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Life in the Grey Area

Wednesday, December 19th, 2012

Sweepstakes Internet Cafes: Life in the Grey Area

A “grey area” is a concept or topic that is unclear.

Sweepstakes Internet cafes are fascinating businesses. Sprouting from a business model that is over 15 years old, sweepstakes Internet cafes have added a powerful marketing tool to standard Internet cafes: Sweepstakes games. While the concept of promoting a product or service with sweepstakes games is nothing new, sweepstakes software has truly elevated the Internet cafe business to a new, much more profitable level. Just as marketing giants such as McDonalds and Coca-Cola have significantly increased their income through the use of this clever marketing tool, so have sweepstakes Internet cafes.

The difference between well-known brands, such as McDonalds, and sweepstakes Internet cafes is that most of the population is familiar with McDonalds (which has over 30,000 restaurants around the world) but nobody has heard of “Joe’s Internet Cafe” (which has a single location in a small town in Florida). McDonalds and Joe’s are doing exactly the same thing. McDonalds sells food and gives away sweepstakes entries. Customers participate in the sweepstakes, which involves chance, and can win cash and prizes from a finite pool of over $300 million. Joe’s Sweepstakes Internet cafe in Smalltown, USA sells computer workstation time and Internet access and gives away sweepstakes entries. Customers participate in the sweepstakes at Joe’s, just like they do at McDonalds, and can win prizes and cash from a finite pool.

Nobody seems to give it a second thought when someone wins $1 million playing the McDonalds sweepstakes, but if someone wins cash at Joe’s some may be heard to say “wait a minute – if you can win cash, that’s gambling!” Why is it gambling if you can win cash at Joe’s, but not if you can win cash at McDonalds? The answer is – it’s the same thing. Sweepstakes promotions follow a very specific set of rules and regulations, whether they’re at McDonalds or at Joe’s Internet cafe.

Some people will quickly chime in “yes, but when you reveal your entries at an Internet cafe it looks like a slot machine!” This is true, it DOES look like a slot machine. This is the method that many sweepstakes Internet cafes choose to reveal the entries. It’s interesting to note that Coca-Cola also uses slot-style revealers to display the results of its web-based sweepstakes games. Does the method of revealing sweepstakes entries make a sweepstakes any more or less legal? Of course not; just look at Coca-Cola!

Internet cafe sweepstakes games fall into what is called the “grey area”. This means that while they may LOOK like something that is not legal in many places in the United States, they actually follow rules that make them legal in many jurisdictions. This can be confusing to those who don’t understand the concept. At first pass, Internet sweepstakes cafes can certainly appear to be illegal. But when you dig through the facts and understand the way sweepstakes games work you will quickly determine that sweepstakes Internet cafes are very different from gambling. Simply put, if everyone would take the time to do a little research (seriously, 10 minutes online with Google) before rushing in and calling it gambling it would save a lot of trouble.

The scene from Monty Python’s “Holy Grail” comes to mind with the village full of idiots and the “witch hunt”. “How do you know she is a witch?” “She LOOKS LIKE ONE!” While watching the cult comedy we all laugh at the preposterous notion that without any facts simply looking like a witch makes the suspect a witch. When asked why Internet cafe sweepstakes games might be legally questionable, the most common answer is “It looks like gambling”.

Those who live, work, and play in Internet cafe sweepstakes industry have grown accustomed to the ongoing skepticism and criticism from the peanut gallery. Sweepstakes Internet cafes follow specific sweepstakes rules and can be a fantastic and highly profitable business model. Yes, it may look like a witch. But it is not a witch. Let’s end the witch hunt now and do some research before throwing the innocents into the fire!

Sweepstakes at Home

Friday, April 8th, 2011

A few of the most important elements of a robust sweepstakes promotional platform are flexibility and adaptability.  This industry is a whirlwind of legal challenges, changing local and state ordinances, and law enforcement that often knows nothing about this business other than “it looks like gambling and by golly I won’t tolerate it in my jurisdiction!”

