This is a guest contribution by Ron Mendelson, CEO of Fast Offshore. Ron has 22+ years’ experience in corporate online gaming services and licensing, offshore banking and International Business.
Over the last few years, the eSports industry has been growing gradually, making a shift from the underground to the mainstream. Now, we know that it has become one of the most in-demand sports of the year. Of course, when the stakes are high on the outcome of events, gambling inevitably becomes a part of the industry.
As we saw conventional sports taking a nosedive this year due to the current situation, eSports moved to fill the gap. More and more people started betting on the outcome of eSports tournaments or in-game events. The pandemic was something of a catalyst to the success of this once niche industry.
If you want to get involved in this dynamic and rapidly evolving market, now is a great time to consider setting up an eSports company.
Create a business plan
Before you rush into opening an eSports company, you need to do some research, particularly if you are not overly familiar with eSports.
A great place to start is by looking at competitors and what they are offering. Look at some of the global betting brands that offer eSports betting, as well as smaller, niche providers. The aim is to identify what the market has, and what is needed. You need to be offering a service that is not currently saturated by many other providers.
You should be considering the following:
- What is your goal?
- How do you intend to achieve it?
- Do you know enough about eSports? If not, do you have a provider or partner that does?
- Which games and tournaments will you provide wagering on?
- Will you be offering skin betting, crypto betting, fiat currency betting or a combination of them?
- Who are your biggest competitors?
- What can you do better than them?
- What is the gap in the market? Can you fill it?
- Who is your target audience? How will you reach it?
This is also the time where you need to start compiling your conclusions into an actionable business plan. This plan should be a roadmap of your answers to all of the above questions, and how you intend on achieving them. It should also include information on how you will monitor and quantify your success as you move forward.
The eSports marking may be a newly emerging one but there is still a lot of competition. Before taking any concrete steps, you need to have done all of the background work and come up with a solid plan of attack. Details like whom you will target, where they are located, what they want or need, and how you can beat your competitors are essential to making your new venture a success.
Once you have figured out your niche and how you will fill it, you need to pick a name for your platform and register any domains, trademarks or applicable copyrights.
Next, you need to think about how you will finance your venture. At this stage, you should also be giving thought to a reasonable timeline for going live. This should be decided based on what you want to achieve, how much you have to spend, and when you need to start being profitable. Remember, setting up any form of online gambling venture can be costly and take some time so deciding on your budget and schedule is important at this stage.
Do some number crunching
You need to consider all of your startup fees as well as ongoing and even surprise costs. This budget should be enough to support you for one year if not two.
If you are starting an eSports betting platform from scratch, there are some costs to consider.
- You will need to apply for an eSports gambling license so you can operate legally
- A company should be incorporated that will hold the license of the platform
- When incorporating a company you may need to have paid-up capital
- Hardware and software will have to be purchased to support operations, betting, and technical features
- If you plan on offering any other type of gambling games on your eSports platform, you need to make it clear to your corporate service provider so it gets included in your license
- You will have to develop relationships with eSports tournament organisers and viewing platforms to facilitate the smooth running of eSports betting- this can come with certain costs
- You will need a well-designed website which will also need to be hosted
- An app may also be a smart move for mobile users and convenience, especially taking into consideration the rise of mobile betting
- To run your eSports platform, you are going to have to hire a team of professionals
- You will have to set up a settlements account
- A payment provider and merchant services are required to receive and make payments
- Renting an office, paying deposits on utility bills, buying office equipment and supplies must also be considered
- You need to designate a marketing budget so you can create hype around your eSports platform before it launches
- Pick the best advertising channels you’ll use and consider sponsorships
- Legal fees are payable to regulatory authorities and the corporate service provider you decide to use to assist you with set up
This is by no means and an exhaustive list of costs you can expect to have before you go live. There will be additional costs along the way such as taxes, notarizing documents, email hosting, entertaining costs, travel, internet, phone lines- the list goes on. We recommend adding a sum for “unexpected expenses” into your budget, to help you prepare for the things you may not expect.
Once the company is open and your eSports license is in hand, there are still many ongoing costs to consider. There are also additional costs that may occur on an irregular basis that you need to factor in when you are creating your budget.
