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iGaming Glossary

What is NGR (net gaming revenue)?

NGR, or Net Gaming Revenue, is a key financial metric in the iGaming industry. It represents the total revenue generated by a gaming operator after deducting specific costs, such as bonuses, taxes, and other operational expenses. It provides a clearer picture of the actual profitability of a brand compared to gross revenue figures.

How does NGR (net gaming revenue) work?

To calculate NGR, operators subtract all relevant deductions from their gross gaming revenue (GGR). These deductions typically include:

  • Player winnings
  • Bonuses and promotions
  • Taxes and regulatory fees
  • Payment processing costs
  • Affiliate commissions

For example, if an operator's GGR is $1,000,000 but $300,000 goes to player winnings, $100,000 to bonuses, and $50,000 to taxes, the NGR would be $550,000.

GGR vs. NGR: Understanding the difference

GGR (Gross Gaming Revenue) and NGR (Net Gaming Revenue) are often confused, but they serve different purposes and provide distinct insights:

  • GGR measures the overall size of revenue generated, whereas NGR indicates the actual profitability of the operation.
  • GGR is useful for market size evaluation and trend analysis. NGR is crucial for operational decision-making and assessing financial health.

Why is NGR (net gaming revenue) important?

NGR is a vital metric for iGaming operators because it reflects the actual revenue available after accounting for costs. It is used to:

  • Assess profitability.
  • Inform strategic decisions, such as budget allocation and market expansion.
  • Evaluate affiliate and partnership performance (as commissions are often calculated based on NGR).

For stakeholders like investors or regulators, NGR is a reliable indicator of an operator's financial health and sustainability.

Examples of using NGR (net gaming revenue).

  1. Affiliate Marketing: Affiliates are often compensated based on a percentage of NGR, incentivizing them to attract high-quality traffic that converts to long-term players.
  2. Budgeting: By understanding their NGR, brands can accurately plan budgets for marketing, operations, and product development.
  3. Market Comparison: Operators can benchmark their NGR across different markets to identify high-performing regions or areas needing optimization.

Benefits of tracking NGR.

  1. Operational insight: Provides a realistic view of profitability.
  2. Cost management: Helps operators identify high-cost areas and optimize them.
  3. Performance-based incentives: Facilitates fair and transparent compensation for affiliates and partners.

Tips for iGaming brands on maximizing NGR.

  • Optimize bonus structures: Design bonuses to attract players while minimizing excessive deductions.
  • Monitor payment processing fees: Negotiate lower rates with payment providers or prioritize cost-efficient methods.
  • Focus on player retention: Retaining loyal players reduces the cost of acquiring new ones, positively impacting NGR.
  • Drive quality traffic: Focus on players likely to generate consistent deposits.