While it is not easy to break through in this industry, the online gambling operation may augur well for landbased operators as it comes to replenish their businesses on the Romanian market in the long run.
Intro: Late last year one of the most important gambling events took place – the 7th Reunion of the Gambling Professionals and the 5th edition of the Romanian Gaming Celebration. Among the topics discussed at this event, which was mainly attended by Romanian gambling professionals was the ONLINE panel – “Online, achievements and future development projects”, sustained by the President of the Remote Gambling Association (AOJND ), Mrs. Odeta Nestor.
As the online gambling field has become a key factor in the development of the Romanian gambling industry, at this year’s edition Mrs. Nestor spoke about the opening of such business in our country.
Thank you for attending the event of 6 December. Please tell us why you chose to speak about how an economic operator can open an online gambling business in Romania.
Odeta Nestor: There has been a significant increase in the online gambling industry over the past years as more and more operators chose to enter the remote gambling industry or to expand their landbased business online. There are countless examples from other markets – European and international, where the online area is regulated, landbased businesses have not been affected. The two types of activities grew simultaneously, which is also the case with Romania.
Do you believe the landbased operators are also interested in expanding in the online area?
Odeta Nestor: More and more landbased operators have been contacting me lately asking for guidance and assistance to decide whether the online, which they considered a supplementation, a safeguard of their business in the future, would be a valid business option for them. I believe some answers are in order for you to have an idea about what the online gambling activity is like. When I am approached by a landbased operator flirting with the idea of also developing an online business, I am trying to understand their aspirations, how much money they have, and so on.
Do you see a Romanian-owned share capital in the online gambling industry in the future?
Odeta Nestor: I would certainly like for more and more Romanian companies to be able to develop this business, but I have to admit the European operators have an advantage: they have already begun, they already have the necessary expertise and produce platforms, services, human resources, and the entire operating system in existence only provides services to Romanian players. Indeed, they have a great advantage over the Romanian undertakings, but this does not make it impossible for landbased gambling operators to operate online. So I would like to give you a hint as to what it means to develop a business of this kind because this is the most frequently asked question on the Romanian gambling market.
What is your vision regarding the opening of a business of this kind in Romania and what are the first steps to this end?
Odeta Nestor: Let us begin with the idea and the decision of implementing this business. Firstly, this project will take at least one year and will go through a number of stages before becoming fully operational, namely until the activity is initiated. For instance, the first stage is the general planning period, which may take 1 to 3 months. During this time, consideration will be given to the type of platforms, suppliers, etc. The contracting period will last 2 to 6 months and covers the contracts executed with all the partners involved in this project, with integrations, development and other types of activities. Then, it will take 1 to 2 months – audit and certifications, 1 to 2 months – the launch period. All in all, these stages will take from 5 to 13 months from the planning date until the actual launch date, this being the most optimistic scenario for this type of project. The difference between the 5 to 6 months and 1 year lies in a number of factors. The decision-making process, the choice of the integration partners, the efficiency of the legal department, the negotiation with the suppliers, which will impose a set-up fee ranging from EUR 40,000 to 50,000 that can be negotiated subsequently, all these add value to the emerging business.
What can you tell us about the human resources used in this type of business?
Odeta Nestor: Employee recruitment in Romania, especially in this online gambling industry without a background, most professionals have been imported; the big corporations brought human capital to Romania or chose to work with teams already formed abroad. The recruitment of these employees is very important, but consideration should also be given to their financial support throughout the business start-up stage, when they will not generate income, namely for approximately 1 year. Another significant step in the formation of the team is the set-up of an own IT division.
Can you tell us what are the costs pertaining to the opening of this type of business?
Odeta Nestor: In this industry, a start-up would have to incur incorporation expenses, irrespective of their place of registration – Malta or Romania, amounting to approximately EUR 2 million until the actual launch, when the company begins to generate income.
In general, the profit margin for this business is ranging between 8 and 14%, depending on the types of gambling platforms, on the cost allocation over an operating period, on the surveys and other new types of optimizations or integrations.
How can we differentiate the newly-established online gambling operators from the existing operators?
Odeta Nestor: For a strong impact on a market like Romania, with respect to marketing planning, there would be a way for a remote gambling operator to make a difference, but this stage also requires rather large investments: ca. EUR 3 to 4 million in the first year.
To conclude, please say something to those who are interested in beginning this type of activity.
Odeta Nestor: In Romania, there are currently 22 online gambling operators, most of which are notorious in the gambling industry. I strongly believe that, while it is not easy to break through in this industry, the operation of a business such as this may augur well for landbased gambling operators as it comes to replenish their gambling businesses on the Romanian market in the long run.