Online Casino Finances: Profits and Expenses of Entrepreneurs

Opening a gambling platform requires significant investments. Expenses go far beyond just purchasing entertainment software. Before launching a gaming project, entrepreneurs must first understand how to calculate profits correctly.

Rosloto’s specialists have prepared a detailed guide that considers all aspects of online casinos’ financial activities. We also offer individual consultations to the vertical’s newcomers.

Main Gambling Business Expenses

Let us consider the primary areas of investment and the approximate amount of contributed funds:

Setup Costs

The final price of a ready-to-launch project depends on the manager’s chosen strategy and range of entertainment services.

To accurately calculate organisational spending, the following aspects must be considered:

1. Initial investment. This category includes purchasing the platform and its setup. The price usually varies between $30,000 and $300,000. The total sum depends on the digital solution’s features and the selected jurisdiction’s requirements.
2. Regular payments to partners. A certain percentage of income must be sent monthly to associate organisations (providers, affiliates, etc.). The figure is at least 3–5%.
3. Formation of a reserve fund. Extra money is insurance against risks for entrepreneurs. In many countries, it is a mandatory requirement, guaranteeing that gamers will receive their winnings if the main business accounts are insufficient.
4. Additional expenditures. Purchasing or renting new products, improving certain services, and performing similar tasks are necessary for a startup to flourish and bring stable revenue.

Gambling Programs

It is difficult to predict the amount of spending on casino software without proper calculations and analytics.

Let us list the main aspects that affect expenses:

1. Monthly costs. As a rule, providers do not sell their solutions, but rent them to operators for a certain percentage of the GGR from each game. This figure ranges between 8% and 15%, depending on the supplier and content type.
2. Payment for integration. Entrepreneurs are advised to use the services of professional developers who install entertainment titles on the platform. This approach helps avoid malfunctions and similar problems.
3. Deductions for jackpots. In amusement products with accumulative prizes, up to 1% of gamblers’ bets are transferred to a special account.
4. Premium solutions. Unique slots and other gaming offers imply solid investments. Exclusive options, created according to the operators’ sketches, and software with modern mechanics are among the most expensive proposals.

Fees for Transactions

Managers need to connect payment systems to their gambling platforms. Administrators are advised to use as many depositing and withdrawal channels as possible.

Among the most common variants are:

• e-wallets;
• bank cards;
• mobile services;
• cryptocurrency gateways, etc.

Monthly commissions depend on profit, as well as on the number and volume of financial activities carried out. Typically, the figure is from 1 to 5%. Nevertheless, it can be much higher if certain risks accompany the execution of transactions (in most cases, this is relevant for unregulated markets).

Tax Payments

Legal work requires mandatory enterprise registration and fees to the country’s budget. These expenses are calculated from income. They do not belong to either operators or software providers. Therefore, managers usually finance the use of gambling programs from funds remaining after paying taxes. The deductions to the treasury directly depend on the region in which the company is registered.

This category also includes project licensing. Each jurisdiction sets unique rates for reviewing applications, obtaining permits, and renewing them. The cost is affected by the commission’s reputation. For instance, the cheapest certificates allow working only in certain states, while influential regulators issue much more expensive documents covering many regions.

Gross Gaming Revenue

The GGR indicator allows entrepreneurs to understand whether their businesses are operating efficiently. The figure shows the amount of money received before excluding taxes and similar obligations.

The formula is as follows:

GGR = Gamers’ bets – Winnings

This metric is essential for measuring earnings, fees, and other figures. Different categories of gross profit are used, allowing managers to better navigate their finances and separate income from mandatory expenditures.

GGR Excluding Bonuses

In some jurisdictions, incentives are allowed to be deducted from profits. This approach increases the final amount of money after taxes but requires more calculations.

The formula is as follows:

GGR = Gamblers’ bets – Bonuses provided – Winnings

For instance, if an online casino owner must pay a 25% commission of the gross revenue, then promo offers must be deducted from this amount. The funds are considered expenses for advertising campaigns.

GGR with Internal Reporting

Responsible operators employ a team of experienced bookkeepers. Nevertheless, business people in unregulated markets cannot use professional accounting software.

In this case, the following formula is used:

GGR = Initial balance + Gamblers’ bets – Winnings – Final balance

Entrepreneurs record funds on user deposits for a specific period and add the money replenished during the specified time. After that, prize payments and the sums left in the accounts are subtracted from the total amount.

Net Gaming Revenue

The parameter, designated by the abbreviation NGR, determines the online casino’s earnings after deducting all costs. Calculations may vary depending on the company.

The most common and simple formula:

NGR = Gamblers’ bets – Winnings – Mandatory expenses

Entrepreneurs spend the funds received at their discretion. Usually, these are investments in additional entertainment products, marketing campaigns, etc.

The Main Things About Online Casino Finances

Experienced staff must be hired for the company to operate efficiently. Qualified specialists monitor all receipts and expenditures.

Let us explore the main financial parameters:

• Organisational costs. This category refers to the initial contribution in launching a gambling platform. Additionally, a reserve fund to solve unexpected problems is necessary.
• Spending on gaming software. Usually, suppliers provide products for rent, taking a certain percentage of the operator’s profit. The figures vary depending on the producer’s reputation and the popularity of a particular solution.
• Tax payments. Legal work involves registering a company and regular money transfers to the country’s budget. Each jurisdiction has unique rates in this regard.

Feel free to contact Rosloto’s team to order the development of a detailed business plan to shape the best financial strategy. We will make all the necessary calculations and help optimise costs.

Our experts can also create a turnkey online casino, a gaming project under the White Label scheme, or a marketing campaign and provide legal support for you.