SUBLICENSING / AFFILIATE PROGRAMS
What is Sublicensing?
Sublicensing is starting an Online Gaming business through an existing licensee of a Internet Gambling Software Provider. In other words, someone became a licensee of one of the companies in the Licensing Section and is willing to offer sublicensing arrangements to other companies. Usually, there is an initiation fee one must pay, which sometimes can be as low as USD $10,000 and as high as USD $50,000 (some are higher). The percentage of the take a sublicensee receives is often much less than a full licensee. While more money is spent on marketing with less returns, the cost to begin the business has been reduced substantially. In addition, the initiation fee helps the licensee offset the licensing fees paid to the Internet Gambling Software Provider. All ecommerce for a sublicensee are accomplished via the merchant account of the licensee. In most cases, each transaction can be tracked individually because it originated from the sublicensee's website. The sublicensee is paid from the licensee directly.
Usually, the gaming license as well as web hosting is offered as part of the package. Sometimes a monthly fee for the web hosting and maintenance is required. Royalties paid to a Sublicense from the licensee are from 20-75% of the monthly profits. It is usually on a sliding scale basis. As an example: the subliensee receives 45% of the the profits for the first USD $550,000 in monthly revenue; and will receive 55% of the profits for $550,001 - 999,999; and will receive 70% of the profits for over $1,000,000 in monthly revenue. What needs to be closely watched is the reporting of the numbers, which is usually via third party.
Another option is to sign up with a casino webmaster affiliate program. An affiliate program is designed as a revenue sharing model: A webmaster receives a percentage of the revenue from another casino for every gambler he/she refers. In some cases, this extends for the lifetime of the wagers from that individual. For example, a gambler goes to your website, which is affiliated with XYZ Casino. The gambler clicks on the XYZ casino link and signs up for an account with XYZ Casino (this is called a "conversion"). The gambler loses $1000 in wagers over the course of the month. If the program paid 25%, the casino would mail a check for $250 to the affiliate (webmaster). Usually there are no upfront costs associated with this. These business models require an extreme high level of trust on behalf of the casino. To maximize revenue, a webmaster generally place the best performing casinos with the largest payouts in the best web position on the site.
A list of companies below offer sublicensing and affiliate plans: