How to Start a Sports Betting Business in 12 Steps (2024)

By Аivаrаs Rаmoškа Updated on July 25, 2024

Understanding the Sports Betting Industry

How to start a sports betting business is a question many aspiring entrepreneurs ask, given that sports betting is a vast and very profitable space. This industry allows people to place wagers on different sporting events. These events include basketball, football, baseball, and eSports.

Of course, legality is a prerequisite for all these. It’s the first thing you check when planning an online betting business. For example, online gambling laws in the United States vary in each state.

Successful navigation of these legalities opens up many opportunities. In 2024, online sports betting will reach $45.9 billion in revenue. We haven’t even mentioned its Compound Annual Growth Rate (CAGR) of 7.41%.

We’ve seen an astronomical leap for sports betting platforms. They have these market trends to thank for:

• Mobile betting: Sportsbooks are now investing in mobile apps. After all, almost everyone has their smartphones with them.
• Technological advancement: We’re seeing tech integration in sports betting. AI-powered predictions and blockchain processing are just the tip of the iceberg. Online casinos are also veering into Virtual Reality (VR) and Augmented Reality (AR).
• Regulation ease-up: More states and countries are easing up on regulations. Governing bodies might be seeing the potential in tax revenue and the economy.

Also, more people are playing huge roles in the online gambling industry. Sportsbooks, data outlets, and media partners are crucial to the space’s success. Plus, emerging segments like esports are further advancing their growth.

The sports betting business will only grow from this point on. But how would regulations mold the market? Let’s find out in the next section.

Legal and Regulatory Considerations for Online Sports Betting

Launching a sports betting business requires compliance with regulatory and licensing requirements within your jurisdiction.

Licensing requirements

You can’t launch an online betting platform right away. The licensing process takes some time, depending on the jurisdiction.

Securing a gambling license could vary in each location. However, these are the most common requirements when applying for an online betting license:

• Fees: Nothing comes free in the online betting business. You have to pay licensing fees and other taxes. For example, Colorado requires a license fee of $1,200 for new applicants.
• Background checks: Jurisdictions conduct very intensive background checks. Prepare necessary documents on business procedures, financial stability, and ownership hierarchy. Licensing authorities require applicants to have a proven track record.
• Security measures: What are your protocols for protecting user data? Your online betting business should be secure and fraud-free. Implement protocols like data encryption and user authentication.

Most jurisdictions display licensing requirements on their websites. We recommend checking these sites to save time on your application.

Regulatory bodies

Regulatory authorities enforce betting regulations. Each regulatory body controls a certain territory level.

For instance, gaming control boards are in charge of state-level regulations. Then, we have those at the national and international levels. Here’s a quick example:

• State level: Nevada Gaming Control Board
• National level: US Department of Justice (DOJ)
• International level: European Gaming and Betting Association (EGBA)

Each jurisdiction implements compliance standards for sports betting businesses. Specific elements might vary, but these are the typical focal points:

• Identity verification: You have to be strict when verifying user identities. Implement multi-factor authentication, password policies, and account lockout.
• Financial transparency: Sportsbooks should have clean financial reports. Regulatory bodies regularly audit financial transactions.
• Consumer protection: Fair play is key to building customer trust. Use Random Number Generators (RNGs) and conduct independent audits. Your sportsbook business should avoid suspicious gaming practices.

Moreover, regulatory authorities require ongoing compliance. This is not a one-off procedure. Ensure that you’re following all legal compliance procedures in your target market.

Risks and legal challenges

Being risk-averse is a good thing for a sportsbook business. That’s particularly true when it comes to the legal aspects.

Your online gambling business may be booming. But one legal misstep could drain all your efforts.

Take for example FanDuel’s previous court battle with the state of Illinois. In 2015, the state’s attorney general outlawed FanDuel as illegal sports gambling. It was only in 2020 when FanDuel officially launched in Illinois.

