“Why is it so hard to start a new gambling business?” This was the question posed last month in an article by Graham Carrick, CEO of RunLastMan.com. In the original article he recorded the fortunes of around 100 e-gaming start-ups.

Carrick concludes his research suggests that “overall the situation looks bleak for starting your own venture in the betting space, especially if you’re looking to get going with a successful B2C platform”.

He lists a few core reasons as to why he thinks it so hard to get a gambling company off the ground:


• No access to government funding
• Angel investors are scared of betting
• You get shunned – early stage companies can often get valued press coverage, cash and investment from competitions, awards and pitching events. However, if you’re a gambling company don’t bother even applying.
• Margins are incredibly tight in betting 
• Acquiring players is ridiculously expensive for B2C

GBGC’s thoughts on the question posed:


• It is difficult to start a new business in any sector. The failure rates are generally high for the period 3-5 years after launch.
• Of the enquiries that GBGC receives, many entrepreneurs want to run a pari-mutuel model. This is often as much because they see it as a less risky business model for themselves rather than because it is what gamblers want to play. Unless high prize pools are guaranteed, higher spending customers generally prefer fixed-odds betting, when there is a choice.
• Social gamers do not convert into real-money gamblers. Business plans that anticipate signing up social customers cheaply and then morphing them into high-staking gamblers in the future are misguided.
• Some of the new ideas are viable as an addition to boost an existing suite of games and services but are not strong enough to stand on their own as a long-term business.
• GBGC finds that some new entrepreneurs to gambling still believe that having a gambling website means that their market is “the whole world”. This approach is not feasible from either a licensing or marketing point of view. You must have specific target markets.
• In markets like the UK the fight for consumers’ attention is getting harder for new entrants. The situation could get even worse if further gambling advertising restrictions are imposed.

Source:
“Why is it so hard to start a new gambling business?”
https://www.linkedin.com/pulse/betbutler-betcade-badugi-all-failed-why-so-hard-start-carrick?trk=hp-feed-article-title-like

GBGC’s CEO Warwick Bartlett and Graham Carrick, CEO of RunLastMan, will both be speaking at the i-Gaming Forum in Stockholm (5-6 April 2017)