How to Start a Sportsbook Business and Profit in 2023
How to start a sportsbook? Three key things you should know
The Whitelabel business model is the cheapest, but comes with major drawbacks, such as low customization options and high revenue share fees.
The API option, on the other hand, allows you to customize your sports betting business the way you want and compete with anyone on the market.
The turnkey model is the golden standard for anyone who wants to become a bookie. Medium flexibility and full control over cash flow and design elements make it the best model for startups that want to become profitable.
What kind of sportsbook you should start depends on how many resources you have
Whitelabel sportsbook solution
The main aspect of the Whitelabel sportsbook is that it’s a low risk, low-reward option.
In a Whitelabel solution, the provider hosts and manages the sportsbook platform, leaving the client to focus on marketing and operational aspects
The main disadvantage of the Whitelabel business model is that the provider may not be able to make changes to the platform quickly or easily, so the platform may not always meet the client’s needs.
This is the cheapest option where you can control only one thing – your marketing strategy.
And that’s it. Nothing else.
- You can’t fully control which countries you can work in because of the platform and legal requirements.
- You can’t control the cash flow and the platform only pays you your profits once a month after you have paid out to your clients.
- You have no control over the payment system providers as you have to use the options offered by the platforms.
- The revenue share you pay to the platforms is much higher than with a turnkey solution. Newbies don’t realize this, start with the seemingly cheapest option and usually lose all their money because they can’t break even.
The list of disadvantages is endless.
We don’t recommend it unless you really know what you are doing, because many things have to go right with Whitelabel to make a profit.
Watch this video to learn why you shouldn’t start a Whitelabel iGaming business in 2023
Turnkey platforms offer a complete package of software, services, and support that’s ready to go.
You don’t have to write code or hire dozens of traders to calculate odds and create the feed. This significantly lowers the initial costs and allows you to start a sports betting business within a few weeks.
Advantages of starting a turnkey online sportsbook
- Dozens of platforms from which you can choose between tens and hundreds of thousands of euros. You can choose between industry leaders and rising stars. You can open a sportsbook in a few weeks and have full control over your business.
- You’ll have an iGaming license. It’s up to you which countries you want to work in. You have control over cash flow and can pay yourself instead of waiting for a paycheck from the platform.
- Revenue sharing is much better with the turnkey solution than with the white label solution. So you save millions of dollars in the long run.
- Relatively quick setup if you know what to do and work with trusted partners.
This option requires you to build your own platform instead of using third-party solutions.
This gives you flexibility and endless customization options.
This model requires more technical development and integration, which can be time-consuming. You need a solid team to start such a project and a significant amount of investment.
As a reward for all your efforts, you get your own platform and full control over the feed. You become more competitive, because you keep the revenue share that other sportsbooks have to pay to the betting platform.
The benefits are endless, but you also have to have enough money to do something for it:
- Find investors to support you in your venture.
- Hire a team of software developers.
- Hire traders who can make sense of the feed and create different types of bets.
- Spend years of work before you can even begin to make money back.
How to build a successful bookie business that consistently makes money
License your online sportsbook
Getting a license is the first step to building a successful sportsbook business.
There are countries where gambling is prohibited, countries without gambling laws and fully regulated jurisdictions.
If you don’t want to limit yourself, an international license is a must. You can choose between licenses from Curacao, Kahnawake, the Maltese MGA and the Isle of Man. We compare all four licenses as well as the license fees in this post here.
The most popular license in the world is the Curacao license. With it, you can work on multiple markers. Startups love it because of the price and the time it takes to get it. In this post you’ll learn more about how to get a gambling license in Curacao.
Want to learn more about what online gambling license you need?Contact Us
Choose the right sports betting platform
This is a crucial step in building a successful business.
There are hundreds of different platforms on the market. Choosing the right platform is crucial for running a sports betting business.
The sports betting industry is growing and your business need to be able to grow with it.
In Europe, where the online gambling market has been around for over twenty years, it can be easy to be faced with legacy issues.
The company may have been active since 2004, but offer very few features for today’s market.
