As a gambling industry journalist, we are pitched so many innovative new ideas and accompanying business plans as companies target start-up success in the sector.
According to Altenar COO Dinos Stranomitis it is the fragmentation of the gambling market due to legal restrictions, as well as the successful birth of so many specialist turnkey providers, which has created such an appetite for new entrepreneurs to get involved.
However, he admitted that just 10% of start ups will survive, while only 1% will grow to achieve success in the industry. Success, said Stranomitis, is not just a technical exercise, but also takes proper planning and the right “feeling or the instinct of the decision maker”.
With that in mind, here is his checklist for start-up success:
With the latest legal restrictions, you have to know which market is for you and your licence. You should know your field, and be prepared to walk through tough and unfair competition. In addition, and perhaps more importantly, you should know your market pricing and be ready to fight to gain advantage against your competitors.
A key consideration is “how much will you pay to get your customers to register with you?” And if this is not cheaper or at least the same as your competition, you will lose the battle sooner or later. In other words, you need to identify the tank you get your customers from.
Break it down into three elements:
- The software related to your market, which basically is the Player Account Management (PAM) system. It provides key functions such as wallet and financial transactions, as well as integration with products and other providers including payments. It’s hard to find a PAM that is a good fit for all markets, simply due to the legal restrictions and customisation necessary to work in specific regions. It would make much more sense to build this element in-house if your budget allows.
- Products such as sportsbook, casino, poker, racing, etc. Practically all you need to do is to outsource those with the main concern to have same or better available functionality with your competitors in line with your budget. For sure, it does not make much sense to build all these products in-house. For anyone claiming otherwise, why does bet365 not build casino games in-house? I would dare to claim that everyone would outsource their sportsbook if they could find a better one at a better price from the cost to build it in-house.
- Front end tools like CMS, CRM, payment gateway etc. All those elements with a smaller but important scope that can give you a great advantage in the market, if you choose them properly and in line with your budget.
It is probably the key area of your business plan. It is mandatory to outsource part of your operations in order to stay in line with your budget. Yet if you find yourself more comfortable delivering part of the operations in-house, then just do it.
From a reasonable approach, it makes much more sense to ensure in-house management of the players in terms of marketing acquisition and retention, plus customer service.
The more you grow, the more operations should move in-house to optimise costs. The road to success is from outsourcing to in-house management, with exceptions if the outsourcing remains at better value for your company.
Make sure you are committed to the plan. If you have no other choice than to succeed, then you will succeed. Simply because you will make all the necessary adjustments to the plan to make it work. There is no single “perfect plan”, but there are “great adjustments” that will drive you to become part of this 1% club of success stories.
Here at Altenar, we are happy to discuss your entire plan before we become a part of your success. Potentially, it will not be just a technical discussion between a technological provider and an operator, but we may find the “great adjustment” to your “perfect plan”.