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The Maltese Herald

Genuine question. Please explain to me how a casino can have €321 million in bets but only €20 million in revenues

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by

Mark Camilleri
in

I would like to prepare an interview for Johann Schembri in the future, but I am still learning about the accounts of a casino business. It’s my first time looking at such figures and I still have more questions than answers.

A gaming expert contacted me today and told me that I was right in my reading of the Dragonara Casino accounts. They declare that €321 million has been bet in total at the Dragonara Casino but only collected €20 million in revenues from these wagers. How is this genuinely possible? I’m still trying to understand this.

Updated: So, someone sent me this which explains the margins of gaming revenue, but the example is with sports betting which may explain the large discrepancy (do people betting on sports have better odds?). I would assume that if the wagers were solely based on games at the casino, the discrepancy would be smaller as people would lose more money.

https://corporatefinanceinstitute.com/resources/valuation/gross-gaming-revenue-ggr/

Comments

  1. isleofcorruption avatar
    isleofcorruption

    Maybe the casino lost a lot of the bets but somehow I very much doubt it?

    Reply
  2. Danny Doneo avatar
    Danny Doneo

    Margins for a sportsbook these times(past 5 years,) is very low and averages around 6% , so this seems very plausible. Sports bettors are very informed today and play wisely. Margin for odds is also very low , so yes , it’s a player’s world and not the casino. Any casino.

    Reply
    1. camillerimark avatar
      camillerimark

      Thank you very much for your explanation. It is a new world for me.

      Reply
  3. Frans Camilleri avatar
    Frans Camilleri

    A 6% margin is unnaturally low, though flukes do happen. It would be more useful and realistic if a five-year average is looked. This reporr from EY helps explain what’s happened in Europe. https://www.ey.com/en_ch/news/2023/07/corona-boom-over-profit-slump-in-the-global-gaming-industry#:~:text=Profitability%20has%20also%20suffered%3A%20After,EY%20Parthenon%2C%20EY's%20strategy%20consultancy.

    Reply

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