Where Every Dollar of GGR Goes: The Full Economics of an Online Casino

Online casinos do not always generate high profits. In our model, from $100 in GGR, an offshore operator retains $14, an EU operator earns $8, and in the UK, the operator actually loses $7.1. In this text, we break down the economics of online casinos across three cases: an offshore license, a European license with a 22% tax rate, and the UK, where the tax for online casinos nearly doubled from 21% to 40% starting April 2026.

Key Takeaways

With $100 in revenue, sales costs, marketing, and other operational expenses leave the operator with $14 under an offshore license (Curaçao, GGR tax: 0%), $8 in a regulated European jurisdiction with a 22% tax, and a loss of $7.1 in the UK with a 40% tax (assuming bonus and marketing costs remain unchanged).

Non-tax expenses exceed tax costs. Admin Fee (operational costs) includes various expenses related to product management, such as payment system commissions, player support and retention costs, royalties to providers, and other charges—these together take $45–65 from every $100 in GGR, depending on the jurisdiction.

Public operators’ data confirms the model. For example, Betsson’s gross margin in 2025 was 63.1%, with an EBIT margin of 21.1%, while Kindred paid 26% of its revenue in betting taxes.

What Is GGR and Why It’s Not Revenue

GGR = total bets – total winnings. Simply put, if your players wagered $1,000,000 and won $960,000, your GGR is $40,000. Regulators may use GGR to determine tax payments.

GGR is gross revenue, meaning the total bets minus winnings, before deducting bonuses, balance adjustments, taxes, and operational expenses. NGR = player bets – winnings – bonuses – balance adjustments, i.e., GGR minus bonuses and balance adjustments. Taxes and Admin Fee are deducted from NGR when calculating EBITDA. Admin Fee includes:

• Payroll for the team;
• Regular licensing fees;
• Technical support;
• Payment and gaming commissions;
• Platform fees;
• Sales costs;
• Marketing expenses, and so on.

Taxes and Admin Fee are deducted from NGR—the remaining amount in the model corresponds to EBITDA.

In our model, we analyzed $100 in GGR by expense categories across offshore casinos, regulated Europe with a 22% tax rate, and the UK with a 40% tax rate. Next, we sequentially examine expenses for bonuses, taxes, game providers, platforms, payments, acquisition, KYC, and the team.

The Model: Three Casinos, One Dollar

We developed an averaged financial model for an online casino (GGR of $3–10 million per year) based on public operators’ reports, regulators’ price lists, and industry benchmarks—all sources are listed at the end. We derived three scenarios:

Scenario A (Offshore). We took a Curaçao license, large bonuses, white label, crypto support, and Tier-2/Tier-3 gray markets.

Scenario B (Regulated Europe). Here, we used a local license with a 22% tax, an in-house platform, limited bonuses, an open payment system, and bank card support.

Scenario C (UK after April 1, 2026). A local license, 40% tax (plus a responsible gambling levy of 0.1% to 1.1%), and strict limits on promotions and player checks.

Table 1. 15M model for an average online casino, in dollars per $100 GGR.

After deducting all necessary expenses from $100 in GGR, we arrive at the following profits: $14 with an offshore license, $8 in a regulated market, and -$7.1 in the UK.

Section 1. Bonuses: 12–20 Percent, and That’s Before Tax

GGR is the casino’s gross revenue. NGR is GGR minus bonuses and balance adjustments, before taxes and Admin Fee. The industry benchmark for the gap between GGR and NGR is 20–40%. For example, DraftKings’ NGR was 62–70% of GGR—promotions took up to a third of revenue. In our model, bonuses account for 12–20% of GGR. They are treated as a direct deduction when calculating NGR, not as marketing expenses.

The specific share of bonuses in GGR depends on the jurisdiction:

• In offshore markets, where bonuses are the main affiliate argument in creatives, they account for 20% of GGR;
• In regulated Europe, with limits on the size and number of welcome bonuses, they account for 15%. For example, in Sweden, bonuses can only be issued upon registration;
• In the UK, conditions have significantly worsened—bonuses have become less attractive due to increased wagering requirements and stricter transparency. We take 12% on average.

It should be noted that free bets and free spins have been part of the UK’s GGR tax base since 2017. Thus, bonuses increase the tax, rather than reduce it, as the operator pays 40% on the money it has already given away.

