How to calculate Gross gaming revenue for online casino

Accardo

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Quote from: Cookdata on February 21, 2022, 04:48:44 PM

Quote from: Accardo on February 20, 2022, 03:58:22 PM

>>><<<

I think there is something mixing from your explanation. You used only fiat to do a calculation and I wonder if the same 15% tax is applicable when you want to calculate the gross gaming revenue in bitcoin.
Let says for example A casino A has a total number of 100 BTC as GGR, is the company going to pay the same 15% for tas you specify on share stake? You know there is a specified percentage of Tax a liquid crypto earner is supposed to pay to internal revenue service.
I'm interested in how companies that accept crypto deposits pay their tax, maybe it's the same way they do with fiat they do to cryptocurrency, I couldn't find tax on casino in most of the crypto tax books I have seen.

I still think your examples were not well simplified as they should be.

NGR is the only way to determine how much the Casino will pay in Tax. Companies that accept bitcoin paying taxes in bitcoin is not logical because they still have to change to fiat so that they'll be able to pay their tax unless they are in a state where people can pay their tax through Bitcoin. Provided that the tax percentage is specified then NGR is the formula to solve and get the result.

magneto

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Quote from: Yogee on February 20, 2022, 05:33:09 PM

Isn't this just basic accounting where you deduct outlows from your inlows. It's probably just a matter of preference but the term "Net Gross Revenue" sounds odd to me since you need to deduct all other expenses from the "gross" to arrive at the "net". I would have used Gross revenue and Net revenue instead.

It is basic accounting.

However, this is used to determine how much the slot providers get as a cut of providing their services, as well as online casino hosting solutions.

So in general, the more GGR a casino has, the more the software providers make as well. That's why this calculation is important to get right.

crzy

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Those game providers are not just available in one site, they are on every site so technically they earn more money as well and they can’t enter into a contract where they will not make money after all. Well, I’m not that good in math but I do know that the house will always win and even the game providers, it could be more and have some bonuses as well so the numbers is just a simple numbers, things can still happen under the table.

Cookdata

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Quote from: Accardo on February 20, 2022, 03:58:22 PM

>>><<<

I think there is something mixing from your explanation. You used only fiat to do a calculation and I wonder if the same 15% tax is applicable when you want to calculate the gross gaming revenue in bitcoin.
Let says for example A casino A has a total number of 100 BTC as GGR, is the company going to pay the same 15% for tas you specify on share stake? You know there is a specified percentage of Tax a liquid crypto earner is supposed to pay to internal revenue service.
I'm interested in how companies that accept crypto deposits pay their tax, maybe it's the same way they do with fiat they do to cryptocurrency, I couldn't find tax on casino in most of the crypto tax books I have seen.

I still think your examples were not well simplified as they should be.

TimeTeller

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Quote from: Fortify on February 21, 2022, 03:12:27 PM

Quote from: Accardo on February 20, 2022, 03:58:22 PM

Recently, I checked out some key point indicators in the online casino. First, I thought some game providers get their share via percentage of spin a player makes but, today after a brief research I found the formula for Gross gaming revenue used to determine how game providers earn from the activities of players.

This is absolutely meaningless as it misses so many factors. Tax isn't the only thing that needs to be deducted out of profits - there are huge company operations, staffing costs and advertising outgoings to consider, which will strip out a lot of the remaining amount. You've basically presented a simple mathematical formula and write it as if you've solved some unknown ancient mystery. What about all the freebies that these casinos give away? What about the DDOS protection that they have to pay huge amounts for when under attack? Where does the money come from for customer support representatives who might be answering questions to unprofitable players? If you really want to look at how these sort of company operations run then you need to start downloading the annual accounts from fiat currency gambling operations, where you will see a true profit and loss calculation.

Yes, he did miss the operational cost in the formula.
But maybe, he just wants to share what he found from one of his sources.
Just to give a basic idea on how GGR or NGR is calculated.
We know, that formula is only a rough estimate to evaluate the GGR of a casino.
At least have an insight on how much a casino is getting as a revenue.
If they can afford to give freebies, it means, they are still on the positive side.
But if the casino is stingy, they maybe, are just in the survival mode.