First of all, your company will often require that statements, returns, or filings are made on an ongoing basis. These require professionals to be paid and there may also be additional ongoing maintenance fees. Your eSports license also needs to be renewed periodically and that comes at a cost, along with audits that you may be required to carry out. Some jurisdictions have gaming taxes and fees that are payable throughout the year and also need to be considered.
In terms of the physical aspect of your business, you will have to pay monthly rent, water and electricity, internet and mobile phone packages, insurance for the business and staff, training fees, staff salaries, employee bonuses, office supplies, branded materials, software licenses, IT support fees, memberships, travel costs, conference tickets- the list go on.
Then, when it comes to the platform itself you need to factor in the web domain and hosting renewal, email providers, ongoing web and graphic design, SEO, online advertising fees, content writing fees, social media costs, UX and testing fees, the cost of certain software and products for the provision of betting on the site.
Again, this list is not exhaustive and you need to take care to plan for every eventuality. After all, it’s better to be under budget than over budget.
When you are putting your budget together, you should also factor in any possible plans for expansion. Do you want to open another site? Offer your services on another company’s platform? Or branch out into different types of betting, not just eSports? Ensuring you have enough liquidity and flexibility to meet your clients and the industry’s demands is an important part of budget planning.
Creating a budget requires the help of a professional. They can help you to consider how much profit you will realistically make and how much of this should be ploughed back into the business. They can also use their industry knowledge to provide estimates on transaction volume, client numbers, payment methods you should accept, and average transaction values.
The key when creating your budget is to be generous in forecasting what you will spend, but conservative in estimating what you will make.
Consider a jurisdiction
Many jurisdictions offer online gambling licenses. If you already own a gaming license, chances are you just need to update your portfolio. Some jurisdictions, on the other hand, may require additional steps to update your license. It’s always best to check with your corporate services provider first.
It is important to note however that not every jurisdiction is the same. Some have high fees and long processing times, others are pretty unregulated and can result in issues with trying to open a payments account.
If you don’t already have an online gambling license, the are several jurisdictions that will happily allow you to operate an eSports betting company from within their territory, subject to the satisfaction of licensing criteria.
Some are more suited to crypto, others are great for startups. Which jurisdiction you pick is not down to your taste or preference, it should be based on the professional evaluation of many factors.
You need to consider a range of matters such as the tax rate, taxation treaties, foreign exchange controls, due diligence, confidentiality, corporate matters, how long it takes to open, what the rules are, and whether there are any limitations on whom you can offer eSports betting to.
Which license you apply for can have a huge impact on the success of your eSports platform. It can affect your reputation, credibility, compliance requirements, and general financial standing. Don’t make any snap decisions and be sure to choose wisely.
You should be looking for a corporate service provider that has at least 15 years experience in iGaming, corporate services, and the jurisdictions you are interested in.
Consider the following before choosing a provider:
- Vast experience
- Transparency on their quotes
- Multi-disciplinary team
- Cross-boarder capabilities
- Industry knowledge
- Offers tailor-made packages for your business
- Also offers turnkey packages including everything that’s required (with no hidden fees)
- Quick response rate
- Professionalism and reliability
Incorporate an eSports company and apply for your license
Once you have partnered with a corporate services provider, it’s time to incorporate your company. As soon as it has been established, start the application process for your license.
At this stage, you will be required to submit documents to prove who you are, where funds are coming from, and what you plan to do. But don’t worry, your service provider will guide you through the process from start to finish.
Depending on which jurisdiction you choose, the entire process can take between a couple of months and up to a year to receive your license.
Pick your software
When starting an eSports company, you are not required to have as many different kinds of software as you might with a typical online casino. As you are not offering interactive games but rather just wagering, it is a much easier setup.
You will however still need various types of software for behind the scenes. These can either be purchased via license or outright depending on your needs.
An eSports company will typically need the following:
- Tech support
- Customer support programme
- Bonus management
- Payment gateways
- Accounting and reporting software
- Security software
- Email software
Payments and revenue
One of the most important parts of your eSports betting venture is getting paid and paying out. To facilitate this, you will need a settlement account as well as contracts in place with a range of service providers.
