Also known as the gross game win or gaming yield, gross gaming revenue (GGR) is among the most important metrics that online casino operators use to gauge their performance. Simply put, GGR refers to the money that players bet minus their winnings. The metric gives online casino operators key data about their strengths while helping them understand where they need to improve.
So, what is Gross Gaming Revenue (GGR), how do you calculate it and why is it for online casino operators? Here is everything you need to know about this key performance metric.
Understanding the Dynamics of GGR
Gross gaming revenue (GGR) refers to the amount of money that an online casino operator like Betway remains with after paying out their players from the total wagers. When trying to understand how GGR works, you need to consider these two factors:
- The amount of cash that players spend in a particular period.
- How much the casino operator returns to their players in terms of winnings.
There are no additional variables that come into play when calculating gaming yield. You don’t need to deduct costs associated with loyalty fees, taxes, employee salaries and other expenses. As such, GGR figures are related to the amount of money that players bring in and take out from the business.
Why is Gross Gaming Revenue Important for Online Casinos?
GGR is the first metric that comes to mind when comparing growth between online casinos and land-based gambling markets. For example, GGR is a straightforward and effective metric that indicates the expansion of online gambling in the American market, where the gaming yield totaled $60 billion in 2022 to record a 14% growth from 2021.
Here are several other reasons why calculating gross gaming revenue is critical for online casinos:
Evaluating performance with GGR
While there are several key metrics for tracking the profitability and performance of an online gambling business, GGR is the simplest place to start before looking at the income statement. In general, if a business like the Betway casino features a high GGR margin, there’s a chance that other performance parameters will be positive. However, low GGR margins are also possible in hostile markets.
Strategy and decision-making
Online casino operators can’t launch a betting site without a solid strategy to attract as many customers as they can to keep the business profitable. For most online casino owners, this strategy involves making the brand unique and delivering an exceptional gambling experience to players. To achieve that, operators need to have quality customer support, high-quality games, and a functional website/app. However, it’s hard to know whether a strategy is working without calculating GGR.
Basis for taxation and regulatory compliance
Regulatory bodies use GGR to determine how much a casino operator will pay in taxes. If an online casino must pay 20% in tax, it must be levied based on the gross gaming revenue figure that the gambling company reports. For example, if an operator reports $1,000,000 in a jurisdiction where the tax is 20%, then the company will need to pay $200,000 in taxes.
