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The operating cost of adult and gambling startups

117 points by theorchid

by b40d-48b2-979e

11 subcomments

    You may have a cool product in the field of sports betting, casinos, or
    lotteries. But almost all social networks and search engines won’t let you
    advertise without a license from the required jurisdiction.

Good. You should face social stigma for creating products that literally ruin people's lives.

by Animats

0 subcomment

I used to know a bondage model and porn producer in San Francisco. She was quite open about it, and it didn't seem to hurt her reputation. Her operation was fully compliant, with 18 U.S. Code § 2257 forms on file for all performers. And yes, law enforcement did come by to check. One day we were talking and I asked about credit card processing. I got a twenty minute rant about the problems of offshore credit card processing, ripoffs in the 7 figure range, arbitrary cancellation... That was the hardest part of the business, and the most frustrating.
She finally gave it up, moved to Texas, and now manages influencer networks.

by A_Duck

6 subcomments

What's the author trying to say here?
It's good that the law isn't the only line between good and evil. A bit of stigma is a bottom-up way for people to shape society.
If nobody invites you to dinner parties because you run a startup that combines payday-lending and day-trading, that's a good thing. It's free alpha for companies doing more worthwhile things.

by post-it

2 subcomments

> When posting job openings, you will always have to beat around the bush, without using direct language. And only then, when the candidate has already agreed to an interview or even after it, do you tell them what kind of content they will be working with every day.
> Employees join such projects for various reasons. Some realize that the pay is better than in legitimate projects. Others come because they couldn’t find a job where they wanted to, or because they are simply interested in working on something forbidden. And then a good company saving the world will come along and offer them a job, and they’ll leave. Building a stable team from people with this kind of motivation is hard.
I think OP made this whole article up. Everyone that applies for Aylo knows exactly what they're applying for. The pay is below-average because (a) there's not actually a lot of money in porn and (b) there's no shortage of dudes that want to work in it.

by gwbas1c

4 subcomments

Wow, I'm shocked at the negative attitudes in this thread. Porn and gambling are legit businesses, even if you don't like it. (And some people used to argue that part of the rise of the PC was because some people bought it as a "porn machine.")
It's important to keep these things (almost) in the open, because when they become illegal, criminals move in and people get hurt.
When I was an intern at a big-name, conservative company, one of my friends came from a porn website.

by ball_of_lint

1 subcomments

Author makes a point badly, but there is an important point here.
It's really strange that we de-facto allow the few large credit card networks (Visa, Mastercard) to effectively impose their own particular views and values on what sorts of businesses can process payments. The stigma+roadblocks against these "high-risk categories" generally doesn't come from the processors (like Stripe, Adyen), but are actually driven by the networks themselves, in response to lobbying by groups such as Collective Shout. https://nabesaka.com/visa-mastercard-deciding-content-legali...
Whatever you think about NSFW media or gambling in particular, you _should_ worry that Visa and/or Mastercard could decide tomorrow that they don't want to process payments for you and cause you to lose your livelihood.

by cleansy

0 subcomment

I worked as a tech in porn in my very early 20s. My experience was the opposite, interviewers later on remembered my CV because I was transparent about it. In 2009-2011 weren’t many places where a junior developer could work on code that served 100M ad impressions /month and 3-5M requests on the pages. Gambling and porn both hook into your dopamine systems, but mixing them together does not make sense at all. The consequences of watching pornography are two orders of magnitude milder than a gambling addiction.

by Scaled

2 subcomments

On the topic of operating costs, the annual "high risk" credit card fees just went up to nearly $2k/year. High risk in quotes because even if you have stellar charge back rates you still get hit with it (did you know the charge back rate for adult is way, way less than the chargeback rate for travel?). The card networks have something called virp/bram, which is basically designed to force adult merchants into paying these absurd fees and limiting the banks they can work with to the most predatory ones. It's a huge antitrust issue that results in higher consumer prices but unfortunately no one is litigating yet

by j4k0bfr

1 subcomments

A well written and thoughtful article! Thanks for sharing.
It's been a while since I've read article on something like online gambling without feeling like the author was trying to proselytize.
Edit:
I appreciate the human perspective shared by the article, and get the feeling that OP offers a warning of the consequences of working in stigmatized fields. Ofc online gambling (and gambling in general tbh) is a terrible thing that ruins lives.

by groundzeros2015

1 subcomments

I didn’t expect him to describe his own field as illegitimate. Somehow knowing you are doing bad things is even worse than a rationalization. Why spend your time with people who don’t believe in what they do?

by miki123211

0 subcomment

This article puts "we pinky swear its not gambling" apps, I'm thinking Robinhood here, but some crypto and prediction market apps would qualify too, in a new light.
If you don't appear to be a casino at first glance, it's a lot easier to find employees, payment processors and advertising networks willing to work with you.
Brick-and-mortar companies (notably Walmart) used the same trick to get tech talent. Having Walmart on your tech resume doesn't look great, having an e-commerce startup called jet.com looks much better, even if Walmart is that startup owner and sole customer.