How are sweepstakes promotional products prepared to meet this dynamic environment?  Unfortunately, many of them are what we would call “one-trick ponies”.  What you see is what you get–and if they need to turn on a dime you’ll find yourself out of business.  This is primarily due to the fact that every sweepstakes solution in America is using a client-server model.  If you need a quick change someone will have to develop it and then come out and install it on every system.  Or, best case scenario, they can do remote updates (one at a time).  This is all well and good–unless there are several hundred, or several thousand, systems to be updated.  Then what?  This could take weeks or months to roll out.

Enter the web-based model.  We have only seen ONE true web-based sweepstakes solution.  This is the SweepsCoach platform, and the more we see results from this platform the more impressed we are by it.  This sweepstakes delivers updates, enhancements, and new games regularly.  These updates are instantly and automatically delivered to all 16,000+ SweepsCoach locations simultaneously when the update is put on the servers.  Speedy updates and INSTANT DEPLOYMENT make this option the most flexible option available.

In this article we want to focus on one hidden treasure of a web-based sweepstakes solution.  A lot of people aren’t aware of this, so we think it’s time to let the cat out of the bag on one of the industry’s best-kept secrets; playing sweepstakes games at home.

What happens if the unthinkable occurs and your city, county, or state completely outlaws sweepstakes promotions?  Well, first of all let’s point out that this is not likely to stick.  They’ve been trying to outlaw sweepstakes for years in several states and haven’t been able to do it.  Sure, places are closed for a few weeks–but they almost always end up opening again soon.  At the end of the day, if the sweepstakes are being run properly they are nearly impossible to completely shut down.  But what happens in that timeframe?  For two weeks, or for two months, or… who knows?  Maybe permanently your business is not allowed to run a sweepstakes promotion onsite.  OUCH!

This is what happened recently in Europe.  An entire country passed strict regulations and penalties preventing anyone from running a sweepstakes in their business.  What did the sweepstakes owners do?  Every sweepstakes solution was forced to leave the country.  Everyone, that is, except for web-based SweepsCoach sweepstakes.  The businesses that were running the SweepsCoach system sent their customers home to play.  This solution was implemented instantly–and those with SweepsCoach games in the US can do exactly the same thing RIGHT NOW.

When an account is created for a new customer, that account is linked to the specific business or location where it was formed.  This means that using the same exact login that the customer uses in the store, that customer can go home (or anywhere with Internet access) and log in to the website: RevealMyEntries.com.  On this site customers can play games to reveal their winnings–exactly the same way they did onsite in the business where they were given credits to play.

The implications of this concept are staggering.  Back to our example in Europe; our sweepstakes promotions are bringing in several million dollars of profit each month–and 100% of the business is being played at home.  This concept also allows business owners to send customers home to play if the store is too full (no open computers left).  It allows customers to play at their own convenience, whether or not your store is open for business. Thus, even while your store is closed and you are asleep, hundreds (or thousands) of your customers can be playing your games and making money for you.

But wait – when your customers are playing from home does this mean you are losing out somehow?  To the contrary–business owners LOVE this concept.  They know that their customers can ONLY receive promotional entries in their store and can ONLY redeem winnings in their store.  Furthermore; we have found that when people go home to play and have to return to the store to redeem (“cash out”), the HOLD for the business owner increases significantly.  Generally speaking, when a customer is given 1 “free credit” for purchasing $1 worth of product, less than 10 cents of that is actually redeemed when that customer goes home to play–the business owner keeps 90 cents.   Compare this to about 50 cents redeemed when that customer stays in the store to reveal his entries.  WOW!

Isn’t there something wrong with revealing sweepstakes entries from home?  Absolutely not!  When you open a bottle of Coca-Cola you may find a code on the bottom of the cap.  To play the Coca-Cola sweepstakes and see if you have won anything, you plug this number into their online website AT HOME on your own computer.  You’ll find this kind of sweepstakes in everything from cereal boxes to cans of soup.  It is extremely common and used every day within the US.

