Everything You Should Know About Gambling Business Key Performance Indicators

April 2021, 07
Gambling Business Key Performance Indicators

Its increasing popularity can be attributed, at least in part, to the level of convenience it offers its players. The players need not travel to casinos within their city or to a whole another city to put their luck to the test. They can go online and do it anytime they want, on any device they like. That’s the kind of convenience that has the potential to revolutionize an entire industry, and it is happening.
As more and more internet users are flocking the online casinos, a growing number of online gambling businesses are cropping up to meet these demands. As the online gambling industry is still in its nascent stage and there is plenty of room for growth, this is the right time for new players to enter this market.
Just because the industry is growing, it doesn’t mean that all the players will thrive effortlessly. Every gambling enterprise should be mindful about their own performance, so that they are going in the right direction. To maintain sustainable revenues, businesses should monitor, track, and improve what are known as key performance indicators (KPIs) that are specific to their industry.

What does KPI stand for in business?

KPI stands for key performance indicator. KPIs, or Business KPIs, are industry specific metrics that indicate the performance of an enterprise over a given period of time. Depending on its strategic and operational objectives, a gambling company may have to focus on improving one or more of these KPIs.

Difference between key result areas (KRA) and key performance indicators (KPI)

All enterprises, small and large, have multiple strategic and operational objectives, which they must achieve for long term success and sustainability.
Business KPIs are quantifiable and measurable metrics that indicate the performance of an enterprise on a particular factor. It helps organizations measure how close or far they are from achieving their stated objectives. By measuring and keeping track of the KPIs, businesses can make the necessary tweaks to their strategic decisions. It ensures that enterprises stay on the right track to achieve their goals.

key performance indicators kpi

For instance, a gambling business that is channeling its resources to improve its market share should focus on market share related Business KPI. Likewise, a venture focused on improving its profitability, should emphasize on profit margin related KPIs.
KRA, on the other hand, are strategic factors, both internal and external to the organization. An enterprise must achieve or deliver positive results on these factors to ensure its very survival and competitiveness in the market. KRAs are usually not measurable and are qualitative in nature.
In simple terms, KRAs are those areas where the business must deliver excellent performance. Its very survival depends on it.

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Important KPIs in the gaming business

Analyzing their KPIs and taking actions that produce tangible and measurable results to improve those KPIs is a crucial process for every successful business. So, here are some of the critical KPIs for gaming businesses.

Gross Gaming Revenue
Gross Gaming Revenue (GGR)
The Gross Gaming Revenue is the true measure of how much money a gambling business makes off of its customers. GGR is the total amount of bets or wagers placed by the players, minus the winnings that are paid to them. It is the money earned by the gambling house, before it pays off all the expenses, salaries, and other costs. GGR is equivalent to sales revenue, not profits.
Net Gambling Revenue
Net Revenue, or Net Gambling Revenue
Net Revenue, or Net Gambling Revenue, is the profits made by the gambling company, after all the expenses are removed from its revenues. In the gambling business, the various expenses include commissions, royalties, licensing fees, advertising costs, IT costs, and so on. There is no fixed net revenue definition. Therefore, each enterprise should decide on the exact formula for measuring NGR and stick with it over the years.
Average Revenue
Average Revenue
The average revenue definition is quite different from that of net or gross revenue. That’s because average revenue is defined per user and not for the entire business. Average Revenue Per User (ARPU) indicates the average revenue brought in by the users to the business. It is calculated by dividing the total revenue generated by the total number of active subscribers, usually per month.
Conversion Rate Sports Betting
Conversion Rate Sports Betting
Conversion rate is a general term that refers to the ratio of people who behaved in the desired way, as against those who were presented with the opportunity to do so. In this case, Conversion Rate Sports Betting refers to the ratio of the number of users who actually placed their first bets or played their first game after depositing the money to the number of users who signed up on the website.
Value Bet
Value Bet
Value betting is a smart way to play online gambling. Good gambling players are adept at calculating the odds or probability of winning a particular game. If a game or bet is priced below than its worth, then it is a value bet and smart players always play such games.
Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV)
Customer Lifetime Value is the total estimated profits that a business expects to make from a customer throughout their past, present, and future relationship together.
Turnover Revenue
Turnover Revenue
Turnover Revenue is a broad term that is generally used to refer to the total sales revenue generated by an individual or organization. Therefore, in the gambling business, it can be used to refer to the Gross Gambling Revenue. On the other hand, it can also be used to refer to the total bets or wagers placed by the players with the house.
Betting Ratio
Betting Ratio
Betting ratio indicates the probability of an event happening in a gambling game. It is usually represented in fractional form, such as 4/1 or 9/1. Converting it into percentage form is quite simple. 4/1 becomes 1/(4+1), which is 0.2 or 20 percent. Likewise, betting ratio of 9/1 becomes 1/(9+1), which is 0.1 or 10 percent.

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How to calculate KPI performance

KPI performance is calculated over a period of time, usually spanning many years. However, the unit of time can be either month, week, quarter, or even a year. The choice of time unit depends on the industry.
In the gambling industry, the business must measure its performance on a monthly basis. So, the unit of time is a month. Therefore, most of the KPIs are measured over a term of month, such as net revenue per month, average revenue per user per month, gross gambling revenue per month, and so on.
Every month, the value of these KPIs are measured and then plotted on appropriate graphs to make it easy to understand the performance of the business. It helps them discover lagging areas, key target segments, and more. They can use this data to make the necessary improvements to their operational strategies to achieve better results in the future.

calculate KPI performance

Closing thoughts

With the increasing disposable income, growing internet connectivity, and the increase in consumer trust in online gambling business, online gambling statistics are going way off the charts. The online gambling industry was estimated to be worth over $47 billion in 2017, and is projected to grow to $75 billion by 2021. That’s only an approximate estimate as actual numbers are not available. So, there is a good chance that this market is already well over that size.  Online casino game developers  of NonStop Casino provider can help you to become a part of this successful world.
There has never been a better time for a gambling business! Take advantage of it today by launching your own online gambling business.

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