Gross Gaming Revenue (GGR) is one of the key performance indicators used in the gambling business. In some countries, it can also be referred to as Gross Gambling Yield (GGY). In this article, you will learn what GGR depends on and how to calculate it.
The formula for calculating GGR
GGR is a financial index that determines the gross revenues of a gambling institution. It is calculated as the difference between the total amount of all bets by the players (A) and the amount of all wins (B). So, it refers to the amount retained by operators after they pay out all the winnings but before they pay taxes and without deduction of the operation costs.
*A is the amount of deposits made
B is the amount of payouts
Why is it so important to correctly understand the GGR? Gambling taxation in many countries depends on GGR. If the tax was fixed for any kind of gambling houses, it could be extremely high for some operators and very low for others.
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When calculating the GGR, additional costs and taxes are not considered. The additional costs mean any other payments except payouts to the players. Those include staff salaries, equipment costs, website maintenance fees, etc.
How bonuses affect casino GGR
When calculating GGR, free bets or bonuses are taken into account only if the player wins and withdraws the money.
For example, the player makes the free (bonus) bet equivalent to $10. If he wins, he can get money. In case of loss, he loses the bet amount.
In this case, the amount of the bet made (A) is equal to zero because the player has deposited $0. If the player loses, GGR stays the same. But if the player wins, this amount is deducted from GGR.
Revenue share GGY
In the context of GGY, it is possible to meet the terms “Proprietary GGY” and “Revenue share GGY.” The first refers to GGY retained by remote operators not subject to a revenue share agreement (individual operators) - this is a basic GGR model. The second one means that GGY is subject to a contractual arrangement to be shared between two or more parties. For instance, it works as a model of an affiliate program, where affiliates receive a share of the profit they brought to the casino. For example, the affiliate attracts gamblers to online casino and receives a percentage of their losses.
GGR is dynamic and can change from month to month, from year to year, depending on players’ luck. Operators should keep in mind that even if the number of players and amounts they deposit stay quite similar, GGR will still be different as the winnings are generated completely randomly.