Many investors are willing to put their money in the gambling industry for one sole reason; it is profitable. However, some bettors still tend to lose focus and rush in to make quick profits. It is not a good idea for so many reasons.
The first reason is that the gambling industry is not one that would bring in millions of dollars on the first day. The business is about longevity. Every investor should go into it with a long-term mindset, or else it won’t pan out well.
Another factor is planning. Those that rush into the business do it without proper planning. What happens to these sets of people is that they lose the drive over time. The structure is such that you must have everything mapped out beforehand. It promotes longevity.
Knowledge from proper research is also lacking for persons who decide to rush in for the profits. Just like any other business, there are important things that every potential investor should know before starting. An important thing is Gross Gaming Revenue.
What is Gross Gaming Revenue
It is commonly known as GGR or game yield, and every gambling business owner must know what it entails. It is a way of calculating the sales or revenue from your business. It helps to keep tabs on the cash flow. Many tend to see the gross gaming revenue as the business’s profits or earnings, and it should not be like that.
To get the total GGR, the winning payouts of customers, who are the bettors, in this case, is subtracted from the total amount that they wager. The amount gotten is tagged as the revenue of the business. Most times, it is best to do it annually.
Most gambling businesses and platforms make the calculations and publish on an annual basis for the public in the form of the casino games api to know what their worth is at that year ending. While some other ones don’t give the exact number but only a range of what their revenue is at.
How to Calculate GGR
There is more to it than calculating only the GGR of the business; there is also another term called Gross Gaming Revenue Margin. The calculation of this varies a little. In this case, you divide the original Gross Gaming Revenue by the total amount wagered by the bettors. The result is usually a percentage.
The GGR margin indicates the rate at which the business is retaining money compared to the amount wagered by the bettors. It is easy to deduce that the higher the GGR margin percentage, the better it is for the business. It is what they term as profit-making.
One thing to note is that the GGR margin does not come in a high percentage like 100% or slightly lower. It is in a small percentage like around the 10% region. It is because of the nature of the gambling business. The bettors must also be winning for them to keep playing. However, in a long term basis, the owner too takes a fair share of profits.
Knowledge is Power
The summation of everything is that potential investors should equip themselves with the right knowledge and skill sets before starting up the business. Imagine an online gambling business owner that doesn’t know anything about the Gross Gaming Revenue or the margin; such a person has no idea of how the business is fairing.
Cases like that would lead to reckless losses in the long term. Someone who does not know if the business is running in losses or extreme profits knows how to manage the risks. It is only a matter of time before bankruptcy comes around.