Casino Financial Planning: Detailed Instructions from Rosloto Experts

Correctly calculating a gambling platform’s income requires considering many factors. Understanding the basic principles of business planning helps operators control the enterprise’s financial condition.

Rosloto’s consultants have prepared an overview of proven formulas so that you can organise and run your online casino properly.

RTP as a Key Gaming Indicator

When making revenue calculations, it is necessary to mind the Return to Player metric, which determines the percentage of bets that users win back.

There are 2 types of RTP:

1. Theoretical. The method of entertainment product development is taken into account here. For instance, choosing on the field between 2 options (red and black), gamblers can expect a 50% probability of a specific colour falling out if attempts are not limited.
2. Actual. The indicator shows particular results for a defined period. In this case, endlessly selecting a variant does not work. Nevertheless, after 1,000 picks, gamers will be convinced that their chances of succeeding are approximately 50%.

Online casino software developers determine the percentage of return in each product. In most programs, it is from 90% to 99.5%. Let us explore this indicator’s formula:

RTP = Total wins / All bets x 100%

Business earnings are the difference between the wagers placed and the final prize sum. The parameter is called hold, and this is how it is calculated:

Hold = All bets – Total wins

Revenue of a gambling platform, presented as a percentage, is called a margin, or house edge. Its formula is as follows:

Margin = Hold / All bets x 100%

There is a simple way to check that an online casino follows the rules of fair play: the RTP rate and the house edge must be added. The result should be 100% or 1. Calculations:

RTP + Margin = 1 (100%)

Return to Player is one of the primary metrics of financial planning for an RMG project, but it is not the only one. Other parameters help make the math more accurate for conducting transparent activities and monitoring efficiency.

Gross Gaming Revenue (GGR)

The indicator shows how much money the operator received before paying taxes and deducting some of the funds to providers for using their content.

The simplest method of calculation is to subtract visitors’ payouts from the amount of wagers:

GGR = All bets – Total wins

It is essential to speak the same language with suppliers and other partners since each can apply identical terms to different concepts.

Here are the 3 main types of metrics:

1. Theoretical GGR. To determine it, you need to subtract users’ prizes from their wagers. It is the simplest calculation method, which is considered generally accepted.
2. Regulator’s GGR. This factor is integrated in individual jurisdictions and is used to define and standardise reports and taxation.
3. Provider’s GGR. The indicator was created by system and content suppliers. The numbers in the category regulate business relations with online casino owners.

The calculation formulas in different partnerships may differ slightly. Operators must clearly understand the distinctions to maintain records and control finances.

As an example, we will describe 2 options for GGR:

Version with Bonuses

Let us assume that the regulator knows about the incentives offered to gamblers. Usually, the jurisdiction allows these additional rewards to be deducted from the revenue before taxes are paid. In this case, the calculation formula is as follows:

GGR = Hold – Bonuses

The gross gaming income will be equal to the sum obtained after subtracting winnings and incentives from the total amount of bets.

Accounting Variation

Modern administrative software integrated into most entertainment platforms automatically generates reports, which allows for various calculation methods. Brands operating in unregulated markets usually lack the appropriate tools because program providers do not want to work with grey studios.

In this case, entrepreneurs use the following math:

GGR = Initial balance + Deposits – Withdrawals – Final balance

Managers take the amount in gamblers’ accounts as of a particular date, add replenishments for a reporting period, and subtract the funds cashed out and the balance at the end of the specified time.

Net Gaming Revenue (NGR)

The metric determines how much money the operator has after deducting all expenses and is essential for internal calculations. Depending on the characteristics of the gambling company, there may be some differences in math.

NGR is influenced by the selected method for determining GGR:

All bets – Total wins – Amount of deductions

In the vast majority of cases, expenses are directly related to incentives and jackpot payments. The final sums vary since bonuses significantly impact gamblers’ activity, including depositing and wagering.

Application of Formulas: Examples

For clarity, we will provide several calculations that will help entrepreneurs better navigate the financial aspects of online casino operations.

Basic Math

Let us assume that all bets in a particular slot for October were $200,000, and gamblers’ winnings reached $180,000. The following formula is used to discover the hold per month:

Hold = $200,000 – $180,000 = $20,000

These figures are necessary to accurately determine the Return to Player:

RTP = $180,000 / $200,000 x 100% = 90%

Imagine that the total earnings of an online casino for October were $750,000, and wagers reached $12,500,000. Let us find out the margin:

Margin = $750,000 / $12,500,000 x 100% = 6%

GGR Calculations

We offer an example of defining gross gaming revenue for a month with the following figures for the reporting period:

• hold — $600,000;
• all bets — $16,000,000;
• converted bonuses — $47,000.

Let us also assume that the jurisdiction requires the business to pay a 15% tax on gross income.

The algorithm:

GGR = $600,000 – $47,000 = $553,000

Margin = $600,000 / $16,000,000 x 100% = 3.75%

Legal deductions = $553,000 x 15% = $89,950

Revenue after taxes = $553,000 – $89,950 = $470,050

NGR Calculations

We will figure out the net profit of an online casino with the following initial data:

• hold — $5,200,000;
• all bets — $9,000,000;
• converted bonuses — $750,000;
• jurisdiction’s charge rate — 10%;
• platform service commission — 5%;
• average content payments — 17% without bonus accrual;
• transaction fee — 4% of all replenishments of gaming accounts.

With this information, you can calculate NGR using this formula:

GGR – Taxes – Platform service commission – Content payments – Transaction fee

GGR = $5,200,000 – $750,000 = $4,450,000

Taxes = $4,450,000 x 10% = $445,000

Platform service commission = $5,200,000 x 5% = $260,000

Content payments = $5,200,000 x 17% = $884,000

Transaction fee = $9,000,000 x 4% = $360,000

NGR = $4,450,000 – $445,000 – $260,000 – $884,000 – $360,000 = $2,501,000

The Main Things About Casino Financial Planning

It is necessary to be guided by several economic factors to maintain business efficiency:

• RTP. The indicator shows the percentage of all bets that gamblers win back.
• GGR. The figure displays a primary-calculated income and is vital for other formulas.
• NGR. It is the money that remains to the brand after deducting all expenses: fees, taxes, etc.

Rosloto’s consultants provide financial planning services for niche brands, conduct all math operations, and help increase the client’s company profitability. Feel free to contact us for professional assistance.

We also offer turnkey online casino development, game integration, and the connection of gambling software for administering RMG platforms.