Launching a sports betting company means navigating through these legal challenges:

• Complying with evolving state-level regulations
• Selecting reliable payment processing options
• Protecting your sportsbook business from security breaches
• Implementing anti-money laundering protocols

Managing a legal sportsbook requires compliance with these protocols. Your legal measures should already be in place before publicizing a betting platform.

How to Start a Sports Betting Business in 12 Steps

We’ve intensively studied a 12-step approach that will contribute significantly to your sportsbook business’s success.

1. Conduct market research

Understanding your target market is of utmost importance. It’s the first thing you do when starting your own sportsbook business.

The online betting niche is a quickly evolving market. It becomes even more specific when you analyze your target location, as demographics and interests vary in each jurisdiction.

So, how can you effectively perform market research? Here’s how you can do it in the bookie business:

• Target customers: Determine the demographics of your potential customers. Take note of the most common age, gender, and income level. You can conduct direct surveys using tools like SurveyMonkey.
• Competitor analysis: Identify other sportsbooks in your market. Use tools like Similarweb to discover industry benchmarks and competitor movements. Determine competitors’ pricing models, audience base, and promotional tactics.
• Data analytics: Gather information through data-driven insights. Use Google Trends to uncover trending keywords and topics. Sprout Social can be used to analyze customer interests and trending social media posts.

Then, you have the betting regulatory changes to attend to. Paying attention to market trends helps you gain a competitive edge.

2. Create a business plan

You can’t control the changing tides of betting markets. However, one thing you can control is your business vision. That starts with an intensively-studied business plan.

But what’s the point of planning if the market constantly evolves? Of course, your business plan is not a stagnant roadmap. You should adapt to the current tune of the sports industry.

Your sportsbook business plan should include these focal areas:

• Unique concept: Come up with a value proposition. Do you have a unique product that can cater to a broader audience? Think of how to offer competitive odds and different betting lines.
• Marketing strategies: Determine how you can engage with potential customers. Consider key factors like marketing channels, targeted advertising, and sponsorships.
• Financial projections: Check industry benchmarks in revenue and operational expenses. Factor these against your funding options. Be realistic in your projections. Use financial projection tools like Zoho Sheet or LivePlan.
• Risk management: Managing risks is crucial in a sportsbook operation. It’s not just about losing money on potential customer winnings. You’re also safeguarding against cybersecurity threats and fraudulent activities.

3. Understand legal requirements

The sportsbook business is a regulatory maze. You’re constantly dealing with changing regulations and policies.

We recommend these actions to mitigate any legal risks:

• Legal consultations: Hire a team of specialists in legal gambling. Schedule regular consultations and audits with them.
• News updates: Visit reputable websites like Legal Sports Report. They provide regular updates on the sports and betting world. Most of these websites offer email newsletters you can subscribe to.
• Market focus: Multi-location launching isn’t a problem for large-scale platforms. It’s different for a small online sportsbook, though. Focus on a single market first before expanding your reach.

4. Secure funding

Startups usually rely on potential investors and sponsors. There are several bootstrapped sportsbooks. However, that isn’t sustainable, especially for your ongoing expenses.

To start an online sportsbook, you need to know your funding options. These could include angel investors, venture capital, or debt financing. Here are several tips on how you can secure funding rounds:

• Prepare your business plan: It should include an extensive list of financial projections and business goals. Potential investors want to see your plans for the future.
• Create an enticing pitch deck: Explain your Unique Selling Point (USP) and competitor differentiators. Use tools like Canva or Pitcherific to make your pitch more engaging.
• Expand your network: Go to sports betting events and conferences. You might stumble upon investors looking for new brands.
• Forge strategic partnerships: Offer value to sports teams and prominent brands. Strategic partnerships can increase brand visibility and reliability.

You can also try crowdfunding platforms like Kickstarter and StartEngine. However, it’s rare for sports betting brands to acquire significant funding from this method.

5. Choose the right technology for your sports betting platform

It’s underrated just how essential sports betting software is. It doesn’t just make your processes easier. Rather, it can make your betting services more customer-oriented.

