Episode Transcript
[00:00:00] Speaker A: Hello gentlemen, this is Max. Today we're going to discuss how to start your own sportsbook. Because starting sportsbook is different from starting your online casino with slots and live casino and everything else. Sportsbook is a different vertical. There are different affiliates for that, different marketing for that. Different people play sportsbook and different people play online casino. They're almost not the same.
So this is the huge one. We're going to discuss many things such as the mistakes you have to avoid and how big companies really screw things up without doing a proper research, as well as we will discuss main things you will need to start your sportsbook and as well as I will share some things, how people can cheat your casino. So there are people out there that are looking to take advantage of new sports sportsbooks and basically to make money to get the money from you and put into their pockets. Right? So this is the entire framework of what we're going to discuss today.
So let's roll in.
But before we start, subscribe for this channel, click that. I can click all the bells and whistles.
So you get notification every time new video comes out. So the first choice that you're gonna have to make is what kind of a business model do you want? You want white label, do you want turnkey? Do you want APIs? All three models are working. There are plenty of choices on the market, but it's really critical for you to choose how much effort you want to put into the business. What is your experience in the business, how much resources you have right now? Do you have a capacity of hiring a lot of people to build something on your own? With white label, you don't have to own anything. Basically, the platform provides you with the entire service. All you have to do is to drive traffic and then by the end of the month, the platform will transfer your revenue, like your profits, like net profits. So if you have any profits, after they deduct all the revenue share percentages of all the fees after they pay to all of your clients, because you will be working under their license, so they cannot risk with their own license by allowing you to control the cash flow.
So, and if you are agree with that, then white label can be a right choice for you with many ifs. And we will discuss all these ifs a little bit later.
So the second one, which is the golden standard of business models is the turnkey. So the turnkey means that you are using the platform of some provider. So you do not create your own platform. You don't have to invest millions of dollars and years of your time and resources into building your platform. You are taking the platform, but you are responsible for the cash flow for the entire business model. You own the license, you pay much less of a revenue share deal, you have much more flexibility in terms of providing the user.
You are responsible for the design, for the conversion, for everything. Which is amazing because you really want to have all these things in place in order to provide that good service. So people come to you again and again, which of course increases profits, increases revenues, allows you to make the next step right? And the third one is APIs. APIs means that you actually the one who develops the platform, for example, you are a group of professionals, you own your own development team of 20 developers and you are building your own platform. So in case, if you are building your own platform, of course you don't have to pay anyone revenue share deals. You are the one who is responsible for your future. You are the one who is responsible for the development of the platform, for all the features that you may need in the future, for the entire cash flow for the license. So you are building a solid, huge business here.
So with my experience, the main model is either the turnkey or sometimes white label.
I cannot say that I like white label too much. There is a video on this on why I actually advise to avoid white label by all means because it impacts your bottom line. Because you cannot control the way users land on your page and then the entire customer journey. So you are not flexible, which means you cannot control anything. All you control is the marketing thing and you get a paycheck once a month. So let's say you made your own decision. So right now the step number one is to decide on the jurisdiction. So what jurisdiction do you want to work with?
Means what country do you want your clients to come from? Do you want to focus on Spain? Do you want to focus on Brazil? Do you want to focus on other 200 countries?
Because you cannot focus on all of them.
This is essential step. And usually when we do this kind of a job, many cases that clients come to us and they say we want to work everywhere, Max. And it's like, well, you cannot work everywhere because you. There are just few companies that work everywhere and they made these steps over the years, adjusting the marketing, adjusting the Persona, adopting the product for every market because every market is different. And market in Africa is different from market in Europe. Market in Europe is a legacy market that exists for many years. And it's completely different from the market in the United States where the sports book, online sportsbook is Kind of a new deal.
So choosing jurisdiction is critical because it will affect the choice of the license that you have to have in order to run Sportsbook. So whether that's the local license with regulated markets, or probably that's an international license that suits most of the markets and not that expensive, easier to get because the next step after you really understand the jurisdiction is the license. And the licensing process takes time. And you don't want to mess with it because you may lose time, you may lose money, and you want to be really focused on that one aspect. Especially if you are just starting your business and you don't have millions of dollars to waste, you have to be clear on that. The second step is to pick your team people who will help you to run your spurs book.
So the critical people are just four.
