The idea of starting a casino business is daunting due to the amount of capital required. You need land, licenses, equipment, and building a new or renovating existing premises which are all costly. Besides, your cash-on-hand needs can go beyond $20 million. If you desire to start a casino, the idea is viable, and you do not have to give up yet. There are different ways to raise capital and launch your business idea.
Bring an investor on board
One of the most viable options is to find an investor and bring him into your business. You may speak to friends and relatives to recommend someone to you or get a consultant to help you out. The investor will have to be convinced that the business is viable and will not lose money. Due to this, you may want to choose a state and a city where you know a casino will do well. The state must have laws that allow casinos to operate legally.
Michigan, for instance, has favorable gambling laws which are helping the casino sector in the state thrive. Land-based casinos have been operating in the state since 1997, but Michigan online casino legalization happened just in 2019. Since the official launch date in January 2021, there are already 14 online casinos in the state. Combined, the casinos’ gross receipts were $1.2 billion in the first ten months of 2022.
Raise seed capital
Seed capital is another option to raise capital to start a casino business. To get seed capital, approach members of your family first. Next, go to your close friends, business contacts, and acquaintances. You may offer them shares in your startup or agree with them on a favorable repayment structure. Make sure you invest in the best online casino games and other products to help you make profits. The advantage of seed capital is that you can negotiate on interest, refund period, or shareholding better.
Borrow from money lending services
Money lenders can be banks, credit unions, or other types of secondary lenders. You must be ready to provide all the paperwork the lender will require. They will ask for collateral which can be your business assets. The disadvantage with lenders is that you will work with their terms, and there might be no room for negotiation. There will be a certain amount of interest payable monthly. Money from lenders provides a good solution when starting a business, but it may best fit for funding short-term expenditures.
Use crowdfunding services
In crowdfunding, you approach people that you do not know but are willing to invest in your business. Typically, you approach the online community and sell your business idea to them. Anyone willing to buy your idea contributes to the crowdfunding platform. There could be restrictions on the minimum contribution a person can make. However, in many crowdfunding campaigns, contributors are allowed to invest as little as $10.
You could raise enough capital from thousands of investors. The crowdfunding website takes a percentage of the money collected as its revenue. You need to understand crowdfunding laws or restrictions that apply in your state. The investors might not be too strict in asking for detailed paperwork like the way Angel Investors or lending companies would require.
