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Business Models

Page history last edited by Adam Steinberg 10 years, 8 months ago

 

          Who buys the product?  Why? 

  • Online gambling can be enjoyed by anybody (over 21). 
  • The gambling industry has a long tradition in the United States and across the globe.  Millions of people gamble, whether it be in a casino, online, or on the sidewalk.
  • It stands to reason that those who only want to gamble, and don't care for the real life casino experience would use online gambling as an outlet.
  • Not every gambler lives near a real casino.  Now, whether it's poker, sports betting or casino games - it's all within close reach.
  • Online gambling is anonymous.  Online poker players do not have to bear the stigma of a "gambling addict" because they are not spending their entire lives inside a casino.  However, it is still possible to lose all of your money gambling online.

 


          How do online casinos make money?

  • Just as in real life casinos, the odds always favor the house.  Betting systems are set up so that the ammount of money wagered will always be greater than the ammount of payout. 
  • Online casinos can charge fees for many things, including but not limited to: withdrawal fees, multiple account fees, account abuse fees, money transfers, etc..
  • Online casinos can also make money as subscription based services.
  • Online gambling houses create constant transactions.  A little bit skimmed off the top of each of them adds up to a large sum of money.

 


 

          Impact of the internet on business models

  • Since the inception of the online casino, gambling has become much simpler on the consumer end.  Thirty years ago, you generally had to travel to a casino if you wanted to gamble.  Inherently, the act of moving one from place to another creates a cost.  Whether you fill your tank with gas and drive there, take a cab or train, or even fly - the process of getting to a casino costs you money.  In today's world, the furthest you have to travel is from your bed to your computer desk.  Additionally, if you get thirsty at a casino you will end up paying $8 for a drink.  If you gamble online you can drink tap water or grab soda from your refrigerator. 
  • Typically, sports gambling has been characterized as a shady affair.  Often, it has involved association with bookies.  There is an increased risk and potential danger in this type of gambling.  Often, a participant will bet beyond his means and end up owing more than he is capable of paying.  With online sports houses, such as BoDogg, there is no such danger.  No one is going to show up at your door to collect.  Your money is funneled directly from an electronic account.  Also, you do not have the option of betting more money than you actually have in your possession. 
  • Online sports houses also offer the same increased convenience as online casinos.  You don't have to be at the race track to place a bet on your favorite horse. 
  • Controlling cheating in online gambling houses is more difficult than in a physical casino.  Where video cameras and security staff used to suffice, there is now a necessity for online cheat protection.  Hackers can beat the software and give themselves unfair advantages.  Online casino companies have to employ counter-hackers in order to work against this.  Additionally, the risk of other players having an unfair advantage will dissuade some potential customers from playing.
  • Casinos, gambling houses, horse races and poker houses used to be completely exclusive of one another.  Today, in the age of the internet, that is still sometimes the case, however, there are examples in which all of those features can be found on a single webpage.  Take Bodog, for example. 
  • A company can build an online casino without having to contruct a billion dollar building.  The initial startup costs are lower than those of real life casinos.

 


 

          Bodog's Business Model:        

 

          People will choose to gamble on Bodog for the following reasons:

  • It's all inclusive.  Bodog has online poker, online casino games, sports betting and horse racing.
  • Innovative system allows bets to be made in real time, play by play.  They advertise the sports betting service as having "every bet you could ever imagine."
  • Bodog prides itself on its ease of use.  Less work for the user results in a more satisfying experience.  The website is simple and easy to navigate.
  • It's generally feature rich.  In every section of the website there are relevant articles posted.  Using Bodog makes you better at and more knowledgable about online gambling.
  • Bodog has a customer service team.  Any questions, problems or customer concerns can be sorted out over the phone with a live support assistant.
  • Bodog guarentees safe transactions.
  • Bodog offers very compelling bonuses, and many opportunities to recieve them.  There are bonuses upon sign up, bonuses for friend referral, and bonuses for reaching a certain number of points.
  • Bodog is feature rich.  It provides odds for every potential bet.  On any given page there are multiple links to relavent information.   You can gamble on your cell phone.