This just proves that the “years of experience” that many companies like to cite as an advantage doesn’t mean much without a successful product.
Relatively new platforms, on the other hand, can have everything the new sports betting business needs:
- They can have a great product.
- They can implement new features quickly.
- They can get the job done quickly and have your sports betting business up and running in no time.
- They have responsive customer support.
There are many options to choose between more mature companies and relatively new platform providers, depending on what goal you want to achieve.
Here’s why choosing the wrong partner can destroy your business
Imagine you’re talking to your prospective partner about different features. You want live streaming integrated within two weeks and an automated bonus system built from scratch within two months.
You sign the contract, pay an invoice, and the work begins.
Two months later, you realize that nothing is ready and you have to wait another six to twelve months.
- Your work is on hold.
- Your bank account takes a hit because you have to keep paying salaries.
- Your plans are now in jeopardy and unattainable.
This isn’t the best way to start a sportsbook.
Unfortunately, this is exactly what happens to many sports betting startups.
Check out this post if you want to know how to choose a platform.
Do thorough research to choose the right sports betting platform
Your business must have an edge.
If you know what features your competitors offer, you can draw the line for the minimum your platform should have.
- Boosted Odds – this can be a great way for bettors to get higher payouts for winning bets. This is a promotion where you get better odds for certain markets for a limited period of time.
- Different types of odds – depending on the market, you can choose between decimal odds, fractional odds, American odds, Hong Kong odds, Indonesian odds and Malaysian odds. If you only offer a limited selection of odds, it could limit customer satisfaction and make it harder to attract and retain customers.
- Bet Builder – allows users to create custom bets by selecting and combining different betting options for a specific event or game. This feature can provide an incentive to place more bets per day and thus increase the revenue of the sportsbook.
- Live Streaming – allows users to watch the games or matches they’re betting on in real time directly on the betting site. Live streaming makes it easier to place in-play bets as users can watch the match live and quickly place bets on the action. This results in bettors wagering more money throughout the duration of a match.
- Live betting – a feature of sports betting that allows bettors to place bets on a game or match that is already in progress. This really helps to increase the revenue because more bets are placed after the game has already started.
You can still have a bunch of customers knocking on the door of your sportsbook, but they’ll leave as soon as they realize how bad your offer is (imagine selling an old Nokia phone, while most people long for a smartphone).
Check what odds feed and data providers your sportsbook platform has and focus on your market
Think about this before you sign a platform, because you could be stuck with a solution that doesn’t have much to offer your market.
If you want to be successful in the Indian market, you should have tons of cricket tournaments on offer.
People in Brazil, on the other hand, will be looking for soccer games, basketball, and e-sports
The more sporting events you cover in your markets and the more events you offer to your customers, the better.
You’ll find that your customer retention increases because people are looking for the best experience. Instead of making just one bet and then leaving your sportsbook, they become loyal customers.
It’s not a good idea to run a sports betting business without knowing people’s needs. You need to do your homework before choosing a platform and a betting odds provider.
After you answer the question “What is my market?” you can figure out which platform best fits your market.
Hire traders or outsource trading to your platform provider
If you’re just starting out, you probably don’t have the budget to hire a team of traders.
The trading department is crucial to the success of running a sportsbook, as it’s responsible for managing the odds and lines of the various sports events.
- They’re there to make an offer more attractive to a customer in your market. This is how you gain an advantage over your competitors. Your customers are constantly looking for better odds and you have to offer them the best to keep them!
- Traders ensure balanced betting and minimize the risk of loss for a sports betting company. They constantly communicate with the marketing and risk department to make your business more profitable and eliminate risks.
- Traders analyze tons of data and adjust odds, they also monitor and manage the flow of bets.
Low latency is crucial to provide accurate and timely odds updates to customers
Latency measures the time that elapses between an event occurring and the provider updating the odds.
Let’s say an important soccer match is taking place and the odds for a certain team to win change during the course of the match.
If a sportsbook has a high latency, there may be a delay in updating the odds for that team, which means that customers who want to place bets on that team may not get the most accurate and up-to-date odds.