The “Play at Home” feature is not something that has to be enabled in case of an unexpected emergency situation.  It is ALREADY being used by SweepsCoach sweepstakes sponsors everywhere.  But if things get tricky and your business needs to keep things on “the down low” for a few weeks or a few months, a client-server model (every sweepstakes product in the US besides SweepsCoach) must tell sweepstakes sponsors “I guess you better close shop.”  SweepsCoach operators can keep their doors open and send customers home to play–instantly.

It is this kind of flexibility that makes the SweepsCoach system and its unique feature set stand head and shoulders above every other sweepstakes product that we have seen (and we’ve tested dozens of them!)

In order to maximize profitability in your sweepstakes business, or if trouble comes, you need OPTIONS. You need FLEXIBILITY and you need SPEED.  The web-based SweepsCoach sweepstakes give you what you need.  Allowing your customers to play from home is just one of the unique differentiating features that makes SweepsCoach the best possible sweepstakes platform in the US.

Web-Based Sweeps

Friday, January 7th, 2011

Every sweepstakes product requires three components.

The Client System. This is the “game terminal”. It is where the customers play games. Businesses can have from one to several hundred client terminals.

The Game Server. This special computer is “the brain” of the operation. It determines the results of all the sweepstakes and “talks to” each of the client systems to display results (who wins and who loses). The server also maintains the database that contains the finite prize pool information.

The Point of Sale (POS). This special computer allows business owners and employees to interact with the server. The POS is used to create customer accounts, to add “entries” to customer accounts, to determine which customers have won prizes, and to do reporting (such as “how much money did we make yesterday?”)

There are currently two models for deploying these three components in a promotional sweepstakes environment. One is a Client-Server model, and the other is a Web-Based solution.

The Client-Server model requires that the sweepstakes software be physically installed on each Client System (game terminal). This option also requires that the Game Server and the POS be physically located onsite, within the same facility as all the Client Systems. In simple terms, this means that a business with a sweepstakes promotion that is Client-Server based needs an onsite server, an onsite POS (these might be combined into a single computer), and software installed on each Client System.

The Web-Based solution pushes nearly everything to “the cloud” (the Internet). It still requires a Game Server, but that server isn’t physically located in your business, but somewhere offsite. This is how eBay, Google, and Amazon run their businesses. Their servers are tucked away in high-tech, air-conditioned, super secure locations (called colocation center) and are being carefully monitored by a team of technicians. Generally there are a handful of different colocation facilities, all with extremely fast Internet connections and back-up power generators. Since these locations are geographically spread out, even if one of the facilities catches on fire or gets hit by an earthquake or any other disaster, the other colocation facilities will immediately step in and share the extra load. This guarantees a very reliable system that almost never “goes down” or has service outages or interruptions. With this model, Client Systems access the Internet, but the actual game application doesn’t need to be installed on each system. The Game Server is offsite, and the POS simply accesses information via the Internet.

Both the Web-Based sweepstakes solution and the older Client-Server model create a unique, finite pool for each location (or store). It would not make sense to have numerous locations playing from the same prize pool because some locations might pay out high while others are paying out low. No worries–whether the solution is Web-Based or the older Client-Server model, both create a unique prize pool for each store.

Now that I’ve explained the components of a sweepstakes system and the different models used to deploy the sweepstakes product, let’s talk about what this means to someone running a business with sweepstakes promotions. In other words–this is all great, but why should you care?

Nearly every sweepstakes product on the market uses a Client-Server model. However, the Web-Based model has several huge advantages over the Client-Server model.

Advantages of a Web-Based sweepstakes solution:

A Web-Based solution means your customers have a choice–they can play in your store or they can play at home. The implications of this concept are staggering. It allows business owners to send customers home to play if the store is too full (no open computers left). It allows customers to play at their own convenience, whether or not your store is open for business. Thus, even while your store is closed and you are asleep, hundreds (or thousands) of your customers can be playing your games and making money for you. Revealing sweepstakes entries at home is perfectly legal, this is how Coca-Cola does it. It allows business owners to tap into an enormous money-making ability that would be IMPOSSIBLE–if not for the advanced Web-Based functionality.

The Client-Server model requires an onsite server. Having an onsite server means you have to purchase an expensive server to put in your business. Generally you need to pay from $3,000 to as much as $10,000 to buy that server. A Web-Based model has that server offsite. You don’t have to buy it. This is a huge up-front savings.

