How much money do online casinos make?
How much money do online casinos make? This is a question that many people ask themselves, especially those investors or entrepreneurs before investing their money in a business of this caliber. The reality, however, is that it is very difficult to quantify the winnings that an online gambling hall can make as it varies greatly depending on the market and the size of the casino.
What we can quantify is the value of said industry, which in 2019 was estimated at around $ 53.7 billion and that as a result of the covid pandemic its value has skyrocketed. Additionally, it is estimated to grow at a CAGR of 11.5% per year through 2027, which will put it somewhere in the $ 100 billion European region.
The exponential growth of this industry is mainly due to the fact that we now have better technology and more precise regulation so that players trust more in gambling websites. Calculating how much online casinos earn is very difficult, however we can say that it can be a very profitable business.
How do casinos make money?
As in any betting house, the company wins when the players lose money in their games. All games have what is known as a ‘house advantage‘, which is a small advantage for the casino operator. This house edge ranges from 1% to 5%, which means that the casino will always win money, even if it occasionally has to pay large winnings to its users.
The reality is that all games are in favor of the casino, however players can win real money, so all casinos must be properly verified by an independent entity to obtain a license. Although there are games that have a greater advantage than others, such as arcade machines compared to Blackjack-type games, the winners’ winnings are also much higher.
What are the costs that online casinos face?
If it is true that an online casino can generate a lot of money, it also faces large costs that can affect the amount of winnings that can be made. All these costs must be on the table and casino operators must take them into account, since although it may seem easy to manage an online casino, the reality is that there is a lot of competition and if things are not done correctly it can be reached to lose money..
These are the costs that every online casino must face:
- Hosting fees: Making a web page involves fixed costs over time such as domain names and server maintenance. In addition, you must have a properly encrypted web page to keep the data of all customers safe.
- License fee: Every online casino must have a license in the country in which you want to operate.
- Software license fees: The games are not free and operators will have to pay a fee to the creator company in order to use them.
- Taxes: Every business must pay its taxes, but casinos in some countries face much higher tax rates.
- Advertising: Make yourself known, otherwise players will be unlikely to find a new casino. This includes affiliate advertising which is one of the most common ways for online casinos to attract new players.
- Bonuses: Finally, we must also consider the cost of all bonuses aimed at attracting new customers that can turn into big losses if they are not calculated correctly.
But how are online casinos making money? Although from the outside it may seem that online casinos control betting, the reality is that this is impossible since algorithms are used that make it impossible to alter any game, so that more and more players trust them.
Get new users
An effective method to attract new customers is to offer free tokens to new users who register, however, it is not so easy since the user must first open an account and deposit some cash with their credit card. With free money you get the player to get hooked, and when he has lost all the money, he will most likely deposit something more, and so on.
Habit of playing through emotions
Emotion is the key word, it is very powerful since it makes all those users enjoy the euphoria and nervousness, receive that adrenaline rush when they bet.
Advantages and commissions of the house
The house advantage is a formula that causes each player to lose a percentage of money when they bet on one of the available games. It is a small percentage, 5%, but adding all the players together is a large number. Neither the player nor the casino knows the outcome of any game before starting, but this advantage gives the casino coverage and peace of mind because it knows that it will always win.
These are some of the main factors that allow online casinos to conduct business and make money. It is a sector with high growth potential, and it already accounts for a large part of the profit generated by casinos and bookmakers today.
Des de nuestra consultoría de casinos TTH Gaming nos dedicamos a asesorar y dar guía, tanto a nivel nacional como internacional, sobre el desarrollo de proyectos, gestión de operaciones, rentabilidad de inversiones y todo tipo de soluciones en el mundo de los casinos. Puedes ponerte fácilmente en contacto con nosotros si quieres consultar cualquier cuestión relativa a nuestros servicios en nuestra web.
From our casino consultancy TTH Gaming we are dedicated to advising and giving guidance, both nationally and internationally, on project development, operations management, investment profitability and all kinds of solutions in the world of casinos. You can easily contact us if you want to consult any question regarding our services on our website.