The online gambling industry is growing rapidly in New Zealand, with more and more people choosing to gamble online. It’s the convenience and flexibility of it coupled with the ubiquity and affordability of reliable Internet. 

This growth has created an opportunity for entrepreneurs keen on starting their own online casinos

If that’s you, there are multiple factors you should pay attention to. Few of these factors are more important than the cost.

As an expert in the online gambling industry, I have seen firsthand the costs associated with starting an online casino in New Zealand. In this article, we break down the different costs associated with starting an online casino in New Zealand. 

Legal and Regulatory Considerations

Setting up a business must start with taking care of all the legal and regulatory requirements. The Gambling Act 2003 regulates all forms of gambling in New Zealand. It requires that all casinos in New Zealand be licensed by the New Zealand Gambling Commission (NZGC)

However, if you are setting up your online casino abroad, then you need to satisfy the business and gambling requirements of that jurisdiction instead. Work with a lawyer to be clear you satisfy all relevant legal requirements.

While laws vary from country to country, certain prerequisites are quite common and it’s best to make sure they are in place beforehand. These include a sound financial structure, implementing appropriate anti-money laundering measures, and providing responsible gambling information and tools to players. 

The cost of obtaining a casino license from the NZGC varies depending on the size and scope of the operation. Fees associated can range from several thousand to tens of thousands of dollars. However, you can expect to pay at least NZ$300,000 for a new operator’s license fee. If you are planning to set up an online casino abroad, license fees will vary by jurisdiction.  

Infrastructure and Software Costs

Gambling software platform

The gambling software platform is bound to be your biggest infrastructure cost. This can go for anywhere from tens of thousands to hundreds of thousands of dollars, depending on the vendor and the required features. A platform with a large game library and a variety of marketing tools will be more expensive than a basic platform. Set aside NZ$50,000 to NZ$100,000 for this.

Website development and hosting

The cost of website development and hosting will be driven by the size, complexity, and features you want. An online casino is an inherently sophisticated website. Expect to pay at least NZ$10,000 for a website.

Payment processing systems

How much payment processing systems cost you to set up will depend on the type of payment methods you intend to offer. For example, credit card processing is typically more expensive than debit card processing. Plan for between 1% and 3% of the transaction value.

Cybersecurity applications and controls

You need protection from viruses, data breaches and cyber attacks. That means incorporating the appropriate encryption, firewalls, and antimalware software. Security costs are a factor of website scale and complexity. Budget at least NZ$5,000 for basic cybersecurity.

Game Providers and Content Costs

Games are the wheels your online casino business runs on. Acquiring a diverse range of high-quality casino games (eg: slots, table games, live casino, progressive jackpots) and software integrations is necessary to attract and retain players. For that to happen, partnering with reputable game providers is crucial.

The cost of acquiring the games will be a factor of the game vendor, the pricing model and the type of game. For example, slot machines typically cost more than table games. Overall, expect to spend anything from a few thousand dollars for individual games, to significant licensing fees for the most popular titles.

You must also take into account the cost of integrating the games and other content into your online casino platform. This will vary depending on the complexity of integration.

Payment Processing and Banking Costs

To accept payments from players, you will need payment gateways and merchant accounts. Payment gateways are intermediaries between your online casino and the player's bank. Merchant accounts are accounts you use to receive payments from players. The cost of payment gateways and merchant accounts will depend on the provider and the volume of transactions.

You should expect to pay banks and payment providers between 1% and 3% of the transaction value for payment processing fees. There may be additional costs, which can include setup fees, monthly fees, withdrawal fees, and currency conversion fees.

Marketing and Promotion Expenses

Setting up the perfect online casino won’t mean much if no one knows it exists or what it has to offer. To attract and retain a steady stream of players, you have to invest in effective marketing and promotion. The marketing and promotion options at your disposal are vast. For example, digital advertising campaigns, affiliate programs, and search engine optimization (SEO) strategies. 

The total cost will depend on the number of channels you use, the marketing cost of each channel, and the reach you want to achieve. Your possible budget range here is huge - NZ$5,000 to NZ$100,000 per month. Good thing is you can always go higher or lower as per evolving marketing goals.

Staffing and Operational Costs

An online casino may be a virtual business but do not expect to successfully run things single handedly. You require a dedicated team for smooth day-to-day operations. How many employees and roles you require depends on the scale of the business.

At the minimum, you need general administration workers, customer support representatives, IT professionals, and at least one designated compliance officer (given the potentially complex legal landscape of running an online casino in New Zealand).

Total Cost Breakdown and Conclusion

With the aforementioned estimates, we can safely conclude that your upfront costs will be at least NZ$500,000 to get a modest online casino off the ground. For larger ventures, that budget can easily run into the millions of dollars. 

Despite the significant starting costs, online casinos can be highly profitable, given the growing demand. To get it right, develop a robust business plan backed by thorough market research and financial forecasting. With that, you can determine the budget you need. Execute your plan via a well thought out marketing strategy.

About the author 

Peter Clayton

Peter is one of Indivisible Gaming's developers and has been working with us since 2015. When he isn't busy working on an upcoming game, he loves writing about all the games that he has played and tested. His experience in the industry is second to none, and we are grateful to have him on our team.