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How to Start a Successful Sports Betting Business

If you’re like me, you gamble because it’s fun, it’s a rush, and because hey, why not? Maybe you think you know the industry so well that you can start your own online sports betting business…

The sports betting market is expected to grow by $134.06 billion by 2024, progressing at a compound annual growth rate (CAGR) of nearly 10% during the forecast period of 2020 to 2024. 

Let’s review what you’ll need to know to start a successful sports betting business, starting with where it’s legal.

Where Is Sports Betting Legal?

It’s important to know the law—sports betting isn’t legal everywhere.

In 2018, the Supreme Court lifted the nationwide ban on sports betting in the United States. This decision left the legality of the practice up to each state.

Which States Have Legal Sports Betting?

Thirty states, plus the District of Columbia, have legal legislation allowing sports betting. Five states have legal but not yet operational legislation.

The following states have legalized sports betting:

  • Arizona
  • Arkansas
  • Colorado 
  • Connecticut 
  • Delaware 
  • Florida 
  • Illinois
  • Indiana 
  • Iowa  
  • Louisiana  
  • Nevada  
  • New Hampshire  
  • New Jersey  
  • New York  
  • Michigan  
  • Mississippi  
  • Montana  
  • Oregon  
  • Pennsylvania  
  • Rhode Island  
  • South Dakota  
  • Tennessee  
  • Virginia  
  • Washington
  • Not a state but Washington, D.C.
  • West Virginia  
  • Wyoming

Which States Allow Online Sports Betting?

Of the forty states that allow some form of sports betting, 22 allow online or mobile sports betting.

Which States Are In The Process of Legalizing Sports Betting?

Maryland, Nebraska, and Ohio are in process of legalizing sports betting in some form. North Carolina, New Mexico, and Mississippi have limited sports gambling legalities.

According to the American Gaming Association, Alabama, Alaska, California, Minnesota, Missouri, and South Carolina have active or pre-filed legislation in 2022.

Where Is Sports Betting Illegal or Not Legal?

The following states do not have legal sports betting: 

  • Alabama
  • Alaska
  • Idaho
  • Kentucky
  • Maine
  • South Carolina
  • Texas
  • Utah
  • Vermont
  • Wisconsin

For more information, check out this interactive map from American Gaming Association. (It may be a little easier to read than our lists!)

How to Set Up Your Sports Gambling Business Plan

As with any business, you’ll need to set your sports gambling business plan up right. Here are some steps you can take to start.

1.  Get Money

Starting a sports betting business isn’t a cheap startup—but the opportunity to build wealth (if done right) is worth the investment.

You’ll need cash for expenses such as:

  • Building out your platform (mobile and desktop) 
  • Lawyers
  • Insurance
  • Your first three months of wagers

Don’t do this on the cheap. You’re up against DraftKings, Harrah’s, and some very wealthy major players. If your platform is glitchy, unwieldy, or if it crashes, you’ll have some very angry people never coming back, trashing you on social media, and killing all your hard work. 

You get one shot at this launch, it has to be five-star worthy.

Apply for capital at Crivello.

 2.  Decide if You’re Licensing Software (Smarter) or Building (Insane)

If you’re a coder, you don’t understand gamblers.

If you’re a gambler, you can’t code.

If you’re a savvy entrepreneur, you know you should use the wheel that exists; not try to invent a new one.

If you’re a unicorn and can do it all—good for you. 

The bottom line: use license software that you already know works well.

3.  Lock Down the Legalities

Get your gambling license, geofence your app, and do everything you can so that the regulators can’t say you left the garage door open when there’s a break-in. You’re going to need:

  • A hell of an IT department
  • A legal team
  • And some complicated insurance structures (see step one)

4. Market the Sh*t Out of It

As mentioned in the “build or license” section above: You should have one person in your company who is in charge of marketing (not an assistant who also has to get you coffee). Then, outsource your marketing to an agency that knows influencer marketing (see step one… again).

With great potential upside comes great investment.  You should have influencers posting about you, ads running… The works.

Decide what makes you different and reinforce it all the way to the bank.

5.  Beta Test Your Platform with a Select Group

There’s nothing worse than an app that doesn’t use the right terminology for what it claims to be an expert on.

If you build it yourself and your nephew codes in the terms wrong, you’ll look like an idiot. Avoid this by testing your platform first. As we said, you have one shot at this, better make it a good one.

6. Accept Crypto and Have the Capacity for Exotic Wagers and Straight Wagers

Your platform needs to give your audience the options they want. For example:

As a sportsbook maker, you want to attract sharp punters and exotic wager action. High limits and messaging that encourages bets over a buck are going to make you a go-to destination for the real gamblers.

