How Do Online Casinos Make Money?
The global online gambling industry continues to boom, generating immense profits even during the pandemic. New markets are constantly evolving in countries where gambling was once banned. And thanks to cryptocurrencies and the incoming Metaverse, players can enjoy a new world of online casino gambling. The global revenue from online casinos was €53.7 billion in 2019, estimated to grow at a rate of at least 11.5% until 2027.
It was sliding online casinos into a revenue of around €100 billion.
Whilst a brief internet search will show total industry profits, what about online casinos’ earnings? We might think that player deposits drive their profits, and they do. But they are also a small drop in a large ocean of potential revenue for these platforms.
Does the House Always Win?
An online casino’s net wins are more or less guaranteed to be positive over the long run. This is thanks to those casino games which run on an RNG. There’s a pre-determined Return To Player figure, which can either be set by the software developer or the casino itself.
These figures show how much money will be returned to players over time. And also how much is profit for the online casino. On average, a casino can make up to 5p for every €1 wager on a slot featuring a 95% RTP.
Live casino games are completely different ball games and work using a house edge. They guarantee profits to the online casino in the long run, though. The gap between the odds and payouts (house edge) creates those huge revenues for any casino, online or land-based.
Blackjack is the least profitable for an online casino; if a player uses a good betting strategy, this could leave the house edge under 0.3%. Different versions of keno can shoot up to 40% of the house edge.
New Customers and Profits
When generating profits, an online casino’s work isn’t over when a player makes a low casino deposit. Whilst revenues from games are guaranteed, what do casinos do to maximise their earnings? To be successful in the long run, an online casino always needs to get new customers, ensure that those customers are playing regularly and are happy and stay put.
A casino will use many different techniques to acquire new players.
This boils down to affiliate marketing with companies driving new customers to the casino’s door. Or often, expensive in-house marketing teams will create new campaigns to draw players in.
Bonuses are incredibly powerful in attracting new players and retaining them. Making a player feel rewarded will get them to stay and play more. An online casino can make money on these bonuses, usually via the wagering requirements.
Driving players to wager on slots rather than live casino games with odds stacked in the casinos’ favour. Online casinos will employ various tactics to keep players engaged. Whilst land-based casinos may blackout daylight and let the free drinks flow, online casinos use attractive bonuses in their games. As well as autoplay functions to keep those wagers coming.
How Much Money Can an Online Casino Make?
We can gauge the answer to this question by looking at recent online gambling companies which have sold for billions to the highest bidders. The UK gambling industry is estimated to produce around €14 billion yearly, and most of this revenue is generated by online gambling.
Kevin Flynn is a lean start-up business consultant, PowerMBA, and Senior Financial Markets Editor at Investors Prism. He lives in Leominster, Massachusetts, with his wife…More info on Kevin Flynn