This can result in customers missing out on valuable betting opportunities. As result they may opt for another provider that offers more up-to-date and competitive odds.
High latency can also attract cheaters who place bets before sportsbook gets un update on results of certain betting events beforehand.
Courtsiding is the practice of transmitting information from sporting events for the purpose of gambling or placing bets directly on a sporting event.
Risk management can give you a competitive advantage and save your sports betting company from bankruptcy
If a sportsbook doesn’t manage risk properly and offers odds that are too favorable for bettors, this can result in many bets being placed on a particular outcome.
If this outcome occurs, the provider will face significant financial losses.
If you don’t have sufficient reserves to cover large payouts, this can also lead to financial losses and damage your reputation.
Therefore, effective risk management is important to protect against unexpected financial losses.
Many sports betting platforms offer risk management, but some don’t. Be sure to discuss this with your platform before proceeding.
Build a strong bonus system to attract and retain new customers
There are numerous bonuses you can offer your customers – sign-up bonus, reload bonus, VIP loyalty program, cashback bonus, no deposit bonus, free bet bonus, enhanced odds bonus, seasonal bonuses.
A bonus system can be an effective way for sports bettors to differentiate themselves in a crowded market, improve customer retention and loyalty, and ultimately increase revenue.
Set your budget properly and understand what certain bonuses mean to your NGR
- Bonuses that are too generous can put you in the red.
- If you fall short of users’ expectations, you’ll have a hard time getting new signups.
A perfectly balanced bonus system is usually an incentive for customers to make a certain move and profitable for the sportsbook at the same time.
That’s why it’s a good idea to start with your competition. Take a look at their bonus systems and use the results to develop your own.
All markets are different. In some countries, certain bonuses aren’t allowed due to regulations and laws. For example, it’s virtually impossible to offer the same bonuses in the UK that other companies offer in Latin America. If you decide to implement the same bonus system in the UK, it’ll destroy your business because you’ll run out of money.
Consider your budget before developing a marketing strategy
Focus on affiliates first if you’re a startup and can’t afford to build a big marketing team. You want to be known and affiliates dominate the market.
The better you’re at the affiliate game, the more successful you’ll be.
Your CPA will never be great in the beginning. But with affiliates you can optimize the entire user journey pretty fast.
Many startups think they can be successful in multiple regions right off the bat with a dozen marketing strategies.
However, this is far from the truth.
Even if there are multiple ways to drive a nail, it doesn’t matter if you run out of budget before you even get results.
Master just one or two acquisition channels first and build a foundation for future attacks.
Affiliates are great because they’re one of the cheapest traffic sources. If you increase the number of affiliates, you can grow your business geometrically.
Set up your bank account for an offshore sportsbook
Bank accounts are a challenge for iGaming businesses. You can’t just go to the Bank of England, Santander, Bank of America or any other major bank to open a business account.
They don’t work with high-risk businesses like online sports betting or online casinos.
More than that.
If you have an offshore license like Curacao’s gambling license, you need a proper structure to open a bank account and connect payment system providers.
Do you need a bank account for your high-risk business?Contact Us
Include all the payment options your new customers expect
Do you want your customers to stay with your sportsbook instead of leaving them to the competition?
Offer them a great way to deposit and, more importantly, withdraw their winnings.
It’s all part of the user experience. And you want it to be top-notch.
People in Europe prefer the bank-to-bank method to fund their gaming account. In Brazil, that’s PIX. In Southeast Asia – cash vouchers, wallets and others.
Most people who win will try to make straight bets and withdraw the money almost immediately, only to place another bet a few moments later.
This is part of a game!
Website design and User experience
You’ll get twenty percent fewer bets from players if it takes too long for them to place a bet!
New startups usually overestimate the importance of design in the beginning. Beautiful designs won’t make you money. Your customers will.
Arguing about colors makes no sense in the beginning when you don’t even have visitors yet.
Of course, a user-friendly interface, fast loading speed, mobile responsiveness, attractive graphics and visual elements, and a clear and concise presentation of data and statistics are important.
