SN SONSOLUTIONZ

Remote Betting Business Plan

Directors: M. Naeem & M. Shahbaz

Executive summary
Betting through smartphones, tablets, laptops and like devices is increasingly becoming common with the passage of
time. Due to this rapid progress it is expected that the betting and gambling industry in Britain will witness swift
changes due to technological advancement. That is why the Government is also keen on revising its taxation and
regulatory regimes for the industry. This can increase the cost of operation for the betting and gambling businesses.
This change may not be negatively influential for big businesses, but for start-ups in the industry and relatively smaller
businesses, this can be negative. Smaller businesses may face the threat of acquisition of bigger businesses if the cost
of operation increases.
Chances are fewer that consumers may get the cost benefits of tax directly from the operators. A compensation attempt
could be made by some of the operators to reduce the effects of rising operational cost by bringing down the promotion
and marketing of flexible expenses. Other operators may wait for synergies operational configuration by placing their
operations offshore in low cost markets. A great deal of uncertainty exists among industry leaders about the extent of
backdoor entry into the British market of illegitimate operators. To determine the entry into the market the operators
usually take consumer interest and market regulations and cost of operation into account. Consumers these days are
selecting e-betting and gambling operators, as their platform for placing bets. This has led to the adoption of innovative
strategies for keeping the consumer interest engaged while maintaining the low cost of operation. In such instances
the operators may look for retaining customers through augmenting per player spending.
To the belief of most of the leaders of the industry, operators will require adopting a renewed strategy towards
partnerships made by them. Suppliers will be looked forward towards sharing the pressure put by fierce industry
competition. This includes the demand for high quality, robust development and reduced costs. Over the course of the
past few years, the British gambling industry has ballooned. This has been made possible due to the popularity of
online gambling games and Labour party’s liberalization of gambling laws during the tenure of Tony Blair. The
Gambling Act 2005, enforced in 2007, allowed the gambling businesses to advertise on television for sports betting,
poker, online casinos, and other games. Further, the law also allowed the machines whereby GBP 100 could be placed
on bet every 20 seconds. The income of the gambling industry has also increased in the country over the course of
years due to increased involvement of people in placing online bets and due to the liberalization of gambling industry
by the British government. The Gambling Commission also affirmed that the income of the industry has increased.
The statistics released by the commission showed that firms won over GBP 8.36 billion from customers. By 2016 the
amount made by the gambling businesses had soared to GBP 13.8 billion, which represents a 65 % increase from the
previous earnings. This has been made possible primarily due to increased spending on the National Lottery and online
gaming. In 2009 the income generated from online gambling e.g. through online pokers, casinos and other games, was
only GBP 817 million but it has now reached GBP 4.5 billion. This shows the increased popularity of online betting
industry. The question then arises that which software should be used by the XYZ COMPANY to fully meet the
advanced technological requirements, the interests of the consumer as well as legal requirements. Different developers
are providing unique features in the software developed by them. It combines not only the software but also some
games which come as part of the software package. The XYZ COMPANY will use effective marketing strategies to
capture the online gambling opportunity from UK gambling industry and the detail strategies are discussed in the plan.
Contents
Executive summary ......................................................................................................................................................................... 2
About Company (XYZ COMPANY ) .................................................................................................................................................. 4
Company ownership ................................................................................................................................................................... 4
Business financial investment ..................................................................................................................................................... 4
Mission ........................................................................................................................................................................................ 4
Company Objectives ................................................................................................................................................................... 4
Keys to Success............................................................................................................................................................................ 5
Market analysis ............................................................................................................................................................................... 5
PEST Analysis ............................................................................................................................................................................... 5
Political and legal factors ........................................................................................................................................................ 5
Economic factors ................................................................................................................................................................... 10
Social factors ......................................................................................................................................................................... 12
Technological factors ............................................................................................................................................................ 13
Competition (Porter five forces analysis) ...................................................................................................................................... 16
Rivalry .................................................................................................................................................................................... 16
Threat of new entrants ......................................................................................................................................................... 24
Consumer bargaining power ................................................................................................................................................. 24
Threat of substitutes ............................................................................................................................................................. 25
Supplier power ...................................................................................................................................................................... 26
Summary of analysis ................................................................................................................................................................. 26
XYZ COMPANY -Strategies............................................................................................................................................................. 28
XYZ COMPANY Marketing Strategies ....................................................................................................................................... 32
XYZ COMPANY -Product ........................................................................................................................................................ 33
Place .......................................................................................................................................................................................... 33
Promotions ................................................................................................................................................................................ 34
Financial strategies.................................................................................................................................................................... 36
Staffing cost ........................................................................................................................................................................... 36
Marketing cost ...................................................................................................................................................................... 36
Players’ payment ................................................................................................................................................................... 36
ANNEX A .................................................................................................................................................................................... 38
ANNEX B .................................................................................................................................................................................... 40
ANNEX C .................................................................................................................................................................................... 42
About Company (XYZ COMPANY )

The company is registered with Company House under the name of “XYZ COMPANY ” with Company Number
10928880. The mission of the company is the provision of fair and best online betting experience to its customers. The
company will be providing online live betting events to its customers. It will also be providing online lottery services.
The company will ensure that the customers experience the best betting services online on the website of the company.

Company ownership

Mr. ABC is the owner of the company. He is qualified at the master’s level in Business Administration (MBA). The
owner of the company possesses exceptional business management, customer service and entrepreneurial skills on the
basis of his degree as well as prior experience. He is fully aware of and is constantly striving to gain more knowledge
about the interests of British customers in betting services and thus aims at running a successful betting and gambling
business in the British market.

Business financial investment

The initial amount set aside for financing the start-up is GBP 450,000/-

The annex of this paper provides the detail regarding the finances of the start-up. The entrepreneur has already credited
his account with the said amount for financing the start-up.

Mission

The mission of the company is to provide fair and exceptional online betting and gambling experience to customers
where they can place their bet in a fair and friendly manner using the latest platforms of the industry. Initially the
company will be providing betting and gambling services online. However, within the course of three years of
operation, the company will also open ten betting shops in the UK.

Company Objectives

The objectives of the company drawn for the first year of its operation include:

 To be known as the best online betting and gambling service in the market
 To maximize the profits by keeping the cost of operation steady
 To maintain the customer retention of at least 85% of the customer base
Keys to Success

The company has drawn the key to success which is as follows:

 The experiential knowledge possessed by the owner of the company which will be a guiding factor
throughout the business operation
 A sophisticated online betting platform which will provide exceptional betting and gambling experience to
customers
 Highly trained customer service staff
 Adopting a consumer-focused marketing strategy whereby consumer will be prioritized at all stages of the
business operation
 Rewards Schemes and Loyalty Card programs will be launched for attracting and retaining consumers.

Market analysis

PEST Analysis

Political and legal factors

The growth rate of the gambling market and revenues considerably increased during this year. Like many other
businesses, the gambling business in the UK was also affected as a result of Brexit. It is because after the results of
the referendum were announced many businesses withdrew their cash from British markets, including also the
operators in betting and gambling sector. Many organizations have started to close their operations in the UK because
the country would be stripped off from the rest of the European Union. This meant that businesses in the UK may not
enjoy privileges with regard to EU countries anymore which they previously used to enjoy. However, the media
reported that the biggest winner of Brexit was the gambling industry. Upon the announcement of the results, bookies
made a huge profit. However, there are still issues which need to be discussed with respect to the gambling industry
in post-Brexit Britain. This includes the status of investment from Europe and EU member countries after Brexit has
finalized.

