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How much money an online casino makes?

How much money an online casino makes?Some entrepreneurs sitting on a large capital were experimenting with opening online casinos. Their business expectations were directly related to plain arithmetic: the number of money the players lose and win. Well, “the devil is in the details”. A Canadian online casino is not only a website providing game entry and money infrastructure utilization to its customers.

One self-respected gambling company incorporates platform, games, customers, financial traffic, commerce, marketing, and official partners into one agile and resilient structure. Many of the gambling entities created on the base of simple digits didn’t survive even a year.

To put an exact number on how much money an online casino makes is unachievable. With this article, we will try to point out the distinctness between 3 different groups of online casino business models and will give you our prospects on their start-up requirements, affordability, and profits.

GGR and NGR

In order to turn an online casino into a profitable business and overcome all the unexpected setbacks, you need to understand the KPI’s (Key Performance Indicators) related to the gambling matter. Collecting data/information, measuring, controlling, and adapting the details for better performance is the only way to manage, comprehend for better navigation if a change is needed, and ultimately to survive in this “sea full of fish”. 

The basic KPI’s used as casino analytical tools are:

  • Gross Gaming Revenue (GGR)

This is a universally adopted revenue indicator, which shows directly the figure of Players’ bets minus Players’ wins. 

The GGR pointer pertains to the amount held by the casinos after they met the winning payouts, but prior to paying all the business costs. Looking at how this revenue is collected there is not a steady structure of repeatedly yielding the same figure, because the GGR bluntly hinges on the players’ luck. The complication here comes from differentiating the real money bets and bonus bets. As a standard, the software manufacturers and game developers are paid a percentage of the GGR amount (royalties).

The economic institutions in some countries are reporting a record level of GGR. However, the profits of the gambling establishments are commonly deemed by society as something unconventional and even “stained” (as in its majority being collected at the expense of “sick-addicted” people, i.e. is assumed that the players suffer huge losses). Of course, these prejudicial opinions are excluding the fact that taxes paid by gambling operators and their affiliates, as a rule, are spent on social needs as schools, hospitals, sports, and public transport.

  • Net Gaming Revenue (NGR)

This is a pointer, which defines the net gains after the GGR is unloaded from all the expenses. The NGR is the leftover profit of the casino at the end of the fiscal period, which is a primary exhibit of the casino’s success. The calculation of NGR may vary from type to type (see casino types below), situation to situation (what business plan is embraced by the casino), and location to location (under which jurisdictions the casino operates). 

I.e. the total sum of all bets made by the players (consider here the complication of bonuses received, bonus bets made, and winnings payouts of bonuses) 

  • the sum of all winnings payout;
  • the sum of all taxes;
  • the sum of licenses;
  • the sum of payment systems fees;
  • the sum of royalties, partners (affiliates) commissions, salaries (employees & support teams);
  • the sum of additional marketing, insurance, and so on.

Other cash linked KPI’s are the real money deposit indicators:

  • NGR divided by deposits - indicating the net profit raised from the real money placed by the players. (obviously as a higher amount here as better for the casino)
  • Bets divided by deposits - demonstrating the real money flow. (undoubtedly as higher amount here as unfavourable for the casino, i.e. there are too many handouts granted to the players)

Some business solution firms are determining other KPI’s related to individual metrics per player, player’s lifetime value, players’ typical behaviour, and players’ migration from game to game and from site to site.

Online casinos types regarding costs and autonomy

Casino buisness planWhite label casino, which is a pre-licensed, pre-created, and ready-to-launch product. Fundamentally white label casino is like operating a franchise business. You simply purchase the platform (the parent company supplies you with the product and/or services in a package), receiving the essentials (license, hosting, platform, variety of games), financial infrastructure (e.g. payment processing system, fraud prevention, detection, etc.), and third party support (marketing strategy, customer crevice, etc.). All this you can have operational within just a few months for a reasonable price.

On the flip side, you will endure very limited rights, slim flexibility, and tiny to non-existing freedom, i.e. for the full length of your franchise contract, you will be bound and dependant on the choices of the game providers/developers.

Another type is Turnkey Casino, which is a self-owned site, which you can design by using one “off-the-rack” platform. You will have the liberty via Software development, Website design, and Casino game content to fashion the best suitable reshaped and remodelled for your own needs casino.

  • Here, Hosting services, Payment processing system, and Licensing are not included, though can be provided as additional service.
  • Here, Technical support, Marketing, and Customer support are not included, only optional.
  • This 100 % proprietorship platform is a high-cost establishment, which can take sometimes a year to launch.

The third type is Self Service Casino, which is starting from the ground up autonomously constructing your own online casino, or adjoining new elements and extensions to your existing brand. There are no fully or half readymade solutions in place. Everything is original and ideal, with unbounded functionality and gaming customization possibilities. While you should manage the new design or freshen up the existing content and have control of the development with your team of IT specialists, the game providers can support your gamification and software integration.

  • Here, Hosting services, Payment processing system, and Licensing are not included, though can be provided as additional service.
  • Here, Technical support, Marketing, and Customer support are not included, only optional.
  • This 100% own establishment, based on your solid gaming understanding and IT skills, despite the lavish capital and lengthy completion time, can become your true “brand masterpiece, differentiating your art with your self-made paint”.

So, how much money one white label casino makes? The amounts in yellow display the sum of all you have to be prepared to pay before you start your operations. Our calculation estimates at about 45000 CAD (with only two additional games).

NetentDuring one operational month, you will need to pay the percentages in green, blue, and white. The percentages in green are minuscular, compare to the rest of the amounts, cause you can decide to manage with little or without (not give any bonuses) or to perform these additional services/referrals yourself - for a smaller price (managing your own office).

The percentages in blue are also minuscular, even though licensing is implemented by the parent company, still will need to be paid some amount for testing and verification, and the taxes we implemented so low considering that your beginning establishment will not make a huge profit to be taxed highly.

The percentages in white are forming the biggest chunk of your casino budget. These are our rough speculation numbers, which sure vary per operator.

  Opening Franchise online casino

Chart conclusion:

About 30% will remain to you,i.e.will be the earnings of your casino. For zero output, you need players to lose 145 500 CAD, which is around 12 000 CAD per month. Add to this, the blocking of websites and the creation of mirrors and overhead. In total, the breakeven point will be somewhere between 15 000 - 20 000 losses in a month.

You cannot disregard the facts that:

  • Even if your monthly balance is negative, many of your expenses are permanent and keep piling; 
  • You might need to put additional money to cover the payouts if one player gets extra lucky and wins big.
  • The understanding is that the high-variance slots can issue 100 000 CAD at a rate of 25 CAD.

Where to play?

  • We highly recommend you play at the best gambling site in Canada - Fastpay Casino. You will be pleased with the excellent customer care, a wide range of games (over 5000), as well as the instant payouts (1-5 minutes).

Choose the best Canadian online casino 2020