How to get the difference between GGR and NGR
There are several indicators of profit related to online casino, and two of them are crucial for understanding the true money-related performance – those are Gross Gaming Revenue, also known as GGR, and Net Gaming Revenue, or NGR. Not everyone can tell the difference between these KPIs, or Key Performance Indicators, so this article will give you an answer and help you in calculating these two formulas of success.
Before going into explanations, there should be established a king of system or legend to rely on and give clearer vision of what should be involved into calculations:
(1) – total amount of bets made
(2) – sum of payments made to players
(3) – sum of bonuses received by players
(4) – total taxes
Then let’s move on to meaning of indicators:
GGR shows the amount of profit gained by casino from player’s interactions before removing the expenses from total sum. Its formula is pretty simple: just remove (2) from (1), and you get the Gross Gaming Revenue
NGR represents clear profit that casino gains at the end of the month with inclusion of all expenses performed by administration. For getting Net Gaming Revenue you have to take from (1) not only (2), but also (3) and (4)
Usually NGR is used for analyzing profitability of the business, its payments of dividends and so on, but it should be remembered that there is no generally accepted approach for calculating it, what means that, depending on the method, the numbers may vary. Like, for example, when calculating NGR, marketing and operating expenses may not be included by ones and picked by others. So, if you go through the business planning, decide first the strict formula of Net Gaming Revenue.
For better understanding of how that works let’s look at such kind of conditions. We have a casino С operating on the territory of UK, where a tax for online gambling platforms is 15 percent. During the year this casino С met the players who made bets on $3 million (1) and won around $2 million (2). They also received bonuses from administration for a sum of $400 thousands (3). And the tax sum for С casino stands for $150 thousands (4).
That leads us to the next sum of NGR: $3 000 000 – $2 000 000 – $400 000 – $150 000 = $450 000
All things considered, Net Gaming Revenue of a casino for a year is $450 thousands. But you should keep in mind that this sum doesn’t include operating expenses and marketing campaigns, which means that final result with all factors included can be way smaller than announced.