Or, for instance:

You run a gambling platform that attracts savvy betting enthusiasts who like to place complex, interesting bets. While you offer lower bets, $100, $500, and $1,000 bets are most common because this is the place where real gamblers bet.

In addition to knowing your audience, you should be using the correct terminology. Remember that whole ‘not-looking-like-an-idiot-thing’ we talked about?

I’ve included some basic terms below. You’re welcome.

Sports Betting and Gambling Terminology 

Outright Betting: Predicting the overall winner of a tournament or playoff competition.

Moneyline: A bet made if a team will win or lose outright with no point spread.

Parlay: A bet that combines multiple games for a higher payout. The more games, the higher the risk but the greater the payout. In order for the parlay to win, each game must win or push (tie). If any of the games lose, the entire wager loses.

Full Cover Bets: Any bet which consists of all available multiple bets over a given number of selections.

Total Bet (Over/Under): A bet on the combined number of points scored by both teams in a game, including overtime/extra innings.

Round Robin: A tournament in which each competitor plays in turn against every other.

Point Spread: Margin of victory set by oddsmakers to attract bets action on both the favorite and the underdog. A favorite must win by a number higher than the point spread to cover the spread. An underdog can cover by losing by a number less than the spread or by winning the game outright.

Straight Bet: A single wager on an event.

*All gambling definitions sourced from the New York Times. 

How to Get Money For Your Sports Betting Business

Do you remember the first step in setting up your sports betting business? We’ll remind you: Get cash. 

Luckily, there are several options to finance your business. Read on for more about business financing types.

At Crivello Capital, we believe in responsible investments and a no-nonsense approach. Learn more about Crivello Capital and how we can help fund your business by clicking here.

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How Do Opportunity Zone Funds Work?

Opportunity Zone Funds allow investors to give back to communities as well as earn some impressive tax incentives. There are over 8,760 qualified opportunity zones throughout the United States. Read on to learn what they are and how to invest in one. 

First, let’s break down some common terms.

Common Opportunity Zone Funds Terms

What is a QOZ?

A QOZ is a Qualified Opportunity Zone.  A QOZ is an area that the federal government recognizes as low-income and in need of an influx of capital.

What is a QOF?

A QOF is a Qualified Opportunity Fund. The key is the Q in QOF; you have to qualify, register, and then invest within a set period of time. QOFs are investment vehicles organized to drive investment in the opportunity zones.

What is a QOZP?

A QOZP is a Qualified Opportunity Zone Property – you don’t have to own that property outright to invest; it just has to be doing business “primarily”  in a QOZ.

What is an Opportunity Zone?

An opportunity zone is an economically disadvantaged and/or low-income community that could benefit from investments and revitalization. Under strict conditions, investments in these communities could be eligible for tax incentives through the Tax Cuts and Jobs Act of 2017. 

How Does an Area Qualify as an Opportunity Zone?

According to the IRS, for an area to qualify as an opportunity zone, it must be characterized by either of the following:

  • A median household income of less than 80% of the median household income of its neighbors, or
  • A poverty rate of at least 20 percent. 

What is the Purpose of Opportunity Zones? 

The goal of opportunity zones and their associated tax incentives is to encourage long-term investments in distressed communities. These investments can lead to the creation of more local jobs and economic growth. 

What Are The Incentives of Investing in an Opportunity Zone Fund?

Three tax incentives of investing in an Opportunity Zone Fund are:

  1. Defer federal capital gains taxes owed today for a period of years
  2. Be eligible to receive a reduction in those capital gains taxes
  3. Be exempted from paying future capital gains taxes if certain investment criteria are met.

How Are Qualified Opportunity Funds Started?

According to the IRS, Qualified Opportunity Funds can be started by real estate investors through several methods, such as:

  • Partnerships
  • Limited Liability Companies (LLCs)
  • Corporations 

And, an entity must:

  • File a federal income tax return
  • Be organized to invest in qualified opportunity zone property
  • Hold 90% of its assets in qualified opportunity zone property

Read how to attract investors to your opportunity zone, here. 

How Do Opportunity Zone Funds Work For Investors?

Opportunity zones provide tax incentives to investors with capital gains. Investors get their money back when the value of the property goes up to fair market value. 

When the investor sells in ten years, the capital gains tax they would have paid is forgiven as a big “thank you” from the government for investing in the low-income area. 

What Are the Benefits of Investing in an Opportunity Zone Fund?

Through investing in opportunity zone funds, investors can reduce the total they pay in capital gains tax. Further, if they keep the property for ten years or more, the investor won’t pay taxes on the appreciation value. 