Now that you have purchased an extremely expensive, highly technical Game Server that is, in essence, “the brain” of your outfit–how does it get installed? You have to pay someone to come out and install it. Don’t think that you or another technical friend of yours can install the system. It will require someone with a very specific knowledge of the sweepstakes software and how that software works with the server, the POS, and the Client Systems. This process usually takes at least a few days and can be extremely painful. Some sweepstakes companies may say “We do the installation for free!” Do not be deceived, there is no such thing as a free lunch (you’ll just get a smaller dinner!) I can assure you that the cost will be buried in something else you pay for. With a Web-Based system the installation is remarkably simple. The systems are “Plug-and-Play”. Pull the systems out of the boxes and they immediately work. The technical genius of a Web-Based solution removes the nightmare of a complex (and expensive) onsite system installation.

At this point, with a Client-Server model, you have purchased a Game Server and gone through the headache of installation. Congratulations! You now have an extremely expensive, highly technical piece of equipment sitting in your store that runs your entire operation. It’s right there onsite, where people can accidentally spill their coffee on it, a power surge can destroy it, or a disgruntled employee can exact his revenge upon it. Let me ask you this question–where would you rather have that server, sitting in your store or offsite in an ultra-safe, backed-up, air-conditioned, humidity-controlled, redundant power generator-fed colocation facility?

Let’s take this another step–what happens if your Game Server has a technical problem? With a Client-Server model and the expensive server onsite you can expect to see a significant technical server-related problem at least once every six months. We know because we’ve opened hundreds of sweepstakes Internet cafes and we’ve been there and done that. If the server has a technical problem with a Client-Server sweepstakes model you’ll be on the phone with tech support trying to get it fixed. Most companies don’t have stellar tech support and even those that do are tough to get ahold of on a weekend (which is, of course, when your store will be busiest and when you’re most likely to have a problem). Odds are they’ll have to send someone out to fix it. This process generally takes at least 2-3 days, during which time your business is closed. OUCH. Compare to a Web-Based solution. The servers aren’t in your store, but are being carefully monitored by a team of highly technical, professional “server babysitters”. The only web-based sweepstakes product we have seen, PromoGames, had an average 99.9% uptime (down for 1 hour per year) for the past 3 years. You simply don’t have server-based technical problems with a Web-Based sweepstakes product.

Computers go down–it’s a fact of life, and the older Client-Server model has no solution other than “hopefully we can get that fixed some day soon!” We’ve had OUR CLIENTS who have used a Client-Server solution be offline and CLOSED for over a week while waiting for their onsite server to get repaired. OUCH! The last thing you want is to not be able to sell your product when you have customers lined up wanting to buy from you. One more point for the more advanced Web-Based sweepstakes solution!

A new game releases – or a new patch or update comes out for your Client Systems or your Game Server. With a Client-Server model how do you think you get that update or that new game? In many cases a technician has to actually come out to your location to install it on each computer. Or, best case, you have to call the sweepstakes company and try to talk them into spending the time to manually update each of your computers. This process usually takes weeks. On the other hand, with a Web-Based solution your systems and servers are automatically updated as soon as the update is made. You don’t have to do anything, “it just works”.

Another key benefit to a web-based sweepstakes platform is that it is a necessary technology to enable a sweepstakes “Totem“. A Sweepstakes Totem is, in essence, an Internet access kiosk that doubles as a sweepstakes terminal. This stand-alone unit has a bill-acceptor and allows patrons to reveal entries. The Totem has no need for a server or a point-of-sale system. Generally, 1 or 2 Totems are placed in businesses such as bars or convenience stores. These units have almost no overhead and have been proven to bring in at least FOUR TIMES as much revenue as stations in a standard sweepstakes room. The Totem’s functionality is enabled by the web-based sweepstakes platform and would not be economically feasible without it. No overhead, 4x the income–Web-Based.

