LTV (Lifetime Value)

LTV is the foundational unit economics metric in iGaming, paired with CAC to evaluate whether acquisition investment is profitable. A player with LTV of $500 and CAC of $200 produces $300 of lifetime gross margin contribution; the same player with CAC of $600 is a net loss. The LTV/CAC ratio is what investors and management actually track; CAC alone is meaningless without LTV context. LTV modeling is sophisticated work in mature operators. The starting point is cohort analysis (tracking revenue from acquired players over time), which produces historical LTV curves that can be projected forward for recent cohorts. Adjustments handle promotional spend, regulatory friction expected to compress LTV (affordability checks, stake limits), market-specific factors (Tier 1 markets show different LTV shapes from smaller markets), and channel-specific factors (organic players typically have higher LTV than paid-acquired players). The LTV-to-payback-period calculation is what most operators actually use for marketing budget decisions.