Just ten years ago, online gambling was a niche market. Today, it’s a driving force in the entertainment industry.
If projections are right, the online gambling market is expected to grow at a compound annual growth rate (CAGR) of 10%, reaching $665.77 billion by 2030.
A phenomenon too big to ignore.
In this article, we will explain what iGaming is, the forces driving its future, the technologies that are catalyzing its success. And one of the biggest questions: Why invest in iGaming?
What exactly is iGaming?
The term iGaming refers to a sector of the online casino and betting world. It includes real-money wagers on different types of games, like poker, roulette, or even esports. The exception to this cash-wagering model is “sweepstake casinos”, where players use in-game tokens to get a skill-based gaming experience without real money.
The journey of the iGaming industry began in the mid-1990s, when the internet started to change almost every part of life.
In 1994, Microgaming launched the first online casino software. This event is considered the starting point of the online gambling world. Two years later, the Kahnawake Gaming Commission in Canada became the first regulatory body to oversee online gambling. Its work boosted international confidence in the internet wagering industry.
Since then, there has been a wide variety of offerings to suit every taste, including:
- Casino Games: Slots, blackjack, roulette, poker, and real-time streamed live dealer games.
- Sports Betting: Wagering on sporting events like football, basketball, esports, and even simulated (virtual) sports.
- Lotteries and Bingo: Players can win smaller prizes in games available 24/7.
- Skill-Required Games: Card games or fantasy sports.
While the iGaming industry is growing rapidly, the battle has become among the leading game developers, like Microgaming, NetEnt, Evolution Gaming, and Play’ n Go. For players, this competition means better games, featuring 3D animations and real-time multiplayer modes.
Take the example of 2015. It was the year that Microgaming’s Mega Moolah slot became an “iGaming bestseller”.
Description: The logo of Mega Moolah slot.
It charmed its way into the hearts of a worldwide player base, thanks to its African safari theme and stand-out progressive jackpot.
Key iGaming Regulations and Compliance
The fast growing iGaming industry provides attractive opportunities. However, operators must meet endless regulation requirements that accompany these opportunities.
To enter a new market, operators must first go through the licensing process, which requires submitting a collection of documents and paying some fees.
Certain countries, like Argentina, Croatia, or Qatar, accept international licenses, such as the Malta Gaming License due to its established credibility, and permit businesses using these licenses to operate within their borders.
However, some countries issue their own licenses that businesses must obtain in order to operate; Canada issues an Ontario license, for instance, and the UK issues its own license as well. These businesses must operate under the regulations of a country’s issued license and serve that country’s players.
Why do countries require a license?
The reason is because many online casinos and sportsbooks exist in an unregulated context, providing unfair space to players. Moreover, unregulated casinos and sportsbooks often pose safety risks on players.
Key international iGaming jurisdictions include Curaçao, which issued around 1,100 active licenses, and Anjouan, with 700 licenses. Even though secondary licensing hubs like Tobique, Kahnawake, and Malta have fewer active licenses, they are still essential to the overall iGaming landscape.
iGaming operators are required to comply with stringent protocols such as Anti-Money Laundering (AML), Know Your Customer (KYC), and Customer Due Diligence (CDD). These responsibilities include, but are not limited to:
- Collecting and verifying players' personal information, such as identification documents and proof of address.
- Monitoring deposits and withdrawals to detect suspicious activities, high-risk customers, or unusual transactions.
- Reporting any relevant activity to the appropriate authorities.
Additionally, jurisdictions require operators to promote responsible gambling by implementing deposit limits and verifying players’ ages.
At first glance, meeting all the requirements may seem daunting. However, our experience demonstrates that this is a golden goose, offering continuous and long-term benefits. By gaining social acceptance and complying with regulations, businesses in this industry can attract and retain a steadily growing user base.
The Technology Behind iGaming Platforms
Behind the scenes, technologies ensure users enjoy a smooth experience on online gambling platforms.
Imagine, you play a hand of poker with live dealers and do so from the comfort of your own home, knowing that the game is as fair and secure as it gets.
It sounds impossible, right?