You use sports betting tools to push a more reliable product. You should cover key considerations, including the following:

• Betting analysis: Some tools help you set odds. For example, Sportradar provides advanced analytics on different sporting events.
• Customer management: Manage customer-related tasks on your sports betting software. These tasks include player segmentation, loyalty programs, and customer support. Tools like SBTech and GoldenRace offer customer management dashboards.
• User data protection: Invest in solutions to protect user data. Tools such as SoftSwiss provide multi-factor authentication and data encryption.

6. Set up the payment system

Winning bets lead to payouts. Customers expect fast and reliable payments for their winnings, and any payout delays or issues could result in very disgruntled customers.

That’s why an efficient payment process is key. Sports betting businesses should prioritize this.

Consider these elements in setting up your payment systems:

• Payment methods: Be flexible in the payment options you’ll offer. You should cater to credit or debit cards, e-wallets, and even cryptocurrencies. Look for payment processors that provide these options.
• Security compliance: Your system should comply with the Payment Card Industry Data Security Standard (PCIDSS). You should also enforce strict user authentication protocols.

Moreover, ensure that the payment interface is easy to use. Your customers should be able to easily access withdrawals.

7. Build a sports betting website or app

Think of how bettors can place bets on your platform. Are you only accepting in-person bets? Or are you putting up a sports betting website and app?

Most sportsbooks now cater to all digital platforms. That means launching a website and an app. Whichever route you choose, here are the features you need to have:

• User Interface (UI): Prioritize responsiveness and navigation in your UI. Check your loading speed, internal links, and dashboards.
• Live betting: Your platform should have real-time capabilities. Offer different betting options, live streaming, and updated statistics.
• Account management: It should be easy for bettors to manage their accounts. They should easily access their active bets, transactions, and loyalty rewards.

8. Develop a marketing strategy

Even the biggest sportsbooks spend billions on marketing. You have the likes of BetMGM and Caesars, and they are still using unique marketing strategies.

This spells the importance of marketing in user acquisition. That’s particularly true in sports betting, where your reputation is paramount.

There are so many aspects to sports betting marketing. Here are the most essential ones in 2024:

• Marketing budget: How much funds can you allocate for marketing and promotions? Set realistic goals that you can fit within your budget. Overspending can be disastrous in the sports betting niche.
• Customer persona: Create detailed profiles for your ideal customers. Factor in betting preferences, demographics, and location. Consider the sports interests in your target location.
• Digital marketing: Build your brand on digital platforms. Create meaningful content like betting tips, sports updates, and live streams. This isn’t just for sports betting, though. The entire iGaming content marketing space offers unmitigated resources to bettors.

9. Establish customer support

Customer support is essential for the success of your own sportsbook. You want to resolve issues to avoid any damage to your reputation.

However, the key is to avoid these issues in the first place. You don’t wait for customers to file disputes for any problems they encounter. Take a look at these tips:

• Proactive support: Review common issues in sports betting. These issues could include payments, rewards, betting options, and technical errors.
• Staff training: You need a sports betting-trained support team. They should know everything, from the rules to your specific services. They must have a passion for sports as well.
• Multiple channels: Offer different means of communication. For instance, not all your customers are present on social media. Provide support through email, website live chat, and SMS. A ticketing system could help streamline your support workflows.

10. Implement responsible gambling measures

Regulatory bodies require sportsbooks to have responsible gaming protocols. Prioritizing your customers’ well-being bodes well for your sustainability.

It’s more than just giving warnings, though. Commit to responsible gambling through these actions:

• Deposit limits: Implement deposit limits, especially for new users. This helps them manage their spending at a responsible rate. You can also allow users to set time limits.
• Self-exclusion programs: Offer a self-exclusion period that bars users from using their account. During this time, they cannot place wagers and other bets. Users themselves can set their preferred self-exclusion duration.
• Helpful content: Be proactive in helping customers avoid gambling pitfalls. Offer blogs and infographics about preventing gambling addiction. Offer tips and strategies on how to moderate their betting activities.