Now let’s take a moment to address a myth about Web-Based sweepstakes promotions. Some sales reps that work for companies selling Client-Server sweepstakes products claim that Web-Based sweepstakes are illegal or increase the chances of legal problems. Hm… Tell that to Coca-Cola (open the cap, read the number on the bottom, and plug it in online to see if you’ve won the sweepstakes!), or to Ford, or to any number of huge companies that offer sweepstakes online. Here’s a specific quote from an opinion letter written by one of the most well-known sweepstakes attorneys in the nation, “…a lawful electronically-delivered instant-win free promotional game is equally lawful whether the server which contains the pool of electronic game pieces is located at the venue where the promotional game is conducted, or anywhere else in the world.” Top sweepstakes attorneys agree–there are no legal problems with having a Web-Based sweepstakes solution.

Let’s move on from the discussion about the Game Server and talk about the Client Systems. In order to run a Client-Server sweepstakes the application needs to be installed on each and every client PC. It’s running locally and it consumes a lot of resources. This means the system requirements, and therefore the system cost, will be more expensive with a Client-Server model than with a Web-Based solution. With a Client-Server environment the application can crash at the client level, causing errors or locking up. With a Web-Based solution the application will never crash at the client level because it’s merely displaying a web page. The Point-of-Sale system is also web-based, which means you can access the full functionality of the POS system from any web browser (including your web-enabled cell phone).

Finally, your data is completely safe with a Web-Based solution because the key servers are 100% remote. If a meteorite hit your business in the middle of the night (heaven forbid) and you showed up to find the entire store in a pile of rubble, you could open up the next day with new hardware right across the street without missing a beat. All of your customer and financial data is 100% safe.

In summary, a Web-Based sweepstakes solution is much easier and less expensive to install, is significantly less likely to have technical problems, and it has automatic patch and new software (or new game) deployment. It allows your customers to play at home so you can be earning income even when they’re not in your store. Oh, and it costs a lot less to purchase.

All things equal, I can’t think of a single reason why anyone would spend more money for a lower-technology solution. It is our professional opinion that a Web-Based sweepstakes product is the only way to go.

Payout Panic

Tuesday, November 23rd, 2010

A very common question that people new to this industry ask us is “can I change the payout?” (or the prize percentage). The answer is a definitive NO. Allow me to explain.

It is a common misconception that there is a “setting” or a “switch behind the counter” that can be moved up and down to determine how much people win. Back in the days of traveling carnivals and snake-oil salesmen there was frequently a “switch behind the counter” that allowed the operator to cheat his customers.

That was then, this is now. It is highly illegal to alter the payout in any way during the game. The game usually lasts about a year–depending on how many entries are in the game (or the pool size).

Furthermore, the sweepstakes software companies employ mathematicians (actuaries and statisticians) to develop the payout tables. These employees are usually people who have gone to school for years before several more years of professional experience all to do one thing–determine the best payout tables. They study trends to determine how much to pay out and when to pay it out to provide the most FUN for customers. This isn’t just about saying “customer should win $10″, but about saying “should the customer win one $10 bill, or two $5 bills, or ten $1 bills?” Sound tough? That’s because it is tough! Believe it or not, it is our professional opinion that “the math” of a sweepstakes game is every bit as critical to its success as having interesting games with good graphics.

Payout dynamics are extremely complex. We’ve seen several sweepstakes companies go out of business while trying to fine tune their payout tables.

So to answer the question “Can I change the payout?” I would respond: in the short run it would be highly illegal, and in the long run you don’t want to! Let the professionals do their job.

Now I’d like to discuss what I call Payout Panic. This is what happens to nearly all new sweepstakes business owners in their first few days of opening their store. It’s almost inevitable. We’ll get an urgent phone call during which the new business owner emphatically insists that the games are either paying out too much, or that they are paying out too little. Which is more common? It’s about 50/50. Go figure.

