Gross gaming revenue is the total amount players wager on a gambling operation’s games minus the total amount paid back to them as winnings. It is the money the house keeps from its gaming floor before any expenses come out. A casino that takes in $10 million in bets and pays out $9.2 million in winnings has a gross gaming revenue, or GGR, of $800,000 for that period.
The formula is simple:
GGR = Total Wagers − Total Payouts
Federal gaming regulations put it in almost the same terms: the total amount of cash wagered on games and any admission or table fees collected, less amounts paid out as prizes or paid for prizes awarded.1eCFR. 25 CFR 542.2 – What Are the Definitions for This Part? Everything else in gaming finance builds on that subtraction.
One boundary worth flagging up front: tribal gaming uses a different measure. Under the Indian Gaming Regulatory Act, “net revenues” means gross revenues minus both prize payouts and total operating expenses, excluding management fees.2Office of the Law Revision Counsel. 25 USC 2703 – Definitions That is not GGR. For commercial casinos, GGR sits above operating expenses entirely.
What Counts as a Wager
The incoming side of the formula changes name depending on the game, and the terminology trips up newcomers.
For table games like blackjack and roulette, the money coming in is called the drop. Federal regulations define drop as the total cash, chips, and tokens removed from drop boxes, plus any credit issued at the tables.1eCFR. 25 CFR 542.2 – What Are the Definitions for This Part?
For gaming machines, drop means the total cash, cash-out tickets, coupons, coins, and tokens pulled from the machine’s drop bucket or bill acceptor.
In sports betting, the same idea is called handle: the total dollar amount of all bets placed, whether straight moneyline wagers, parlays, or live in-game bets.
What Counts as a Payout
The payout side of the formula is more straightforward. It includes every dollar disbursed to players in the form of jackpots, winning bets, and small machine payouts. Non-cash promotional items without a direct cash value at the time of play generally do not count as payouts in this calculation.
A Worked Example
Suppose a slot machine processes $500,000 in wagers over a weekend and returns $450,000 to players through various wins. That machine’s GGR is $50,000.
Scale the same subtraction across hundreds of machines, dozens of table games, and a sportsbook, add the results together, and you have facility-wide GGR for the period.
Hold Percentage
GGR expressed as a fraction of the total wagers is the hold percentage. If a blackjack table sees $200,000 in buy-ins and the casino keeps $40,000 after paying winners, the hold is 20%.
Hold runs higher than the mathematical house edge on any given game because players recycle their winnings. Someone who buys in for $100 might wager that money multiple times before leaving, and each cycle gives the house another shot at its edge.
Adjustments Before the Number Is Final
The raw wagers-minus-payouts figure often gets adjusted before it hits a tax return or a financial statement. These adjustments matter because gaming taxes are levied on GGR directly, so every dollar excluded is a dollar that escapes taxation.
Promotional Credits and Free Play
Casinos and sportsbooks routinely hand out free bets, bonus credits, and promotional play to attract customers. Whether an operator can deduct these from GGR before calculating tax varies dramatically by jurisdiction. Some states allow full deduction of promotional credits from taxable revenue. Others prohibit any deduction. A few cap the deduction at a percentage of revenue or handle. The same $1 million in free-play giveaways can carry very different tax consequences depending on the state.
Uncollectible Markers
When a casino extends credit to a player through a marker and the player never pays, the operator may be able to deduct that loss. Federal tax law allows a deduction for any debt that becomes wholly or partially worthless during the tax year.3Office of the Law Revision Counsel. 26 USC 166 – Bad Debts The debt must be “bona fide,” meaning it arose from a genuine debtor-creditor relationship with a valid obligation to pay a fixed sum.4eCFR. 26 CFR 1.166-1 – Bad Debts
Gaming markers create a wrinkle. Gambling debts are unenforceable under some states’ laws, which might seem to disqualify them. Federal regulations address this directly: a gambling receivable that is unenforceable under state or local law still qualifies as an enforceable obligation for bad-debt purposes, as long as the operator already included that receivable in income.4eCFR. 26 CFR 1.166-1 – Bad Debts Sloppy recordkeeping on marker issuance and collection can still disqualify the deduction.
Progressive Jackpot Liabilities
Progressive slot machines accumulate a jackpot that grows with each wager until someone wins. Under accounting standards, a casino should not accrue the jackpot liability before it is actually won if the machine can legally be pulled from the floor without paying the base amount. For the incremental portion that builds as players feed the machine, gaming regulators generally consider those funds to belong to customers and require their eventual payout. Tax rules generally do not recognize the liability until the jackpot is actually paid, creating a timing difference between the books and the tax return.
GGR vs. Net Gaming Revenue
GGR tells you how much the house won. Net gaming revenue, or NGR, tells you how much the house kept after the cost of winning that money. NGR starts with GGR and then subtracts player bonuses, chargebacks, payment processing fees, royalties owed to game developers, licensing costs, and gaming taxes.
The gap between the two can be wide, especially for online operations. A sportsbook running an aggressive customer acquisition campaign might report strong GGR while its NGR is thin or even negative during promotional periods.
Investors looking at operator earnings should know which number they are reading. A company reporting “gaming revenue” in a press release might mean GGR, NGR, or something in between depending on its accounting conventions. SEC filings use the more precise accounting treatment, but marketing materials and industry reports often use these terms loosely.
Why GGR Is the Number Governments Care About
Unlike corporate income taxes, which apply to net profit after expenses, gaming taxes hit GGR directly. An operator with high overhead still owes the same gaming tax as an efficient competitor with identical GGR. The tax comes off the top.
Rates vary widely. For sports betting alone, state tax rates range from 6.75% to 51% of sportsbook revenues. Traditional casino gaming taxes generally fall somewhere between those extremes, though certain game types face steeper rates. Pennsylvania taxes slot machine revenue at rates between 48% and 54%, while table games in many states face rates in the low-to-mid teens.
Because the tax applies to gross revenue rather than profit, even a small error in the GGR calculation cascades into a significant tax discrepancy. A casino that underreports GGR by $500,000 in a jurisdiction with a 30% gaming tax rate owes an extra $150,000 before penalties. Gaming commissions audit these calculations closely, and penalties for underreporting can include administrative fines, license suspension, and in serious cases, criminal charges for tax evasion.
How Sports Betting Changes the Picture
Sports betting GGR follows the same formula, handle minus payouts, but the timing and volatility are different enough to matter.
In a casino, the law of large numbers smooths out slot and table results fairly quickly. A busy blackjack pit produces a predictable hold percentage night after night. Sports betting is lumpier. A single upset in a major football game can swing a sportsbook’s monthly GGR by millions. The sportsbook’s margin, or “vig,” drives GGR over time, but any given month can look wildly different depending on outcomes. Analysts evaluating sportsbook operators tend to look at GGR over quarters or full seasons rather than individual months for this reason.