But that’s the user experience. And it has to be the best experience your customers could ask for!
People want everything to be fast and they don’t want to waste a second of their time dealing with frustrating features that companies might think are clever.
They don’t want “your smart.” They want to place a bet. Period.
In practice, you need to make sure they can bet money with your sportsbook in five seconds or less. If it takes five seconds longer, you lose twenty percent of your turnover.
The user experience from the moment your potential customers land on a page until they make a purchase must be an essential part of a good turnkey platform. If your sports betting platform provider has several successful customers in your market, you can rely on them.
Let’s get to the design part…
Usually, platforms have several templates that you can use for your own sportsbook. You can choose one you like the most or hire your own team to develop the design from scratch.
There is no right answer to this question. It’s absolutely fine to start with proven designs and invest in a new one later.
Choose a suitable CRM system to engage customers
Your job isn’t just to generate new customers, but to keep them coming back. The more you focus on this part of the business, the more profitable your sportsbook will be.
It’s always easier and cheaper to get your existing customers to come back than to get new ones.
This also allows your affiliates to properly evaluate the possibilities of working with your company. More money generated on the backend means more money for your affiliates.
Successful sportsbook affiliates are more likely to work with someone who can provide facts about their customer retention rates.
Click on this link if you want to learn more about “How to promote online casino and increase revenue by 25% (for free).”
Hire people to help you run a sportsbook
If you decide to hire a team, here are the positions you should start with:
- A Project Manager – A project manager can help streamline the sports betting operation by uncovering inefficiencies, improving processes, and making sure everyone is working toward the same goals. This person needs to have experience with all aspects of the business – product, marketing, risk management, customer support – to get the job done effectively.
- SEO marketing expert – If your goal isn’t to make a quick buck, but to build a brand, SEO is a must. A good marketing expert will help you increase the quantity and quality of traffic, which will lead to more leads and conversions. Even though this type of marketing requires a lot of money and energy in the beginning, you’ll end up with a customer acquisition machine.
- Affiliate Manager – this person will help you build strong relationships with your affiliates and make sure that they’re satisfied with the partnership and motivated to promote your sports betting business.
- CRM Expert – he’ll help you implement effective customer retention strategies to keep existing customers loyal to your sports betting business.
- You can choose between Whitelabel, API and Turnkey business models. Different models will give you different freedom over the business processes and fee structures. Whitelabel is a “low risk – low reward” option with no control over the business systems and cashflow. In long run it can be the most expensive option because of high fees you will pay to the platform provider. Turnkey, however, will give you a balance between the price and flexibility.
- The first step in setting up a sportsbook is acquiring a license. The markets you choose determine the type of license. The most popular international licenses are – the Curacao, the Maltese MGA and the Isle of Man license.
Contact us if you want to learn more about licenses.
- Choosing the right partners is the key to your success. Make sure that the sports betting platform providers have successful clients to work with. You can choose to work with the industry leaders or with smaller and faster platforms that will grow with you.
- Conduct a research! When you research the competition, you’ll learn a lot about their offerings, features, and payment options. You want to make sure you can easily integrate everything you need into your platform.
- Check what feeds your sportsbook platform provider works with to make sure it fully covers your chosen markets. Check the latency and other critical factors that are important for your customers’ satisfaction.
- Work on your marketing strategy. We recommend you start with affiliate marketing when you have a limited budget. Don’t spread yourself across multiple acquisition channels, because each marketing strategy requires more resources.
- Offer your customers a variety of payment options. Make sure it’s easy to deposit money, but also easy to withdraw it. This is an important element of customer retention.
- Make sure you focus on usability first. The design of the website doesn’t matter much in the beginning and you can choose between the options that your platform provider offers.
- A good CRM system will help you build strong relationships with your new customers. This will make you less dependent on new customer acquisition and build a loyal community.
- Hire people to help you run a sports betting business. A project manager, an SEO expert, an affiliate manager and a CRM expert will help you start on the right foot and build a successful sports betting business.