Today we will consider two crucial money-related key performance indicators (KPIs) that speak of the online casino profits: Gross Gaming Revenue (GGR) and Net Gaming Revenue (NGR).

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Well, one can definitely day that most of the transparent sections of online gaming loyalty programs are dedicated to “perks to the mass of member-customers”. But that said, profiling is a huge part of any semi-decent scheme, and most operators also keep a healthy budget to entice players on top of the program’s rewards. KPIs for more than 20,000 online stores. The growth of online gambling Online gambling consists of playing casino games, poker and/or sports betting via the internet.

What is the difference between these KPIs and how to calculate them, you can find out in the material prepared by the experts of Slotegrator.

Calculation formulas

GGR is a financial indicator that shows the amount of money gained by the casino as a result of players' activity, but before deduction of additional casino expenses. It has a simple formula:
GGR = A - B.
NGR is a financial figure that determines the basic profits share collected by the casino at the end of the month. It is defined by the following formula:
NGR = A - B - C - D.

Legend:

A – total amount of all bets placed by players;
B – the sum of all payments to players;
C – the sum of all bonuses received by players;
D – the total of all taxes.

GGR does not include bonus payments and taxes. Therefore, this indicator is often used in calculation of tax deductions. As a rule, the amount of tax is a given percentage of the GGR.

NGR is a measure of a gambling establishment's net revenue minus all payments to players and tax deductions, but excluding operating expenses. It is usually used to analyse business profitability, dividends payments, etc.

However, there is no generally accepted approach to the definition of NGR. It has to do with the fact that this indicator is used in monitoring business profitability but has no ties to mandatory payments. For example, operating, marketing and other expenses may or may not be deducted from the total amount of bets when calculating NGR. Therefore, throughout the business planning, it is important to decide what formula to use.

Example

For better understanding, let's look at some fictitious online casino, Good Luck, registered in the UK. The given jurisdiction regulates online gambling with a 15% tax on GGR.

In the span of a year, the players of Good Luck made bets on $5 million, and won $2.5 million. At the same time, they received a total of $700,000 as various bonuses.

Thus, the value of A = $5,000,000; B = $2,500,000; C = $700,000.

GGR = $5,000,000 – $2,500,000 = $2, 500,000.

The value of D, according to the specified tax rate, will be equal to the tax base multiplied by 15%.

D = $2,500,000 * 15% = $375,000.

Consequently

NGR = $5,000,000 – $2,500,000 – $700,000 – $375,000 = $1,425,000.

Net Gaming Revenue of the online casino Good Luck totals $1,425,000 for the year.

Here, NGR does not include operating expenses as royalties to providers, payments to affiliates, commissions of payment systems, staff salaries, etc.

Conclusion

Despite being at its nascent stage, the online gambling industry shows the essential rates of growth. And the market, according to experts, has great potential. The Slotegrator experts admit that there are more and more entrepreneurs willing to start own online casinos today.

By taking a decision to kick off own online gambling projects, many investors focus only on total deposits and winnings of players. However, there are other indicators to analyse the gambling project performance. Therefore, for your project success, it is important to understand the difference between those KPIs, the purpose of each, as well as to conduct an in-depth analysis.

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As forecasted by Slotegrator, iGaming would grow by 11-12% over the next two years. To get real income in this prospective sphere, casino owners need to provide the precise evaluation of their business return. So, what are the basic metrics for performance appraisal (KPI) of iGaming platforms and what are their peculiarities?

What is KPI?

One can launch a successful gambling business on the Net in two stages. The first one lies in technical nuances such as license purchasing, platform obtaining, adding games to it, software integration. The second stage is of the same importance including promotion and other marketing issues: gamer attraction and retention, a launch of effective loyalty and affiliate programs.

KPIs allow to estimate the efficiency of a marketing plan. These metrics are methods used to evaluate and calculate the revenue of a virtual resource.

They are helpful at not only appraising current achievements but also determining further actions to promote the platform: advantages and disadvantages of the strategies. KPIs in online gambling business are divided into several key categories:

• financial KPI;

• human KPI;

• hybrid KPI.

