How the virtual casino economy works

Introduction: Housekeeper as a communication system

The economy of a virtual casino is not a "percentage of turnover," but a tightly coupled system: game mathematics (RTP/volatility) → player behavior (frequency/sessions/deposits) → marketing and bonuses → payment and tax costs → compliance and risks. It can only be controlled by metrics and discipline.

1) Basic definitions and formulas

Turnover (Stakes): the sum of all bets for the period.

Payouts - the sum of all payouts to players.

GGR (Gross Gaming Revenue): Gross gaming revenue.

💡 GGR = Turnover − Wins = Turnover × (1 − actual RTP)

Bonus Cost (gross): cash/freespins/cashback recognized as an expense.

Taxes/Levies: taxes on GGR or NGR depending on jurisdiction.

PSP Fees: fees of payment providers (deposits/conclusions/chargeback).

Affiliate payments (Affiliate/RevShare/CPA): marketing royalties.

Content Fee: share of slot/live game providers (usually% of GGR for a specific game).

Platform Fee: fix/turnover per platform/hosting/stream studios.

NGR (Net Gaming Revenue) - "net gaming revenue":

💡 NGR = GGR − Bonus Cost − PSP Fees − Content Fee − Affiliate Payouts − Other Variables

Gross Profit:

💡 Gross Profit = NGR − Game Taxes − Platform Fees (unless noted above)

OPEX: PHY, support, licenses, compliance, legal, marketing (brand), infrastructure.

EBITDA:

💡 EBITDA = Gross Profit − OPEX

2) Game math: RTP, volatility, hit rate

RTP (theoretical return): 92-98% depending on vertical. Below RTP → above GGR, but stronger sensitivity to churn.

Volatility: "how often and how big pays." High volatility gives "rarely, but a lot" - it increases emotion and risk, requires speed/rate limits.

Hit Frequency: probability of winning per round (for example, 30-35% for slots).

Game speed: Spin/hand per minute → directly affects turnover and fatigue. Ethical speed limit and pauses (RG) reduce short-term turnover but increase long-term retention.

An important consequence: player safety (Retention) and LTV usually grow at a "comfortable" speed and honest UX, even if the instant GGR is lower.

3) Unit Economics: LTV, CAC and cohorts

LTV (Lifetime Value) - expected player income per life cycle:

💡 LTV ≈ ARPU × Avg. lifetime (or discounted NGR amount by cohort)

It is more practical to count through cohorts:

break new players by registration date (D0) and build NGR on D7/D30/D90/D180;
Payback CAC: the day when the cumulative NGR − (bonuses + PSP + affiliates) covers the cost of attraction;
LTV/CAC> 3 is a healthy benchmark for stable growth.

Key conversions:

Register → KYC pass
KYC → 1st deposit (FTD)
FTD → 1st bid
D7/D30 Retention и Reactivation Rate

4) Marketing, bonuses and partners

Channels: affiliates/media baing, ASO/SEO, streamers, affiliate events, CRM (email/push/in-app).

Affiliate payment models:

CPA (fix for FTD), RevShare (% of NGR by player), Hybrid (CPA + RevShare).

Bonus economics:

Vager (xW): Required turnover to play.
Eff. Bonus Cost: actual value = "withdrawn" funds from the bonus.
Follow Bonus Abuse: arbitrage strategies, group schemes. We need device/payment method/speed limits.

CRM loop: personal suggestions for risk/value cohorts (RFM segments), re-activation with "soft" incentives, and not aggressive cache.

5) VIP segment and revenue concentration

Typically, 1-5% of payers generate 30-60% NGR. For VIP:

Liability limits (max bet/loss), personal manager, transparent terms.
Clear RG procedures: timeouts, checking the source of funds (AML), cooling-off between replenishments.
Money is more expensive than reputation: GGR's brief surge does not justify regulatory risk.

6) Payments and liquidity

PSP Fees: 0. 5-4% on deposits, up to 1-3% on conclusions; crypto-off-ramp - under the contract.

Chargebacks/Refunds: risk pools, "weighing" controversial methods.

Cash Float: Liquidity headroom for payouts/jackpots/operating expenses (often 1-3 week NGRs).

Restrictions: banning credit cards in a number of countries; limits on the speed of repeated deposits; multivariate checks for large amounts.

7) Jackpots and risk insurance

Local/network/progressives: part of the bet goes to the pool, increases conversion and PR.

Responsibility: reserve for jackpots (liability), for progressives - transparent accounting.

Hedging: for super-large prizes - insurance contracts/risk redistribution with providers.

8) B2B chain: who gets what

Content providers (B2B): take% of GGR games (approximately 8-18% in the market, varies greatly).

Platform/aggregator: fix/turnover, reporting/hosting services/stream studios.

Affiliates/streamers: CPA/RevShare.

Operator (B2C): accepts traffic/compliance/payment risk, holds NGR balance.

Lesson: there are no "cheap" games - uncompromising honesty/studio going through providers is worth their interest, but reduces operational incidents.