Fortify

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Quote from: Accardo on February 20, 2022, 03:58:22 PM

Recently, I checked out some key point indicators in the online casino. First, I thought some game providers get their share via percentage of spin a player makes but, today after a brief research I found the formula for Gross gaming revenue used to determine how game providers earn from the activities of players.

This is absolutely meaningless as it misses so many factors. Tax isn't the only thing that needs to be deducted out of profits - there are huge company operations, staffing costs and advertising outgoings to consider, which will strip out a lot of the remaining amount. You've basically presented a simple mathematical formula and write it as if you've solved some unknown ancient mystery. What about all the freebies that these casinos give away? What about the DDOS protection that they have to pay huge amounts for when under attack? Where does the money come from for customer support representatives who might be answering questions to unprofitable players? If you really want to look at how these sort of company operations run then you need to start downloading the annual accounts from fiat currency gambling operations, where you will see a true profit and loss calculation.

goldkingcoiner

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The basics of the of your mathematical formulae foundation seem to be fine, however I feel that such a simplistic way of revenue calculation might not be optimal. Unless we are talking about a very simple skeleton of an online casino, there should be a few more additions to be concerned about. Maybe not now but definitely in the future, when your casino goes big. Perhaps if you were to add a few variables in your equations like bonuses, rebates/discounts, referral payments.

The small things do add up, over time.

fiulpro

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But we cannot exactly calculate everything since all the players and their individual bets, getting all that information might be a bit challenging since at the end of the day it makes no sense to invade someone's privacy. Plus all these things are calculated by the softwares now and their net profits as well, they are all mostly done by governmental bodies sometimes to make sure that they do not cheat and pay their taxes on time based on the profits that they made. But you can always check the gross profit that they made from the bet you made on your site! Might be interesting for some people.

Trojane

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This is actually true and remains the basic part of the casino's revenue point; have you thought about the charges the make each time you're either funding or withdrawing money from the sites? Have you also asked yourself how much they make for the traffic on the sites too? The whole thing incures a whole lot of profit to them that they can even make more than what you propose, it's a nice IQ research anyways Wink

24Kt

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Quote from: ?? on ??

This is a fine and wonderful finding. It will help even non player of casino or non gambler to know about what is happening there in the casino and including the profit and losses with numbers of players etc. This is good and I click the to read, I do find something interesting, it shows also the calculation that the casino pay for tax.

The math here is just very simple. So if we see the casino is very generous with their bonuses, it means, they are earning very good income. Because they can't afford to pay those bonuses or rewards if they are just earning enough to cover all the payments and expenses. And it also shows that the government which is handling the casino is really getting a good amount of money. Which is why, during the pandemic, gambling business is identified to be one of the businesses that contribute to the recovery of the economy of the place where they are operating at.

Yogee

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Isn't this just basic accounting where you deduct outlows from your inlows. It's probably just a matter of preference but the term "Net Gross Revenue" sounds odd to me since you need to deduct all other expenses from the "gross" to arrive at the "net". I would have used Gross revenue and Net revenue instead.

Accardo

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Recently, I checked out some key point indicators in the online casino. First, I thought some game providers get their share via percentage of spin a player makes but, today after a brief research I found the formula for Gross gaming revenue used to determine how game providers earn from the activities of players.

Formula

GGR= A – B

A - Is the total amount of all bets placed by players
B - The sum of all payments made to players

E.g:

At the end of 2021 stake casino players made bets on $4,000,000 and won $1,500,000.

To calculate the GGR

A= $4,000,000
B= $1,500,000

GGR = $4,000,000 - 1,500,000 = $2,500,000

Task

Solve for NGR (Net Gross Revenue) if the total amount of bonus shared on stake is $500,000, and Stake pays 15% Tax on GGR.

NGR is the basic profits share collected by the casino per month.

Formula

A – B – C – D

Note: C= The sum of all bonuses revived by players
while D = Total of all taxes

To solve for D multiply $2,500,000 by 15%

Goodluck. I learnt something new today, and I'm not alone. Cheers.

Read for clarification, where I got my inspiration

Topic: How to calculate Gross gaming revenue for online casino (Read 138 times)