Should iGaming Operators Develop Their Betting Technology In House?
The betting technology that powers the most popular online sportsbooks and casinos around the world is the driving force behind an online gambling industry that’s projected to be worth $127 Billion USD by 2027. Without the backend technology to facilitate deposits, wagers, and payouts between operators and their players, the online gambling industry simply wouldn’t exist.
But who’s responsible for creating this technology? And as someone who runs or wants to run their own iGaming business, should you develop your own betting technology in-house?
Let’s start by answering the first question.
Who develops sportsbook and online casino betting technology?
There are several companies around the world like Lion Gaming Group that provide betting technology for iGaming operators. Depending on the country or region iGaming operators want to run their business in, they may or may not be able to work with certain technology providers. This is due to the fact that betting technology must be compliant with gaming regulations in specific regions. For example, operating in the USA and the UK require different licenses than those that can be used for regions like Latin America or the Caribbean.
Sportsbook and online casino technology providers spend millions of dollars and countless hours developing, maintaining, and updating their technology stack to ensure the operators they partner with provide a flawless betting experience for their players. In many cases, these betting technology providers don’t run their own iGaming operations, but solely focus on licensing their technology for operators who want to start their own iGaming business. In fact, some of the most popular sportsbooks (we’re talking publicly traded, global brands) outsource their betting technology to third-party providers.
Which leads us to the next question.
Should iGaming operators develop their own betting technology?
The answer to this question depends on three factors.
- The amount of time you have to launch a product
- The financial capital you have to allocate toward developing technology
- The human capital required to develop, maintain, and upgrade your betting technology
For iGaming operators who are still in their infancy but want to bring a product to market relatively quickly, developing your own betting technology in-house isn’t a suitable option. It can take years to develop a betting solution that is reliable and compliant with gaming regulations.
99% of new operators just starting out will be better served by outsourcing their sportsbook or casino technology with a company like Lion Gaming Group. Instead of the years it would take to develop technology in-house, you can opt for a white label solution complete with your unique branding and be up and running in weeks instead. You can read more about white label sportsbooks and casinos here.
Financial and human resources
When thinking about bringing betting technology in-house, operators also need to consider the financial and human resource costs associated with doing so. In short, they’re not cheap.
A team of developers to build the product or products you want to offer players along with lawyers who ensure that the technology you’ve invested time and money in building is compliant with regulations can quickly run into the 7-figure range. And that’s just to build the technology itself. There are additional, continuous costs associated with maintaining it, upgrading it, and keeping it compliant with changing regulations.
White label betting technology eliminates the financial burden of bringing an iGaming operation to market. The licensing fees that iGaming operators pay to outsource their betting technology to providers like Lion Gaming Group are quite literally a fraction of what they would pay to develop their own technology in-house. Operators can spend that money more wisely on customer acquisition and customer service to help grow their business.
When does it make sense for an operator to develop their own technology?
Established operators who have scaled their business and have the capacity to incur the financial and human resource costs associated with building their own betting technology can seriously consider bringing their technology in-house. However, what they need to understand is that the existing expertise that brought them to the point of running a successful iGaming operation isn’t directly translatable to successful software development.
It’s likely that the operator’s expertise is in business functions like customer acquisition, customer retention, sales, and customer support. These are vastly different skills than software development and legal acumen. In a strange kind of irony, these established operators who no longer plan on outsourcing their betting technology instead choose to outsource the skills required to bring that same technology in house. It can save some money in the very long term, but there have been several cases of successful operators who have tried to bring technology in-house that ultimately ended up failing due to the skills and knowledge gap associated with doing so. An alternative option for operators who are looking to move on from their existing betting technology is to consider partnering with a new vendor that has better technology.
If you’re wondering whether you should develop your own betting technology or outsource it, email us at [email protected] and we’ll happily offer our expertise to determine the best path forward depending on where you are in your journey as an iGaming operator.