Betting industry is highly regulated in the UK and several policy changes were made since the 1960s in British gaming
and betting industry. The Gambling Act 2005 represents the most significant regulatory change. The Act makes it
mandatory for operators to get a license from the Gambling Commission. Offshore operators are not required to obtain
a license from the Gambling Commission but are allowed to operate online. However, XYZ COMPANY will not
operate as Offshore which is why the company will obtain remote gambling license from the Gambling Commission.
Criticism has also been levied against the Gambling Act 2005 for failing to create a fairy regulatory system for the
gambling industry in the UK. These concerns are intended to be addressed by the recent policies currently under
consideration and now the Gambling Commission has a specific requirement for the Gambling companies to do their
business in the UK. There is a lot of specific requirements for the different type of the gambling businesses. The
following discussion covers the major license conditions and code of practice.

Licence conditions and codes of practice (LCCP)

In order to successfully run online gambling and betting business it is vital to comply with certain legal requirements:

Technical standards

There are certain technical standards with which all license holders must adhere to. However, such standards should
not be taken as a means of gauging the quality, reliability, and security of services. These are the bare minimum of the
industry. These standards highlight the equivalence between various technology types and are not specifying any
proprietary technologies and products. Testing regimes associated with such standards will enable equivalent
international standards (ISO). These standards are also not meant to confine the content of the games or the utility of
latest technologies. These standards relate to the technical standards of gaming machines, technical standards related
to gambling software and that of remote gambling, and technical requirements in relation to casino and bingo.
Therefore, to meet the technical standards we need to have sufficient amount of money. Meeting the technical
standards can increase overall start-up cost.

Technical Standards of Remote gambling and Software

There are certain remote technical standards (RTS) with which license holders of remote gambling and gambling
software houses are required to comply with. There are also requirements related to the procedures and timings of
testing. Such standards highlight the specifications regarding technical standards and the requirements in relation to
security which will be met by XYZ COMPANY as a remote gambling company. The company will also ensure that
the gambling software is purchased by the software house which has complied with licensing and other legal
requirements.

Technical standards:
Security requirements (ISO/IEC 27001: 2013 standards). Gambling Commission has recently started consultation to
bring changes to the remote technical standards applicable to remote gambling and software so these all standard will
be met by XYZ COMPANY . Following discussion covers some important points which must be fulfilled by XYZ
COMPANY .

RTS amendment (October 2017)

RTS requirement 2C

 The RTS standards require gambling operators to compulsorily provide the customers with a choice about
choosing to accept the fluctuation in price automatically which takes place once the bet is being requested.

 It has been recognized by the Gambling Commission that the utility of the word ‘automatically’ would imply
the fluctuation in price to take place automatically which can be switched on and off by the customer at will.
This is required to be an account wide option to be introduced by operators. However, the idea underlying this
requirement is to make sure that notification offer is being made to customers in enabling them to accept the
fluctuation of price on the basis of per bet.

 Implementation guidance 2C (b) outlines the application of the requirement in the instance the offer of
notifications is made at the account level.

Remote general betting (standard) (real events) operating licenses

Regardless of where the operator is based in the world, there is a need for a license if:

• XYZ COMPANY Facilities are being provided to consumers for gambling and betting in Great Britain,
whether online or through any other remote means of communication

 Any part of equipment of XYZ COMPANY related to remote gambling will be based in Britain

XYZ COMPANY as the provider of remote gambling services is required to proceed only under remote operating
license. The remote general betting (standard) (real events) operating license permits the license holder (such as XYZ
COMPANY in the current instance) about the provision of facilities regarding online gambling and betting services
to British consumers. It enables the operator to provide facilities in regard to betting on real events. Betting on virtual
events on websites is not included in this type of license, which is why we will not offer such type of services. In future
if we plan to introduce such services, we will only do so upon obtaining a license. It is because if the operator intends
to offer betting on virtual events the operator must also hold the general betting (standard) (virtual events) operating
licence.

Key equipment

There is no specification about the location of the gambling equipment under the guidelines issued by the Gambling
Commission, but we will place our equipment in Manchester because the owner is based in the said city, so it will be
easier for the owner to manage his business along with other commitments. However, various factors may be taken
into account by the commission when the application in this regard is placed before the commission. This is done to
ensure that there are appropriate levels of controls being maintained over gambling operation services. The factors
taken into account by the Gambling Commission in this regard include:

 The equipment of gambling operation is located in a country where it is allowed

 The Commission must be given access to data by the operator on demand basis to maintain regulatory affairs.
This is particularly required in the instance when the Commission cannot locate the equipment where it was
said to be located.

 The Commission reviews the data to satisfy itself that all records and data are complete and accurate.

Besides, the Gambling Commission also is legally authorized to have access to the key staff of the gambling operators
at minimum notice duration. It is the responsibility of the operator to satisfy the Commission about the manner in
which affairs of the business are being managed.

As above a disused that there is a very specific role regarding may gambling business activities, therefore, XYZ
COMPANY will fulfil the whole licenses criteria to legally operate in the UK.

Gambling Taxation matter

The system of taxation for gambling and betting in the UK is quite complex. Those operators which are based in the
UK are required to pay tax. However, most mobile based betting platforms are based outside the UK and thus have to
pay very low taxes due to being jurisdictional different from the UK. Different betting and gaming activities attract
different levels of taxation. Roulette is taxed at 15% of the profit earned by the operator based in the UK if the business
is offering to bet online (this will apply on XYZ COMPANY ). However, the same operator has to pay 20% of profit
as a tax if Roulette is played on the machine; and between 15 to 50 percent if played in a casino that would not apply
on XYZ COMPANY because we will comply operate as an online remote gambling company. Many countries are
controlling the gaming and betting through federal laws and licensing requirements. Regulatory regimes have also
been revised over time by many countries to accommodate to latest requirements e.g. online betting. A legal framework
in this regard typically involves issuing a license to the companies that are seeking to operate betting and gambling
business. Such companies are required to pay gambling tax over their income from gambling business. For example,
William Hill is one such a licensed operator operating this business not only in the UK, but in many other countries as
well, including Australia, Spain, Gibraltar, US, and Italy.

Another layer of taxation is added by virtue of VAT. This is paid by the operators on many of their operations e.g.
over advertisements. However, gaming and betting operators cannot recover VAT. However, those operators that are
operating online from the outside UK do not have to pay VAT. But the British government has announced to regulate
it on the basis of ‘place of consumption’ basis. This means that taxation will be applied on the basis of the location of
the consumer and not that of the operator. Remote operators, even if they are operating from the outside UK, will have
to pay taxes in the form of general betting duty, remote gaming duty or pool betting duty at 15% of their profit.
Nevertheless, currently there are also proposals under consideration for simplifying the tax net for gaming and betting
industry so if we take this type of the decision in future to take location, we must need to consider taxation matter first
but currently, we will operate from the UK.

International operators are concerned about the variance in taxation policy across the European continent due to two
reasons. Firstly, operating in different jurisdictions attract different types of tax regimes which makes it difficult for
the gaming and betting operators to smoothly operate which why we are avoiding such type of complexities. Secondly,
some countries have introduced punitive taxation regimes which have made it difficult to operate certain gaming and
betting activities in a profitable manner. Since the harmonization of such regulatory regimes is not imminent at EU
level, therefore, the complexity will remain in place for some more time.

Understand the one making payments into customers’ account

As a gambling operator, BET 44 must be aware of the channels through which payment is being made in the accounts
of the customers. This is being done to prevent money laundering from happening through gambling business and
their customers. This also represents the social responsibility of the gambling businesses to prevent their business
being used as a medium of money laundering. In this regard, Know Your Customers (KYC) requirements are also
applicable to the gambling operators. Therefore, XYZ COMPANY as the remote operator must be aware of the
customers who hold an account with operators and must also know the source of the fund into such accounts. Further,
the customers must also be informed about the policy in this regard and the actions that could be taken if third party
funding is found in the account. For example, a self-excluded person can also maintain an account through someone
else. We are aware that this is prohibited, and the operator must thus be aware of the parties through which customer
is funding his account.

Therefore, it is the obligation of XYZ COMPANY as gambling operators to ensure that requirements in relation to
anti-money laundering and that of social responsibility are being met. Because if the Gambling Commission finds out
that the gambling operator has not complied with such requirements, then the Commission can take regulatory action
against such operators.

