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How do you set up a bookmaking (bookie) business?

 
September 28, 2015

How do you set up a bookmaking (bookie) business?

 

A bookmaker company (also called bookie) is an organization with a complex structure, bringing in an income by taking, processing and calculating bets on sporting and various other events. If you are not familiar with all the nuances of this type of business you will need an experienced partner or a director who will help you to set up the business, working for part of the profit. At the initial stage, however, it is more important to choose the right contractor.

 

Ok, Google!

 

During the writing of this article, search engines were scoured and peppered with variations of the key phrase “set up a bookmaking company”. Most of the suggestions could be boiled down formulae for setting up a bookmaking company for $3000–5000. Most resources offer step by step instructions for setting up bookmaker companies, including the possibility of franchising. There were several solid analytical publications which sought to explain the essence of the processes involved, rather than just the practical mechanisms. Not one resource covering all the possible questions at once was found.

The lower figure of $3000, repeatedly mentioned in several articles, is undoubtedly tempting but not realistic for someone who knows the cost of real business, whether in the bookmaking industry or elsewhere. Nonetheless, it is technically possible to set up a bookmaker’s company for $3000.

 

Classification

 

Bookmaking outlets can be divided into three groups:

  • Offline outlet
    This is a classic outlet where a person can come to make a bet in person. Offline outlets can often be found in shopping centres and office buildings, but they are most prevalent in bars. The centre of a room usually contains a large screen, with several smaller ones to the sides. A popular sporting match is broadcast live and the customers, in good spirits after a reasonable portion of freshly poured beer, are nourishing their gambling spirits. Everyone is having a pleasant time. The customer, aside from watching the match, drink in hand, gets an emotional uplift and feels a winning streak emerging. The owner is sure to sell a few extra beers, regardless of the outcome of the bets.
  • Online outlet
    An online outlet can take the form of a website where bets are made via a number of devices (such as a computer, tablet or smartphone) connected to the Internet. The main advantages of this type of outlet are support for various payment systems, an enormous range of potential clients and availability in any location around the world.
  • Private bookmaker clubs
    Some countries (Turkey, for instance) impose legal restrictions on bookmaking businesses. This does not, however, mean that the world placing bets is inaccessible to their citizens. There are private bookmaker networks, which can be divided into two types. The first ones are underground; they are usually located in bars, not advertising themselves as bookmaker outlets. Such places can be liable for criminal activity. The second category is restricted online outlets, accessible via certain bypass techniques.

 

The countries where bookmaking is illegal routinely block the offending Internet resources. Nevertheless, it is extremely difficult to actually prohibit anything on the Internet. There are a multitude of techniques allowing restrictions to be bypassed: VPN, proxy servers, browser plugins, special programs and mobile applications. Even if an authority blocks direct access to a bookmaking site, anybody can use one of the abovementioned techniques. The security of such operations is effectively guaranteed as the traffic is directed through foreign servers.

 

Legal issues

 

A bookmaking business cannot avoid legal issues. Most international bookmaking companies are registered offshore. It is very important that when opening a bank account, the category of business to be undertaken should be correctly stated as bookmaking, otherwise problems may emerge sooner or later.

There are two main licensing options:

  • A single license for an online company;
  • Multiple licenses covering every country in which the company operates.

 

In the countries where bookmaking is legal, the company is officially licensed. When you set up an online company, however, it can be registered and licensed only for the country within whose jurisdiction the company falls. For offline businesses the procedure is far more complex – a license will be required in every country where there is a subdivision of the company, even if it is just a single booth at an airport.

Acquiring a license in its turn is achievable only after the submission of a relatively thick pack of documents. The pack’s thickness varies significantly, of course, depending on the level of bureaucracy in the country, but as a rule it will be a significant undertaking and putting it together will take up a lot of time.

It is highly unlikely that a single entrepreneur will be able to collect the necessary documents in a foreign county if acting alone; it will be necessary to find an experienced person who knows all the legal ins and outs of the country. Relationships with local officials must also be taken into consideration; they can often manifest as mutually profitable arrangements.

It stands to reason that setting up a multinational online company is much easier than opening offline outlets in multiple countries, since organizing documentation for one license requires a much smaller financial and time input.