What are their differences and subtypes?

Financial KPI

Financial indicators give the clearest and most transparent picture of profitable investments. They show the revenue and loses volume and allow to monitor the trends. There are several types of financial indicators.

• Gross Gaming Revenue (GGR). One of the most important success indicators that is pretty easy to calculate. One has to take the total quantity of winnings from the total amount of bets. Thus, this indicator shows the money lost by clients before the deduction of all costs.

• Net Gaming Revenue (NGR). Gross revenue minus all operating expenses. They include commissions, affiliate payout, bonuses, payment for gambling licenses. This is real net revenue of a casino. It allows to access the project’s profitability over a certain period.

• NGR/SumDEP. Net revenue from players’ deposits. The higher the indicator is, the better for an online establishment.

• SumBet/SumDep. It helps estimate money turnover in games. Pay attention to its growth: it means that a casino pays too many bonuses for users.

Human KPI

Indicators based on a human factor are as important as financial ones. They cannot be referred to separately. One has to appraise their influence and interconnection. Such metrics are divided into two groups - major and minor.

Major indicators: conversion, life-time value, churn rate.

Conversion. This indicator shows the efficiency of an online gambling resource in terms of client attraction. It is given in clear figures: how many users reacted to advertising (a banner or a link) in contrast to those who saw it but did not move forward.

Conversion helps track and analyze general traffic, correctly distribute bonuses, and see whether promotional expenses pay off. It consists of the following indicators:

• viewing – visiting;

• visiting – registration;

• registration – deposit.

Life-time value (LTV). One of the most important indicators directly connected to casino success. This metric is the total amount of money a client brings to the platform over the time of his/her activity. The majority of marketing strategies are aimed to boost this indicator. LTV is calculated out of the following formula: client average revenue over a month (or a week) divided by the number of months (weeks) of his/her activity on the website.

Churn rate (CR). The lower this indicator is, the more successful a casino works. CR shows how many people leave the resource. It demonstrates the correlation between gamblers who quit a casino and loyal clients. In case if CR goes up, owners of gambling resources should rethink the customer retention strategy.

There are two minor KPIs: bounce rate and session depth. They come in handy if one needs to analyze the pitfalls of the resource and build a sophisticated program of updates.

Cost per acquisition (CPA). This indicator clearly demonstrates the effectiveness of costs spent on a client who performed certain actions: clicking the link, registering, depositing. Low CPA (expenses on one user) is a good result. The indicator can be calculated in this way: month’s advertising money is divided by the number of active users who joined the casino within this period. The best result is when the income they generate for this resource covers ad expenses.

Average revenue per user (ARPU). It shows the average revenue of a loyal client within a certain time period. The formula is fairly simple: casino income over let’s say a month is divided by the number of active users over the same period.

Monitoring and analyzing KPI

KPIs should be collected via special software, simply put, an online casino platform. It allows to obtain exact results and avoid human errors. Due to automation and special programs, the system continuously collects data.

Surely, this process cannot be feasible without a high-quality and reliable gambling platform that produces reports and statistics, takes into account all financial data and maximum information about user actions.

Reliable and top-market software ensures:

• quick interaction with clients and affiliates;

• analysis and accounting of all financial transactions;

• automated processing of massive data volumes;

• basic analytics tools.

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However, data collection and linking together is just one step in this process. Obtained information goes to experienced analysts who draw necessary conclusions and build an online casino development strategy.

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Conclusion

As estimated by the analysts at iGaming Business, the total revenue in the field of gambling in 2018 reached €44.4 bn and is to surge over €56.8 bn in 2022. In order to gain considerable income in such a highly competitive sphere, online casino owners need to take into account key performance indicators (KPIs) to the fullest.

Each metric is important both separately and integrated into others. So, the indicators have to be investigated as a whole. Multi-level analysis conducted by experienced marketers may calculate profitability of a gambling platform as well as elaborate a strategy for its further development.

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