Economic factors

. These factors involve employment rate, interest rate, cost of raw material, and rate of foreign exchange. Following
the Brexit vote, the economic performance of the country struggled. However, in past six months, the trend is towards
normal. The household spending power had squeezed in the first half of the year 2017 which is a negative element to
start up a new business. In the current scenario, it is believed that the projected UK growth will decrease from 1.8%
to 1.5% by the end of 2017 and further down to 1.4% in 2018. This shows the slower growth of consumer spending
power. However, not all industries are affected by this.

Despite the fact that the unemployment rate is lower down, the wage rate is not steady. In the first quarter of 2017, the
investment was relatively well. However, the period immediately before and after Brexit witnessed lesser investment
arriving in the country. London is still believed to be the fastest growing region in the country even in 2018. However,
the pace of its expansion is expected to slow down as compared to previous rates of expansion. Average real growth
is expected to be seen in other regions of the country, i.e. 1% to 1.5%.

It is easier to chart the meteoric rise of fixed odds betting terminals (FOBTs). British gamblers faced a 73 % increase
in the loss of their bets on FOBTs since 2009 i.e. GBP 1.8 billion from GBP 1 billion. This is true despite the fact that
the number of such machines only increased by 9%. This shows that people are not only increasingly placing bets over
such machines but are also losing bets. On average, each such machine generates GBP 52,887 a year, which is twice
the national average wage. Resultantly, the government is also considering the review of FOBTs to reduce the
maximum stake from GBP 100 to GBP 2 on such machines which, according to the Association of British Bookmasters
(ABB) will damage the industry.
ABB also commissioned the study of KPMG whereby it was found out that if such review is put in force, then the
industry could face losing 106,678 jobs and 8788 gambling shops could face closure. If a crackdown is made, then it
can cost GBP 1 billion to the Treasury by 2020. The Association also denied the link between problem gambling and
FOBTs. However, the recent report issued by Gambling Commission provided that 11.5% of those who place a bet on
FOBTs are problem gamblers. Their number has also increased by 7.2% since 2012. It was also claimed in the same
report that the number of problem gamblers in the country was not at the alarming level and it was found to be
statistically true by the Commission as well. However, two surveys of the Commission did find certain problem
gamblers to have the habit of compromising, damaging or disrupting family, recreational and personal life as a result
of gambling. The estimate by the commission of problem gamblers was between 109,000 to 413,000 which represents
0.6% of the adult population. This shows that although the figure is not alarming, it is quite visible. The figures,
released in 2015 showed that the percentage has increased to 0.8%. This shows that although the figure has not risen
to an alarming level, it is increasing over time. It has also been observed that men are likely to develop problem
gambling habit as compared to women. Only 0.2% of the adult women were found to have a gambling problem as
compared to men who were 1.5%.

It was also found by the Institute for Public Policy Research, and Gamble Aware that the British economy could be
facing GBP 1.2 billion annually due to problem gambling. There are also some tools available to help in this regard
for problem gamblers. One such a tool is “self-exclusion” This scheme enables the gambler to opt out from betting for
a particular period which cannot be reversed for that particular duration. Resultantly, a large number of people opted
for self-exclusion, i.e. 11,424 in 2009 to 34,091 in 2016 according to the report by the Gambling Commission.
However, there have also been breaches of this self-exclusion which increased from 4,033 to 18,784 during the same
period.

A factor which has prevented the government from taking action in this regard, so far, is the tax benefit which the
government receives from the gambling industry. Betting, lottery, and gaming duty increased from GBP 1.48 billion
to GBP 2.8 billion between 2007 and 2016 according to the report of HM Revenue & Customs. Media would also be
on the losing end if action is taken against the betting industry as it earned over GBP 1.4 billion from advertisements.

Bitcoin and another cryptocurrency for online betting

Generally, the gaming and betting operators accept major currencies such as US Dollars, Pound Sterling, and Euro.
Customers can pay in cash or through their debit or credit cards. However, this has not prevented the conversion rates
to affect the customers. Moreover, the businesses are also exposed to uncertain risks by operating in multiple currencies
simultaneously. This can affect the certainty of business in gambling and betting industry. That is why some gambling
and betting operators have started to accept cryptocurrency as well such as Bitcoin. Bitcoin is famous among customers
and operators due to its anonymity of the network. This prevents the identity being stolen online which is why XYZ
COMPANY will use Bitcoin to reduce the uncertain risks of operating in multiple currencies. There are many different
forms of gambling businesses in the gambling industry including bingo clubs, casinos, Trackside betting, betting
shops, lotteries, mobile betting, online betting and online gaming. The majority of the customers still prefer a physical
form of betting i.e. through casinos or shops. However, online betting is also rapidly growing.

Social factors

The factors that focus on the social environment to identify the emerging trends are known as social factors. These
factors enable the marketers to get a deep understanding of the customers` needs and requirements. Social factors
include education levels, attitude changes, changes in lifestyles, cultural trends, and change in family demographics.
In 2015, the population of the UK grew to 65.1 million (largest ever) that is more than half a million since 2014.
However, it is estimated that steady growth in population will continue and will reach to 70 million individuals by
2026 which is positive factor gambling business.

If the social factors related to the gambling industry are taken into account, it appears that the technological
advancement is also influencing the gambling industry. The customers are increasingly finding their interest in online
betting services. Above graphs show that there is increasing trend in society to play gambling online which is also
going to increase in future. This is a great opportunity for XYZ COMPANY to open a remote gambling business in
the UK.
Technological factors

However, now the technological changes have made it possible to gamble and bet online. Therefore, technological
changes will always be a relevant factor. A robust growth has been seen in the gambling business in the year 2017.
Due to the technological advancement, the online gambling trend is going to increase in the UK. Bet and gaming
operator

New betting and gaming generation should get rid of the traditional desktop and laptop channels and instead start using
mobile phone platforms. Mobile using consumers is in favour of getting smooth and sustaining experience. In this
background, it is challenging for some of the operators to provide a user-friendly movable proposal. This situation
warrants a groundbreaking new entry in the gaming sector, particularly with minimum barriers to enter. Established
media brands come in consonance with the movable device and developed an effective scheme to attract more
consumers. By using mobile device channels in partnership with a towering brand, an opportunity arises for them to
join the industry exclusively. The mobile device works in the medium term to drag the success on interacting with the
consumer. Operators are required to present novel and sensational products to the consumers for their continual
engagement, it is like presenting a product with distinct and differentiated products to win competitive advantage.
Under new features of the game format, a truly differentiated product can be developed for movable devices that
facilitates the consumer with easy to use. As an instance, an app is developed with the use of specific location, tailoring
the contents to the needs of the new games or players through swiping the cards instead of clicking the cursor.
Operators find it challenging to make an investment in developing new product duly absorbing the additional tax as
well as compliance costs. By adopting this strategy, a better chance of success can aspire.

A great number of consumers use online machine games, namely B2 and relish the in-shop betting with feelings of
non-replication on-line. Industry leaders in great numbers think that betting and gaming at retail level serve to develop
a brand and plays a significant role like cross-pollination in remote gambling. However, due to continual changes in
regulations, B2 machines have no certain future responding to problems in the relation to gambling. Taking into
account the profitability associated with these machines, operators with retail adoption can get significant impact as a
result of regulatory changes. There is unanimity that mobile will keep thriving in remote bet and the gaming industry.
Some operators are of the view that out of multi-channels, mobile is one of the channels while many regard it as single
out factor with regard to the importance. The future lies with mobile as the desktop is getting inert in the imminent
five years.

Trends in Online Gaming in the UK

The data by the UK Gambling Commission for 2016 revealed that the sector only grew. GGY for 2016 was GBP 3.6
billion only in the first half of the year 2016. It is expected to grow in 2017 as well. Despite the fact that the consumer
spending power has reduced, the market for gambling has increased, particularly also because of the online gaming
facility. The online gambling brands have only become popular in recent years. 10.6% of Compound Annual Growth
Rate (CAGR) was predicted to be experienced by the sector as highlighted in the report of KPMG which is a good
opportunity for XYZ COMPANY .

