Preface: Despite all the promises and ambitions this industry seems to offer, there are numerous con artists, scam operators and disreputable people in this industry (some with criminal records). Keep in mind, this industry is NOT regulated. Therefore, it would be short sighted to think that everyone in this business is honest. Some firms claiming to be the most reputable and honorable in terms of casinos and business are in fact out to rip everyone off. Despite their glowing and trusting appearance, they are the opposite in every way. Some online casino and sportsbook companies do not abide by agreements in the form of contracts they sign.
Gambling911, Casinomeister and Major Wager are sites which gamblers voice their satisfaction and dissatisfaction with various casinos. It is an extremely popular site which gamblers read regularly. Affiliate Guard Dog Casino Affiliate Programs' Scam Alert and the Association of Players and Casino Wemasters and watches the various webmaster affiliate programs offered by casinos. For a casino to be listed in a negative light on either of these two webpages is not a good thing and can hurt the financial profitability of such an operation long term.
What should a prospective licensee watch for?
1) Domain Name: The Internet Casino should OWN the Domain Name (domain name availability can be checked for and registered at Godaddy.com). It is best to get both the (Dot).com and (Dot).Net domain names ($70 each for 2 years). We recommend that you do NOT register the (Dot).org domain name and respect that it was reserved for non-profit organizations. Another good place to look is for AFTERMARKET DOMAIN NAMES at Moniker, Afternic and Great Domains. These are domain names that were not registered or went unpaid - now they are in the public arena and anyone can buy them.
There are quite a few internet casino owners actively looking to sell their casinos. Many do not realize that they do not own the Domain name (otherwise known as URL). So a casino named www.EXAMPLE-casino.com can be making USD $60,000 per month. But the owner doesn't own the URL, the Internet Gambling Software Provider or someone else does. If someone buys the casino from him, its worthless. The only reason why people will bet on the site is the URL. How will a new gambler know that the sportsbook and casino site is now located at www.SUCKER-casino.com ? The Internet Gambling Software Provider sure isn't going to tell those customers the new URL, they will probably send the traffic off to another casino and sportsbook site. Without owning the URL, the internet casino is worthless. Click HERE to find out who actually owns a domain name in question.
2) Servers: The licensee should OWN and OPERATE the server. Otherwise, the licensee ends up being in a deal of TOTAL trust with the licensor and can never be 100 % sure exactly what financial transactions are taking place. In addition, they will not be 100% sure if customers are being sent to other casino and sportsbook sites (yes, it happens). Note that if one OWN & OPERATES the server, a 24 - hour telephone customer service center to handle wagers is probably necessary. It shouldn't have to be a lot of people, but people are necessary to answer phones for technical and customer service issues (Note: It is recommended that one understands the Unlawful Internet Gambling Enforcement Act of 2006 and the Federal Wire Act of 1961 with regards to telephones and wagering from US citizens - also, see the Legal Issues section).
3) Software: This is a tricky subject. Since the licensee didn't design the software, it should be tested thoroughly before the casino goes online. It should not crash. All financial transactions should go through smoothly, verified by using various friends from all over the world to perform transactions. If the casino is not taking bets in the USA and/or Canada, then it should be confirmed with people in those countries. They should try to place wagers and be unsuccessful. Thorough knowledge and understanding of how the payout percentage works within the software is also necessary. A software provider with a following of numerous casinos that are independently owned and operated suggests the software is both stable and secure.
Beat The Internet Casinos is a book whose title seems self-explanatory according to its reviewers.
There are cases where some Internet Gambling Software Providers have progammed the software to recognize bogus players, preprogrammed to win. So, unbeknownst to the licensee, a computer controlled player enters the casino with a credit card and wins left and right. In addition to getting a higher percentage of the take, the Internet Gambling Software Provider also GETS the WINNINGS. Talking to others in the industry about the company in question is helpful in avoiding this pitfall.
4) Customer Service: Internet Gambling Software Providers right now are EXTREMELY overloaded with software work. Technical problems may take some time to correct them. It is best to try to understand their time constraints and work it out with the company first before going online. Hiring programmers to take care of problems if necessary may help. It is embarrassing to have a casino with mis-spelled words.
5) E-commerce: This goes hand in hand with the software. Thorough knowledge and understanding of merchant accounts, charge backs, bank fees, and other online commerce is necessary. Also, knowledge of the companies involved and having with them established secure verification procedures is also required. See the e-Commerce section for more info.
6) License: Some form of gaming license from the country the casino is operating in is required to run an internet casino. ONE SHOULD MAKE ABSOLUTELY SURE THROUGH THE GOVERNMENT THAT ONE ACTUALLY HAS A GAMING LICENSE. Some Online Gambling Software Providers claim the licensee has to pay money for a government license and in turn they never pay the government for your license. They simply pocket the cash.
There are two types of licensing for running an online betting. First and foremost is the gaming license. This is a government license, which grants authority to the betting establishment to take wagers and bets. The second is a software license. This is a license from an Online Gambling Software Provider to utilize their betting software. See the Licensing section for more information on software licensing.
7) Political Stability: Check the CIA World Fact Book and lookup the political stability of the country you're placing your company and server in. Castro-Like Revolutions or Panamanian Invasions in a Third World Nation will adversely affect your business (phone lines are the first thing to go down).
8) US Market and US Laws: See the discussions from Legal Issues and Economic Factors. This is an important decision only the principle of an online casino can make.
9) Disaster Plans: As most internet casino and sportsbook businesses are located on Islands in the Caribbean, Hurricanes and other natural disasters may have the potential to knock out communications, which will adversely affect an online sportsbook and casino business. Having a back up server in another region of the world would reduce the likelihood of this pitfall.
10) Patents: It is prudent to examine any patents the industry may have that may affect an online betting business. The software you purchase or design may actually conflict with existing patents related to the internet casino and sportsbook business, which is considered a legal liability. As an example, two patents that can be examined are USA Patent Number US 6,030,288 - Apparatus and process for verifying honest gaming transactions over a communications network and USA Patent Number
US5800268 - Method of participating in a live casino game from a remote location. Please note that in the past, the US Patent Office has granted internet related patent approvals for widespread internet applications which many people protest. As of April of 2000, the US Patent Office has more strict requirements for internet related patents. However, previously approved internet related patents remain recognized by the US Patent office. This Document informs more about how to avoid patent infringements.
11) Blackmail: On rare occasions, organized crime figures have targeted internet casinos with hackers using "denial of service" attacks, which results in massive winnings for the player. Although the winnings were not achieved in a fair and judicious manner, the criminals then call the internet casino owner, demanding either payment or death. Under such scenarios, online casino owners tend to choose the former option.
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| Last Update: October 2010
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