Net gaming revenue (NGR)
What is net gaming revenue?
Net Gaming Revenue (NGR) 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, payment processing fees, affiliate commissions, and other operational expenses.
Unlike gross gaming revenue (GGR), which only subtracts player winnings, NGR provides a clearer picture of the actual profitability of a brand by accounting for all major business expenditures.
Why is NGR important?
NGR is essential for understanding the true financial health of an iGaming operator. While GGR shows how much revenue is generated from player activity, NGR reveals how much of that revenue remains after all business costs are covered. This makes NGR a critical indicator for operators, investors, and regulators who need to assess profitability, plan budgets, and make strategic decisions.
For a deeper look at how NGR compares to other core metrics, see Blask’s guide to iGaming KPIs.
How is NGR calculated?
The formula for net gaming revenue is:
NGR = Gross Gaming Revenue (GGR) – Bonuses – Taxes – Payment Processing Fees – Affiliate Commissions – Other Operational Expenses
Example:
If an operator generates $1,000,000 in GGR and incurs $200,000 in bonuses, $100,000 in taxes, $50,000 in payment processing fees, and $50,000 in affiliate commissions, the NGR is:
$1,000,000 – $200,000 – $100,000 – $50,000 – $50,000 = $600,000
This figure represents the operator’s true revenue after all direct costs.
How does NGR differ from GGR?
NGR and GGR are closely related but serve different purposes:
- GGR (Gross Gaming Revenue): Measures the total revenue from player activity, minus only player winnings. It reflects the raw performance of gaming operations.
- NGR (Net Gaming Revenue): Accounts for all major business expenses, providing a more accurate view of profitability.
For more on GGR, see Gross gaming revenue (GGR).
What costs are included in NGR?
Common deductions from GGR to calculate NGR include:
- Bonuses and promotions: Free spins, deposit matches, and other incentives offered to players.
- Taxes and licensing fees: Payments to regulatory authorities and government bodies.
- Payment processing fees: Charges from payment providers for deposits and withdrawals.
- Affiliate commissions: Payments to marketing partners for referred players.
- Other operational expenses: Customer support, fraud prevention, and technology costs.
Advantages of focusing on NGR
- Clearer profitability picture: NGR shows how much revenue is actually available for reinvestment or distribution.
- Better budgeting and planning: Operators can allocate resources more effectively by understanding their true net income.
- Investor and stakeholder confidence: NGR is a standard metric for evaluating business performance and potential.
Challenges and considerations
- Varying definitions: Some jurisdictions or operators may define NGR differently, so it’s important to clarify which costs are included.
- Impact of bonuses and promotions: Aggressive bonus strategies can significantly reduce NGR, even if GGR remains strong.
- Regulatory requirements: Operators must comply with local tax and reporting rules, which can affect NGR calculations.
For insights into how regulatory environments impact revenue and profitability, see Blask’s path to a novel metrics breakdown framework for local and international iGaming brands.
NGR and other financial metrics
| Metric | What it measures | Use case |
|---|---|---|
| GGR | Revenue after player winnings | Operator performance, taxes |
| NGR | Revenue after all business costs | Profitability, budgeting |
| Blask Index | Market interest and share | Market analysis, trends |
| Competitive Earning Baseline (CEB) | Expected revenue based on market data | Strategic planning, benchmarking |
Case study: NGR in action
An iGaming brand reports $2,000,000 in GGR for the quarter. After accounting for $400,000 in bonuses, $200,000 in taxes, $100,000 in payment processing fees, and $100,000 in affiliate commissions, the NGR is $1,200,000. This figure allows the operator to assess profitability, plan investments, and compare performance against industry benchmarks.
Best practices for optimizing NGR
- Monitor bonus spending: Track the impact of promotions on NGR and adjust strategies as needed.
- Streamline operations: Reduce unnecessary costs to improve net margins.
- Stay compliant: Ensure all taxes and regulatory fees are accurately calculated and paid.
- Use data-driven insights: Leverage analytics platforms like Blask to track performance and identify optimization opportunities.
Conclusion and next steps
Net Gaming Revenue (NGR) is a vital metric for any iGaming operator, providing a transparent view of profitability after all business costs. By focusing on NGR, brands can make smarter financial decisions, optimize their operations, and build sustainable growth.