Online casinos have become hugely popular over the last few years. There are more sites on the market than ever before, and they are bringing in different levels of revenue across the board. We’ve taken a close look at the various online casinos out there, and how much revenue they are likely to bring in over the course of a year.
Global Market
The global market for online casinos is growing at a significant rate. There are more sites on the market currently than at any other point in time. On top of this, there are also more players who enjoy online casinos than ever before. It means that overall revenues are rising, but remember that there are many online sites out there.
It means that even though overall revenues are increasing, it doesn’t mean that the revenue for each site is rising. What is more likely, is that the bigger sites are seeing much greater increases in revenue, but the smaller sites are seeing incremental increases, and in some cases, a drop-off in revenue.
The global revenue hit $66.7 billion for online gambling in 2020, which was up from $58.9 billion in 2019. This is actually quite a small increase when you take into account the increase in opportunity for online gambling over the course of that time. Many factors play into this, including the higher levels of infrastructure in some smaller countries, and the legalization of online gambling within the US.
This isn’t the biggest story though. The overall global revenue is predicted to hit $92.9 billion by 2023, which is most likely to be due to the uptake of online gamblers in the USA. This will be a significant increase to overall revenue, but it is likely to be cemented around a few sites, rather than spread out across the whole industry.
There are a couple of reasons why this is the case.
Monopolies
Monopolies are in place in more countries than you would think. One of the most prominent examples is Norway. Here, only the state-sponsored gambling provider is allowed to be used. It means that gambling revenue within the country is almost solely focused at that site. However, what does make a slight change to this, is the fact that offshore sites can still be accessed. Whether these sites reveal their revenue in the same way that other sites do, isn’t fully known though. So, it could be revenue that isn’t counted towards global totals.
While the US doesn’t have an official monopoly like Norway, it does still have a similar process in place. Within each state, there are just a few providers that can offer online gambling. It means that players don’t tend to have the ability to choose from a wide range of different providers. So, the revenue within the USA is concentrated at just a few different sites and providers, rather than spread out across a lot of different sites.
Popularity
This is something that has a big impact on how revenue is spread out across different online casinos. Popularity. If a site is already popular then it is much more likely to attract new players who have just entered the market. It’s why some of the bigger names in the industry tend to see sharp revenue upticks when there is an event that causes new players to try online gambling on a large scale.
This saturation makes it very difficult for newer online casinos to grab a foothold in the market. It can sometimes lead to them offering significant loss leading promotions to players. The idea is that once the player has signed up, then they will remain there in the long term.
This is obviously not an exact science, and it can mean that newcomers to the market will often fall by the wayside if they don’t have a high-quality custom at a fast pace.
Revenue Means very Little
While most people might think that revenue of $1 million per year is a good starting point for a new company, for an online casino it would be likely to make a loss on this amount. The costs that are associated with running an online casino, are very high for the first few years, and most sites will make a loss when they first startup.
This is why a lot of online casinos don’t actually announce their profits when they first startup. While they obviously have to release them, they don’t make such a big deal out of them as they will at a later date.
Part of this is due to the significant costs that regulatory licenses and deals with software providers have. When setting up an online casino, it will cost a significant amount just to put the site together in the first place. Due to this, it means that sites will have to be willing to turn a loss at first before they can expect to turn a profit in the long run.
So, when you see the significant amounts of revenue that the online gambling industry brings in, you have to understand that a lot of that revenue goes out to other areas. There are marketing costs, support staff costs, customer payouts, developer payouts, license payouts, and more in place when creating the site.
On the whole, the biggest sites are the ones that make a profit, and the smaller sites tend to have to work hard to get to that point.
Big Profits?
It should be noted that if a site is able to get past the difficult early stages, then the revenue that is available becomes a lot higher. As a loyal customer base is built up, it means that players will contribute to the overall revenue the site creates at a much higher level. This will allow for far superior levels of revenue to be created, and a more sound business plan to be implemented in the longer term.
