Winnings in a Casino: How to Calculate the Prize Pool18 february 2020
1.1. Reserve Fund
1.2. Current Prize Pool
Nothing affects the brand’s reputation as positively as timely payouts of the money that was earned by gamblers. However, sometimes events beyond the control may happen when the size of a prize is bigger than the size of funds that the operator has.
A well-thought-out financial strategy and accurate calculations made by the business owners will help them to avoid a lot of problems in the future.
The casino's basic prize pool is the total sum of money on the company’s accounts, which is going to be spent on the payout of the won money. All funds are accumulated in separate banking accounts of the enterprise.
Depending on the method of organization, there are the following types of deposits:
Its creation is one of the compulsory conditions for the issuance of a permit for the gambling activity in many tax jurisdictions. For example, Ukrainian law adheres to this principle. The minimum bank guarantee for land-based and online casinos is 34 thousand hryvnias.
Many European countries, such as Estonia, calculate the size of their reserve funds in percentage depending on the amount of share capital. If at the time of obtaining the license, the applicant has not enough funds, then the reserve fund must be formed in future with the net profit. Companies should annually send 1/7 of the income until the required amount of money is collected.
They use funds to cover the unforeseen expenses during the work of a gambling project. Big winnings in casinos are also paid from the fund if there is not enough money on the current account of the company.
This is the sum of bets of all gamblers in one casino (or in a network of gambling establishments) in the selected period of time. The size of the fund is constantly changing. It depends on the winnings in online casinos and the overall activity of clients.
If the creation of the reserve capital is regulated by law, then, current savings will always be only the operator’s task. Their calculation is complex and requires a certain set of knowledge and skills.
Planning of the amount of the fund is an important step in the launch and subsequent operation of a virtual platform. If everything is done correctly, operators will never be in a situation where gamblers win more money than the casino has at the moment.
The calculation method looks like this:
- Determination of the probability of prize money for each type of entertainment that can be played on the resource. For slots, for example, the maximum coefficient is used — 1 to 5000. For roulette and dice, the reduced rates are usually used: 1 to 35 and 1 to 30, respectively.
- Selection of the maximum and minimum limit for one bet. Beginners should orient towards the average data in already promoted casinos. Popular platforms, in turn, can implement the original strategy with limits.
- Determination of the maximum winnings in the casino for each available game. For example, with a minimum bet on the slot machine in the amount of 3 dollars, the maximum prize will be 15,000 dollars.
- Calculation of the optimal size of the prize fund. To do this, it is necessary to multiply the average number of gamers at the peak torque by the big win for each type of casino game.
As for the revenue side of the fund, it is formed only by the operating income that comes from players.
Experts recommend operators to distribute each bet made by a visitor according to the following principle:
- 30-35% — expenses of the enterprise. These are mostly operating costs — salaries of the staff, maintenance of the software and website, marketing, services of payment systems, and taxes;
- 10-15% — a casino margin;
- 5-10% — payments to software vendors if operators rent the game content and monthly deductions are stipulated by the contract;
- 10-15% — expenses for the support of loyalty programs (bonuses, special offers, and discounts);
- 30-45% — creation of the prize fund. All online casino wins are paid out from these savings.
The already promoted platforms often change the stated correlation depending on their needs and additional sources of income. Such casinos make good money on the advertising and because of the additional funds, good bonuses are paid to the employees or the prize pool is increased.
In addition to planning the size of the prize fund, you can use the following tools:
- Limits on the payout amount. This type of restriction is used not only by beginners in the industry but also by popular brands. In the end, operators benefit from it since the law of the length of the dispersion still turns out to be on the side of online casinos.
- Cooperation according to the White Label scheme. One of the items of an agreement is the fair distribution of expenses on the payouts to gamblers. The parent company is responsible for the big wins in the casino, and the subsidiary pays the current prizes for the combinations.
These are progressive jackpots, in which two or more casinos participate, and the drawing itself is organized by a well-known software vendor. Microgaming, NetEnt, Evolution Gaming, and other well-known providers have such offers.
In this case, the payment of winnings in a casino is the prerogative of the brand that organizes the jackpot draw. To become a participant in the action, you must sign an agreement and rent the content from a specific developer. Then, the provider opens a special account for the operator, on which the necessary funds are accumulated.
Tournaments, as one of the effective ways to retain customers, can be held every week, once a month, quarterly or be confined to a specific event.
The formation of the fund has its own specifics:
- Tournaments with a fixed amount of the prize money — Freeroll — allow you to predict the size of payouts in a gambling establishment. Only those players who get to the top 10 or 3 of the rating can receive money. An operator forms the amount of the final winnings at his own expense, and participation in the competition is free for the visitors to the resource.
- Tournaments with a saving fund — Buy-in — provide for the formation of the prize fund of the event from the entry fees of its participants. Payouts of winnings in the casino are carried out only with funds collected by gamblers, which is extremely beneficial for operators.
One of the main functions of CRM systems is the creation of various analytical reports. The received information is useful for planning the casino budget and its important component — the prize pool.
The CRM system will calculate the number of real visitors, offer optimal limits for bets and withdrawals, plan the amount of profit for the future, and help you to identify real financial risks in the operation of the platform.
A well-thought-out back-office will also become a reliable assistant for the business owner. As a rule, such an option is already built into the purchased software, so some complex settings are not required.
Online casino wins are a compulsory component of the expenditure budget of the enterprise. In the long run, the company will always benefit but, at a certain point, gamblers always manage to hit the big jackpot.
The casino should pay the earned money on time. For this, it is important to properly plan the prize fund of the enterprise, the calculation of which is a labor-intensive process.
Casino Market will help you to create a financial strategy and calculate micro and macro business indicators.
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