How Much Money Do Casinos Make?

Keyboard With Casino Chips, Dice And Playing Cards

The only way to make speculations about how much an average US or UK online casino makes, is to look at total yearly industry revenue.

Compare that to the estimated number of online casinos and you've got your numbers.

However, that number can only be estimated, so results vary greatly. Some people swear that average casinos make around $20 million per year and others tell you they make $70,000 a day in Vegas.

But we’d have to take a closer look at variables to be more precise. These include:

  • Size, licensed countries, number of visitors
  • Expenses casinos must pay to break even
  • The US industry vs. the UK industry

There’s a lot of information (and also maths) ahead, so let’s dive right in.

Speculations: How Much Does an Average Casino Make?

According to our own calculations, with some help from reputable sources, we've come up with an average monthly intake:

  • For the UK, it’s £375,000
  • For USA casino, it's $1.2 million

So how did we get to those numbers? Well, it’s a question of looking at the total worth of the gambling industry in each country, and then taking into account the variables.

UK Online Casinos: The Value of the Online Industry

Casino on Laptop on Great British FlagData from 2017 provided by the UK Gambling Commission puts the value of the UK’s gambling industry at a total of £13.8 billion.

Online casinos pull in around £4.5 billion of that number.

When you see that land-based casinos pull in around £2 billion, it becomes apparent that online casinos are rapidly becoming the dominant gambling scene.

The UKGC’s findings thus show that a third of the UK gambling industry is online. This gives an idea as to the number of UK online casinos currently operating, and how successful they are.

Sports betting remains the highest grossing form of gambling, with slots close behind and table games lagging behind them both.

US Online Casinos: The Value of the Online Industry

us online gamblingFor some reason, there are more estimates about how many US gambling sites currently exist. This might be because US players are starved of legit sites they can play at, with the ban in effect.

However we don’t know quite how accurate those numbers are as they can fluctuate between the 1,500-4,000 mark.

Let’s stick to what we do know, first. According to 2017 data from Statista, the total revenue for the online gambling industry in the US is about $44 billion.

Of course, there is a big gap between casinos that perform well and smaller ones that don’t earn quite as much.

But in order to calculate the average monthly intake of both UK and US casinos, we have to make informed guesses and averages with what we've got.

Calculating a Monthly Intake

Let’s say that, on the online market, there are roughly 3,000 US casinos and 1,000 UK casinos. The calculation is simply to divide the annual online industry income by the amount of casinos.

Annually, if we lived in a perfect world where profits were distributed equally across all casinos, this is what the numbers would look like:

  • US: 44 billion divided by 3,000 = $14 million/year = $1.2 million/month
  • UK: 4.5 billion divided by 1,000 = £4.5 million/year = £375,000/month

You’d of course have to then shave off the yearly license & software costs, and the monthly costs of running a casino (roughly 40% of the casino’s profit).

In the case of the US, you'd still have casinos that are raking in around half a million in profit per month. And for the UK, it'll still be in the hundreds of thousands.

Again, this is just speculation on average casino winnings. But in reality, the scales are tipped so that a small fraction of casinos make the bulk while the majority earn small pickings (in casino terms, anyway).

Speculations: How Much It Costs To Run an Online Casino

online casino expensesYou might be wondering where we got that “40%” figure from. It’s basically the royalties that get sent off to software providers and affiliate sites (if using the revenue share system).

But there are other costs to take into account, too. You may not have thought about this much, but casinos do cost quite a lot to keep up and running.

So even if they seem to make a lot of money on the surface, you can't really know if they are making a profit or if they're paying off their past deficits.

License Fee

In the UK, the Gambling Commission makes casinos pay an annual application fee for the casino license. The amount you pay is incumbent on how much you earn per year.

This is what you’ll find on the UKGC’s official site:

ukgc casino license fees

Software Fee

Now let’s turn to the monthly fees. The biggest expense a casino has to make is their monthly payment to the software providers whose games they host.

According to some articles, it’s estimated that certain big-name software providers power 60% of all online casinos. These are software giants like Playtech, Microgaming, and NetEnt.

On average, they can charge around $11-12,000/month & ask for a 15% cut of the casino’s winnings.

Affiliate Program Fee

All successful casino owners have an affiliate program as a way of getting income from other sources than just their casino games & sportsbook.

Affiliate sites basically advertise the casinos they are partnered with, and in return they get a commission on each player they bring to the casino.

There are 2 types of commissions:

  • CPA (Cost Per Acquisition): up to $500

The casino pays the affiliate this fee for each player who finds the casino via the affiliate, signs up & makes deposits at the casino.

The exact number varies according to how often the affiliate sends in players, and how many are sent in.

The CPA must evidently be lower than the worth of the player, so that the casino can still profit. Some place the average online casino gambler worth around $1,000.

  • Revshare (revenue sharing): 25% off of player’s losses

In this case, the casino will pay the affiliate a percentage of their players’ losses. The exact number is usually around 25%.

Of course, there’s room for negotiation here if the affiliate site is well-known and reputable.

Server Hosting

If you’ve paid for your own site before then you’ll know something about how server prices skyrocket when your use of bandwidth goes up.

Now just imagine how high those prices climb when your server hosts a bunch of graphically heavy games. Some sources have estimated this price to be around $3,000 to build.

Employee & Customer Service Wages

Now, an online casino may require a smaller team than a land-based one – but it’s still got to be a solid one for them to be successful.

Let’s count what an average online casino would need.

  • 5-10 people for customer service
  • Affiliate manager & Customer Retention Manager
  • 3-5 people on the IT team
  • 3-5 people on the content team

The monthly expenses you’d spend on your team obviously depend on how big your team is, and whether you choose to use cheaper offshore labour or local labour.

Let’s say you have a team of 13 people and everyone’s on an average minimum wage ($1,200) – that climbs up to $15,600/month.

Overall Monthly Costs

So in total, this is a rough idea of how much you might have to pay per month to keep your casino running:

  • Cuts on royalties: 15% (software) + 25% (paid out in commissions) = 40%
  • Software ($12,000) + Staff expenses ($15,600) + Server costs ($3,000) = $30,600
  • To break even, your casino would need 60% of earnings to be $30,600/month
  • So in total: $51,000 a month just to break even

Many casinos only begin to break even a few years into the business, after finding their feet.

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