Coin-Operated Amusement Devices

SIC 7993

Companies in this industry

Industry report:

This industry includes establishments primarily engaged in operating coin-operated amusement devices, either in their own or in other places of business. Such amusement devices include jukeboxes, pinball machines, mechanical games, electronic games, pool tables, shuffle alleys, electronic darts, video games, kiddie rides, prize dispensing machines, and slot machines. Amusement (including video game) arcades and parlors are also included in this industry.

Coin-operated amusement devices were the staple of video arcades of the 1970s and 1980s. Large rooms, found in malls, restaurants, resorts, shopping strips, and college campuses, among many other places, were gathering places for youth, who fed quarters into an array of video games. However, the growing popularity and advancing technology of home gaming systems, beginning with the NES and advancing in the early years of the first decade of the 2000s to Playstation 3, Xbox 360, and Nintendo Wii, led to the nearly complete demise of the large youth-targeted arcades. In their place came family entertainment centers (FECs), casual dining facilities with large game rooms geared to a range of ages, including younger and older children and adults, and gambling operations, including casinos and horse racing tracks in states that allow them to have slot machines as a means for competing with casinos.

The modern-day FEC began to emerge in the 1980s and differed from past entertainment areas that featured coin-operated amusement arcades, which were commonly found in theme and amusement parks or in vacation or downtown areas and relied on tourism. The modern FEC is usually a large indoor facility set in a residential area, offering multiple attractions including play areas, miniature golf, bowling, go-karts, batting cages, laser tag, and sections with coin- or token-operated games. The development in the 1970s of soft, contained play equipment, safe for children to bump against, helped spawn the modern FEC, allowing developers to combine large and adventurous play and gaming areas. FECs can range in size from 15,000 to 200,000 square feet.

Many FECs depend on coin- or token-operated games for a portion of their revenues. Per capita expenditures were less than $15 per visit, so FECs relied on repeat visits and a steady flow of new customers. Although not always the main drawing point of the FEC, token-oriented games accounted for approximately 25 percent of the income of these establishments.

Coin- and token-operated amusements were also significant at small venues, like Chuck E. Cheese, which operated a chain of 530 pizza restaurant-game rooms in 2009, where games and merchandise accounted for nearly 50 percent of revenues. Chuck E. Cheese's began in San Jose, California, in 1977, with the concept of merging two favorites of children, coin-operated rides and pizza. After being purchased in 1984 and merged with Showbiz Pizza Place, Chuck E. Cheese's proved a stronger brand name and all Showbiz establishments were changed to Chuck E. Cheese's by 1993. Since 1997 Chuck E. Cheese's have operated under the corporate name CEC Entertainment, Inc., of Irving, Texas. CEC posted revenue of $814.5 million in 2008.

As of January 1, 2012, Chuck E. Cheese's operated 556 stores employing 17,300 workers, including another 16,900 operating company-owned stores. The majority of Chuck E. Cheese's were located in California with 80 operations and Texas with 60 operations. The company also had 14 company-owned stores in Canada and 13 franchised operations in Chili, Guam, Guatemala, Puerto Rico, Saudi Arabia, and the United Arab Emirates. The company reported revenues totaling $818.3 million in 2009 and $817.2 million in 2010, before rising slightly to $821.1 million in 2011. The company had net income of $61.1 million in 2009 and $54.9 million in 2011. Chuck E. Cheese's was actively seeking additional franchise partners in Latin America, Asia, and the Middle East.

More adult versions of entertainment centers feature casual dining, a full bar service, and cavernous game rooms. Among the most popular are Dave and Buster's, based in Dallas, Texas, which has about 50 locations in 20 states with $536.3 million in revenue in 2008. Dave and Buster's "coin-operated" games have gone high-tech. Patrons purchase a card on which they load points. Each game costs a certain amount of points, which is removed from the patron's card when it is slid through the vending device. ESPN Zone, started by the cable sports network, has eight locations, each of which offer food and drinks, more than 150 monitors showing sporting events and feeds from the various ESPN channels, and more than 10,000 square feet of interactive sports games. Dave & Buster's realized revenues of $541.5 million in 2011, up 3.8 percent from $521.5 million in 2010. Amusement and other revenues totaled nearly $269 million, responsible for 49.7 percent of total revenues during 2011. As of January 29, 2012, the company operated 58 company-owned stores in the United States.