What Else to Expect in Online Gambling Trends in 2018?

#1: There will be growth in Mobile gaming: It has already been seen that those who are not introducing mobile-
friendly websites are not so popular among consumers as well as near search engines such as that of Google. These
days, customers want to gamble from the convenience of their mobile phones as well, so XYZ COMPANY will offer
a secure and friendly website to the customers.

#2: Freemium model will benefit online gaming: Consumers these days are also offered a free trial of online and
mobile gaming. This includes no commitment on the part of the consumer and the consumer can withdraw at any time
without any financial obligation. This is increasing the popularity of online gaming among consumers. The online
betting and gaming brands are offering such offers to attract customers. Therefore, such type of offers will be placed
by XYZ COMPANY to attract the customers. Some brands have also started to offer the start-up bonus which the
customer gets to start betting online. This will also be used by XYZ COMPANY .

#3: There will be growth in esports: esports are expected to cross $1 billion in revenues for the year 2017. It is believed
that many online gamblers will be offering the services of eSports for diversifying their revenues and attracting more
customers. eSports and online gambling are expected to grow despite the post-Brexit economic uncertainty. However,
the brands in this sector are also looking for ways of differentiating their offering ahead of sign up bonuses. Due to
increase in the number of online surfers, the online brands of gaming and betting will continue to attract customers,
which is a great opportunity for XYZ COMPANY in the online gambling industry.

MOBILE CONSUMERS

The increase in a number of mobile users also implies an increase in the number of potential consumers. The
penetration of smartphones has increased by 60% and the ownership of tablets has increased by more than doubled
and reached 36%. At least eight out of 10 adults aged 25-34 own smartphones and half of them have tablets too. A
third of gaming and betting consumers are reported to have used smartphones for betting and 16% have been found to
have placed a bet on their tables. The operators of the industry as surveyed by Deloitte believed that smartphones and
tablets provide the avenue for operators to attract more customers.

Betting and gaming is part of the western culture

and is regarded as a leisure activity. The industry got
new life with the popularity of mobile and tablet-
oriented betting channels. This has enabled the
operators to increase their customers. Smartphones
and tablets have made it easier for customers to
place bets from the convenience of being at home or
wherever they are. This change in the behaviour of
a consumer to place bets over smartphones or tablets
has come to limelight from the report by William
Hill (October 2013) that mobile betting increased by
113% and that net revenues from such betting
increased by 126%. Paddy Power also pointed out
in their 2013 Interim Results that 47% of the
revenue from online betting was generated by the
mobile app.

Nevertheless, critics also point out that mobile-based transactions are still less in the industry. It is because the industry
operators are making very gradual investments in this sector. Many operators could introduce mobile based betting
gradually because they wanted to introduce their machine-based gaming and betting activities on mobile platforms.
However, the fact that the number of consumers in the industry is growing shows that there are plenty of opportunities
for industry operators to reap benefits of online gaming and betting.

eSports

The success of gambling and betting over sports is largely known. People tend to bet and gamble over sports more
often than on anything else. This only makes it likely that eSports will also attract customers. Due to this reason, many
online games emerged over the years such as Starcraft, DOTA, League of Legends, and Counterstrike, etc. where
people can play the game over the network in groups and place bets over their matches. Such games also enable people
to enter into tournaments either individually or as part of the group.
The rewards for winners in this regard have been estimated to be in the millions and thousands of people are watching
such matches live or online. Therefore, it has been predicted that eSports will surpass other sports in near future. That
opportunity will be capitalized by XYZ COMPANY in future. The gambling and betting operators already made it
possible to place a bet on sports online. However, the concept of eSports has changed the gambling and betting concept
by providing involvement to the betting person. The person placing the bet can enter the match.

As the PEST analysis shows that the political, legal and technological factors are improving the UK gambling industry,
it puts cost pressure on XYZ COMPANY to meet the customers’ demands and also the legal requirements. Overall
social and economic trends of the UK are in the favour of the gambling industry. While there is still need to analysis
the current competition situation of the market, which is going to discuss now.

Competition (Porter five forces analysis)

Rivalry

If the business is unable to maintain competitiveness through such strategies when the rivalry is high, then it can have
lost its market share before competitors. There are total 2,788 licensed gambling operators as of 31st March 2017
according to the report of the Gambling Commission. 357 of such operators are operating in more than one sector.
Among these are also the operators who have the license to conduct 3,685 activities.
There are 11,010 gambling places in Great Britain which are all operated by licensed operators. However, this
represents a 3.7% decrease in such places.

Remote gambling

This is a type of gambling in which a person is participating by employing remote communication, e.g. through the
internet, television or telephone. The data are regulated in this sector by Gambling (Licensing & Advertising) Act
2014 enforced on the 1st of November 2014. The Act requires the maintenance of data regarding remote gambling
providers, regardless of where they are based i.e. inside or outside the country. There are 788 remote gambling
activities allowed by the Act. This is an increase of 4.6% of the activities allowed for remote gambling.
Total GGY from remote operators by British customers was GBP 4.72 billion between April 2016 and March 2017.
This does not include remote National Lottery and other large sector lotteries. This shows 34% of industry’s GGY.
The total GGY for the industry is GBP 2.26 billion. Most of GGY was generated by remote betting i.e. 36.8% and by
remote casino activities i.e. 55.5%. This represents 92.3% of remote GGY. The remaining 7.7% GGY is generated by
remote betting exchange, remote pool and remote bingo games that attract new competitor in the market that would
create more competition in the future, but still there is a great opportunity for XYZ COMPANY to get advantage of
the healthy growth of remote gambling business in the UK.
 These figures are provided on the basis of annual returns.
Following the consultation at the industry level, the
Commission conducted the revision of the manner whereby it
previously used to collect data on gambling software as now
it does not collect income on the basis of software type
anymore. The details regarding the amount of income are on
the basis of transactions conducted between operators on the
basis of business to a business arrangement. Gambling Act
2005 defined the gambling software as a software which is
employed for remote gambling (involving also the online
gambling) but that it does not involve anything which is employed only for gambling machine. According to the
estimates shown in figure 8, 31.2% of betting were made over Football, 19.6% was made on horse trading, 7.6% was
generated by ‘other’ category, 9.4% was generated by dog racing, golf, cricket, tennis and financial betting. 32.1% of
remote betting were on account of unallocated revenue shares.

Gambling software
 Those operators who held gambling software generated a revenue
of GBP 632.07 million in a period between April 2016 and March
2017. The accounts of the customers in the remote sector were
totaled at 28.87 accounts. This included the account in respect of
remote casinos, bingo and betting operators. A total of 31.85 million
new accounts was also registered during the same period. Remote
operators held GBP 666.1 million in these accounts.

The statistics in regard to the gambling industry are

published twice every year, i.e.. in May and in November as
well. These provide the latest information with respect to
each sector that the Gambling Commission is regulated. The
latest statistics in this regard have been for the period
between April 2016 and March 2017.

To put an end to online and offline gambling rivalry

The online gaming was originally seen as a rival to traditional gaming shops and casinos. This was true when online
gaming and betting was in its infancy stage. However, this is not true anymore, which is why we are opening XYZ
COMPANY to successfully compete with online gambling companies only. It is because many shops, casinos and on
ground gaming and betting places are increasingly offering their services online as well. Customers can now place a
bet on many such websites as they would in a shop on the ground. Many land-based betting and gaming establishments
are now offering mobile apps and websites where their customers can place bets. Some establishments have also
introduced online gaming and betting at their land-based premises such as by William Hills. This shows that the rivalry
in this regard is coming to an end since land-based gaming and betting establishments are also establishing their
presence online.

