Budget Planning in the iGaming Business

To estimate potential costs and profits, you should understand the capabilities of your casino.

They depend on many factors:

the quality of hosting;

the characteristics of a gaming platform;

the type of a licence;

the assortment of entertainment software, etc.

Information about these parameters will help you determine the scale of the future project, the outreach of an audience, and potential revenues.

A lot of external factors also affect the profitability of casinos:

the economic situation in the country and the world; the characteristics of a particular market; the effectiveness of business promotion, and others.

When launching a new entertainment start-up, an operator needs to plan each step very carefully. This will help a businessman to enter the market as efficiently as possible and avoid mistakes. Financial calculations play a particularly important role in organising the work of a new project.

Learn how to plan an online casino budget correctly from this article prepared by Smart Money. Order the creation of a business development strategy with detailed calculations for your project.

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The Estimation and Calculation of Costs and Profits

When creating a start-up, you cannot predict the exact amount of expenses and potential financial benefits. However, you may analyse some parameters that will affect the operation of your future business and forecast approximate costs and income. This stage is called estimation.

After launching a project and starting the interaction with the audience, you will see real results. This will let you compare them with your predictions. This stage is called calculation.

How to Determine Potential Income?

To estimate potential costs and profits, you should understand the capabilities of your project. They depend on many factors:

• the quality of hosting;
• the characteristics of a gaming platform;
• the type of a licence;
• the assortment of entertainment software, and others.

Information about these parameters will help you determine the scale of the future project, the outreach of an audience, and potential revenues.

Consider the example presented in the table:

In total, clients will put impressive sums into a site. However, it is worth understanding that these are not an operator's profits.

This money will be used to place bets. Each gaming machine has a certain percentage of return to the player. Thanks to this parameter, you can easily calculate the potential revenue of an online project.

These are rough estimates. As a rule, the winning amounts are used by players for further bets. Therefore, actual profitability figures may differ from forecasts.

The average ratio of the total sum of deposits to an operator's revenue is about 55%. This means that if a client deposited $1 into the account, about 55 cents would be an operator's hypothetical profit. It is worth considering this fact when planning the budget for your internet project.

The Determination of Probable Expenses

It should be understood that the amount received above is a very rough calculation. In addition to accumulating profits, an operator also needs to invest the funds received in the continuous development of a business and attracting new customers. Therefore, it is worth paying close attention to costs when developing a financial strategy.

Approximately 10% of the revenue goes to promotional activities. Operators spend another 2% on the formation of the prize fund.

Consider the example:

In addition to the expenses on advertising and pay-outs to players, the following costs should also be considered:

• the payment of taxes — 18%;
• the purchase of software — 12%;
• fees for processing payments — 3%;
• gaming platform maintenance — 4%;
• refund of money — 2%.

Let us see how the amount of potential profits will change, taking into account these expenses:

It is worth remembering that the hypothetical income will decrease after payments to players.

The Calculation of Costs and Revenues after the Launch of a Project

This approach to determining expenses and profits is applied after the opening of a start-up. An operator already has accurate data on the functioning of a platform. Thus, it is possible to determine the current result and plan further work more effectively.

Consider the example:

Now we should make calculations considering RTP:

Next, it is worth making calculations, considering the costs of promotional activities and the formation of a prize fund. In the specific example, the operator spends 14% of the revenue on bonus programs. The amount allocated for jackpot pay-outs is 1.5%.

In the process of interacting with customers and suppliers, the operator will determine the exact amounts required to pay for the services of providers, fiscal deductions, and other costs:

These calculations will help you get the amount as close to reality as possible. However, it is worth noting that a lot of external factors also affect the profitability of casinos:

1. The economic situation in the country and the world.
2. The characteristics of a particular market.
3. The effectiveness of business promotion, and others.

The Main Things about Planning an Online Casino Budget

The most important task in creating a business plan is financial calculations. Having a rough idea of ​​potential costs and revenues will help you manage your monetary resources properly and maximise income.

• Operators can predict expenses and earnings based on the characteristics of their projects.
• Entrepreneurs should generate reports to track costs and profit tendencies.
• The comparison of forecasts and real data will allow a businessman to create an effective strategy.

To develop a detailed financial plan with the essential calculations, enlist the support of professionals.

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The Smart Money team has extensive experience in business planning and maintenance of gambling projects of various scales. We are ready to share useful information and create a unique strategy for the development of your start-up.

Contact our managers to learn more about the topic and conclude a cooperation agreement.