Yes, it works thanks to these core technologies:
Random Number Generators (RNGs): Software that ensures fairness by making random decisions, like assigning cards, or determining prize winners. The software generates a number of different outcomes.
Live Dealer Systems: Allow real-time interaction with human dealers running games like roulette and blackjack.
Secure Payment Gateways: This is a specific technology that protects the users' money when they participate in iGaming. Many online casinos and sportsbooks use encryption and ensure compliance with the PCI DSS to keep their users' data safe.
Artificial Intelligence (AI): This technology offers personalized game suggestions and 24/7 chatbot support, analyzing player behavior to improve marketing strategies and game development.
Blockchain: It's no longer just about payment. Sure, it makes deposits and withdrawals faster than ever before, but it’s also powering blockchain casinos, which allows players to stay anonymous. Blockchain online casinos don’t require users to share personal information. Cryptocurrency wallet is enough to start playing.
Mobile Gaming: With 75% of players preferring to game on the go, developers are creating apps that make it easy to play anytime, anywhere. Mobile casino games match the desktop counterparts in every aspect, from offline access to 3D graphics and multiplayer modes.
Market Trends and Growth Drivers in iGaming
Let us divide iGaming trends into three areas:
- Regulations
- Marketing
- Technology
What is in store for us in those areas?
Regulations
The environment of regulations grows more complex and dispersed. Countries and even states enact their own rules and mandates concerning taxation, licensing, advertising, and player protection. Businesses must adapt to diverse regulatory landscapes. For example, Ontario enforces stricter regulations, while Brazil mandates payment systems to register with the Central Bank.
Businesses must have flexible strategies for the jurisdiction they want to operate in that focus on compliance, structure, and market viability.
Marketing
The days of marketing strategies focused solely on quick awareness without long-term planning are over. In today’s landscape, neglecting to build genuine connections with players risks encountering an iceberg that sinks your “ship”. Personalization has become a cornerstone in fostering meaningful relationships and ensuring lasting success.
When users get personalized experience, exclusive content and gamification as part of their journey, they are more likely to return. Micro-influencers became key allies of businesses in building connections with niche audiences.
Later, we will take a closer look at how it works.
Technologies
As marketing is becoming personalized, technology is playing a pivotal role in making it possible for us to deliver these tailored experiences.
The iGaming world is transitioning to efforts where almost everything is automatic, where player enjoyment is a top priority, and where security is guaranteed.
That said, online gaming platforms and software developers will use advanced analytics to understand their audiences on a deeper level and deliver recommendations that are not just personalized but also fully interactive, creating realistic gaming worlds.
The Role of Payment Systems in iGaming
In the hyper competitive landscape, users want to experience seamless, secure, and most importantly fast transactions. Anything less, they’ll go straight to a competitor. As a result, the payment systems are a necessary component of the iGaming industry.
There are plenty of options that operators can choose from: payment gateways such as Paytm, Stripe, or Neteller, cryptocurrency, and e-wallets.
As you can see, identifying reliable payment solutions that work for both users and businesses is not as straightforward as it may seem.
Some payment providers manipulate statistics, hide fees, or avoid clear contracts, making them untrustworthy. These so-called “partners” appear to be more interested in taking the operator’s money and cutting ties than in fostering a real partnership by working together.
Beyond unreliable payment providers, operators have to deal with regulatory issues. Legal frameworks can shift in unpredictable ways. For example, in India, the government takes a hard look each year at the processors that make payments for gambling companies and enforces very strict rules.
We cover iGaming payment systems in detail in another article.
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Challenges and Limitations in the Gambling Industry
Here’s the list of major headaches for operators:
Spoiler: It’s not just complex regulation.
Challenges Related to Jurisdictional Licensing
Each jurisdiction — whether international, national, or regional — has its own rules regarding licensing, taxation, and compliance standards. As a result, companies looking to expand and remain legally compliant must meet these regulations. However, these rules often change. This can sometimes involve complying with updated regulations, unpredictable renewals of licenses, and even bans.
Operational Challenges
Unfortunately, unreliable payment providers make it difficult to identify trustworthy partners. Many tell half-truths about their payment successes.