The online British gambling market expanded to £4.7bn (30 November 2017)

The online gambling market of the UK has generated the Gross Gambling Yield (GGY) of GBP 4.7 billion in a period
between April 2016 and March 2017. This shows a 10.1% increase in GGY from remote gambling as per the report
by the UK Gambling Commission (UKGC) compared to a previous same period year. In a period between April 2016
and March 2017, the GGY generated by the entire British gambling sector was GBP 13.7 billion, which is a 1.8 %
increase from the previous same period a year. This represents an opportunity for XYZ COMPANY . Nevertheless,
34% of the entire UK gambling market is now held by remote gambling which shows a 1.5% increase from the
previous same period year and that is again an opportunity for XYZ COMPANY .

It has also been highlighted by the report that 3.9% decrease in the number of betting shops has been seen on a yearly
basis, which is a threat for XYZ COMPANY which is why are not going to open any physical shop for betting. The
bingo shops also decreased by 1.4%. The number of licensed arcades fell by 5.1% in the UK as per the report of
UKGC. However, the casinos increased in number, i.e. they increased by 1.8%. There was a slip in UK National
Lottery contribution to good causes by 16.9%, but an increase of 20.5% with regard to large society lotteries’
contribution. Moreover, there was also a decrease of 1% in the number of people employed by the gambling industry.
The executive director of UKGC, Tim Miller, stated that the latest figures reveal the growth of gambling market
nevertheless. The online sector has particularly grown. However, there should also be the growth in responsibility with
the growth of the sector, said Time Miller. He said that gambling-related harms should be prevented from being caused
to the public. He urged the businesses in the sector to ensure the protection of customers.

Over the course of the past few years, the British gambling industry has ballooned. This has been made possible due
to the popularity of online gambling games and Labour party’s liberalization of gambling laws during the tenure of
Tony Blair. The Gambling Act 2005, enforced in 2007, allowed the gambling businesses to advertise on television for
sports betting, poker, online casinos, and other games. Further, the law also allowed the machines whereby GBP 100
could be placed on bet every 20 seconds.

The income of the gambling industry has also increased in the country over the course of years due to increased
involvement of people in placing online bets and due to the liberalization of gambling industry by the British
government. The Gambling Commission also affirmed that the income of the industry has increased. The statistics
released by the commission showed that firms won over GBP 8.36 billion from customers. By 2016 the amount made
by the gambling businesses had soared to GBP 13.8 billion, which represents a 65 % increase from the previous
earnings. This has been made possible primarily due to increased spending on the National Lottery and online gaming.
In 2009 the income generated from online gambling, e.g. through online pokers, casinos and other games, was only
GBP 817 million but it has now reached GBP 4.5 billion. This shows the increased popularity of online betting
industry.

It is easier to chart the meteoric rise of fixed odds betting terminals (FOBTs). British gamblers faced a 73 % increase
in the loss of their bets on FOBTs since 2009 i.e. GBP 1.8 billion from GBP 1 billion. This is true despite the fact that
the number of such machines only increased by 9%. This shows that people are not only increasingly placing bets over
such machines, but are also losing bets. On average, each such machine generates GBP 52,887 a year, which is twice
the national average wage. Resultantly, the government is also considering the review of FOBTs to reduce the
maximum stake from GBP 100 to GBP 2 on such machines which, according to the Association of British Bookmasters
(ABB) will damage the industry.

ABB also commissioned the study of KPMG whereby it was found out that if such review is put in force, then the
industry could face losing 106,678 jobs and 8788 gambling shops could face closure. If a crackdown is made, then it
can cost GBP 1 billion to the Treasury by 2020. The Association also denied the link between problem gambling and
FOBTs. However, the recent report issued by Gambling Commission provided that 11.5% of those who place a bet on
FOBTs are problem gamblers. Their number has also increased by 7.2% since 2012. It was also claimed in the same
report that the number of problem gamblers in the country was not at the alarming level and it was found to be
statistically true by the Commission as well. However, two surveys of the Commission did find certain problem
gamblers to have the habit of compromising, damaging or disrupting family, recreational and personal life as a result
of gambling. The estimate by the commission of problem gamblers was between 109,000 to 413,000 which represents
0.6% of the adult population. This shows that although the figure is not alarming, it is quite visible. The figures,
released in 2015 showed that the percentage has increased to 0.8%. This shows that although the figure has not risen
to an alarming level, it is increasing over time. It has also been observed that men are likely to develop problem
gambling habit as compared to women. Only 0.2% of the adult women were found to have a gambling problem as
compared to men who were 1.5%.

It was also found by the Institute for Public Policy Research, and Gamble Aware that the British economy could be
facing GBP 1.2 billion annually due to problem gambling. There are also some tools available to help in this regard
for problem gamblers. One such a tool is “self-exclusion” This scheme enables the gambler to opt out from betting for
a particular period which cannot be reversed for that particular duration. Resultantly, a large number of people opted
for self-exclusion, i.e. 11,424 in 2009 to 34,091 in 2016 according to the report by the Gambling Commission.
However, there have also been breaches of this self-exclusion which increased from 4,033 to 18,784 during the same
period.

A factor which has prevented the government from taking action in this regard, so far, is the tax benefit which the
government receives from the gambling industry. Betting, lottery, and gaming duty increased from GBP 1.48 billion
to GBP 2.8 billion between 2007 and 2016 according to the report of HM Revenue & Customs. Media would also be
on the losing end if action is taken against the betting industry as it earned over GBP 1.4 billion from advertisements.
There is intense competition among industry players in the gaming and betting industry. The five key players have
nearly half of the entire market. Britain is usually dubbed as the anchor market for many international level gaming
and betting organizations. In the past few years, the British gaming and betting market have considerably increased
e.g. remote gaming has increased twice its size since 2009.
A third of the betting revenues in Britain are generated by online sports betting. On ground, betting shops still, house
majority of the betting. However, considerable growth is expected on betting over smartphones and tablets. However,
some researchers have argued that online betting may soon overtake the on-ground betting. Researchers believe that
the increased sale of smartphones implies that mobile apps, including that of betting will also be downloaded more
frequently. The above discussion shows that the UK remote gambling industry has significant growth history and it
has expected growth in the future, but the same time there are many branded remote gambling companies in the market
that would increase promotion and overall marketing communication to hit the market in require pace.

Threat of new entrants

. If this threat is high, then the threat of competitiveness is high as well. The total worth of the industry at the global
level as of 2012 was estimated to be at $417 billion. The online channels were estimated to be contributing $33.8
billion. This represented 8% of the contribution from online gaming and betting industry towards the overall industry.
However, the British market is often regarded as the most established one for gaming and betting. The expenditure of
consumers in Britain as of 2013 was estimated to be more than GBP 2.5 billion. The growth rate annually in British
market is 12%, which shows that the industry can cross GBP 4.4 billion by the end of 2018. As there are considerable
amount and experience required in the gambling industry that increases threats of new entrants in the market, but due
to the considerable growth of industry attracts new companies in this industry.

Consumer bargaining power

Customers who are involved in gambling on betting exchanges maintain a prominent balance in their account since
they need to have sufficient balance in the account for covering the liabilities of their bets instead of having to have
funds only for covering the stake of bets. Active customers are the ones who have been involved in previous 12 months.
New customers are the ones who are coming for new registrations, but have not gambled yet. It may also be so that
the customer maintained an account with more than one gambler. Therefore, the data relate to accounts instead of
individuals. The bargaining power of customers is highest in the industry. This means that XYZ COMPANY will
have to invest more in promotion activities for keeping the customers engaged.

Threat of substitutes

. The threat is high for XYZ COMPANY , so the XYZ COMPANY has to devise strategies for maintaining
profitability in the market, e.g. generally through differentiation strategy whereby it develops innovative products to
attract customers. Therefore, we decided to spend around £36,000 per annum on promotions and new games.