 

           Bodog pulls revenue in the following ways:

  • There are various fees associated with having an account with Bodog.  For instance, in any given month a consistent online gambler will withdraw money from their account a number of times.  On Bodog, the first withdrawal comes with no fee.  After that, all of the month's remaining withdrawals bare a $40 fee.
  • Each section of the Bodog site operates in a unique way.  The method of profit in online poker is different from the casino, and different from horse racing. 
  • In the online casino, users face unfavorable odds.  The system works so that the ammount of money wagered will almost always outweight the total ammount of payoff.  Most of the money wagered in the online casino is funneled directly into a Bodog bank account.
  • By offering "every type of bet possible," in the sports gambling page, Bodog gives the user many new opportunities to bet.  Whether it's on the next at bat in a baseball game, or how the next round will go in a boxing match, users can bet in real time, as the sporting event is occurring.  By offering so many opportunities to bet, more bets are placed more often.  As the odds are always for the house, Bodog collects far moer than it gives back in this process.
  • Horse race betting operates essentially the same way as it does in real life.  Most bets are on losing horses, and all of those losing bets mean money in Bodog's pockets.

 

          What is Bodog's profit contingent upon?

  • Bodog has built itself in a linear fashion that mirrors the company's growth.
  • As the website has become more popular and pulled in more revenue, it's continued to add new features and incentives.
  • Bodog operates on an economy of scale.  As it gets more more popular, it becomes less expensive to provide service to individual users.  Many of Bodog's costs are fixed.
  • Bodog offers a more complete service than almost any of its competitors.  To have a customer support team is very expensive, as it increases labor costs dramatically.  However, this cost must be far outweighed by the increase in business as a result of such a feature. 
  • In essence, Bodog can afford to do more for its customers because it has such a large customer base.  It maintains comparatively high operating costs, yet continues to profit. 
  • Bodogg also relies upon effective advertising to keep its brand growing. 

 

                                             sources -   http://www.bodoglife.com/en/media-room.htmlhttp://www.bodoglife.com/bonuses/


          Partygaming.com's Business Model

 

          People will choose to gamble through Partygaming for the following reasons:

  • Partygaming offers support for many languages and currencies.  People in foreign countries will feel more comfortable using software supporting their dialect and their currency.
  • Partygambling has safeguards in place to prevent abuses, and overuse of the online gambling facilities.  Players can set a maximum deposit limit, a maximum time limit, and utilize "self exclusion tools," which, in effect, work to keep the user away from the gambling site for a certain period of time. 
  • This casino gives its users the most control over their own habits.  Displays conscienciousness for customers.

 

          How does Partygaming bring in its revenue?

          Partygaming.com provides the following graph to explain its flow of revenue:

          Our Revenue Model

 

  • Revenue is contingent upon getting new signups and retaining them.  When a signup becomes a regular player, he becomes a source of steady revenue for the company.  
  • Typically, a player will sign up in order to access only one feature of the online gambling website - poker.  By enticing the user with other options (different games, betting formats), partygaming stands to turn a customer who used to just play poker into a user who enjoys casino games and sports betting as well.  If a company can offer the customer something he already wants, in addition to the service already provided, or make him realize that something's available that he didn't know he wanted, the company can provide more services.     

 

          How will partygaming.com stay profitable?

  • By targeting a unique customer base.  Because regulations keep Partygaming from offering real money gambling in the United States, it is forced to focus its business on other territories.
  • The key to maintaining increases in profit lies in the ability to bring in large numbers of new users every year.  Partygaming's strategy involve hitting the markets with the most potential.  Any household with a broadband internet holds the possibility of new customers.  As the diagram below illustrates, there is a huge global market with broadband capability, and it will only keep growing. 

                                        Number of broadband households 

  •  Accordingly, Partygaming wants to cater to individuals residing in these potential markets.  The company's strategy is to "Localize the customer offer," which mean that it will offer its services in a variety of languages and currencies, thus broadening the appeal.
  • The company does constant analysis on the playing patterns of its customers.  Analysts within the company have derived the average playtime of each type of user, whether it be poker or casino.  Using these statistics, as well as projections for new sign ups, partygaming can accurately figure out the value of each added customer. 

 

 

                         sources - http://www.partygaming.com/pg/pages/responsibility/responsiblegaming/safeguards, http://www.partygaming.com/pg/pages/aboutus/introduction

 

 

Comments (2)

Adam Steinberg said

at 6:41 am on Apr 14, 2009

http://www.ecommerce-journal.com/articles/13944_your_own_internet_casino_a_dream_or_a_target - long article with information about the various forms of online gambling - web based casinos, live casinos.

David Seabrook said

at 2:42 am on Apr 28, 2009

60 minutes video about online poker added

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