The operating cost of adult and gambling startups

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.

    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.

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.

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.

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

> 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.

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!

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.

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."

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.

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.

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?

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

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.

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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.

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> 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.