Retail and Remote Bet and Game Convergence

Operators on retail levels have come under

heavy impact with the advent of movable
betting. Betting on horse race has come
down offline and started to form of an
online presence through portable devices
where attractive promotions and movable
devices including functioning two races has
increased manifold. Sports betting has
increased tremendously on betting shops
boosted by periodic football tournaments
and other sporting events. Visitors those are
among regular real estate agents, B2
machines are popularly under the use of the
regular visitors of the betting shop and they're offering became the best performing offer for the better shape (see
Figure below).
 The industry has unanimously that importance of betting shops is due
to two causes. Firstly, the majority of the operators in the UK reflects
a potent brand functioning on a retail basis and is beneficial off-line
and online bet. Secondly, no research could have given significant
evidence on gambling through mobile devices betting in the retail
environment. A past research conducted shows that visitors of betting
shops, bet and gamble in large numbers online, thus providing potential
as ‘cross-fertilization’.

Supplier power

The question then arises that which software should be used by the
XYZ COMPANY . Different developers are providing unique features
in the software developed by them. It combines not only the software, but also some games which come as part of the
software package. However, the type of software depends on the type of game for which the business is seeking
software, e.g. online casino, poker, roulette, sports, etc. There are also software solutions whereby important functions
are available, e.g. multiplayer games, live games, mobile games, etc. However, the number of software suppliers in
the industry is limited which has the effect of increasing their power. But still XYZ COMPANY has selected the
industry renowned software providers for providing excellent services.

Summary of analysis

Betting through portable devices is expanding along with the gaming industry. Under the aegis of this expansion, the
next five years expect the British industry to undergo a drastic change. The present Government takes aim to induct
an approach new to taxation as well as regulations relating to the industry.

Experts have suggested taxing the betting and gambling industry and bring changes in the statutory regime surrounding
the betting and gaming industry. This can increase the cost of operation for betting and gaming businesses. It may not
affect the big businesses as much as it can affect the smaller ones and start-ups. This will only cause the market share
of big players to get strengthened. That is why the businesses in the industry should focus on utilizing strategies
whereby they can reduce the cost of operation. One way of doing this is to bring down the cost of promotions. Some
operators have also focused on providing services from outside the UK.
A great deal of uncertainty exists among industry leaders about the extent of backdoor entry in the British market of
illegitimate operators. To determine such entry, consumer perceptions are taken as the yardstick which determines the
entry into a market by identifying the interest of consumers, the cost of complying with regulations and values
perceived by consumers.

Nowadays customers are also increasing their presence over betting games available on smartphones. Customers are
choosing from a wide range of games available on smartphones. Therefore, now the operators have an added
responsibility to ensure that their customers are satisfied on mobile platforms as well. Betting and gambling businesses
can reduce their cost of promotion to direct finances for ensuring their presence on smartphones so that more customers
can be engaged.

Market leaders believe that in the wake of new taxation and regulatory regimes the businesses in the industry will need
to develop new partnerships. This may also involve partnering with suppliers so that the burden is equally distributed.
But the competition will only grow more. This includes provision of excellent services, innovative games and
minimum cost.

Gaming and betting through mobile devices is perceived to be growing significantly in the industry seeing its
exponential growth ushering a new era. Therefore, the approaching five years will see the quality of handheld devices,
including tablets as well as smartphones will serve as success winning driver not conditional as the core.

The product that will be considered competitive viz a viz new entrant will attract operators’ investment for
development. Worthwhile that new entrants are allured by the growing capacity of betting and gaming depth of the
British market. The growing potential advances mainly due to the new operators through their self-investment or
partnering with others to allure the consumers with a new interface and improved operations overcoming the previous
issues confronted by the extent products.

Operators’ action to introduce the POC tax will escalate the activities leading to increase in market spending in the
coming six to twelve months. It is generally expected that rise in market spending will enable the small operators to
sustain whilst big brands are better positioned to get an advantage in applying economies of scale.

The gaming and betting sector remain operative under the importance of brick and mortar businesses such as online
retail stores. Consumers get a great deal of awareness through these and a multi-channel model is developed by the
interaction of these outlets. Retail environment, however, is not likely to grow much in the approaching five years of
time.
In order to ensure consistent growth of revenue in the future, operators must utilize the social media channels. Although
it is believed that real money betting on social media may not be so popular in coming five years, but in the long run
the relevancy and importance of betting through social media channels cannot be ruled out.

Operators’ capacity to fulfil promises quality, offering advanced models of handheld devices that strives to acquire,
retain and developing loyalty to a greater extent helping operators to meet the high demands on margins.

XYZ COMPANY -Strategies

The business analysis discussed above is conducted with the help of some commonly utilized business models. These
models are utilized in the current paper for evaluating the strategies relevant to XYZ COMPANY . The strategic
direction starts with the business level strategies so the XYZ COMPANY business strategies are addressed through
using of generic competitive strategies as shown in below figure.

Cost Differentiation
The competition in the gambling and betting industry is increasingly becoming high these days. One cannot expect to
overtake established operators, e.g. Titanbet whose owner, Teddy Sagi, is always in the news and is considered to cast
a positive impact on the brand regardless of the type of news he is found in therefore we will do our best effort to
create best distinct brand image in the customer's mind through offering secure, friendly and fair gambling services to
our clients.

However, there are also concerns regarding blacklisting of casinos by legal institutions as well as by the players.
Although this is not very common but is also not out of the question in this industry. Additionally, our business is
entirely new then pitfalls are also likely to be experienced by our business, so we will avoid any blacklist issue.
Therefore, it is vital for us to hire a competitive, skilled and experienced team to run the gambling and betting business
which is why we are hiring minimum 5 people for different positions to manage our business effectively.

As it has been discussed in the analysis section, the gambling and betting through mobile devices is perceived to be
growing significantly in the industry causing its high growth and thereby ushering a new era. Therefore, the
approaching five years will see the quality of handheld devices, including tablets as well as smartphones will serve as
success winning driver not conditional as the core. Therefore, XYZ COMPANY will offer high quality and friendly
online betting environment for the customer that will create a distinct image in customers’ mind and will be helpful in
creating a differentiation advantage for the company. Moreover, online gambling will also provide strong grip on the
business perspective because of online data storage business activities would lead a strong strategic decision. Because,
the gaming and betting sector remain operative under the importance of brick and mortar like retail online stores.
Consumers get a great deal of awareness through these and a multi-channel model is developed by the interaction of
these outlets.

As the remote/online gambling business will be useful to gain advantage from growing online gambling industry, at
the same time it would reduce overall business cost as compared to the physical betting shops that would lead towards
cost leadership advantage for XYZ COMPANY . At the same time, the remote gambling would provide an opportunity
to take customer from anywhere in the world, e.g. referral bonus would not be limited only for UK based customer as
our customers can refer their friends from anywhere in the world. That would also lead towards reducing our costs
through economies of scale.

XYZ COMPANY will create competitive advantage through using advance gambling software that will fulfil
customers’ demands and legal requirements. The question then arises that which software should be used by XYZ
COMPANY to full advance technological consumer and legal requirements. Different developers are providing
unique features in the software developed by them. It combines not only the software, but also some games which
come as part of the software package. However, the type of software depends on the type of game for which the
business is seeking software, e.g. online casino, poker, roulette, sports, etc. There are also software solutions whereby
important functions are available, e.g. multiplayer games, live games, mobile games, etc. as the gambling industry
analysis shows that there is considerable growth being observed in the mobile gaming market. Therefore, it is only
viable to develop software in this regard, particularly for those gambling businesses which have only on ground
presence, but it’s not worth for XYZ COMPANY to develop our own software. In this regard, we are aware of the
demands of the customers and legal requirements to operate as remote gambling business in the UK. According our
market research EveryMatrix provides relevant software and they are very popular in the market. Therefore, we have
decided to use their service to offer a competitive online betting environment for our target customers.