Section 2. Tax: From Zero to 54%

Tax is the only expense item that varies from 0% to 54% of GGR, depending on the jurisdiction specified in the license. The table below shows rates for 13 jurisdictions based on Track360 data.

Table 2. GGR tax rates in 13 jurisdictions as of September 8, 2026.

Public reporting shows how tax rates translate into a burden on operators’ revenue in practice. For Kindred (Unibet) in 2023, betting taxes amounted to £318 million with revenue of £1,210 million—26.3%, with 82% of revenue coming from locally regulated markets. For Betsson in 2025, betting taxes amounted to €186 million—15.5% of revenue, with 68% of revenue from regulated markets.

Pontus Lindwall, CEO, noted that the growth in this share was the reason for the decline in operating profit: “The share of revenue from locally regulated markets reached a record 68% (compared to 60% the previous year), which, in turn, affected the increase in gambling taxes.”

The jump in the UK from 21% to 40% was the sharpest in the history of regulated markets. Evoke (William Hill, 888) estimated the additional impact on the group at £125–135 million per year with revenue of £1.78 billion. Non-Executive Chair Mark Summerfield pointed to the market connection: “The situation in regulated European markets like the Netherlands shows that a sharp increase in taxes leads to consumers quickly shifting to the illegal market.” The Netherlands is not just mentioned here: after the tax hike to 34.2%, the country fell short of its tax revenue forecast by approximately €200 million (iGB).

Section 3. Game Providers: 12 Percent, Independent of Jurisdiction

After game development, the provider needs to place the game on multiple casino platforms. This is usually done through intermediaries, sometimes via direct integration with the operator. The commercial model is based on revenue sharing. The publisher receives a percentage of the GGR for each title and transfers part of the revenue to the development studio.

• 11–26% of GGR goes to original game suppliers; 
• Commissions to lesser-known providers for slot copies average 9–13%. This scheme is especially popular among small providers who lack the resources to enter the market independently;
• 6–10% is usually paid for a sports engine (SoftIGaming, 2025 price list);
• 9–18% is paid when working with aggregators. An aggregator company enters into contracts with game studios and offers operators ready-made game packages through a single API. The aggregator takes a percentage of the GGR: part goes to the provider, part is kept by the aggregator;
• Many large operators launch in-house game development studios. Own content is maximally beneficial to the business: no need to pay commissions to third-party aggregators and providers. However, only companies with significant technical resources and a large user base can implement such a scheme.

In our model, we used the same provider rate ($12 out of $100 GGR in all three scenarios). The actual rate is determined by the commercial agreement and can be negotiated considering the jurisdiction and its tax. Betsson’s report partially confirms this. License fees (payments to game and platform providers) in 2025 amounted to 8.6% of revenue (€102.6 million). It’s important to remember that Betsson is an operator with its own platform and a large sports share, so its percentage is lower than that of a pure casino.

Section 4. Platform: 4–8 Percent or Developer Salaries

The next step after market analysis is choosing a platform for the future casino. The operator has three options:

White label. When choosing a white label, no separate license is required—the operator uses the platform’s existing certificate. This allows for a quick launch (4–12 weeks on average), a one-time payment for product creation (setup fee of $15–150K and $5–50K per month for maintenance (Symphony Solutions, 2026)), and a constant commission of 10–30% of GGR.

Turnkey solution. Unlike White Label, a turnkey solution gives the operator more control over the product. It uses its own license and a third-party platform (fixed payment).

In-house platform. In this case, the operator creates a unique platform from scratch. This approach requires significant investments, including forming a development team and technical support. Without a full C-level core, the project simply won’t survive. The platform is a complex IT product that will take several years to develop. Since the entire infrastructure is built from scratch, substantial investment is needed to reach MVP.

For the offshore scenario, we took a white label at the lower level (10% of NGR, which is $8 per $100 GGR).

In regulated scenarios—own or ready-made platform with amortization of about 4% of gross revenue; for Kindred and Betsson, which control the technology, these expenses go into employee salaries and “other” costs.

Section 5. Payments: The Stated 2.8% Turns into 8–11%

In addition to the usual percentage commissions for each payment, there are other expenses that can significantly increase the operator’s total costs. Among them is the base rate deducted from each transaction. For example, 2.8% of the deposit amount. This is usually the figure discussed during negotiations with providers, but it is far from the only one.

