It’s difficult to say exactly how much online casinos make as it varies a lot depends on the market and the size of the casino. The global online casino industry was reported to be worth $53.7 billion in 2019 and has been increasing in value over the years. It’s estimated to grow at a CAGR of 11.5% a year until 2027, which will put it somewhere in the region of $100 billion.
The online casino industry is increasing in value thanks in part to better technology and also because of improved regulations that mean players have more trust in gambling sites. Although we know how much the industry is worth, it’s still difficult to predict how much profit casinos are making. However, we do know that it can be very profitable, as indicated by the growing number of high-quality online casinos that have launched in recent years.
How Do Online Casinos Make Money?
Online casinos make money when players lose money on their games. Every game at the casino has what’s known as the house edge, which is a slight advantage for the casino operator. Usually, this advantage is between 1% and 5%, and it means that over time, the casino will always make money from its players, even if it occasionally has to pay out big wins.
Although casino games are in favor of the casino, it’s still possible for players to win real money, and all casinos must be verified as fair and safe to obtain a license. Online casinos use random number generators to determine the outcome of a spin, roll, or deal. The random nature of games is normally tested and verified by an independent third party, and any casino should be able to prove that its games are fair.
Some games have a much larger house edge than others, with slots usually giving casinos a better edge than table games. This is why many online casinos offer a much larger collection of slots compared to games like Blackjack, which has a lower house edge. In the end, the casino wants to maximize the amount of money it can make from each player while also ensuring they keep coming back for more. That’s why slots, which have a high house edge but can pay out big wins, are heavily favored by casino operators.
What Costs Do Online Casinos Pay?
Although real money casinos can potentially make a lot, they also need to pay a lot of costs that affect how much profit they can make. Casino operators have to think carefully about these costs as even though running an online casino might seem easy, there’s a lot of competition, and failing to consider costs can result in a casino losing money.
The following are all costs that casino operators need to be aware of when setting up their site:
- Hosting fees – Domain names cost money, and the site will also have to pay a fee to be hosted on a server. This varies a lot depending on the size of the site and the type of domain name it uses, but it’s usually one of the lower fees involved in running an online casino. On top of this, operators need to consider site encryption and the costs involved to keep customer data secure.
- License fee – Online casinos need to obtain a license in the country they want to operate in, or else they’ll be at risk of legal consequences. Gambling commission licenses usually cost a set fee, and this might be a one-off fee or an annual fee, depending on the jurisdiction. If casinos want to maximize how many players they can accept as well as prove their trustworthiness, this is always important.
- Software license fees – Casino games aren’t free, and casino operators will need to pay a licensing fee to the software providers to use them.
- Taxes – All businesses need to pay taxes, but most online casinos are taxed at a higher rate depending on where they operate.
- Advertising – Players are unlikely to find a new casino unless the site pays for advertising. This includes advertising through affiliates, which is one of the most common ways online casinos attract new players.
- Bonuses – Finally, there’s also the cost of bonuses. Most online casinos offer bonuses to attract new players, and these lead to heavy losses if the risk isn’t calculated properly.