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On this page, we’ll be getting to grips with how much money an online casino makes – you’ll find that the figure for most online casinos is far lower than you might think.
How Much Does a Casino Make in a Year?
So, let’s jump straight into the main question: how much does an online casino make? Well, the industry as a whole makes around $50 billion every year – a pretty impressive number. However, remember that there are around 4,000 online casinos in existence, therefore meaning that the average online casino is earning somewhere around $12,500,000 every year.
You might think that $12,500,000 is a lot of money, and you’d be right. However, the figures are heavily weighted towards the bigger names in the industry. For example, one of the biggest names in the business, LeoVegas, had revenue of over $422,000,000 in 2019, according to their annual report. This means that, in order for the average to be $12,500,000 per casino, many casinos have to earn significantly less than the average figure. In fact, there will be many casinos that don’t even hit seven figures, and some that don’t even make any profit at all.
Therefore, as with every other business in the world, figures differ for different casinos. Some make hundreds of millions of dollars every year, while others barely scrape by and will, in all likelihood, go out of business soon. So, next time you think that your chosen online casino is a money-making machine, designed to line the pockets of those in charge, remember that this might not be the case at all.
What Are the Expenses?
It’s important to realise that online casinos have to pay some significant expenses, which is why many fail to make any money at all. Firstly, there are the games. Many don’t realise that casinos don’t usually make games themselves. Instead, they licence them from software providers, such as NetEnt and Microgaming. These big names charge in excess of $10,000 per month to use their software, and they also take a large chunk of profits made by the casino from their games.
However, there’s an even larger expense: affiliates. Casinos encourage other websites to point gamblers towards them, and whenever they do, the affiliate is paid a commission. This varies from casino to casino, but it can be in excess of 30% of the money lost by the player, over the entire time they play at the casino. As you might imagine, affiliate payments add up, with a single casino having to pay multiple affiliates every month. Of course, it’s worth it, as the casino receives more traffic and still makes a profit from the new customers, despite the affiliate payments.
Why Do Some Casinos Make More Than Others?
There are various reasons why casinos such as LeoVegas rise to the top and others fall by the wayside without making an impact on the industry. However, the main reason is this: the ability to spend money to make money.
It costs a lot to start an online casino, but it’s even more expensive to market that casino to a level whereby it becomes a name known to most gamblers. Online ads need to be taken out, emails need collecting, TV advertisements need to be produced and aired. If a casino doesn’t have enough money to make an impact, it’s destined to fail from the beginning.
There are, of course, also other reasons. The most successful casinos invest heavily in research and development, as they look to differentiate themselves from other casinos out there. They might offer a new way to hand out bonuses, gamification elements to boost enjoyment, or exclusive games not found elsewhere.
The top casinos also find ways to make savings. Their size means that they can often negotiate more favorable deals with partners, such as the software development companies. What’s more, their more sophisticated corporate structures allow them to manage personnel costs efficiently. Essentially, as in all walks of life, the larger casino corporations have the clout and the know-how to drive their costs down considerably.