How to Invest in An Opportunity Zone Fund

According to the IRS, investors must transfer cash or property to the fund in order for the full investment to be eligible for tax benefits. Additionally, investors must meet annual investor reporting requirements and time their investment within 180 days of realizing capital gain to receive the tax benefit.

Consider working with a tax or financial advisor to help you file the correct paperwork, ensure you’re following the appropriate rules and regulations as well as guide you through the process of investing in an opportunity zone fund. 

How to Find Opportunity Funds to Invest In

When researching opportunity zones and opportunity funds, investors may be met by a series of hypotheticals but find very few funds that are actively looking for investors. This happens because opportunity funds are excellent tax protection vehicles–and you have to be in the club to get on board.

What investors won’t see is how easy it is to become a registered opportunity fund.  It’s well within the scope of possibility for most high-net-worth investors. 

Interested in being part of our OZF? We should talk.

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Types of Hard Money Loans

In the world of hard money lending, real estate loans are often the go-to. Why? Real estate loans provide the lenders with a physical piece of collateral to keep the loan isn’t repaid. 

Hard money loans usually make sense for the lenders but not always the borrowers. Borrowers interested in hard money loans for immediate needs should know exactly what they’re getting into before they decide to proceed with a hard money loan. 

What is a Hard Money Loan?

Hard money loans are a type of loan which borrowers secure with real property or “hard” collateral. 

Borrowers most often use hard money loans for real estate transactions. Additionally, hard money loans are typically sourced from an individual or investment company, not a bank or other financial institution. 

Are Hard Money Loans Reputable?

Hard money lenders are often part of an alternative lending organization and can be reputable. 

However, borrowers can protect themselves by looking out for red flags as they venture into the world of alternative lending. These red flags may include:

  • Blank spaces in documents
  • Prepayment penalties
  • Additional services packed into the loan
  • Extra-fast closing

Choosing to use alternative lenders means taking the time to carefully understand what your loan terms are and what your capacity is to repay them.

For more information, learn how to avoid predatory lenders, here. 

Why Are Hard Money Loans Expensive?

Hard money loans often have quick approval processes and few qualification requirements. These loans get borrowers the money they need when they need it. In addition, lenders do not typically focus as closely on credit scores when approving hard money loans and are therefore more likely to work with borrowers with a poor credit history. Because of this, the lender is taking on more risk.

These benefits don’t come cheap. Hard money loans are often associated with high-interest rates and the risk of the borrower losing the collateral property if they default on the loan.

Common Uses for Hard Money Loans

Infographic on five types of hard money loans

Fix and Flip Loans

Real estate investors use fix and flip loans to purchase properties, improve them, and sell them at a profit. Borrowers use these loans to support the purchase of the property and in addition to covering associated costs to complete the renovation. 

Residential Renovation Loans

Residential renovation loans use a property’s estimated value after renovation instead of its current home value to calculate how much the property owner can borrow. This gives borrowers more credit than if the value is calculated based on the value of the home before the renovations. 

Investment Property Loans

Investment property loans help borrowers purchase homes to rent out for extra income or to flip and sell for a profit. 

Cash-Out Refinance Loans

A cash-out refinance loan replaces a borrower’s current mortgage with an updated, larger loan. This loan pays the difference between the amount borrowed and what the borrower still owes on the home.

Cash-out refinance loans provide borrowers with a new home loan for more than they currently owe on their house, allowing them to spend more on home improvements, debt consolidation, or other financial obligations. 

Types of Hard Money Loans For Businesses with Cash Needs

Commercial Bridge Loans

Borrowers use commercial bridge loans to fund a specific project or immediate opportunity, usually in real estate. These loans typically “bridge the gap” between the borrower needing to meet the financial obligation–for example, purchasing a property– and securing long-term funding. 

Commercial Foreclosure Bailout Loans

Commercial foreclosure bailout loans stop foreclosures and pay off the existing mortgage with a new one. These loans can get complicated; we suggest working with a professional or even an attorney when working with commercial foreclosure bailout loans. 

Consider Crivello

If you know how hard money lending works but don’t want to go through the stricter process with a conventional alternative lender – we should talk.

Our mission at Crivello Capital is to positively impact communities and the lives of business owners through direct investments, real estate investments, and alternative lending. We focus on clarity, transparency, and a no-nonsense approach to lending and investment. Read about our responsible investments to learn more about us and our principals. 

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How to Find a Private Money Investor

Let’s be honest–If you googled “how to find a private money investor,” you may have bigger problems than finding a private money investor. 

Let me explain: many successful businesses have a tight network of fellow business people who can refer you to the right private investor–do the terms primary circle and secondary circle sound familiar to you?