Gambling is classified as a high-risk business. Players often dispute payments through the bank—either out of ignorance or deliberately trying to recover lost money. Due to these risks, operators pay higher commissions to providers and face constant restrictions from regulators in target GEOs. A peculiarity in iGaming is the high percentage of first deposit rejections due to bank filters that consider gambling suspicious activity.

Fixed commissions are especially painful for operators with a small average check—with a $5 deposit, a fixed fee of $0.5 amounts to 10% of the transaction. The rolling reserve is usually 5–15% of each transaction.

The stated 2.8% of the deposit amount reflects only the base acquiring rate. The effective cost of payments, including fixed commissions, reserves, and chargebacks, reaches 8–11% of the deposit amount. In our model, these expenses amount to $8 per $100 GGR offshore, $5 in regulated Europe, and $4 in the UK.

Section 6. Acquisition: 17–25%, with a Third Going to Affiliates

Marketing is often the second-largest expense. Kindred Group published preliminary results for the 2023 financial year, where £220.7 million was spent on marketing. Marketing expenses amounted to approximately 18.2% of gross revenue. Another £37.7 million went to RevShare commissions. Affiliate marketing operates on a performance-based model, eliminating upfront payments and allowing operators to pay only for actual player acquisition.

Small casinos are noted to use affiliate programs the most, as 40–60% of new players come through affiliate channels. Affiliate programs from different products vary significantly in terms of rates per referred player and payment models (CPA, RevShare, Hybrid). The amount can be fixed (CPA) or percentage-based (RevShare)—calculated from player losses.

The hybrid model combines the two main payment models—CPA and RevShare. However, rates and percentages in the hybrid model are usually lower than when working exclusively with RevShare or only CPA.

In our model, acquisition costs amount to $25 per $100 GGR offshore, $18 in regulated Europe, and $17 in the UK. Offshore, paid traffic and bonus promotion are more expensive. Rising customer acquisition costs squeeze the profit margins of small affiliate operations. Affiliate payouts account for about a third of this expense item.

Section 7. KYC and Compliance: 1–3 Percent; Levy Separate

As more key countries move toward regulating the iGaming industry, the importance of compliance and cooperation with regulators continues to grow. However, even in already “white” markets, regulators are simultaneously tightening control over the sector. The state fights gambling addiction and money laundering by strengthening KYC and AML standards and limiting advertising.

Consider this: the cost of onboarding a client for most banks is about £50, but for online gambling operators, it’s closer to £200. Even accounting for customer acquisition and marketing costs, this is incredibly high. Operators must also consider the infrastructure needed to launch a compliance platform and the costs associated with obtaining licenses and approvals.

In the model for the UK scenario, there is also a mandatory levy, which amounts to $1.1 per $100 GGR and is shown as a separate line “RG Levy” in Table 1. The “KYC and Compliance” line includes only external expenses for verification, licensing, and audit fees, without compliance team salaries and the separately shown RG levy.

Licensees who do not pay the levy may lose their licenses.

Section 8. Team and Operations: 12–14%

Arbitrageurs are generally not ready to take on operations—essentially, it’s a new business that needs to be built from scratch. The minimum cost is $12 per $100 GGR.

The largest operational expenses are undoubtedly personnel costs. This is a static item—payroll for technical support, the C-level management core, back office, and administration. Without a management core, no project will survive. And since this is the only item entirely made up of salaries, reducing it is difficult.

Volumes cannot be reduced as quickly as bonuses or marketing. In each $100 GGR, we allocate $12 offshore, $14 in regulated Europe and the UK. In the latter case, an additional team is added to handle compliance, reporting to the regulator, and responsible gambling. Compliance team salaries are only accounted for here, in the “Team and Operations” line, and are not duplicated in the “KYC and Compliance” line; these are fixed costs that do not decrease proportionally with GGR.

Conclusion: What’s Left

All expense items and EBITDA remainder are summarized in one table. The last column shows the same UK model before April 1, 2026, when the rate was 21%, to see the cost of one license change.

Table 3. Summary of all items, in dollars per $100 GGR.

We can draw three conclusions from this table:

1. Only in the United Kingdom does tax outweigh bonuses and marketing combined. Offshore, bonuses, providers, payments, and acquisition take $65 of every $100 GGR; in regulated Europe — $50. When taxes rise, margins fall. The direct impact of tax increases is felt more in profit margins than in player expenses.
   