The EveryMatrix is providing software solutions to gambling and betting industry for nearly a decade. The company
is focused on providing customized and flexible software for gambling and betting businesses. There are various
gaming partners, which are seeking software solutions from the said company which is why we also decided to get
their service to offer reliable, secure and advanced online gambling platform for your customers. Therefore, currently
we are communicating with EveryMatrix because of their quality services and ultra-flexible customize gaming
management platform.

There are more than 100 software’s that are integrated into the EveryMatrix platform. There are also over fifty methods
of payment included in this platform, but due to the limited budget, initially we will offer maximum 10 types of the
payment methods for XYZ COMPANY . Besides the gaming/betting platform, they also have an efficient system of
fraud detecting which would be helpful for XYZ COMPANY to protect from any fraud. Additionally, the software is
legally compliant with various jurisdictions which also includes UK and Malta.

There is a wide range of services integrated with the platform. This also includes IGaming CMS, vendors integration,
player handling and payment processing. Moreover, the flexibility of the system can be so estimated that if the vendor
requires the addition of more features they can easily be added to the platform, so it would be helpful for future
additions in the business. Moreover, an essential element of the platform is that it is compliant with UK and EU legal
requirements. Moreover, the platform generates regular reports for the businesses which allow consistent progress
over the business.

EveryMatrix has offices across Asia and Europe and is delivering custom oriented solutions in such regions within a
product range such as:
  Odds Matrix: It is a sportsbook which has won several awards as it provides over 25,000 live events every
month that would be helpful to offer a more number monthly event to XYZ COMPANY customers.
 CasinoEngine: It is the biggest aggregator of casino content in the market and is offering over five thousand
games.
 GamMatrix: It is a unique iGaming platform which also includes integration of services like payment
processing, iGaming CMS, in-depth reporting, player handling, etc these all features are an integral part of
XYZ COMPANY remote gambling.
 MoneyMatrix: There are over hundred payment solutions offered by this platform internationally and is also a
fraud detecting software, so we can increase the number of payment up to the maximum level for our customers.
 PartnerMatrix: it is a single agent and affiliate management system which is utilized in various markets thus,
the PartnerMatrix would be useful for our marketing activities.

https://everymatrix.com/gammatrix

All aforementioned products and software’s are helpful in enabling a gambling and betting business like ours to grow
further by employing such software. These software’s will enable our business to operate globally and accept payments
from many countries simultaneously at the same time it would be helpful to gain cost and differentiation advantage
over the rivals. Moreover, XYZ COMPANY will keep on improving the proposed schemes pertaining to handheld
portable devices, consolidating the brand and develop strategic and collaborative ties with partners as well as
gatekeepers.

Partnering with Gatekeepers

The increase in gaming and betting through portable devices poses a challenge of building a partnership with
middleman as a requirement of this channel. Software providers are already getting their role changed and this role
will provide more cushion to share the competitive pressure by using the movable devices. We will constantly demand
for their partner quality with a consistent stride of development. We understand that software suppliers get their role
trickier a bit because operators need quick pace leading to market and delivery of supreme quality at all stages. The
customers will be able to update the propositions twice a year or once a year. In the world of the portable device, twice
a year or once a year policy will keep the progressed ahead of the critical curve.

XYZ COMPANY Marketing Strategies

The overall marketing strategies are divided on the basis of generic marketing Ps (Product, Price, Place, Promotions.

Place
Remote/online
betting platform
Product
Live events (horse
Promotion
race, football etc).
•Online lotteries

XYZ
COMPANY
Marketing
Strategies
XYZ COMPANY -Product

Product

Online
Live events
lotteries

XYZ COMPANY will offer live event betting and online lotteries for the customer. It has been discussed above that
Odds Matrix is also offered by EveryMatrix which has won several awards as it provides over 25,000 live events every
month that would be helpful to offer a more number monthly event to XYZ COMPANY customers. We will show
live events through our website that would bring long-term customer relation and brand advantage. Furthermore,
following famous lottery will be offered for customers, but more the type of lotteries will be added with the passage
of time.

1. Lotto
2. Lotto Millionaire Raffle
3. EuroMillions
4. Millionaire Maker
5. Thunderball
6. Irish Lotto,
7. Power play
8. CAsh4 life
9. MegaMillion

Place
The XYZ COMPANY will offer 100% online betting for the customer, but whole business activities will be performed
from company registered address in Manchester. Therefore, website and mobile apps are important elements for XYZ
COMPANY , but it is not vital to possess dense programming knowledge to develop a gambling website. There are
various innovative solutions available today for developing the gambling-related website which also has the
functioning back up system. There are also various choices available regarding design and layout. The gambling
software providers are distinguishing themselves on the basis of themes and characters they can develop. There are
several software providers in this regard e.g. Net Entertainment which is providing web developing services for
gambling businesses with extraordinary characters and unique designs. There are also many other developers in this
regard that are renowned in the industry, e.g. Microgaming, Playtech, and NetEnt. But, we will use EveryMatrix
services for website as well because they provide web development services to gambling businesses whereby XYZ
COMPANY can maintain full control of the website without any external involvement. However, in addition to
technical requirements of the website, it is also essential to comply with the legal requirements. Now, as the customers
desired quick results and also expect their transactions to be safe and secure. Therefore, it is vital to consider the system
of payment that could be installed for the effective and safe transactions. This is generally part of the software package
which the EveryMatrix will provide to us because we will use EveryMatrix company, s services for website, software,
payment system and for other technical requirements.

Promotions
It is very common to promote website for generating revenue from online gambling and betting business, therefore, it
is essential for us to attract customers to the website. The revenues are generated when the players lose the bet,
therefore, plenty of players are required to maintain the profitability of the business of XYZ COMPANY . In order to
attract players, it is essential that they become aware of the presence of the XYZ COMPANY gambling site. This will
be done through social media because a large number of people can be attracted towards something simultaneously
through social media. A report by PricewaterhouseCoopers shows that people are increasingly getting attracted
towards placing bets online, but there are strong promotional strategies required by online gambling companies.
Therefore, there is always room for operating in the online gambling business in this sector. We can attract them
through gambling forums, blogging, article marketing and social media websites, but we believe that as per our limited
business resources we should adopt viable promotion strategies therefore, we are more preferring to social media
marketing through offering promotion code to our target customers. Moreover, we will also offer a referral bonus to
our customers and we will allow our customer to refer their friends from anywhere in the world that will increase our
business beyond the UK geographical gambling market.

When customers will be successfully attracted towards XYZ COMPANY website and maximum possible traffic will
be generated on the website then XYZ COMPANY website will be listed by search engines on first google pages but
it is not an easy task to bring gambling website on the first google page. However, it is not advisable to use GoogleAds
in the initial days of the business as it can be costly for XYZ COMPANY . This is the reason that XYZ COMPANY
will be more relying on social media networks to attract a large number of customers because AdWords requires a
considerable amount of investment because AdWords will cost approximately GBP 122.87 per click in the gambling
industry. Relying too much on AdWords or on keywords will place us in difficulty and additionally it will consume
too much of the marketing budget. Instead, it is more viable to focus on social media marketing where single promotion
can be projected to a large number of customers simultaneously and we will offer attractive promotion bonuses for
new and loyal customers. We will use text message and email direct marketing with our loyal customer that would be
helpful to create long term relations with customers.

The brand itself comes up as a major key factor behind the success of any company. Promotional ads and endorsements
influence to make a selection among different preferences of the brand through bet and the game. Following the
relaxation of the regulation of Gambling Act 2005 in the UK on a bet and game advertisement, a great spin in
expenditure on account of promotion and marketing was seen. The coming time within 5 years will reflect who has
expended funds well, which is why we have arranged sufficient funds for our marketing activities that would
strengthen our brand image in the market.

