Online Casino Profitability in Canada: Expenses vs. Earnings

It is no secret that the online casino industry is booming on a global scale. The market for online casinos is experiencing significant expansion in a range of countries such as Canada, which allows operators to move in and cater to the demand. If the sheer number of virtual offerings is not enough to go by, financial analysts have estimated that the global industry is worth billions of dollars. The complexity of this business model has left many suspicious individuals wondering how the industry makes money and is so lucrative. Here are some of the main expenses and earnings that affect the profit margins of a Canadian online casino.

Expenses

What many skeptics fail to realize is that running an online casino requires operators to pay hefty fees and shoulder significant expenses. From the moment an online casino is pitched, potential operators need to pay certain fees and charges to ensure that the casino is abiding by the rules, will be able to maintain its market share, can afford to update the offering as often as possible, and is by the means to pay the skilled workers required to provide a seamless gaming experience.

Licensing

There are several reputable authority bodies in the world right now. Some of these organizations operate mainly in their jurisdiction and others, such as the Malta Gaming Authority and Curacao Licensing authorities, cater to more operators that offer their online casinos to a host of countries. The fee for these licenses is quite hefty, ranging from one thousand to almost three thousand euros. The licensing fee is not a once-off payment and has to be paid annually to the relevant Authority. There are also extra costs involved depending on the class of license that is required.

Marketing

For an online casino site to attract a lot of traffic and engage with potential new members, operators need to employ a marketing agency or permanent staff that specialize in the effective advertisement and marketing of the casino and it’s offering. The costs to employ a full-time team for this is significant which is why most online casinos employ agencies that work on specific projects at a fraction of the cost.

Maintenance

This expense is similar to the marketing one. For a site to function optimally and have features that are worth advertising, the site has to be maintained. Besides the software updates and improvements that need to be made to an online offering to ensure that it is on par with market standards, sites also offer value-added services such as 24/7 customer support via chat. This means that the site needs to be able to provide this functionality seamlessly.

Earnings

Considering the numerous expenses that running an online casino entails, it seems nearly impossible that casinos are making any profits at all. That being said, here are the ways that online operators cover their expenses and still manage to make a decent profit.

House Edge

The house edge is often referred to as the only legal way for casino management to manipulate the system. The reason for this manipulation is that the casino needs to make a profit on each game to sustain itself. There is a formula in place that calculates the percentage that the house pockets across various titles and on each bet. Operators are required to share this information with all members.

Memberships

Another key way that casinos make money is through loyalty programs and paid memberships on the site. There is a slight cost in running these kinds of facilities but the profits far outweigh the expenses. Paid Memberships boats a range of exciting features such as exclusive offers and promotions.

Conclusion 

Although there are already many online casino offerings on the market, new operators will likely continue to pop up to cater to the global demand of virtual gaming locations.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.