Budget Planning of Online Casino Environment: Financial Breakdown

17 march 2021
Online casino, Management
Author: James Burton
Source:

The financial aspect of online casino management embraces the understanding of the main sources of profit as well as expenses shortage. It is closely related to the legality of the gambling website and considers tax elaboration, compliance to jurisdiction requirements, and accounting.

The ability to plan an online casino budget is necessary for every operator. Beginning entrepreneurs might find it complicated to understand all nuances immediately. So, Casino Market experts offer an extensive guide on financial literacy.

Order a complete elaboration of the gambling establishment with the in-depth budget configuration according to the business aims.

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Gross Gaming Revenue

Gross Gaming Revenue of an online casino

Gross Gaming Revenue does not represent such instalments as bonuses or jackpots. It is basically a proportion of gambling outcomes that indicates the casino’s winnings against customers per a certain timeframe.

Here is an example of the GGR calculation of a typical gambling website:

  • The average sum of total deposits is $4 million annually.
  • $3.2 million is taken away by players in a form of winnings.
  • $800,000 is a casino GGR that needs further calculations before the real profit is estimated.

The first sign of the portal financial issues is a drop in GGR.

It can decrease for various reasons:

  1. Poor efficiency of casino marketing.
  2. A shift in demand for certain games.
  3. Financial instability in the operational region.
  4. Unsatisfactory incentives (bonuses, loyalty programs).
  5. Better offers on the market.

The stability of Gross Gaming Revenue is vital for a gambling establishment. So, as soon as an operator notices the drop, increasing acquisition and retention rates is the first step to managing the problem.

By utilising particular advancements like competitions, progressive jackpots, spin rewards, an operator attracts new players. Meanwhile, established gamblers are incentivised to deposit more with VIP statuses, premium content, and regular discounts.

Net Gaming Revenue

Internet casino Net Gaming Revenue (NGR)

The NGR indicator is the GGR without:

  • bonuses;
  • chargebacks;
  • commissions (to payment processors and entertainment suppliers);
  • eminences;
  • taxation obligations.

Net Gaming Revenue presents a complete image of platform efficiency. It is the most utilised indicator in business to illustrate performance levels.

The main task of the NGR is summing up important variables of a gambling website to understand the direction of the operation more comprehensively than by the GGR. These two terms are utilised frequently at the international level when matching the competitors’ performance.

Keeping in mind the example with GGR ($800,000), it is possible to continue calculations and see the estimated Net Gaming Revenue of an online casino:

Taxation value icon
Taxation value
Average percentage
16%
Sum
$128,000
Platform payments icon
Platform payments
Average percentage
4%
Sum
$32,000
Chargebacks icon
Chargebacks
Average percentage
1%
Sum
$8,000
Net Gaming Revenue
$480,000
Commissions to payment processing icon
Commissions to payment processing
Average percentage
5%
Sum
$40,000
Software contributions icon
Software contributions
Average percentage
14%
Sum
$112,000

So, this amount is an operator’s profit from his gambling establishment. Furthermore, it helps analyse the effectiveness of players’ incentives and manage them more productively.

NGR to Deposit Rates

With the help of Net Gaming Revenue, it is now possible to illustrate the level of account replenishments that have transformed into profit for an operator.

NGR to deposit rates allow an operator to see how much gamblers put on the line and what amount of wagering is received as a planned profit.

In case players replenish their accounts but do not go further to wagering, the issue might be in the selection of games. For instance, the offered assortment does not have appropriate convincing content for players to emerge. It is quite similar to the analysis of internet stores when they try to comprehend the reason for a product being put in a cart but not checked out.

Budget Planning Approaches

Casino budget planning: approaches

The understanding of key casino financial principles is only halfway to successful management. The ability to plan the budget with corresponding available data is extremely important for the efficient operation of a gambling establishment.

Experienced casino owners have elaborated two critical approaches to planning their budgets:

  1. Projecting. An operator assesses his business possibilities, sums up all available financial resources and calculates estimated expenses and potential income of his gambling establishment.
  2. Analytical. After an online gambling establishment has operational experience, the manager gathers all information and compares it with the previously projected numbers during planning.

The Main Things about Planning Budget of an Online Casino

The financial question of a gambling establishment is quite similar to any other business project. An operator has contributions from customers, makes obligatory deductions, and receives net profit. However, beginning entrepreneurs might require additional assistance in elaborating a successful gambling website budget.

Casino Market has a team of proficient financial experts to ensure new operators in the profitability of their projects.

Our specialists conduct an in-depth theoretical rundown, focusing on:

  • the Gross Gaming Revenue that is players’ deposits minus their winnings;
  • the main problems of achieving positive GGR (poor marketing efficiency, a shift in gaming demand, financial instability, unsatisfactory incentives, etc.);
  • a clear understanding of Net Gaming Revenue that considers major obligatory deductions (bonuses, chargebacks, eminences, taxes, etc.);
  • ratio NGR to deposits that illustrates how well players’ account replenishments transform into operator’s revenue;
  • projecting and analytical budget planning modes that help maximise the estimated income.

Casino Market has already aided dozens of operators to understand all subtleties of gambling website finances. If you are looking forward to starting an online gaming establishment, our team will assist you in the platform organisation up until the first profit is received.

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Contact our specialists via:

  • Skype: support.casinosupermarket
  • e-mail:manager@casino-market.com
  • the feedback form.
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James Burton The Casino Market partner, the owner of the gambling establishments’ network
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