Beyond payment systems, platform inefficiencies, like bugs and glitches, often extend casino launch timelines by 2 to 3 times the original estimate. This is the result of involving many different parties and the need for effective project management and coordination among them.
Unjustifiably High Service Prices
Certain services are expensive due to their niche nature and the limited number of experts in the field.
For example, when you hire someone to integrate a casino with Telegram, you pay anywhere from $5,000 to $20,000, even though the actual work might take only a few hours and be no more difficult than some of the jobs for which you pay your specialists half that sum.
Excess Paperwork and Intermediaries
Navigating the process of obtaining and maintaining an iGaming license can be overwhelming, especially when working with companies that overpromise and underdeliver. Many present themselves as direct providers but are, in reality, intermediaries. This often results in delays, incomplete or poorly prepared documentation, and frequent mistakes.
These intermediaries typically fail to review documents thoroughly, leading to constant back-and-forth between operators and licensors. This not only wastes time but also creates unnecessary frustration for operators.
The iGaming industry is constantly evolving, with new regulations, KYC updates, and compliance requirements emerging regularly. Operators must also ensure timely license renewals and adapt to these changes, particularly in high-risk areas. For those unfamiliar with the process, attempting to manage it independently can lead to errors, delays, and additional costs.
To avoid these pitfalls, it’s crucial to choose a reliable licensing partner. By leveraging experienced professionals and tools tailored to iGaming, operators can streamline the licensing process, reduce errors, and stay compliant with ease.
This is why working with a trusted agent, like us, is not just beneficial - it’s essential to avoid unnecessary setbacks and ensure success.
Marketing and Player Engagement in iGaming
As we said earlier, effective marketing strategies have been changed. What is important now is how to maintain users, keep them involved and engaged, and build loyalty among players; because, in the end, retaining players — not just attracting them — is what iGaming is about.
There is more competition, and fragmented marketing doesn’t work. Brands need to be data-driven and future-focused throughout the entire player journey from first contact all the way through to retention.
To improve the user lifecycle, it's important to cover the marketing basics.
What does that mean?
The funnel provides a high-level understanding of where users are in their journey.
Description: The image illustrates a typical funnel of user journey.
To illustrate, if 1,000 players advance to the Consideration stage, just 20% of them will proceed to Conversion.
This means that focusing more effort on strategies to increase player engagement during the Conversion step can get more potential users completing the funnel, thereby increasing revenue. Investing in bonuses or gamification without knowing what works for a casino or sportsbook is a sure way to lose money.
As you might know every brand's journey begins with brand awareness. Skipping this step is like opening a casino in a hidden alley: people may find it, but without visibility, even happy customers won’t return. In iGaming, a brand that isn't visible or recognizable doesn't exist.
Micro-influencers are key allies, as already mentioned. For example, CasinoDaddy, a popular Twitch and YouTube influencer, streams while playing slots or live casino games, promoting brands to a niche audience. Influencers on Instagram and YouTube often share affiliate links from iGaming companies. Operators can partner with influencers to promote free entry gateways, tournaments, or gaming events.
What’s a takeaway?
Now, shaping identity, building trust, and creating lasting connections that encourage players to engage, return, and remain loyal is the business of marketing.
Why Invest in iGaming?
The iGaming sector keeps expanding, with thousands of online casinos, sports betting platforms, and poker rooms. But is it a smart choice for investors?
The answer is yes, and here’s why.
When done well, most projects can break even and make a profit quickly. On average:
- Small to medium projects become profitable in about 6 months.
- Medium to large projects achieve profitability within a year or slightly more.
From there, success depends on scaling and ongoing development.
A strong foundation is necessary for profitability. The iGaming sector calls for top-notch quality, and launching an unfinished product can be too expensive.
The iGaming industry is a highly dynamic and complex business environment that requires entrepreneurs to pay close attention to every detail. Among those details, two stand out as critical:
- User Experience: It must always be the top priority, creating a seamless and enjoyable journey for players.
- Regulatory Compliance: Staying fully compliant with all regulations is non-negotiable.
Failing in either area can undermine even the most innovative and engaging business strategies, making success nearly impossible.
Thinking about investing in iGaming? Contact us to gain an understanding of the global online gaming business.
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