A guide to white label gaming: Part one
Dennis Lukovkin of iGaming content and software provider Innovaventis looks at common mistakes and misconceptions that prevent businesses from running successful white label operations.
Around 200 new online casinos, 350 sports betting sites and 10 poker rooms appear every year, targeting the same markets, with similar strategies. Half of these will not reach their one-year anniversary because of low profits, a lack of technical platform expertise, few customers, poor user retention rates or other operational mistakes.
Having worked in the iGaming industry for more than five years on seven different online platforms, I’ve started to feel a certain responsibility towards those looking to launch a white label business. Therefore I’m not looking to advertise my company’s products or capabilities in this piece, but want to use my personal experience to educate newcomers.
When you are planning to start an online gaming project, it’s crucial to choose a business model that is most effective for your plans. Sports betting, online casino, eSports, bingo, lotteries, fantasy sports are all options. Most gambling business investors are looking at online casino and sports betting start-ups (which account for 24% and 48% of the market respectively), because these are the most popular verticals. That doesn’t mean you should follow the market – or look to go in the opposite direction in a bid to carve out a niche. Think about what works for your business.
For white label sportsbooks, I’ve found that products such as eSports, virtuals, lottery or bingo tend to be complementary. Most white label casino operators will integrate a sportsbook product as a bid to tap into the huge global audience of sports bettors.
White label poker is a different story. The poker industry is in the doldrums, losing market share of around 1% each year (it accounted for around 8% of the global gaming market in 2017). This is due to new products targeting the same demographic, such as daily fantasy sports or eSports. Both cash and tournament poker requires an audience of at least 10,000 active players to cover operational and platform expenses.
Platform providers usually offer all product verticals as part of their sportsbook or casino portfolio. This allows you to start in one of the larger verticals, then drive incremental revenue growth with complementary products.
After deciding what product to lead with, you have to choose your target market. With more than 4,200 white label competitors active around the globe, you need to pick carefully. Pick a market that you know, or at the very least have a strong affinity with. If you don’t feel you have this level of local knowledge – get it. Most new white label site fall at the first hurdle after launching without conducting a proper market analysis. This should be the first step of your product marketing strategy in the project’s lifecycle.
You also need to be licensed. Most white label sites tend to hold either a Curaçao or Malta licence. The Curaçao license is the most popular, and least valuable. It takes around two to three weeks to secure certification, and up to two months to ensure you have the appropriate business infrastructures, working with a qualified legal consultant. The main problem for Curaçao licensees is proving their credibility to players and affiliates – most will launch then close within three months, leaving customers chasing funds and affiliates their commissions. Therefore experienced partners tend to only work with Curaçao licensees with at least a year of successful operations behind them.
The licence conditions imposed by the Curaçao government tend to be fairly relaxed, to put it mildly. This means uncertified game providers can easily secure licences to offer substandard products. Ultimately a Curaçao licence will broaden your horizons, but narrow the range of potential players and partners available to your white label operation. You’ll have to work very hard to build up trust.
The Malta Gaming Authority (MGA), on the other hand, is trusted by affiliates and players alike. This is due in part to the significantly higher requirements for applicants; to secure a licence alone would take anything from six to 12 months. It is easier to operate as a sub-licensee of white label provider’s Malta licence.
Malta’s regulations monitor which markets you are in, whether your offering is compliant with data protection laws, uses certified payment systems, offers self-exclusion and ring-fences player funds. It may not provide a route into any market, as Curaçao does, but you will instantly gain credibility, and your white label project will have more scope to grow quickly and sustainably.
Other, dot.country, licences, have stringent conditions attached and require significantly more investment. They are also very competitive, meaning you’ll be required to spend more, then have to wait longer for a return on your investment.
Once you have decided on your core product offering, which markets you plan to target and where you will be licensed, you’re ready to go live. This brings a whole new set of challenges; with more than 4,000 competitors out there with the same content from the same providers, you need to find a fresh and innovative way to target players.
We’ll come to this in the next article in the series, where I will explain how to ensure your white label brand can shout loudest in a noisy room.
Denis Lukovkin, CMO at Innovaventis with International Economics Master’s degree. Over 5 years working experience with European gambling projects, 3 product awards nominations in 2018.