The Casino Business Model: 3 Crucial Facts

The Casino Business Model: 3 Crucial Facts

Every trade needs a business model to run on, but very few business models are as intricately reliant on theoretical mathematics as the casino business. We are not just talking about data analytics, predictive analytics, revenue figures, profit margins, stats, and percentages that are common to all sectors in general. The business of running a online pokies house goes much, much deeper than just that. Keeping three of the segment’s most important factors in mind, here’s a brief intro to the casino business model.

The House Edge

As mentioned, casino revenue generation models are built around mathematical probabilities and one of the most important of those probabilities is the house edge. The house edge is either a percentage or a ratio that defines how much an advantage the casino has over a player, every time they place a bet. House edge is not a universal number, so it differs from game to game, even inside the same online or land casino with

For example, the house edge in roulette and blackjack is always going to be different inside the same casino. Now, the UKGC has restrictions on how much of a house edge or advantage a casino can have against its patrons, which also differs depending on the game. There is still ample room for casinos to work profitably within the allowed maximum edge; but there needs to be a balance between the two following factors:

  1. It cannot be so low that the casino fails to earn and maintain a profit after expenses.
  2. It should not be so high that players lose interest in playing at the casino.


The Theoretical Win or THEO is a number that designates how much the house; or the casino should potentially win from each player. The number is highly variable, as it depends on:

  • The total money staked by player.
  • The casino game being played by that player.
  • The house edge in respect to that casino game.

Unless a casino can calculate, determine, and maintain profitable but fair theoretical win percentages in all their offered games, the business model will not work. They will either suffer losses, or they will fail to even build a decent player base. See this post to find out how theoretical wins (THEO) should be calculated for maximum success on both fronts.


Gambling is a legitimate business sector in the UK; so online/offline gambling houses must have their licenses and permits to operate in the country. How the Gambling Commission assesses gambling business applications are well documented in Section 69: Gambling Act 2005. There is no guarantee regarding whether the UKGC will accept a gambling license application or not but submitting a well-prepared and legally compliant business plan will considerably improve chances of approval.

A casino’s ability to stay profitable and honest hinges on a very good understanding and application of the chance theory. Mathematics is not all that there is to it of course; but it does play the most important role in making the gambling business work.

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