Although sweepstakes use a finite pool (or a closed system), there is still LOTS of fluctuation. Most good sweepstakes companies will pay out somewhere in the low 90 percent range. But it’s critical to understand that some days will be higher than that and some days will be lower than that. This is NORMAL and is all part of running a sweepstakes promotion. When a business owner calls us after being open for 2 days and says OUR STORE IS PAYING OUT TOO MUCH! We’re going to BANKRUPT! we sometimes want to put him directly on the phone with another new business owner, who called 5 minutes ago to say OUR STORE ISN’T PAYING OUT ENOUGH! after being open for two days. There are HIGHS and there are LOWS and they ALWAYS, ALWAYS balance out. This is because it’s a finite pool. If you pay out at 80% today (too low!) you’ll probably pay out at 100% or more tomorrow (too high!) – but in the end it all evens out. It has to–it’s a mathematic fact.

Generally during the first few days of just about every new store we spend a great deal of time on the phone with business owners explaining this point over and over again. People new to sweepstakes promotions almost always hyper-analyze payouts during the first few weeks and panic at every peak or valley. Finally after a few weeks of watching ups and downs, they begin to see the average and can sleep at night with the understanding that, much to their relief, the sky is NOT really falling.

Getting Started: A-Z

Monday, September 13th, 2010

This is the step-by-step overview of how to get started in the Internet cafe sweepstakes industry. It’s long but it covers it all. Rome wasn’t built in a day, and an Internet cafe can’t be opened in “3 easy steps”. There’s just a lot to cover. If you’re seriously considering jumping into this industry, keep reading.

I want to get started. What do I do first? What are the next steps? What does the process look like and how much is it going to cost me?

First of all let’s be clear–there are a number of companies in this industry who will be fighting over your business. A few of those companies offer strong, legitimate products and a handful are “mediocre”. The majority of the sweepstakes software products on the market are simply terrible. Unfortunately, some of the junky products are represented by smooth-talking salesmen eager to separate you from your wallet. Be sure to use common sense as you do your homework and avoid sweepstakes scams.

It’s not rocket science to put together a software application that looks like a slot machine and attach a “sweepstakes” label to the front of it. However, creating a legal, well-balanced, beautiful sweepstakes promotional platform that makes money doesn’t happen overnight. Once this is done you must get the sweepstakes software certified by an authorized third party or many law enforcement agencies will not recognize it as a legitimate sweepstakes. For this reason you’ll want to avoid most of the sweepstakes you’ll find advertised on Google.

Above all, as you’re entering this new industry be sure to use common sense! Here’s a great article that walks through a quick checklist of what makes a sweepstakes company good and what makes it… “fishy”. SHOPPING SWEEPSTAKES–using common sense!

The first thing anyone considering getting into the sweepstakes business should do is do your homework. Do you know what this business is? Have you visited a sweepstakes Internet cafe? Start by read through our site (especially the FAQ section, the Services section, and the entire Sweeptalk section). Step 1: Do some research!

Next, visit a sweepstakes Internet cafe to play the games. Sometimes people call us wanting us to explain the business. The first question we ask is have you ever seen one? Trying to understand this business without ever seeing it in action is extremely difficult. You should definitely visit one–especially if you’re considering investing a lot of of time in the sweepstakes business. Explaining the concept to someone who has never seen it is like trying to explain what chocolate ice cream tastes like to someone who has never tasted ice cream. Step 2: go get a bowl and dig in!

Now that you have an idea of what the business is all about, two fundamental questions are How much money can I make in this business? and how much does it cost to get started? Obviously the answers vary wildly, but here are a few quick, specific answers.

Revenue from a sweepstakes Internet cafe that is: a) using a good sweepstakes software, b) in a good location, and c) run properly will bring in at least $1,000 per terminal (computer) per month. We have clients making 10x this much, but this is a good benchmark. NOTE: Don’t assume that all sweepstakes games will do this well–many of them are absolutely terrible; nobody will play them and could lose the entire investment. The Internet cafe sweepstakes industry is not for the squeamish. Be smart, be careful, and try to find someone you can trust. That’s why we’re here.

Startup costs also vary tremendously depending mainly upon the size of your business (how many systems) and the sweepstakes promotional product you select (which games). Our favorite products on the market currently range from about $400 to $700 per station. So if you’re opening a sweepstakes Internet cafe with 20 stations your total cost for computers is about $8k. Of course, there should be NO UPFRONT COST for the sweepstakes software. Some sweepstakes companies may try to charge you something for the sweepstakes software upfront – but we are highly skeptical of any company that does that. They will make their money once your business is running. Why should they try to charge you for it before that point? Sweepstakes software companies should make their money when you make your money and not a moment before that.