 

Strategic issues

 

One of the most important factors to emerge at the early stages of your bookmaking venture is the question of proper market positioning. It is important to differentiate in some way from one’s competitors who, let there be no doubt, are numerous, or else the investments will have been made for nothing. However, in some Asian and African countries with less crowded markets even a standard, totally by-the-book solution might be successful. Working in those countries does, however, present its own peculiarities.

It won’t be possible to achieve the success of Bet365 without multimillion dollar investments, which is why it makes sense to build the business over time, step-by-step. First of all it will certainly be necessary to choose an information supplier. There are three conventional methods of collaboration with an information supplier:

Method 1 entails collaboration with an existing bookmaking company on the basis of a partnership agreement. As a result, you won’t get your own outlet but a cashier desk, in a bar for instance. This method means full compliance with the rules and regulations of the host company. The regulations will deal with the software, betting types and rules for players. But the system may simply fail or experience unexpected glitches. Nothing can be modified, meaning that it isn’t possible to implement any “personal touches”. It is a quick and cheap solution, but unreliable in the long term. It will suffice for establishing only one or two outlets.

Method 2 means working under a “White Label” model. This is a popular solution for bookmaking companies operating on a national scale (10–100 outlets). With this setup it won’t be possible to work without collaboration with a larger company, but their role will be limited to the provision of software, under an agreement of profit-sharing on agreed terms. Accounting, server and administrative capacities are delivered almost entirely in-house. Consequently, one has far more instruments at hand to influence the effectiveness of doing business. It is more flexible while offering greater opportunities and the freedom to make adjustments to various coefficients. This option is far more effective for development, while being cost-effective and relatively fast to initiate.

There are some disadvantages to this option. “White Label” doesn’t allow 100% control over the bookmaker product, and you won't own the intellectual rights. For instance, there would be no support mechanism in place if the company which had provided the software simply closed down, or if it became necessary to translate the content into Spanish where the software offers support only for English and German. Life can produce many situations like this, and there’s no way of shielding oneself from them when working under the “White Label” model. Of course, it is always possible to exchange one information provider for another, but the process will require further financial expenditure.

Method 3 is full independence on the bookmaking market. This option is suitable for entrepreneurs who want to create an independent bookmaking company and are prepared to invest in it. A company established under this model can set up an unlimited number of outlets, work with small businesses as a senior partner, be competitive online and control all of the rights to the brand.

 

How do you become independent?

 

To set up your own company with minimal expenditure you can take a readymade solution as a basis and customize it with specific functions. An example of a product created in this vein is Bookmaker, created by EDISON Software Development Centre. The functionality of the software allows for the customization and adaptation of the project for specific conditions related to countries or regions, mentalities and habits of target audiences and any other specifics.

Bookmaker contains the following features:

  • A wide range of functions for players;
  • An array of administrative tools;
  • A user-friendly reporting system;
  • The possibility of implementing modifications, updates and innovations.

 

There are several versions of the software covering offline and online outlets as well as private bookmaking clubs. The developer conducts adjustments and modifications for a particular market, the creation of special designs and further maintenance; the client owns all the rights to the software. The question of purchasing the entire source code for the product can be negotiated on a case by case basis. Furthermore, this solution is suitable for the creation of private bookmaker networks.

One of the key advantages of this solution is that the client’s company can sign agreements for providing their own services under “White Label” terms, giving out permission for others set up outlets under its brand and thus bringing in additional profit and, by all accounts, significant profits.

An autonomous structure presupposes obtaining sporting statistics from specialist companies. The structure of Bookmaker allows clients to change statistics providers as and when it is necessary. Not many sources provide statistical data wholesale. Limited market competition carries with it the danger of price increases, but the built-in possibility of a quick switch from one provider to another serves as a safety net.

 

Conclusions

 

To set up a bookmaking business, one has to decide first of all on the contractor and deal with all the associated organizational and legal issues. A large-scale operation necessitates choosing the third type of collaboration with the contractor, as explained above. Finding one’s flair at the very beginning is highly important: without it there’s no way of moving ahead of your competitors on the market, who will be trying to bring in the same customers, for better or worse. The flair that makes the business work will depend on the country, its mentality and your potential clients’ way of life. The business must be legal, meaning that obtaining a government license is essential.

Moreover, one should never underestimate advertising campaigns. Nothing can be accomplished without them. If there is an existing client base, mail-outs provide a good solution. If not, such a base can be purchased relatively easily. One can advertise through many channels including on TV, online and in the vicinity of the offline outlets. Everything depends on the specifics of the market depending on where it is located.

 

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