were later sued by Manchester and Watford, for not honouring their part of a sponsorship deal.
• EveryMatrix – Refused to invest in responsible gambling tools. They were fined for these shortcomings by UKGC, but instead of trying to change how they do things, they just saw themselves out of the UK market.

Comparative Analysis

To sum up, it’s possible to compete if you play your cards right. Right now new brands are trying to penetrate different markets using new tech. An example would be metaverse casinos that aim to leverage both VR and blockchain technology. Even when new countries open up their markets, it’s still difficult to go against big brands who have the connections and experience that help them set up their operations.