Other than the technical solution, hardware and software, the only other significant expenses are leasing or buying the location and getting it ready. “Getting the place” may require first and last month’s rent–count on spending at least a few thousand dollars on this. Preparing the commercial property for business can include: painting, carpeting, lighting, decor, electrical work, networking, building counters or buying tables, getting chairs, getting a front desk, and sometimes even some construction work (if you need to add a bathroom, for example). For a typical location of about 2,000 sq ft, total site preparation for 30 stations could be about $5-$10k. You can bring this price down by doing some of the work yourself instead of hiring it out to local contractors.

Thus, opening a standard Internet cafe sweepstakes business with 30 player stations (including renting a place, paying for the buildout and site preparation, and purchasing the sweepstakes systems) would probably cost between $15k – $25k. The biggest variable here is the cost of getting the location and building it out. If you already own the location and it requires little or no buildout costs this cost could be as low as about $12k – $15k.

For a quick look at some of the projects we have completed, check out our image gallery.

Now that you have done research to understand the Internet cafe sweepstakes business, you have visited one, and you have an idea of the potential REVENUE associated with the business and the COSTS involved, you can make an educated decision about whether or not you want to launch the business. If your decision is YES, keep reading.

Next steps: You’re ready to get started. Now what?

Ask permission, not forgiveness. This is contrary to the popular phrase–but you can never be too safe in this industry. We don’t care if you’re absolutely sure it will be okay, or if there are already three of them in your town so “one more won’t hurt”. Always, always ask. Go to the city or the county licensing office. Ask to get a business license and tell them you want to open an Internet cafe with sweepstakes promotions. If they ask what it is, tell them. Our clients sell all kinds of products, but the most common is Internet time and running promotional sweepstakes to increase product sales. Make sure you have an OKAY from the local authorities before moving forward with anything.

You may even consider scheduling a quick meeting with the local law enforcement (Sheriff or Police) to give them a “heads up”. This is a delicate matter. You’re not asking permission of the Sheriff because it’s not up to him to interpret the laws. It’s up to him to enforce the laws. So once you already have approval of the city/county for your business, the meeting with law enforcement would be more of an “FYI”. Essentially you’d be saying “We have approval, we’re excited to be opening our new business in your community. Thanks for protecting us. We’d love to have some of your officers over to give them a tour and maybe have an activity at a discount, etc.” You get the point, this is a public relations meeting, not a “can we get approval” meeting.

A word to the wise–if the local authorities or law enforcement tell you they’re not okay with the business model it’s much easier to pack up and find another city or county than to try to prove to them why it should be okay (or worse, opening without permission and picking a fight). Moving your proposed spot could take a few days. Going through the process of proving that it’s okay once the authorities have told you they don’t like it could easily take 6 months – a year and cost a fortune.

Find a location. Look for a place near your customers. Lower to middle income spots are great. Strip malls are great. The kinds of businesses you may want to be near include Wal-Mart, check cashing businesses, pawn shops, maybe slightly seedy but still safe. The elderly frequently love Internet cafes as well because the concept is very similar to BINGO. They’ll come not to “win big” but to spend $10 or $20 to be entertained for a few hours. High traffic areas are good. High visibility and accessibility is good.

How much space will you need? A good rule of thumb is to get about 50 square feet per computer. Thus, 1,200-2,000 sq ft would be great for a 30-system business with room to grow.

NOTE: Some of our distributors or clients employ a slightly different model. Rather than opening one large store with 20+ sweepstakes machines, they place a few of them (usually 2-6) in a business that is already open. This setup can be placed in convenience stores, bars, laundry mats, or other high-traffic areas and can be a very lucrative model. For more information, watch the video on the front page of our website that describes “sweepstakes kiosks” or “Totems”, and read the articles on our site about Totems. If you’re interested in doing something like this let us know and we can discuss.

