Online casinos like Trustly pay n play have become more popular over the years, although many people are still not familiar with them and how they operate. As online casinos continue to grow in popularity, both brick-and-mortar establishments and online gaming companies must learn how to source finance to operate effectively. Here are five ways online casinos can finance their activities.
1) Assets
Casinos can finance their activities in several ways. The most common method is through advances from lending institutions. A casino may get an advance for up to 90% of its expected gambling revenues during the first year, based on its projected earnings and profitability.
Also, many casinos have banking relationships with major lending institutions that allow them to secure loans at competitive rates and terms that include lines of credit or letters of credit.
2) Borrow from a private lender
Online casinos may also want to consider borrowing from a private lender for the funding of their activity. This is done through an individual or company that lends money to you in exchange for repayment with interest at a set date.
There are two basic types of lending institutions: commercial banks and investment banks. A commercial bank will only provide financing if the online casino has solid credit, while an investment bank’s underwriting process is more relaxed because they don’t lend out as much money as commercial banks do.
3) Use credit facilities
There are several ways in which online casinos can raise funds to be able to keep their businesses going.
A company can, for example, establish a credit facility that the casino draws on as needed. In this scenario, the casino is borrowing money from a third party and repaying it at some point in the future.
4) Get a cash advance facility
Some casinos may not have much cash flow in the short term, which can create liquidity problems. This kind of issue can be solved by taking out a cash advance facility with an organization that provides short-term business loans.
This type of facility is usually provided by banks or financial institutions and will typically carry a high-interest rate (compared to conventional loans). However, it should only be used as a stopgap measure while the business grows.
5) Trade shares
Many online casinos are publicly traded. In this case, they can borrow money from the market by issuing shares. If these casinos default on their loans, then the shares of that company will lose value.
However, in most cases, shares represent an agreement to pay back a certain amount at regular intervals for a predetermined period.
Conclusion
Online casinos have made major strides in recent years in terms of earning customers’ trust, and as a result, many more people are now playing at these casinos than ever before. However, it’s worth noting that despite the significant growth in the market over the past decade, online casinos still face challenges when it comes to acquiring the financing they need to maintain their operations and grow their businesses. This has resulted in many online casinos turning to players to raise money through an innovative concept known as crowdsourcing. Here are five ways online casinos can source finance and improve their bottom line by getting their players involved with funding their activities.