KPIs in iGaming: when performance meets compliance

Taken literally, Key Performance Indicators (KPIs) are solely about revealing whether targets are being hit. However, in the iGaming industry, they extend beyond performance metrics to also play a role in complying with regulations.

KPIs – especially two in particular – are therefore metrics that no iGaming operator can take for granted. Read on to discover how you can improve your operations whilst meeting regulations with our guide to key iGaming financial KPIs.

Why do KPIs matter in iGaming?

In every industry, KPIs are essential to evaluate. This isn’t surprising considering that they are known as Key Performance Indicators. It is therefore their duty to illustrate whether individuals, departments, strategies, and/or entire businesses are operating in a way that is achieving success or not.

It is no different when placed in the context of the iGaming industry. In fact, due to it being an extremely competitive industry with new firms seemingly emerging all the time, they are arguably even more important to firms operating in this area. Additionally, given that some KPIs explicitly reveal the financial health of iGaming operators and allow for tax calculations, regulators across the world from the UK to the US, Europe to Australia, and more, all state that certain KPIs must be reported upon regularly.

What are pivotal KPIs for iGaming operators?

There are many KPIs to choose from, but some are more relevant than others depending on the goals of a business. When it comes to iGaming firms, however, two KPIs cannot be ignored – Gross Gaming Revenue (GGR) and Net Gaming Revenue (NGR).

Together, these KPIs give both operators and regulators a clear understanding of the financial health of a company. They therefore help steer internal business decisions and through their submission keep firms compliant with regulations.

How to calculate GGR

To understand the true economic value of gambling activity, an operator will calculate their GGR. This is achieved by subtracting the amount of winnings returned to players from the total value wagered.

How to calculate NGR

Unlike GGR, NGR considers costs from across a business such as payment fees, salaries, bonuses, taxes, and more. As an equation it is: GGR - (Bonuses + Taxes + Fees + Other costs).

It therefore requires more input but delivers the overall profitability of an operator. Crucially, data integrity must be assured across all sources which feed into the calculation of NGR.  

KPIs from a compliance perspective

As mentioned, within the iGaming industry, production of both GGR and NGR ensures compliance with regulations. With these being KPIs that are also important for firms from a business perspective, production of them and related reports is therefore no doubt a priority for finance professionals at iGaming operators. However, that does not mean that it is easy to do so.

In order to calculate GGR and NGR compliantly, data must:

• Be collected from a variety of sources

• Be accessible at regular intervals  

• Have integrity

Consequently, reporting upon GGR and NGR is therefore reliant upon good data management practices such as:

• Consolidation of data

• Fast processing speeds

• Accurate reconciliation

The role of automated reconciliation in producing GGR and NGR metrics

As metrics that serve a compliance purpose, GGR and NGR must be accurate. Plus, as KPIs that reveal the financial health of a business, firms like to gather values for them as quickly and as often as they require to review them. As a result, it should come as no surprise that automated reconciliation is the best way to arrive at GGR and NGR values.

Automated reconciliation is quick, reliable, and accurate. Best of all, when executed via Aurum Solutions’ software, it can easily be used on all the data which feeds into the calculation of GGR and NGR.

With a bank of over 600 APIs, a data-agnostic processor, and exceptionally fast intelligent automatic reconciliation which can be scheduled for any time, no matter what PSPs you work with and how regular you wish to review your GGR and NGR, Aurum guarantees the integrity of the data you require to calculate these crucial KPIs. It should also be noted that thanks to automated reconciliation making the sourcing of GGR and NGR easy, it provides accountants with another method to check that the revenue arriving in their business’ account is correct.  

Get your iGaming metrics on track

Having KPIs heading in the right direction is what every business aims for. However, KPI metrics only hold value to firms if they are accurate, and in the instance of GGR and NGR, if they can be produced at intervals that are demanded by regulators.

With there being multiple time-consuming steps to gather accurate data for the calculations for GGR and NGR, it is therefore of paramount importance that this can be done efficiently. For the likes of Throne Entertainment, La Tinka, The Tote and other iGaming operators this is the case thanks to them deploying Aurum Solution’s vast bank of APIs and super-fast reconciling processor.

To keep on track of your revenue targets and report upon crucial KPIs on time, book your Aurum demo today.