Top 5 Reasons Online Casinos Fail and Go Bust

Online betting is on the up and up with ever more places for players from around the world to play. But success is far from guaranteed and reasons both obvious and subtle, sudden and slow can cause seemingly profitable enterprises to plunge into financial freefall. Here are five of the biggest reasons that can cause online casinos to fail.


Adapt or Die

Online Casinos and Failures to Adapt

The world is a fast-changing place these days, with technological progress often outstripping what seems possible. Just imagine trying to explain Bitcoin to someone in 1970. They would probably think you had enjoyed some particularly exotic mushrooms. In general terms, the online betting industry has been swift to respond to the opportunities presented by advancing technology, and those who have not have often ended up becoming online casino failures.

It's not too unusual to see an online betting site that has a pedigree of a decade or two, or occasionally more, but many sites have not been able to survive that long despite betting being great fun for players. It can be easy to continue operating on the same basis as has worked in the past, with a single software supplier, same financial options, and so forth without updating and upgrading the offering. But this is akin to the Buddhist saying of keeping a raft tied to your back after you've crossed a river. Businesses must adapt to stay relevant, and if cryptocurrency, whether Bitcoin, Litecoin, Dogecoin, or another, is not accessible on your site then every player into crypto will be looking elsewhere. The same goes for mobile accessibility via smartphones and tablets, which is commonplace nowadays.

Complacency and a failure to update and adapt has done for many an online casino, causing failures that could have been avoided.


Growing Too Fast

Rapid Growth, Rapid Decline

In his famous treatise on the acquisition of power, Machiavelli wrote that those who rise rapidly often decline just as swiftly, as swift ascents are often due to good luck and when this runs out then, like a rollercoaster reaching its zenith, a speedy descent is likely to happen. This can also be true in the business world, including as a cause of failure for online casinos.

Betting online is big business which means there's money to be made but the competition is quite ferocious. Players have a vast array of potential sites to join and standing out from the crowd can be difficult. This is especially the case for a newcomer to the market, standing up against established names that have had years or even decades to iron out any technical wrinkles and to build up a solid reputation. Ironically, one of the biggest threats to a new betting site can be an excess of success in the early stages, which seems great but can plant the seeds of financial destruction.

Generous welcome promotions like real money no deposit bonuses are de rigueur these days, enticing players to sign up with substantial match deposit promotions and free spins. The match deposit values are often in the hundreds but can reach thousands. And this is the problem. Because players shop around for the best deals and with many people actively casino bonus hunting, some new casinos overdo it. And succeed too well. Excessive generosity attracts large numbers of players, who all take advantage of the promos and, in so doing, cost the casino a small (or large) fortune all at once. At the same time, garnering too many players too quickly can result in a site slowing down, and even when this doesn't occur a new casino, not yet flush with cash, may be forced to put the brakes on withdrawals, which is not going to win any fans among players keen to get their hands on winnings. Not to mention a flood of bettors can overstretch the customer support team, compounding the problem and earning a new site a bad reputation for both slow payments and poor responsiveness from customer support which is sure to make players angry.

Bad reputations are difficult to turn around, especially for new sites that haven't built up a longstanding history of competence and fairness. Rapid growth instead of slower but steadier organic growth can be much worse for a betting site. The slower approach does not overwhelm customer support or cause the same cashflow and withdrawal problems, and can be much better overall.


Games are the Main Attraction

Online Casino Failure due to Lack of Game Variety

This one is not a dead cert to lead to failure, but it certainly is not a positive factor and it is a weakness that is becoming more and more significant as time goes by. Some sites have literally dozens of software developers providing games. It goes without saying that this is a great asset for an online casino, as failure to provide desired games is a huge weakness. Put together 20 or 30 different software studios and under a single virtual roof a casino can furnish players with thousands of slots, dozens of regular table games, live dealer games, and other extras such as bingo, keno, virtual sports, and more. Many online casinos these days have a sportsbook side, enabling players who love sport to combine both passions, and to do so without needing to bother registering at another site.

Compare this with a single software developer casino and, for a new player, the contrast is stark indeed. While the biggest software studios such as NetEnt and Microgaming come with hundreds, maybe thousands, of games, most have far fewer. And if a newcomer is sizing up whether to join a site that has just one big software developer contributing games, or a site that has that same developer and dozens more, the choice is pretty obvious. Not only that, table games, both live and regular, can be anywhere from thin on the ground to non-existent at single developer online casinos, whereas multi-developer sites can offer a much broader range, attracting and retaining card sharks as well as reel jockeys. Having said that, depending on where a casino is located there can sometimes be limitations. For instance, you'll often find RTG used at no deposit casinos in Australia.


Limited Playerbases

Demographic Focus

The world of online casino failures and successes is a battlefield because the industry is so competitive. We have already explored how firms can undermine the foundations of their own businesses through excessively generous bonuses that prove self-destructive in the end (and stringent terms that penalize players are sure to annoy them too), but sometimes online casinos can hamstring themselves in another way by focusing too much on exclusive and small demographics.

The broadest possible player base is essential for an online betting site, covering both sexes, multiple countries, and welcoming practically everyone who wishes to play (and is of legal standing to do so). However, there have been rare examples of online betting sites that have focused specifically on niche demographics. The main effect of this approach has been to deter the majority who might otherwise be interested. Cameo Casino was designed by and catered to female players, and while this online betting site lasted for a decade it proved ultimate folly for the business to cut itself off from the clear majority of players. Casinos can wrap themselves in a flag, whether that's playing up to stereotypes like American eagles or British bulldogs, and still appeal to other nationalities, but deliberately going after a minority group (in the gambling world) when there's a ferocious level of competition is not a wise move.


Management Matters

Online Casino Failures due to Mismanagement or Criminality

It can be tempting to view the world of online casinos as a realm of guaranteed profits, given the business model is predicated on an average house edge to ensure making money. But the truth is quite otherwise. Mismanagement can, and has, lead to sites going under. This can come either in the form of a failure to be sufficiently competent and making honest mistakes or, occasionally, due to a nefarious individual or group undermining a site from within by skimming off profits and sucking cash out of the firm.

Getting the basics right early on is important, from having a distinctive visual approach to slick navigation, and a compelling marketing campaign. At the same time, bonuses, as discussed in detail above, need to strike the right balance between being generous enough to attract players without being so excessive as to cause cashflow problems and sink a new site beneath a torrent of new players. Securing a good licensing arrangement with top class regulatory bodies such as those of the UK, Malta, and Gibraltar can also go a long way towards fostering trust in a new site.

Beyond competence at a business level, online casino failures can sometimes be caused by the dubious actions of a small number of bad apples, or even just one ne'er-do-well. One perfect example of how a bad egg can destroy an otherwise promising online casino is 666Bet. It first enjoyed a rapid rise in the UK before gaining larger numbers of players from other countries, and all seemed set fair. Sadly for those working at this firm, it turned out Paul Bell (director) had made off with much of the cash, leading to players being unable to withdraw their winnings. In the end, one man caused this online casino to fail when it otherwise would have been a success story. And that's why it's so important for players to check and ensure the site they are considering joining is trustworthy, to avoid buyer's remorse.

And that completes our look at a quintet of leading reasons for online casino failure. From the player's perspective, always remember to check reviews to learn about top sites to play at like 888 Casino and Fair Go Casino. This way you'll be able to steer clear of ropey sites that are well worth avoiding.