So you can have the sportsbook manager. This is the right hand of yours. This person has to know a little bit about everything because he will be a key person that will glue all other purse together. The second person is of course the risk manager. So this person can be either from finance field, let's say from banking industry, or probably from online casino.
And he has to understand all the risks of sportsbook, right? So he will assess all the risks. He will try to develop all the right rules for your sportsbook so you do not lose tons of money on one single event. He will be responsible for managing the bankroll and risks associated with your bankroll if you don't have a lot of money right now to work with.
And bankroll is really a big thing in sportsbook because you can manage your bankroll much more effective in sportsbook than you can manage it in online casino, for example, because in online casino, people can win such things as a jackpot and then they can take a bank and run away with it, right? So your risk of losing tons of money is much higher than the risk with Sportsbook, where you can allow your people, your customers to make bets, for example, with a limit up to 1,000 bucks, and that's it. So you can manage your risk much, much more effective than an online casino.
The third person is the customer support. So this is the customer experience thing, and this is the big one. Because I hear all the time that, well, we can put artificial intelligence in place where we can outsource this thing to someone or probably should we hire someone. So here's the thing. You can have artificial intelligence in 50% and you can have a real person behind the monitor that will help your customers to navigate the space with Sportsbook it's much more difficult to speak to people because they have so much more custom requests. They can ask you about events that are happening right now. So you will have to educate them them, they can ask you what is going to happen. For example, if something unexpected happens, for example, there is a football match and everyone ends up in a pit fighting. So they may ask you, okay, how will the Sportsbook will manage this? This is something artificial intelligence cannot take the charge of yet.
So it's really good to either have your own team member, a person who is responsible for customer experience and the customer support, or to probably split this thing between artificial intelligence, where for general questions, you know, the PC, the artificial intelligence will reply to some questions and if there are some custom things that your test request will be pushed through to a real person that will handle the SaaS pay. The person number four, of course is the marketing expert. So how will you market your business? Because you can have the best product on the market, the best product in your field, but no one will know about it unless you market it properly in all the strategies and tactics this marketing expert has to be familiar with. So you have to plan out your actions in the direction where you want to head on and then to act accordingly as a team. Because if you're just starting, then you have a limited budget and you want to make sure that this budget is spent in a proper way in marketing will take a huge piece of it. So you will be spending on marketing and people more than anywhere else. Because marketing by the end of the day drives people in. And this is exactly what you want. You want people in into your sportsbook, you want them to make bets and you want them to come back again and again. So I would recommend to start with these four critical positions and then to scale your business accordingly as you grow and build up. Of course there will be many people who try to take advantage over your sportsbook. This is how some of them make, you know, the living.
Put the bread on the table and we can call them cheers, we can call them scammers, whatever you want.
But this is the reality that your sportsbook will have to deal with. And your risk manager will have to make sure that you are secured against most of such risks. So one of the most popular way to abuse Sportsbook and also the casino, but it's more often in Sportsbook is of course the bonus hunters. So bonus hunters are people who are looking for great deals, such as, for example, 100% welcome registration fee and then they register, they receive 100 bucks on their account. And if there are no proper rules set in place, then they probably will spend, they will make a couple bets with your spurs book and either they win or they lose a couple bucks. Then they will ask to withdraw hundred free dollars that he just received onto their account. So this is very popular method to, you know, get money from sportsbooks. And they analyze hundreds of sportsbooks. There are specific services that help them to do that. So this is the most popular one. The second one, of course, is the site quoting. So site quoting is basically a method when a person or a group of people are going for some event. So for example, example for a tennis match and they really sit there live on a, on a court and they check how the game is going.
So the point here is to get the result faster than the online sportsbook gets their odds.
So as they are there live, of course they hold a smartphone in a hand and they start making bets because they are the first people who actually see that event just happened. For Sportsbook, it's kind of a long way. So scouts, they have to send information to feed provider, to odds provider, and then odds providers, they send information to the sportsbook to the service provider. So it takes a couple seconds to get the results to sportsbook. And this is the reason why it's important to choose right partners. So your partners will determine whether you are successful long term or if you fail, short on something. And this is not just about the latency on how fast the odds become live on your sportsbook. This comes from analysis of the entire marketplace. So as I just said, sportsbooks in Europe are completely different from sportsbooks in, in the United States. Many platforms, they deal with tons of legacy issues. Platform can exist since 2012, but nothing much happened since then. They don't have any new features. The way they implement new things are really slow and rigid and you cannot get anything out of them for years because they just do not reinvest any resources in developing new things. And if your market is Europe or any other advanced market, then you want to be competitive. You want to know what your competition does. So that's why market analysis is so important. You have to know the features that exist with other sportsbooks and you want to have like all these features as a default for your sportsbook even before you start.