Talk to the landlord (or the commercial leasing agency). Some will be perfectly fine with the idea. Some will not. Again, if they don’t like what you’re doing it’s much easier to move on than to engage in an argument and try to prove to them why it’s okay. Trust us on this.

While you’re working on finding a location, figure out which games (sweepstakes system) you’ll be using. This is perhaps the most critical decision of all. At this phase it would be very helpful to have input from a trusted industry expert. Search the Internet, compare sweepstakes companies, call people, and learn everything you can about the industry to make an intelligent decision. Be sure to find a company that uses legally certified sweepstakes and one that answers its phones.

NOTE: Someone who works in a sweepstakes store will likely be an expert on one product but have no experience with any other kind of sweepstakes software. Going back to our ice cream example; this would be like asking someone who has only eaten chocolate ice cream which flavor of ice cream is the best. “I LOVE CHOCOLATE!” Take it for what it’s worth.

Speaking with salesmen for specific products can be informational and can’t hurt. Of course, they’re all going to tell you why their product is the best. A real strength of SweepsCoach is that we can discuss strengths and weaknesses of many of the different products because we have actually used them in Internet cafes. We’ve seen them all in action, we’ve helped our clients set up, install (and uninstall) dozens of different sweepstakes products and we’re happy to give you the lowdown. For more information on our background, check out the Services, the About section of our site.

There are many, many kinds of sweepstakes products. We are familiar with just about all of them and have worked with most of them first hand. We know which companies are making money and which are not. This is because we get phone calls all day long from people who are using the different games. Many are switching from one sweepstakes software to another because those they are using aren’t very good and they’re not making money. You don’t want those games. We have a very short list of games that are working well for people. Which games are making the most money? Give us a call and we’ll give you our professional opinion of the top 2-3 options in your area–which are the best and why.

Sometimes the best sweepstakes solution may not be as obvious as you think. Keep in mind that no sweepstakes software company will tell you about their weaknesses. Are their games good? Is the math model they use in their games good? Is their technical support good? Will they protect the area and not let someone else open with the same software right across the street from you? Will they add on bonus, surprise expenses once you’re already open (and threaten to turn off your games if you don’t pay?) There’s a lot to think about!

Ironically, some of the busiest games are popular because they pay out TOO MUCH. This means that the customers love the games because they keep winning but the business owners are paying out at slightly greater than 100%. The busier the sweepstakes store is, the more money the business owners lose. We have received a number of calls from people using sweepstakes software with this problem. Who would have guessed? Using this sleazy tactic, some sweepstakes software companies makes a fortune on licensing fees. In this case the sweepstakes manufacture is raking it in–at the expense of the business owner who is slowly losing his shirt.

There are dozens of sweepstakes gaming companies but only a small handful that are are really working for business owners. Contact us and we’ll give you our honest opinion on who’s who out there. Then you can make an informed decision about which sweepstakes product makes the most sense for you.

Now that you understand the business, you’ve asked permission of the local authorities, found a perfect location and selected a promotional sweepstakes solution, what’s next?

Buildout and Marketing. When you get to this point we’ll be happy to hold your hand through the process. Carpeting, painting, lighting, decor, counters, tables, or cabinets for the sweepstakes systems, chairs, electrical work, networking, Internet connection… This stuff is all in a day’s work for us. You’ll also start spreading the word that your business is coming so that when you open the doors your customers will be waiting for you. Don’t assume that “if you build it, they will come”.

While you’re busy with these projects we’ll be working on two things. First we’ll be coaching you through the buildout and marketing, and second we’ll be getting the sweepstakes technology solution put together for you. It usually takes the same amount of time for our technical group to get the systems assembled and ready to go as it does for you to get the onsite preparation completed. We’ll coordinate our efforts so that by the time you’re cleaning up the paint and sawdust, your sweepstakes systems will be showing up and you’ll be ready for installation and training. This process should take a few weeks.

You’re open! Finally the business is ready to go, the place is all set up and smells of fresh paint, the new sweepstakes systems are installed and your employees are trained. You’re exhausted but it’s all worth it because here come the customers!