2. At 40% tax, the math stops working. The UK scenario shows an EBITDA loss of $7.1 under the same operational conditions that previously yielded nearly $12 before April 2026. The difference between 21% and 40% is 19 points, while the operator’s total EBITDA was 12.
   
3. Large companies will stay, medium ones will disappear. So far, large operators remain relatively protected. Their international diversification allows them to absorb weaknesses in the UK market while redirecting investments elsewhere. Firms under greater pressure appear to be mid-sized, casino-focused operators with lower profitability and greater dependence on the UK market.
   

How a UK Operator Survives

Operators have a limited set of countermeasures: reducing bonus generosity, tightening VIP program management, cutting customer acquisition costs, improving automation, lowering RTP, or scaling through consolidation. Major UK-listed operators have published mitigation plans to compensate for and offset the loss, aiming to restore EBITDA to $8–10 per $100 GGR. Our calculation below shows how hard that is.

• Bonuses are being reduced (from 12% to 8%). Evoke’s CFO Sean Wilkins revealed that the group prioritizes high-value players over customer volume. Regulus said many operators are still protecting bonus levels while trying to cut other costs. However, analysts believe this approach is “unsustainable” as bonus costs rise and other savings opportunities are exhausted;
• Marketing spend is being cut from 17% to 14%. For leading UK operators, these emergency mitigation plans will unanimously include cost reductions across all areas (job cuts), promotions (fewer bonuses), and marketing (less advertising);
• Game provider costs are being cut from 12% to 10%. The rise in Remote Gaming Duty to 40% creates pressure. Some operators will reduce costs; others will restructure their relationships with suppliers. Evoke stated it expects to mitigate about 50% of the tax increase impact, including savings on suppliers.

So: 8 + 41.1 + 10 + 4 + 4 + 14 + 3 + 14 = 98.1, EBITDA approximately $2 per $100. This isn’t about business—it’s about stretching to the next budget. It also explains why Evoke, Entain, and Flutter are simultaneously complaining about the market: a player whose bonus has been cut and slot margin increased will go where a 0% tax allows offering 96% RTP and a 200% bonus.

Reducing slot payouts from 96% to 95% with the same number of players increases GGR by 25%, and to 94% by 50%. This is the house edge arithmetic: 4 → 5 → 6 points. Customers don’t immediately notice such a decline. As Helen Walton, co-founder of G.Games, says: “RTP is absolutely a pricing lever. Operators are already using it.” In the UK, she notes: “Standard RTPs have shifted from about 96% to 94%.”

What This Means for You

For the Operator. Operators who understand how these metrics interact make better operational decisions. If you only look at GGR, you usually notice problems too late. In a market with a 25% tax or higher, the model must be profitable with bonuses ≤10% and marketing ≤15%.

For the Affiliate. Operators typically deduct for things like taxes, licensing fees, software, banking costs, bonuses, chargebacks, marketing, and administrative fees. Most in the industry recognize that as markets become regulated and taxes rise, these deductions increase—leaving less profit in circulation, and most affiliates understand this will affect them just as much as operators.

For the Provider. Existing supplier relationships will be reviewed, new investments will undergo stricter scrutiny, and procurement negotiations will become more commercially oriented. Projects that previously looked attractive because they represented innovation may now struggle to secure budgets if the link to measurable business outcomes isn’t clear. For B2B suppliers, “we have a great product” becomes a much weaker proposition.

Methodology

In this article, we discussed the nuances of operating a casino, main expenses, and challenges. If you don’t look at margin quality and cost structure, you see a snapshot, not the full picture.

The 15M scenario models describe expense items in $/$100 GGR for three scenarios: an offshore Curaçao license (0%), local licenses in Europe (22%), and the UK (40% + levy). Expenses are current as of September 8, 2026, and for a 2–2.5× deposit-to-GGR ratio. The main sources of figures were: Kindred’s 2023 report, Betsson’s 2025 report, Evoke’s 2025 results, Track360’s tax and affiliate rate summary, and regulator data on jurisdiction rates.

The expectation is that tax increases will lead to a noticeable market crisis. “We readily admit, however, that we don’t yet have clear data confirming this,” said Regulus Partners. “The problem for forecasting and, more importantly, for operating in the UK online gambling market is that nothing special will happen until everything happens at once.”