How the online gambling sector is fuelling startups

Humans have been gambling for millennia. Archaeologists have found depictions of people betting on animal fights on ancient Greek and Roman pottery and ancient Egyptian dice used for gambling games. But it's not so easy to tell what the future of the world's multi-billion dollar gambling industry will be.

There's certainly a growing interest in the industry right now. Part of that is due to the growth of online gambling, which covers a diverse array of activities including sports betting, playing virtual casino games, remote participation in live casino games, online bingo, and online slot games.

Since the 1990s, the online gambling sector has been expanding throughout the world. Indeed, from 2011 to 2017 alone, the global online gambling industry grew in value from near $30 billion to over $50 billion. That kind of growth has attracted wave after wave of startups, many of which have been very successful.

The startup guide angel.co counts almost 800, with an average valuation of $4.7 million. And this robust growth is set to continue in the near future, with some analysts predicting that the global market will be pushing the $100 billion mark by 2024.

So how do these startups operate in order to take advantage of the growth in the online market?

Special offers

It is rare among online gambling sites for one to be offering a service that others cannot. No site can claim proprietary rights over slots, or poker, or roulette – instead, sites compete to offer the same service better. One key way of attracting customers to your game rather than any other is to make tantalising offers to potential players, like offering bonuses or free games when new customers sign up. 

Special offers require very careful calibration however, as they can shave the company’s margins substantially, and aggressive competition in this arena is already well underway. For startups, the danger of burning through capital at an early stage with special offers is particularly acute.

Slots games

Slots games are one of the key drivers of revenue in the online gambling sector. Many sites offer slots games alongside other services, like bingo. For instance, in the UK, slots games yielded £2.1 billion for the online sector, which was worth £5.3 billion in total – that’s almost half the yield coming from one game type! 

But bear in mind that competition to draw players towards slots games is intense - a quick perusal of the various offers of no deposit required free spins for UK players shows a host of different sites offering between £20 and £40’s worth of free credit and spins to new customers.

User experience

Many gambling startups who thrive do so because they pay close attention to the user experience. This is a way of providing a palpably better service without comprising the yield through special offers. That doesn’t mean it is easy though.

Providing a good user experience requires a forensic level of attention-to-detail with insights and statistics garnered from customer feedback and digital marketing. In practice, this tends to mean having an appealing and intuitive user interface, which is of particular importance for apps, and being responsive to customers’ evolving needs.