Cutting promotional budget proves as an effectual way to reduce costs, but as a new online gambling brand we need
significant amount for promotion to introduce our brand to the target customers. That is why we have an unexpected
marketing budget to back plan. We will offer free games or bets as a promotional tool to attract and retain customers.
At the same time, we are using very reliable and innovative betting software and they are also providing apps and
website, so it will also inspire loyalty through secure and user friendly services. The factor of customer loyalty is
crucial in this business because if the customer is not satisfied, he can switch to another service provider. That is why
we are communicating with very well-known EveryMatrix company to get their technological service for XYZ
COMPANY betting services. As it has discussed in the analysis section that in the coming five years, customers will
continue to place bets with their favourite operators, it is the time for us to review the previously adopted strategies
that result in customer loyalty by offering quality online gambling platform for our customers.

The approaching five years will indicate a score of loyalty tools such as loyalty rewards to target customers, including
also the use of common wallets, profiles and player accounts that aim to link profile of customers across the platforms.
But the player accounts that holistically links player with playing habits. Information based on these concepts will be
used to tackle a problem with gambling and data will also be used for service improvement and for other marketing
activities. Systems will be developed that assist XYZ COMPANY to comprehend the online betting behaviour of
individuals that would lead to an effective product/service development strategy for XYZ COMPANY .
Financial strategies

Staffing cost

Customer services staff is the most important asset of the organization and in the current situation, it will be ensured
that there are at least four to six people that are required to handle the queries round the clock which will be posted by
the players. We also need Affiliate Managers who are entrusted with the responsibility of recruiting Affiliate Partners
for marketing the XYZ COMPANY website. It is also vital to hire a Customer Retention Manager whose
responsibilities include keeping the profitable players engaged with XYZ COMPANY . It is also vital to hire an
experienced IT team for handling IT-oriented problems; therefore, we will hire Affiliated Manager, Customer
Retention Manager and IT technicians to deal with technical issues. The financial projection in annexes outlines the
total cost of salaries.

Marketing cost
According to our budgeting the cost of marketing can vary between GBP 20,000 to GBP 36,000 but we have funds
for unexpected marketing and operational cost. We will hire a top affiliate marketing associate who will generate
traffic to the website. As it has been discussed above that remote gambling is increasingly becoming competitive which
is why it is not profitable to utilize Google click per add because it can be costly for the start-up business. Top affiliates
can generate traffic on the website through the help of keywords such as “online casino”, “top casino”, “best casino
online”, etc., but we will do keywords on gradual basis that would take time to get final results.

As it has been estimated that nearly GBP 30,000 a month can get consumed towards top affiliate each month. However,
for stat up businesses this may not be feasible. Therefore, in the current situation, social media marketing is preferred.
This type of marketing will enable the business to attract a large number of customers simultaneously who are looking
for online gambling and betting websites. This marketing can be done through websites such as Twitter, Facebook,
Instagram, etc.

Players’ payment
The software on remote gambling requires the business to compulsorily maintain the reserve of GBP 200,000 to GBP
300,000. Based on the type of fund the business must maintain this level of reserve for the activities it is offered online.
This is being required for ensuring that the winning players get their winning amount immediately. It is vital that the
business is able to pay out to the customers. For example, if the business decides to fund the account through PayPal,
Neteller, Mastercard or Visa or Skrill, it is essential that the accounts are filled with a requisite amount of money. We
can even distribute the amount of these accounts are also in a bank account. This will ensure that the business is able
to pay out to the winning customer.

Besides, we can also outsource the payment to a payment processor who will be instructed by the business to make
the payments. A gambling business can also set up its own payment processing team. However, the easiest way for us
as start-up gambling businesses is to outsource the payment process since this process is efficient and is responsive. It
is possible to maintain an efficient level of payment through the outsourcing process. Therefore, in the current situation
also the payment process will be outsourced.
ANNEX A
CASHFLOW FORECAST FOR: XYZ COMPANY -REMOTE GAMBLING

Date: JAN 2018

YEARS: FEB 2018 - JAN 2021 Start Up Jan-19 Jan-20 Jan-21 Total

Incomings £ £ £
Labour / Sales 0
Services / Sales 245,000 306,000 335,000 886,000
Bank Loan 0
Own Capital 374,666 374,666 374,666
Start Up Loan 0
0
Total 374,666 245,000 306,000 335,000 1,260,666

Outgoings
Cash Purchases 0 0 0 0
Credit Purchases 0
Drawings 0
Wages (inc on-costs) 113,000 138,000 141,500 392,500
Subcontractors 0
Gaming software 2,000 24,500 30,600 33,500 88,600
License fee 2,666 8,545 10,824 10,824 30,193
Payment processors 3,500 18,000 18,000 18,000 54,000
Rent & Deposits 12,000 12,500 13,000 37,500
Light / Heat / Power 2,500 3,000 3,500 9,000
Telephone + Stationary 600 800 1,500 2,900
Postage 150 200 250 600
Insurance 3,500 4,500 5,000 13,000
Advertising 15,000 15,000 30,000 30,000 75,000
Website 1,500 1,500 1,500 1,500 4,500
Motor & Travel 1,500 2,500 3,000 7,000
Consumables / Other 800 1,500 2,000 4,300
Repairs & Renewals 2,500 2,500 2,500 7,500
Accountancy / Legal 1,500 2,000 2,500 6,000
Loan Repayments 0 0 0 0
Bank Charges 500 500 500 1,500
Contigency / Reserves 350,000 0
Capital Items 0
Total 374,666 206,095 258,924 269,074 734,093

Surplus/Deficit 38,905 47,076 65,926 526,573

Balance @ Start 374,666 413,571 460,647
Balance @ End 413,571 460,647 526,573
ANNEX B
XYZ COMPANY -REMOTE GAMBLING

Projected Profit and Loss Account for: 01 FEB 2018 - 31 JAN 2021

For the period ended: Jan-19 Jan-20 Jan-21

£ £ £
Sales including Debtors 245,000 306,000 335,000

Direct Costs
Initial Stock & Material - - -
Add Purchases - - -
Less Year End Stock - - -
Sub Contract Labour - - -

Gross Profit 245,000 306,000 335,000

Gross Profit Percentage 100% 100% 100%

Overheads:
Wages 113,000 138,000 141,500
Gaming software 24,500 30,600 33,500
License fee 8,545 10,824 10,824
Payment processors 18,000 18,000 18,000
Rent & Rates 12,000 12,500 13,000
Light / Heat / Power 2,500 3,000 3,500
Telephone 600 800 1,500
Postage 150 200 250
Insurance 3,500 4,500 5,000
Advertising 15,000 30,000 30,000
Website 1,500 1,500 1,500
Motor & Travel 1,500 2,500 3,000
Consumables 800 1,500 2,000
Repairs / Renewals 2,500 2,500 2,500
Accountancy / Legal 1,500 2,000 2,500
Loan Repayments - - -
Bank Charges 500 500 500
Depreciation - - -
Other Expenses - - -
Total Overheads 206,095 258,924 269,074

Pre Tax Net Profit 38,905 47,076 65,926

Profit Percentage 16% 15% 20%
ANNEX C
XYZ COMPANY -REMOTE GAMBLING

Projected Balance Sheet As on: JAN 2019 - JAN 2021

For the period ended: Jan-19 Jan-20 Jan-21

£ £ £
FIXED ASSETS - - -

CURRENT ASSETS
Stock - - -
Debtors - - -
Cash at bank (includes £350K reserves) 413,571 460,647 526,573
Cash in hand 2 2 2
413,573 460,649 526,575

CURRENT LIABILITIES
Taxes 7,392 8,944 12,526

7,392 8,944 12,526

NET CURRENT LIABILITIES 406,181 451,705 514,049

NON CURRENT LIABILITIES

Directors A.c 374,666 374,666 374,666

TOTAL ASSETS LESS LIABILITIES 31,515 77,039 139,383

SHAREHOLDERS FUNDS
Share Capital 2 2 2
Retained Earnings 31,513 77,037 139,381
SHAREHOLDERS FUNDS 31,515 77,039 139,383
42