Otherwise people will probably start wagering with you, start betting with you. But then they will realize that your sportsbook doesn't support so many features that they like. So, for example, like live streaming, where they enjoy watching the live stream event as it happens. And they like to make more bets, increasing your lifetime value of the client. Right. And if you do not have that feature, then guess what, of course they will leave.
So having a right partner that will serve as a backbone for your business and that implements all the new features, that understands the market trends that is growing with you is just as critical as, you know, starting your business and even starting investing in your business. Because if you make this thing wrong, then it can take a couple of months to actually realize that, realize that you are losing your money, that you are not making any progress. And this will push you to change the partner if you still have the budget. Another thing is payments. The payments are huge in online casino. The payments are huge in sportsbook as well. And it's even more important topic in sportsbook because everything is happening so fast. Matches are happening every minute. People who want to bet for their own team, well, they want to make a bet right now. So you have to provide them with the opportunity and with option to deposit money as fast as possible using their favorite methods.
And as critical as depositing money is also allowing them to withdraw their money as well. Because if they have an easy way to withdraw all the money, even if you pay some additional percentage, allowing them to do that, it only means that these people that will be speaking satisfied, they will receive the experience, like top notch experience.
So by allowing them to withdraw money, what you're actually saying is that, well, I'm fine paying that price, but at the same time, I know that you will be my repeat customer, but you will come again. And this is what usually happens. So people win, for example, $100 here and there, they want to withdraw the money, then they see another match is happening, so they put deposit money back again. And this has to be like really fast, like lightning fast, without any traction, without any additional steps that would probably harm that experience and make them and push them to go to bet with your competitor. Because they know that there are 200 other companies where they can go and, you know, get the same service.
Now the last element is the money. So I get this question all the time. How much money do I need to start the sports book? Can I start with 500 bucks? The answer is no. And it really depends on the business model that you want to choose. The topic that we discussed in the beginning of the video. So if that's a white label, then it's the cheapest option that you have in the beginning. But it can be the most expensive option when you grow because it doesn't cost you a Lot, lot to set up the white label platform and to make sure that everything is working. But you will be paying much more in revenue share deals. So you will be paying a big chunk of your profit to the platform, which of course stops you from growing, which of course stops you from being aggressive on the market.
And well, you cannot do anything with that one. And you cannot transition that easily from white label to turnkey because that's usually the way people think. They say, well, we will be successful with white label and then we will transition to turnkey. Well, it's a wishful thinking because sometimes it's not that easy. If it's possible at all, some of your partners will stay.
Well, they will never be that flexible that we say, well, you have to stay with us until the end of the agreement.
And they will try to not to work with the other IT team on transitioning the entire player database and other functions of your white label on the online sportsbook. So it's really a tricky question whether you should start with white label in transition or you should start with turnkey immediately. If you ask me, then turnkey is the golden standard, because with turnkey you have the best of everything.
And with turnkey, of course, the license will be one of the biggest expansion expenses than the platform itself.
So the setup for the platform usually is between 10,000 and can go up to hundreds of thousands of dollars. You don't have to invest hundreds of thousands. I speak about that all the time in my videos.
You can start with something as cheap as possible, but something that allows you to build that unique value proposition position and the platform that provides all the features that you need. Right, so you don't have to go to the big guys right from the beginning, pay them tons of money, and then to pry whether you have some money left and whether you have enough of money to invest into your marketing. So the platform is the second investment. The third biggest investment, of course, is marketing. So you will be devoting around 20, 25% of your GGR that you generate on all of your marketing expenses. This is the range where your business will stay healthy. There are businesses that invest like 70% of the marketing, but then they realize that they are not profitable. Nothing is left for ngr, so they cannot pay their own bills. Right.
And the last one is of course the people. So you want to pay salaries. Salaries almost in every business is one of the biggest expenses out there.
So these are four elements that you have to plan out and this is how you want to distribute all of your investment and There is nothing much to it. Some it things probably servers, so some maintenance fees. So this can be a 10% of your entire budget and you will be fine.
All right, this was Max. This was the topic about how to start your online sportsbook. Go subscribe under this video, click all the bells and see you in my next video. Have a good day. Bye.
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