Learning Key Casino Mechanics and Revenue Calculation with Online Casino Market

Online casinoManagement
18 may 2020

In the vast world of the gaming business, smart operators must be able to calculate their revenue quickly and ensure they receive the most out of their website. Casino mechanics are a sophisticated set of formulas that are essential to understand regardless of whether you run a White Label platform or are in charge of your own website.

Good to know that the specialists from Online Casino Market are always there for you to deliver a comprehensive insight into the topic of casino revenue. Moreover, if you feel you might need some extra assistance or an individual approach to explaining the mechanics, feel free to contact our specialists that will gladly offer you a wide range of possible services.

Gaming Economy — Key Elements

Gaming economy: key elements

Before getting into the revenue calculation, it is essential to perceive a few basic terms and be able to operate them in the process.

Let us begin with the RTP — Return to Player. It is a percentage of a wager that the game will necessarily payout to the players. It includes two significant aspects:

  1. Theoretical RTP reflects the method of developing a game and its mechanics.
  2. Real RTP is defined upon the actual result during a specified period.

Even though different types of games have a different RTP, on average, it makes from 90% to 99.5% of the deposited funds. In order to calculate your RTP, you must divide the amount of won money to the amount of wagers:

RTP = Won Money / Total Wagers

Your profit is made of the difference between the wagers and the players’ payouts. This amount is called a Hold. It can also be pictured in percentage that is called a Margin:

Hold = Total Wagers - Payouts

Margin = Hold / Total Wagers

All these calculations make us understand that if we add the Return to Player percentage and the Margin, it will be equal 100%.

Revenue Calculation

Revenue calculation: the Gross Gaming Revenue

It can vary from business to business, depending on the type and the number of verticals offered. Some platforms can form their revenue differently from others. Meanwhile, all the methods are adjustable.

The local governments can form the income tax based on the profit in a different way from how you or your software providers calculate the revenue. Consequently, commissions will also vary.

In the online gambling business, the Gross Gaming Revenue is not considered a profitability measure but rather a sales marker. Operators use GGR to calculate how much your activity brings you before deducting the expenses. Basically, it can be portrayed as a result of subtracting players’ payouts from players’ wagers.

You can measure the GGR differently and have a minimum of 3 separate methods that you should know about:

  • Theoretical GGR — includes all wagers minus all winnings. It is the simplest and most straightforward form of payment.
  • Regulator GGR — a formula that is created in particular jurisdictions for the standardization of reports and taxes.
  • Supplier’s GGR — a formula that a particular platform or a software manufacturer uses to maintain commercial relationships with operators.

On top of that, it is essential to understand the distinctions of different possible GGR representations that include 2 approaches in general.

Bonus-Based

In this approach, you will account the Real Hold and subtract bonuses that were converted to real money:

GGR = Real Hold - Bonus Converted

Accounting-Based

Some platforms with no reporting systems installed tend to use this approach, based on the predefined numbers they have:

GGR = Starting Balance + Deposits - Withdrawals - Ending Balance

Net Gaming Revenue

Net Gaming Revenue

NGR is basically a KPI that is predefined for reflecting the operator’s profit after deducting the expenses. It is mostly used for internal reporting and can differ from platform to platform. There is no single formula for NGR since this KPI is used for monitoring how profitable a business is. As a result, the operational, marketing, and other expenses can or can not be deducted from the general amount while calculating NGR.

NGR calculation strongly depends on the formula that you use to figure out your GGR that we then use to subtract the expenses from:

NGR = Total Wagers - Payouts - Additional Expenses

The additional expenses usually include the jackpot contributions and bonuses converted to real money.

Average Cost

You must also be able to understand how expensive your gambling platform is. All expenses contribute to your satisfactory revenue since the percentage used to cover these costs will usually be your regular obligatory fee to the service provider.

Gambling platform

  • Setup fee
  • Monthly revenue percentage
  • Monthly minimum
  • Monthly payments for particular services

Gaming content

  • Monthly payment from GGR (8–15%)
  • Jackpot contribution
  • Premium content

Payment process

  • Percentages from depositing and withdrawing
  • Depends on the market with an average of 1–5%

Professional Casino Revenue Summary

Professional casino revenue summary

Surely, calculating your revenue is not easy to complete. You have to consider so many things that sometimes the new casino owners quit just because they can not figure out how their profit is able to increase. If it happens that you are on the verge of the same condition, we suggest you resort to specialists from Online Casino Market.

Our proficient experts will make it clear for you:

  • how the critical gambling economy aspects work;
  • the most efficient way to calculate your revenue, considering your particular case;
  • your NGR and the means to increase it;
  • how to reduce the cost of regular fees and retain efficiency.

Next time we are going to dive even deeper and try to explain how to prevent the widespread scams and not allow money-laundering activities on your platform. If you have any issues, feel free to reach our support team for any information needed.

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  • the feedback form.

Author

Karen Fill

Gambling business expert at Online Casino Market

18 may 2020