9) Taxes and regulation

Models vary:

GGR tax (e.g. X% of GGR), Sales tax (less frequently; dangerous with high RTP), personal income tax/deductions from winnings (local), VAT/service taxes (for commissions/platforms).

Extraterritoriality: considered by targeting the player (language, payment, domain).

Reporting: country revenue breakdown, separate accounting of bonuses/payments/affiliates.

10) Compliance, anti-fraud and RG: "trust economics"

KYC/AML: age/identity/source verification; sanctions lists; address scoring.

Responsible Gaming: deposit/bet/lose limits, timeout and self-exclusion, reality-check; banning "turbo/autospin" by default in a number of jurisdictions.

Antifraud: multi-accounts, bonus abuse, abnormal patterns; device-binding, velocity-limits.

Compliance price: Raises OPEX but lowers penalties/blockages and raises LTV through trust.

11) An example of an end-to-end economy (simplified)

Suppose for a month:

Turnover = 10,000,000
Actual RTP = 96% ⇒ GGR = 10,000,000 × (1 − 0. 96) = 400 000
Bonuses recognized as expense = 40,000
PSP Fees (1. 5% of deposits, approximately from the turnover of rates is considered through cash flow; simplify) = 30,000
Content Fee (12% от GGR) = 48 000

Affiliates (20% of NGR-to-Affiliates; calculate iteratively):

Step 1: NGR (before affiliates) = 400,000 − 40,000 − 30,000 − 48,000 = 282,000
Step 2: Affiliates (20%) = 56,400
Total: NGR = 282,000 − 56,400 = 225,600

GGR tax (say 20% of GGR) = 80,000
Platform Fee (fix + turnover) = 10,000
Gross Profit ≈ 225 600 − 80 000 − 10 000 = 135 600
OPEX (team, support, compliance, hosting, marketing brand) = 90,000
EBITDA ≈ 45 600

Conclusion: with a GGR margin of 4% and moderate costs, the project remains profitable, but highly sensitive to bonuses/affiliates and payment commissions.

12) What "breaks" the economy most often

1. Aggressive bonuses without wagering control → a high proportion of "live" money from bonuses, abuse.

2. Expensive traffic (CAC is growing), and in RevShare you share NGR "for life."

3. The payment mix is shifted to expensive methods/chargeback risks.

4. Content mix: an overabundance of highly volatile games without rhythm/pause - cache jumps and complaints.

5. Underestimated RG/AML load → penalties/locks/outflow.

13) Key control levers

RTP/volatility/speed → emotion/comfort/margin balance.

Bonus policy → vager, mouthguards, targeting, soft-reactivation.

Payments → routing on cheap PSPs, limits, cooling.

Content portfolio → alternating "rhythm," live events, tournaments, MR/VR scenes.

CRM/personalization → RFM segments, predictive outflow models, RG signals.

Affiliates → CPA/RevShare/Hybrid mix, black/white lists, creative audit.

14) CFO KPI Panel

Income and margin

GGR, NGR, NGR/GGR (%), NGR/FTD, NGR/DAU

Content Fee% and Affiliates%
Taxes/GGR, PSP Fees/Deposit Volume

Players and behaviour

Conversion Registratsiya→KYC→FTD

Retention D7/D30/D90, Reactivation Rate
ARPU/ARPPU, LTV/CAC, Payback (day)

Comfort/quality (especially VR/XR)

Session Length, Early-Exit <5 мин, Complaint Rate

RG: % Limit Players, Trigger Response Time

Risks

Chargeback Rate, Fraud Transaction Alerts/1k

Jackpot Liability, Cash Float Weeks

Compliance Incidents/month

15) Financial control roadmap (60-120 days)

0-30 days

Create a single P&L by verticals: slots, live casino, poker, sports.

Implement NGR (D7/D30/D90), Payback CAC.

Payment commission card by methods/countries, routing.

30-60 days

Rebuild bonus policy: mouthguards by segment, vager, anti-abuse.

Reduce Content Fee by games → remove low-margin traffic eaters.

RG-dashboard: default limits, cooling-off, reality-check.

60-120 days

A/B rhythm and "speed" games (pauses, effects) vs hold/complaints.

Implement predictive re-activation (soft offers, not cache dumps).

Revise contracts with affiliates (Hybrid/RevShare ceilings, SLA creatives).

16) Economic sustainability checklist

P&L by vertical and country, LTV cohort model.
Controlled bonuses: mouthguards, vager, anti-abuse.
Optimized payment mix and routing.
Content portfolio with alternating volatility and event.
RG default (limits, timeout, reality-check), transparent advertising 18 +.
Provider and Affiliate Ceiling Agreements and SLAs.
Jackpot reserves and hedge plan.
Tax reporting/GGR, trace audit.
Antifraud/chargeback procedures and velocity limits.
Cash-float ≥ 1-3 week NGRs.

Conclusion: Profit through discipline

The economy of a virtual casino is based on three pillars: honest mathematics, careful UX/rhythm and financial discipline (cohorts, bonuses, payments, taxes, RG/AML). Everyone competes with the same games - those who more accurately manage the unit economy and trust win. This is how short-term margins become long-term businesses.