by nine_k

0 subcomment

> You may have a cool product in the field of sports betting, casinos, or lotteries.
I stopped to think what a cool product in this area may look like, without being toxic. Maybe a site explaining why betting loses money in the long term, or how casinos hook gamblers up with random-looking but not entirely random responses of the one-handed bandits?

by singleshot_

0 subcomment

> You may have a cool product in the field of sports betting, casinos, or lotteries. But almost all social networks and search engines won’t let you advertise without a license from the required jurisdiction. Finding investment for such projects is far harder than for conventional niches.
That’s because you are operating in the market of degeneracy, taking profits by offloading your victims’ losses on their commercial counterparts through the bankruptcy system and the rest of us through social services.
There is a reason there were laws against this until the degeneracy operators figured out how to further corrupt our democracy.

by walrus01

0 subcomment

This article manages to completely fail to mention one of the primary reasons why credit card processors won't touch porn sites. Not because it's porn, but from a strictly financial risk analysis POV, because a significant portion of the successful charges to cards are later disputed by the cardholder. Some person signs up for a $30 per month whatever porno subscription, and then doesn't understand what they agreed to later on, or regrets it, or their spouse or partner finds the charge on their credit card statement, doesn't know what it is, and starts a dispute with the card issuer.
Compared to something else that sells a tangible good on the internet, or some ordinary software as a service thing... If you have 10,000 charges to 10,000 different people placed from an ordinary merchant, and you compare that to 10,000 charges from a porno website, there will be a vastly larger number of chargebacks and human-caused fraud disputes with the porno website. It's a continual and ongoing pain in the ass for any credit card processor that does business with such a merchant.
The major processors (stripe and its top competitors) have decided that it is not worth the hassle and are completely happy to cede this niche market to specialists. Basically for the same reason that a car loan through a subprime lending company originated by a "buy here pay here" car sales lot will have a much higher percentage interest rate, because of the risk to the lender, credit card processing for the adult entertainment market will have a much higher percentage fee charged to the merchant to run those cards.

by gavinray

0 subcomment

Do you all want to know a fun fact about adult-content startups:
Why do you think Onlyfans is the reigning platform for what it does.
Not because it's technically superior, or has the best advertising, or any other logical reason you might summon.
It's because they have a sweetheart deal with a payment processor (Stripe).
I put some time into seriously investigating what it'd take to get an adult-content platform off of the ground, here is one of the emails I received from a self-advertised "high-risk processor":
```
  > "Yes, we do have some Payment Facilitator solutions. However, none of these processors will accept Adult content."
```
Nobody will touch it with a 10 foot pole. It's absolute bullshit and is ripe for disruption.

by _doctor_love

1 subcomments

Generally speaking I am a classical liberal in that I believe "vices" like drugs, pornography, prostitution should be legal in order to be regulated and in the open. It cannot eliminate abuse but it can help mitigate it.
What I would LOVE to see in the United States in particular is a system where we tax pornography and then plow that money back into sex education in public schools. The state of sex education in the United States is so far beyond a joke it is a travesty.
That said, I also feel a lot of folks who are pro-legislation are quite dishonest about the negative side-effects of legalization. They definitely exist!

by Zopieux

2 subcomments

I cannot care less what (legal) porn content people consume in the intimacy of their room. I cannot understand being prude about this. Like all things, over-use is unhealthy, but I have yet to see studies proving the societal damage caused by porn. Before you ask: the loneliness epidemic (which intuitively translates to more porn consumption) is just a symptom of people losing a "third place" to socialize, or not having their own place. Those are rooted in the shitty economic landscape we're in, and uncontrolled urban sprawl with no public transit.
Gambling/betting though? Overwhelming societal damage with basically no upside beyond the ghouls in charge. Regulate this shit to death, tyvm.

by leetrout

1 subcomments

The title is "Stigma is a tax on every operational decision"

by casey2

0 subcomment

This is really only true for companies operating in old spaces. If you are on the ground floor of social media or roblox then there is no stigma against that fact that you are exploiting children, child labor, and profit on massively increasing the likelihood that they are exploited by predators

by antonyh

1 subcomments

And yet I can buy a Premier League soccer shirt with a casino brand sprayed across the front. I wish it would stop, advertising gambling via sports sponsorships should be banned. It literally prevents me from buying the shirt.

by littlecranky67

2 subcomments

> A regular provider charges a regular commission but will not work with you, while another will want a commission 10 times higher and will agree, but may stop working with you at any time.
I know I will get downvoted for this because it is an unpopular opinion, but this exactly the reason why we need bitcoin as a means of payments without any middlemen involved.

by camdencheek

1 subcomments

by Lerc

0 subcomment

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by abetancort

0 subcomment

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by Invictus0

0 subcomment

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