These terms suggest that business owners already know private investors through friends, family, or other connections before the deal is closed.  

Don’t let this intimidate you. You can still access the funds you need for your business through a private investor by connecting to investors in other ways. 

Looking For a Private Investor? Meet Crivello Capital

If you did google it and were led here without knowing who Crivello Capital is–I’ll tell you.

Crivello Capital is a private investment company focused on the positive impact capital can make in communities and the lives of business owners. We place an emphasis on investing in opportunity zones, as well as investing in startups who show promise. Learn more about opportunity zones, here. 

What Makes Crivello Different Than Other Private Investors? 

I’m a one-man show with a no-nonsense approach. That means no red tape, no piles of paperwork, or mountains of forms. I’m here to invest wisely in companies that excite me and are making communities better. 

Learn more about Crivello Capital, here. 

Let’s review what private investment is and how it works so you can fully understand what I do and how it can help your business. 

What Is A Private Money Investor?

A private money investor–also referred to as a private money lender– uses their private capital to finance investments. Private investors work directly with the borrowers and are not affiliated with a financial institution.

Who Is Considered A Private Money Investor?

A private lender is a person or fund that is not a bank or credit union and is not a loan broker.  A private lender has money to lend directly and has their own criteria for who to lend it to. 

There are three circles of private lenders. Let’s take a moment to break them down. 

The Primary Circle

The primary circle is people you know: a parent, cousin, friend from high school, the pitcher from the company baseball team that throws a wicked curveball. 

The Secondary Circle

The secondary circle consists of colleagues and friends of your primary circle. For example, your dad’s friend from business school, your best friend’s colleague, the company pitcher’s friend from their last job. 

The Third-Party Circle

This is where I come in. The third-party circle is people you don’t personally know. This is the largest capital pool you can access and it’s full of opportunities. 

Why Are Private Investors A Valuable Asset?

I’m so glad you asked. Private investors can be an attractive option for borrowers because they have different approval requirements and faster application processes than financial institutions, like banks. 

Because of these differences, private investors may be more willing to work with borrowers with poor credit. Additionally, private lenders often have an informal or streamlined application process, allowing borrowers quicker access to the funds. 

How Do Private Investors Work?

The process of working with private lenders will be similar to other types of loans. Borrowers apply for funding, use the funds for the designated project or purpose, and pay the loan back in installments with interest. Like loans from financial institutions, the interest rates and qualifications can vary depending on factors such as the investor, the project, and the borrower. 

What Investments Do Private Investors Fund?

If you looked up what kinds of businesses private money lenders invest in, you’ll mostly see real estate investments.  While private investors do commonly invest in real estate, private money, not a fund, invests in whatever it wants to invest in–that’s why it’s private. 

Banks have regulations, brokers have fees, and private lenders set terms and rates based on an individual case-by-case basis. 

How Do You Borrow Money From a Private Lender?

First, show me what you got; present your financial information completely and accurately. I want to see the good, the bad, and the reality.

It’s tempting to make your books look better than they are but it’s probably not in your best interest; if your business is struggling because of poor financial management, it’s important to find the problem as quickly as possible so you can learn, adjust, and get better as a business owner.

How Do I Find Private Funds?

There are a couple of different routes you could take in looking for private funds and private investors. 

  • You could google “how do I find private funds?” for some online resources.
  • You could ask other business owners. Fellow owners may work with private investors or banks that have relationships with alternative lenders. 
  • You could network online, at events, etc. to connect with private investors and convince them to invest in your business.

Or,  you can reach out to me and tell me why investing in your business is a good idea. Apply for capital in 4 simple steps, here. 

How Do I Verify a Private Investor?

That’s a good question. 

Larger lending institutions can be a bit of a double-edged sword; bigger institutions will have a full, credible lending history but often set more regulations and rigid criteria for lending. 

To verify private investors, you can:

  • Talk to a business owner the investor previously loaned to
  • Ask questions
  • Meet face-to-face
  • Use your judgment
  • Only agree to terms you feel are fair

A Final Word

Private money can be an attractive alternative lending option to traditional bank loans because private investors offer faster approvals, lenient restrictions and may work with borrowers with low credit scores. That being said–private money isn’t for everyone.

Private lending can be a seedy world–that’s why it’s imperative you find the right private investor for you and your business. 

At Crivello Capital, we take pride in our transparent process and no-nonsense approach. We want to bring clarity back into the transactional world of corporate lending and investment. Sound good to you?

Learn more about Crivello Capital and our mission, here.

Ready to Apply for Capital?

Apply for capital in 4 simple steps, here. 
Read on to learn more about Crivello and what to do if you’re unbankable.