How to Calculate the Monthly Profitability of an Online Casino?
First of all, it should be taken into account that this article can be considered as trains of thought, and its authors do not own online gambling establishments and are not armed with any specific information on the financial situation of brands that are mentioned below.
If you want to find out about huge sums of money earned by Internet casinos, we offer you to look through this article.
To begin with, let us calculate monthly costs for the operation of a gaming club. The most significant part of expenses is associated with the software. The vast majority of websites rent it from one of the three major gambling software vendors:
- Net Entertainment (NetEnt).
Our records show that they support the work of 60% of gambling establishments in whole. Services of the developers that were mentioned above are expensive.
To rent their software will cost you from eleven to twelve thousand dollars monthly. The developers receive 15% of casino winnings as well. Expenses here are rather heavy, assuming that it is just the beginning.
A list of expenses consists of more columns. Many gambling establishments cooperate with affiliate programs to attract customers to their resources.
And here is how it happens.
A webmaster has a data portal or a website. He subscribes to the program and promotes it, receiving commissions for every user.
There are usually two types of commissions:
- CPA (for the attracted customer);
- Revshare (the distribution of revenues).
CPA (Cost Per Acquisition)
is a fixed monetary amount that is paid to an affiliate for each signed up gamblers who made a deposit to a gambling establishment. This sum can be from twenty-five to five hundred dollars, in dependence to the capacity size, which the website can send the casino.
When it comes to CPA, operators take risks by paying players more than they will lose. However, it is fine because thanks to a great quantity of visitors, gaming clubs can predict the sum of money an average visitor loses. And it is larger than CPA.
According to trustworthy sources, a common user costs a gambling establishment not less than one thousand dollars. We bare in mind both “small” gamblers who bet and lose only twenty-five dollars and high rollers who can lose ten thousand dollars each month over the years.
Another option is Revshare or the distribution of revenues. Here a gambling establishment pays a partner a percentage (about 25%) of the gambler's loss during his life. Major affiliates may require a higher percentage of revenue.
That is, if a user that loses ten thousand dollars monthly was attracted to the casino through an affiliate program, the affiliate receives two thousand five hundred dollars monthly.
However, those affiliates who work on such terms should take into account the funds that were won by the redirected players. If a player has received these ten thousand dollars when the fortune was on his side, he can assign winnings of a dozen or hundreds of other visitors that were redirected by the affiliate.
Thus, there is a fixed charge of twelve thousand dollars monthly. Besides, 25% of winnings in casinos are paid in fees, and 15% of royalties belong to a vendor.
Gaming clubs should expend funds on the maintenance operation and hosting as well. Let us suppose that there is an opportunity to manage the global customer support division with the help of the offshore labour and spend on this only five thousand dollars monthly.
As we may guess, a secured server is used here. For those who have never dealt with web hosting for websites with the similar traffic or resources that use large network capacity to implement games, it is enough to know that it is high-priced. However, things are not so bad. Figuratively speaking, it is two thousand five hundred dollars.
Now we know the price for fixed costs, and 40% more go for the payment of winnings to gamblers. Therefore, to break even, 60% of casino earnings should be equal to twenty thousand dollars every month. It means that minimal winnings of a casino should be at least thirty-three thousand dollars a month in order not to find itself in the minus column.
The total income of the gambling market is about forty or fifty billion dollars a year or about four billion monthly. After the division of four billion into the number of functioning gambling establishments, we will get a sum of income of a standard casino. Actual numbers will be not exactly the same, anyway, that is something.
Casino City is a famous data source for gambling establishments on the Internet, particularly in relation to the database of property items. If your settings allow you to see gambling establishments that work in English, accept gamblers from Texas and those states where the US dollar is accepted, you will receive a roster of two hundred and five objects. If you change a search criterion to "Any", it will be expanded to more than three thousand six hundred casinos.
Let us assume that Casino City is not a fully reliable source since it does not include four hundred casinos on its list. It means that there are four thousand online casinos with an income of four billion dollars per month. Dividing four billion by four thousand, we get one million dollars. Does it mean that all gambling establishments on the Internet receive one million of the gross profit? No, it does not.
Here, as in many situations, it will be appropriate to mention the Pareto principle. 20% of the best online clubs probably earn 80% of the profit. It means that eight hundred of them take the main part of it and the remaining three thousand two hundred gambling establishments get not so much.
Nevertheless, let us assume that one million dollars per month are a correct sum, 40% of which will go to payments of affiliate programs and the software. The monthly profit, in this case, will be six hundred thousand dollars. If you subtract other expenses, the gaming club will still receive more than half a million monthly.
We can’t be sure about the income that a casino receives monthly. Of course, significant means should be spent for the maintenance of this business but still online gambling resources produce a real profit.
Obviously, it bears the risks to launch an online gambling establishment from the legal point of view, and they can be different in different countries. Some jurisdictions have no strict restrictions about users and regions they come from.
But anyway, we have very interesting amounts of money for analysis.