Compared to brick-and-mortar casinos, online gambling houses are much cheaper and more widespread, both for players and casino owners. If you’re interested to know, how much do casino owners make online, this article is for you.
Why businessmen start online casinos?
Today, it’s estimated that there are between 3,500 and 4,000 online casinos exist. As of 2021, they make around $56 billion in revenues (gross incomes) a year. That is, roughly, $14.9 million a year gross income per year per one online gaming house.
Do all Internet casinos make that much? No. We’re sure that the Pareto principle works here as everywhere: 20% of the casinos earn 80% of profits. The division tells the following: 20% of the most successful houses grab $44.8 billion, which is $59.7 million a year per one casino, the rest make $3.733 million a year per one.
These numbers give a clear answer to the question of internal drivers of future online casino owners to open a new gaming website – the calculated money seems lucrative, no matter in which country of the world you live.
How to make money with an online casino?
To make a picture closer to reality, we’ll rely on the statement that an average online casino makes $3.733 million a year or $311 thousand a month (based on a previous chapter). And how much does a casino make a day? Based on this number, it is $10,370. But you should understand it is a very rough estimation since there are simply no stats for each online casino (they aren’t published) – we only have general numbers, just as the rest of the marketing experts.
But do all the money stays within the disposition of the casino’s owner? No. There are periodic and sporadic expenses, which are a part of the normal business process. We’re exploring them in detail below.
First of all, to start earning on the casino, a businessman has to open one. The initial cost of opening differs, usually floating between $50,000 and $200,000. The number consists of:
- White label or not (will royalty be included or not)
- Cost of website and its hosting with broad bandwidth to operate with thousands of connections per second
- License, which is the costliest part (from a very low-cut $20,000 version given by Curacao to around 2 million British pounds of the fattest all-embracing license in the UK). Let’s adopt $30,000 as the real cost of the license
- License deposit or guarantor fee – could be from $10,000, depending on the licensor
- Connection to most popular gaming providers – to make sure to attract as many gamers to your casino as possible, also doing it easier (NetEnt, Microgaming, Playtech) – this is around $5,000 for each, not considering their monthly royalties
- Safety deposit to cover for the big winnings of players at the initial step
- Hiring people who will run the casino – a manager, support center, back office, bug fixing, development guys…
- Initial advertising.
How much do online casinos make?
Now it comes the fun part. Having $311 thousand a month of gross revenue in mind, we’re looking at what a casino owner typically spends, to extract from.
- Gaming provider expenses. Those three named – NetEnt, Microgaming, Playtech – take around $12K a month + 15%-20% of the casino’s winnings in their games. They usually make over 50% of all games of an average casino (in different parts of the world, the situation will differ but in the English-speaking world, it is as such). So, 50%*311,000*20%=$31,100.
- White label royalties (if any): 5% of revenues ($15,550).
- Personnel expenses: let’s take $5,000.
- Website’s hosting and keeping-up: $5,000.
- Affiliate program. It can be a CPA, which is a flat amount for bringing a new customer who makes a deposit, or RevShare, which is an ongoing payment for the brought customer throughout his entire lifecycle in this casino. Depending on the conditions of a particular affiliate program, the expenses will vary. For the sake of calculations, let’s take 25% RevShare.
- Advertising to bring people in. Let’s establish it at the level of $20,000 a month to make sure the stable inflow of new customers.
- In-house promos. They would include various offers to new gamers, periodic tournaments, prizes, and other giveaways. Let’s establish them at the level of $100 per active player a month (given that thanks to the attached wager, 90% of the amount returns to the casino).
- Good customer support service. Overseas remote support of good quality will take around $10,000 a month for a small casino.
- Other fixed expenses: $5,000.
So, what do we have as a result?
Based on various available statistics, we have calculated that an average player spends (loses) in an online casino $900 a year. That’s $75 a month. Given that, monthly $311,000 in revenue would be generated by 4,146 active gamers. Let’s consider a casino attracts 200 new gamers who make deposits monthly. CPA from them would be 200*900*25%/12=$3,750 a month.
In-house promos would make in this scenario 4.146*100*10% = $41,460.
Let’s now extract all the expenses:
Thus, an online casino making $311K a month of gross revenue receives the profit before tax equal to $171.19K. The profitability here is 55% – a very generous one, we must admit.
But, as you might have already guessed – that’s not all. Alas, the casino owner must pay taxes and yearly subscriptions to keep up the activity of the gambling license. Both rigidly depend on the jurisdiction of taxation and licensing. Tax and running the legal company could consume up to 60% (but people usually choose the cheapest jurisdiction, like Sint Maarten, Aruba, Curacao, or other cheap countries, lowering it even down to zero). The license takes annually from $15,000 and up.
Conclusion on how to make money on online casino
Being an online casino owner seems like a lucrative offer. Based on numbers and surface analysis, 55% ROI looks like one of the most generous offers among many businesses. Still, it applies to most casinos while the newcomers to the market have to understand that they won’t be profitable during 1-2-3 years after opening.