The Hidden Truth of Crypto Games: Reading the Gambling Industry Economic Model

What Your Project Is Missing

New crypto games keep emerging, but many disappear quickly. Why is that? Many teams focus solely on “fun game mechanics” while overlooking what truly matters: the economic model that the gambling industry has validated over hundreds of years.

Before starting or investing in crypto games, you need to understand the core concepts of the traditional gambling industry. These are GGR and NGR.

GGR and NGR: Key Metrics in the Gambling Industry

GGR(Total Gaming Revenue, Gross Gaming Revenue) is the most widely used profit indicator in the gambling industry. Simply put:

GGR = Total Bets - Payouts to Players

For example, if a casino receives $1,000,000 in bets and pays out $700,000 in winnings, the GGR is $300,000. That’s the casino’s actual profit.

But why do crypto game teams need to know this? Because the loss rate(failure rate)determines the GGR. The loss rate refers to the percentage of total bets that players lose.

NGR(Net Gaming Revenue) is more complex:

NGR = Total Bets - Total Payouts - Bonus Payouts - Relevant Taxes

NGR is more frequently used by regulatory agencies and publicly listed gaming companies because it accounts for bonuses and taxes.

The Secret of House Edge

Do you know that gambling is not a fair game? Even without dealer cheating, every game has a built-in house edge(House Edge).

In relatively fair games like blackjack, baccarat, or dice, the house edge ranges from about 0.5% to 20%. This is the source of profit for casinos.

Here’s an important insight:

• If the loss rate is too low: the casino cannot make a profit.
• If the loss rate is too high: players will abandon the game.

Therefore, casinos intentionally adjust the loss rate. The reason online gambling is easier to control than offline is precisely because — algorithms can manipulate random number generation.

The Fundamental Difference with Crypto Assets

Now, an interesting question arises: What is the difference between gambling and crypto games?

It’s about whether players can accept the volatility of payouts.

Gambling games have a fixed payout framework. No matter how many people play simultaneously, the rules of baccarat don’t change, and the probabilities in blackjack remain constant.

In contrast, crypto assets are different:

• Uniswap’s token yields depend on trading volume.
• Binance’s altcoin dividends vary over time.
• NFT yields are unpredictable.

This is why GambleFi projects are indistinguishable. Platforms like Rollbit, Stake, all look similar — casino games, sports betting, baccarat, fishing, roulette. The mechanisms differ, but the economic models are the same.

What’s needed in gambling isn’t thousands of different games, but a well-designed mechanism that multiple operators can replicate.

Growth Model: Chip Washing and Agent Systems

How does the traditional gambling industry acquire users?

There are two chip systems:

1. Cash chips: convertible both ways
2. Mud chips: only used for betting

Mud chips act like free trial coins in crypto games. Betting with them locks in liquidity. Winnings earned with mud chips become cash chips, and each time a bet is placed, the dealer(promoter) receives a rebate.

This is the core of chip washing.

Looking at rebate systems in spot trading exchanges, the same structure applies:

• Trial funds lock liquidity like mud chips.
• Promoters earn profits with each trade.
• The larger the liquidity, the greater the overall revenue.

Real Case: Mahjong Meta’s Hall Owner Mechanism

Recently, Mahjong Meta announced fundraising, which is an interesting case. It’s a project that moved traditional mahjong onto the blockchain, with a very noteworthy economic model.

Issued Chips: MJU (Fixed $0.1 stablecoin)

Three game modes:

1. Rank (PVP): up to 6% table fee
2. Yingzhen (AI dealer): fixed payout structure
3. Jiaoluguan (Private hall): user-operated

The Jiaoluguan mode is interesting because the hall owner takes 30-70% of the fee, which is quite generous compared to traditional Macau chip washing points.

But there’s a hidden issue:

• Opening a hall requires upfront costs (NFT lease or purchase)
• Hall owners must be their own opponents (unable to control the loss rate)
• No mud chips are involved, so players can leave at any time

Ultimately, the hall owner’s profitability depends on net gaming revenue(NGR), calculated as:

NGR = Total Bets + Liquidity Distribution - Total Payouts - Hall Operating Costs

Compared to traditional agent systems like Rollbit:

• Basic tier: 10% rebate of invited players’ losses
• Premium tier: 20% rebate of house edge
• Red tier: negotiable (up to 45%)

Rollbit’s agents have no upfront costs and don’t need to be opponents. It’s a pure horizontal direct sales system.

Why NGR Matters

Understanding the difference between NGR and GGR is crucial for crypto game teams’ survival.

GGR shows total revenue, but NGR shows actual profit because it deducts bonuses, airdrops, and rebates.

Most online gambling relies on agent(broker) systems, sharing GGR with casino operators. As the number of games increases, operating costs rise, which is why most NGRs are only around 3%.

The same applies to crypto games:

• More bonuses and airdrops lower NGR.
• Higher rebate rates reduce actual profit.
• Ultimately, loss rate control determines life or death.

Advice for Crypto Game Teams

1. Crypto players are not traditional game consumers

   • Target “investors seeking ROI,” not “people who enjoy gambling.”
   • The idea that “the game must be fun” alone is risky.

2. Actively leverage the gambling model

   • Is your project’s revenue model suitable for GGR?
   • Is your profit model clear?
   • How will you control the loss rate?

3. Learn from the traditional gambling industry

   • Macau and Las Vegas have already paved the way.
   • Don’t ignore hundreds of years of experience and know-how when trying to forge a new path.

4. Reevaluate your revenue model with NGR

   • Don’t just look at GGR; calculate net profit after all costs.
   • Understand how bonuses and rebates eat into actual revenue.

The future of crypto gaming isn’t about innovation alone. It’s about the ability to precisely implement proven economic models from the traditional gambling industry on the blockchain.