You can also partner with responsible gaming organizations. The National Council on Problem Gambling (NCPG) provides resources and support materials on this topic. They have self-assessment tests and treatment programs for gambling addiction problems.

11. Launch and promote your business

You’ve reached the stage where you’re ready to launch your own sportsbook. After the meticulous planning stages, you can now publicize your product.

Sorry to burst your bubble, though. This stage still requires intensive planning. After all, you have to generate a lot of buzz around your new sportsbook.

How can you build up anticipation towards your betting business? Here’s a step-by-step approach:

• Pre-launch: Roll out teasers or even a beta version. This “soft launch” allows you to rework your platform before the full rollout. Highlight your features through a series of teasers. Also, don’t forget to promote the date of your launch event.
• Launch event: Offer incentives and welcome bonuses during launch day. You can even offer free bets to further entice bettors. Request for media coverage, particularly from sports and gambling news outlets. Consider linking up with the Help a Reporter Out (HARO) platform.
• Partnerships: Do you have the budget to partner with sports organizations? If yes, this could be a worthwhile investment. Recently, we witnessed sports betting brands partnering with the NBA.
• Ongoing promotions: Organize your ongoing marketing activities. Use scheduling tools like Hootsuite to schedule your social media posts. Capitalize on market trends to offer seasonal promotions.

12. Measure and optimize performance

Sports betting is a market that constantly switches forms. Evolving regulations and customer preferences play a huge role in that nature.

That’s why your sportsbook’s performance could see fluctuations. To monitor your performance, try tracking these key metrics:

• User acquisition: Track the costs that come with acquiring customers. Take note of conversion rates from your lead generation efforts.
• Engagement: Monitor website views, social media engagements, and bounce rates. These metrics allow you to optimize your multi-channel marketing playbook.
• Revenue: Analyze your Return on Investment (ROI). Measure your customers’ lifetime value, deposit amounts, and total revenue.

There are analytics tools you can use to make this process easier. For website metrics, try the free-to-use Google Analytics. To analyze your mobile app’s performance, consider using Mixpanel.

Challenges in the Online Sports Betting Business

Sure, many countries are easing up on sports betting legalization. But it doesn’t mean that it’s easier to succeed as a sportsbook business.

There are still a lot of walls to break through. Here are several challenges you might encounter:

• Saturated market: Ongoing legalizations make way for a saturated market. For instance, legal betting in the United States is expanding as we speak. You have to find ways to differentiate your brand from other established platforms.
• Technological advancements: You can’t just buy into every tech advancement. It takes a lot of resources to adopt a certain technology. You have to choose technologies that align with your brand.
• Risk management: Risks will always be a part of this industry. How can you mitigate profit risks and regulatory hurdles? Can you stay compliant with ethical and legal regulations?

What sportsbooks usually do is partner with marketing experts. Some sportsbook-focused marketers like Fortis Media have intensively studied the betting space. They’ve uncovered innovative, regulation-compliant marketing strategies.

These strategies help boost your brand without putting you at risk.

Future Trends in Sports Betting

The sports betting business is still under construction. The market will undergo trends and changes in the coming future. Here are just a few:

• Microbetting: Don’t settle for predicting game outcomes. Bettors can now predict specific plays and in-game outcomes.
• Virtual games: VR and AR pave the way for a more immersive experience. Bettors can experience a thrilling live setting even at home.
• Esports betting: Fantasy sports isn’t the only emerging market. Esports is steadily becoming a mainstream sport. Betting platforms might gravitate more towards the esports space.

Conclusion

Sports betting is finally realizing its potential. As more states legalize betting platforms, the industry is poised for more growth.

The need to adapt will be paramount for a sports betting business. Competition is getting fiercer by the day, and regulatory evolutions must be attended to.

Having said that, the future is bright for sports betting. If you can adapt to the trends, there’s no doubt that your sportsbook will take off.