You should aim to offer as many different payment methods as possible including bank transfer, credit and debit card, cryptocurrency, eWallet integration, and other mainstream payment platforms. The more options you can offer potential customers, the more customers you can retain.
This is also the time you need to set up your accounting systems. You can opt for in-house accounting, external accounting, or a combination of the two. Matters such as annual filings, tax returns (where applicable), and other financial matters can be taken care of by your corporate service provider.
Design a website
Now it’s time for the fun bit- designing your app and website. Remember that first impressions count and you only have one chance to make a good one on potential clients.
Your website needs to incorporate slick branding, a pleasing colour scheme, unified fonts, and be consistent throughout. Your users should have seamless experiences whether they are on your website, stand-alone landing pages, social media outlets, apps, even when they see your banners on external websites.
It should be easy to place bets on your site or app, check results, and generally navigate the site. Don’t underestimate the impact of a good UX design and strive to offer your users the best experience possible by running A/B testing experiments. These results will point you in the right direction and help you understand your user preferences better.
In addition to this, vital information such as customer service, tech support, contact details and FAQs should be easily accessible and quick to find.
You also need to make sure that your website is secure and protected from hackers or nefarious actors. Betting sites are easy pickings for such individuals and providing protection of customer data, card and payment details, and other matters are key. Breaches can cost you dearly both in terms of reputation and financially.
Marketing and Networking
While crafting your business plan, there were several marketing-related areas you should’ve revised carefully such as:
- General market(s) analysis
- SWOT analysis (strengths, weaknesses, opportunities and threats)
- Competitor analysis
- Product features and benefits
- In-depth customer research
Now you understand who your clients are, where are they based, what’s their age range, gender, income and other demographics. At this point, it’s recommended to create one (or several) buyer personas to communicate effectively with each of your target audiences.
Pay attention to each of these buyer personas’ likes and dislikes, the type of message you want to convey to that specific audience and talk directly to their needs, wants and concerns.
After analyzing what your users need and how they’re using the product or service, go over their journey with your competitor to identify your competitor’s weaknesses. Think of how to fulfil those needs and gaps and optimize the product your competitors are offering.
Now that you’ve crafted a better solution that differentiates you from the rest, you have a competitive advantage that must be communicated, highlighted, and employed to better serve your niche.
Choose wisely when it comes to picking the right channels to invest your marketing efforts on (such as in-software platform communications, social media, search engines, email marketing, banner placing, events, sponsorships, forums) as each audience is different. Usually, a single generic campaign doesn’t work as well as several audience-specific campaigns.
The key is to test, test, and then test again to continually optimize your results. You no longer have to go with your “gut feeling” as old school marketers did. Numbers talk, you just need to listen!
Last, but not least, publish interviews with the founders, work with affiliates and sponsor some eSports events. Start networking with movers and shakers in the eSports world including players, sponsors, and tournament organisers. Reach out to industry publications and news sites as well to get yourself heard.
Hire your team
By now you will have already hired some staff to get you to this stage but it’s now time to get the rest of the team on board.
Ideally, you want to form a core of individuals with experience in eSports, supported by those who have experience in betting, online gambling, tech, and other similar industries. These, in turn, can be supported by individuals who are specialists in a range of other sectors including finance, marketing, and legal.
The idea is to form a web of multidisciplinary professionals that can all synergise to create a well-oiled machine. Consider the creation of the following departments before you go live:
- Human resources
- Accounting and finance
- Compliance and regulatory
- Marketing and Affiliates
- Tech Support/IT
- Customer service
- Web management
We can’t put every single step into one article, as every set up is different, but by now you are about ready to go live. Launching an eSports platform is incredibly exciting as the market is on the cusp of widespread popularity. To help you find your way and make the most of this opportunity, just make sure you engage with the right corporate services provider from the word go.
About the author:
Ron Mendelson has been working in the online gaming industry since the industry started in the late ’90s in Costa Rica. Since then, he has helped countless clients start, relocate, and grow their businesses in jurisdictions spanning several continents. Fast Offshore assists in online gaming licensing, blockchain & cryptocurrency business services, company formation & management, corporate structuring, Forex licensing, payments, accounts, regulatory compliance, and more. The firm has clients located around the world including the U.S.A, Central and South America, Europe, and Asia. He can be contacted at [email protected].