How taxes and license affect casino profits

1) Basic Casino Economics: A Simple Model

GGR = player bets − winnings (or 'bets × hold '/house edge).

NGR (net gaming income) = GGR − bonuses − upcells of providers − jackpot deductions.

Casino EBITDA ≈ NGR − (taxes + license fees + payment providers + hosting/CDN + studios/game providers + compliance + marketing + support).

Mini-calculation (for clarity):

Monthly rates: 1,000.
Mean hold: 4% → GGR = 1,000 × 0.04 = 40.
Bonuses and jackpots: 6 → NGR = 40 − 6 = 34.
GGR tax: 20% of 40 = 8.
License/fees/compliance/payments/content/marketing and operating system: 18.
EBITDA = 34 − 8 − 18 = 8.
Conclusion: for the same traffic, the key "switch" is the tax rate and the total cost of the license/compliance.

2) Exactly how taxes change margins

Taxation models (found individually or in combinations):

1. Turnover tax - a percentage of all rates.

Plus: ease of administration.

Minus: the most painful for low-margin products (sports betting, live games). Even 1-2% of the turnover with a hold of 3-5% "eat up" the lion's share of the margin.

2. GGR tax - percentage of gross income (bets minus winnings).

Balance of interests: Correlates better with real margins.

3. Income tax (CIT) - on accounting profit after expenses.

Depends on accounting; with a strong operating system, it may be lower than the shares on GGR.

4. VAT/sales tax - sometimes not applicable to rates, but may apply to fees/services.

5. Withholding taxes - deductions from winnings that affect player behavior (below turnover → below GGR).

Practical effect:

With a 2% turn-over tax and a 4% hold, the effective "tax share" from GGR = '2 ÷ 4 = 50%'.
With a GGR tax of 20%, it is taken only from margin, and not from turnover, therefore it is more predictable.

3) License: fixed and variable costs

What the operator usually pays:

Application fee/Due diligence fee: one-time application and verification fees.
Annual license fee: an annual fixed fee (sometimes on a turnover scale).
Compliance cost: RNG audit, game certification, system tests (on demand).
Contributions to responsible funds/ombudsmen (if provided).

Why it matters: Fixed amounts put pressure on small operators and startups, raising the payback threshold. Big brands are smearing fiscal and compliance costs on more GGR.

4) Regulatory requirements affecting the economy

RTP and mechanics: minimal RTPs (e.g. 95% +) reduce hold and GGR per unit turnover, but increase trust and LTV.

Responsible play and limits: deposit/time/lost limits reduce short-term turnover, but increase stability and reduce chargeback/complaints.

Speed and payment rules: hard SLAs for withdrawing money → higher costs for payment rails and liquidity, but less churn.

Marketing and KYC: prohibitions on aggressive advertising, KYC before the game, age gates - lower registratsii→depozit conversion, but better quality of cohorts.

Technical hosting/mirrors/logging: log storage, server localization and monitoring requirements increase OPEX.

5) Providers and payment rails

Payment commissions (cards, A2A, wallets, crypto processing) directly cut NGR.

Content fee (game studios): fix + rev-share.

Chargeback/fraud filters and online screening (if there is crypto) - compliance costs, but save on fines and risks.

6) "Jurisdiction A vs Jurisdiction B" scenarios

A: High turnover tax (2%), soft licence

Holds on slots/rates are "squeezed" due to turnover tax.

It takes a lot of momentum and deep marketing to keep EBITDA.

The risk of "skewing" the product matrix in favor of high-margin games.

B: 20-25% tax on GGR, strict licence but predictable rules

Margins are more stable; easier to plan cohorts and LTV/CAC.

Higher fixed compliance costs, but fewer regulatory surprises.

The operator wins with mature analytics and careful marketing.

7) How to calculate the break-even point (BE) in a simple way

Let:

Stakes = 'S', hold = 'h'. Then'GGR = S × h '.
GGR tax = 't'. Tax = 'GGR × t'.
Other variable costs = 'v × GGR'.
Fixed (license, salaries, infrastructure) = 'F'.

Then EBITDA ≈ 'GGR × (1 − t − v) − F'.

GGR BE point: 'GGR = F ÷ (1 − t − v)'.

The higher the't' and 'v', the more GGR is needed to "go to zero."

8) Which strengthens profits when fiscal burden is high

Shift to products with better hold (but no UX deterioration): competent portfolio of slots/live games.

Retention increase: CRM segmentation, missions, tournament grids, personal offers instead of "wide" bonuses.

Payment optimization: local methods with a lower commission, a decrease in the share of chargeback.

Anti-fraud and compliance by design: fewer fines/returns - cleaner margins.

Content mix and procurement: negotiations with providers (minimum fix-fee, more rev-share, where it is profitable).

A/B control of RTP and bonus economics: balance "generosity ↔ LTV."

Jurisdictional portfolio: licenses in several countries to diversify tax rates and marketing opportunities.

9) Frequent misconceptions

"Offshore will solve everything." Payment costs and risks of blocking/fines often increase; Cohort LTV is worse due to trust.

"Let's raise RTP - that's enough." RTP affects the hold, but without retention and unit economics of marketing, EBITDA will not save.

"Marketing will pull out." With the turnover tax, the growth of turnover can increase the "tax leak" faster than the margin.

10) Mini-FAQ

Which is more harmful for margin: 2% from turnover or 20% from GGR?

When holding 4%, 2% of turnover is equivalent to 50% of GGR - significantly heavier than 20% of GGR tax.

Why pay an expensive license if there is a cheap one?

Expensive often gives stable access to payments/advertising and increases player confidence → higher retention and LTV, paying off fix-fee.

Does RTP at the request of the regulator affect profits?

Yes I did. A higher RTP minimum reduces cold, but improves trust and turnover. Balance is key.

Is it possible to compensate for the high tax?

Partly due to the portfolio of games, local payments, a decrease in bonus burn, strong retention and jurisdictional mix.

Casino profits aren't just about traffic. The tax model (especially the turnover tax), the GGR tax rate, fixed licensing and compliance costs and regulatory requirements for RTP/marketing/payments put the most pressure on the final margin. An operator who considers the unit economy wins, selects the right jurisdiction, optimizes payments and withholding, and builds compliance as part of the product - then even with a high fiscal burden, EBITDA remains healthy.