Concurrent with FECs and entertainment centers geared toward adults both becoming well established during the final quarter of the twentieth century, the proliferation of legalized gambling produced dramatic growth for some participants in another segment of the coin-operated amusements industry. Slot machines have become so popular that they provide 70 to 75 percent of casino revenues. The American Gaming Association (AGA) refers to revenue as gross gambling revenue (GGR), the amount wagered minus the winnings returned to players. GGR, according to the AGA, "is the figure used to determine what a casino, racetrack, lottery or other gaming operation earns before taxes, salaries and other expenses are paid." The GGR increased annually since the mid-1990s, reaching $36.22 billion in 2008 before falling to $34.28 billion in 2009 and rising slightly to $34.60 billion in 2010. Five casino markets had gross revenue surpassing $1 billion in 2008: the Las Vegas Strip with $6.12 billion; Atlantic City, $5.55 billion; Chicagoland, Indiana/Illinois, $2.25 billion; Connecticut, $1.57 billion; and Detroit, $1.36 billion. The six casino markets that had gross revenue surpassing $1 billion in 2010 were the Las Vegas Strip with $5.77 billion; Atlantic City, $3.57 billion; Chicagoland, Indiana/Illinois, $2.05 billion; Connecticut, $1.38 billion; Detroit, $1.37 billion; and St. Louis, Missouri/Illinois, $1.08 billion.

Another popular coin-operated gambling device is the video lottery terminal (VLT). VLTs are slot machines that display video games, such as video poker and bingo, for low-stakes gambling. In states where these machines are operated, they are part of the state lottery system. The VLT terminals are the same as the video poker machines in Las Vegas, Nevada, except for the payment devices. Money is fed into the machine, and winnings and losses are electronically calculated and printed out for the player. State lottery revenues have slacked off, and the video lottery is a means for states to increase revenues. Video lottery terminal machines offer the gambler the opportunity to play video poker, blackjack, keno, or bingo for a nickel to $2.50 a bet.

The leader in the gambling segment of the industry is International Game Technology (IGT), the world's largest manufacturer and designer of gaming machines and software. IGT controls more than 70 percent of the U.S. slot machine market and had annual revenues of $2.53 billion in 2008. Its products include spinning reel slots like Cleopatra, Double Diamond, and Elvis; video slots like Alien and the Addams Family; and video poker. In addition, IGT develops video gaming, player tracking, and accounting systems, terminals for government-sponsored lotteries, and progressive jackpot slot-machine networks (MegaJackpots) that link slot machines from several casinos. IGT's revenues fell from $2.01 billion in 2009 to $1.95 billion in 2011, mainly due to the closing of a facility located in Alabama. Of the $1.85 billion, $1.07 accounted for gaming operations with product sales totaling $883.9 million. The company reported a net income of $283.6 million for 2011. In November 2010, the company hit the 2 million mark for total slot machines produced. In March 2012, IGT announced they were partnering with Italy's Lottomatica Group, the largest VLT operator in Italy. This unique relationship will provide IGT not only entry into the Italian VLT market but also a market worth more than $2 billion in gross gaming revenue.

Bally Technologies, Inc., which had sales of $883 million in 2008, also develops systems for linking slot machines together and, through its Bally Gaming and Systems subsidiary, makes slot and video gaming machines. Self-described as the "oldest slot manufacturing company in the world," Bally Technologies reported revenues of $778.2 million in 2010 dropping slightly to $758.2 million in 2011 with an estimated 2,500 employees worldwide. Total gaming units fell from 14,398 in 2010 to 13,597 units in 2011. However, the company extended its reach into both Australia and Italy in 2011, which was expected to increase revenues through 2012.

Regulation of coin-operated amusement devices varies from state to state. Some are very strict regarding every aspect of the industry, including use and location of the machines. For instance, in Texas, regulations determine the percentage operators may pay to the owner of the establishment in which their machine in located. Operators must also keep records of income from individual machines, while some states regulate less strictly and allow operators wider parameters.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

News and information about Coin-Operated Amusement Devices

Research and Markets Adds Report: Coin-operated Amusement Devices - Global Strategic Business Report.(Report)
Entertainment Close-up; October 27, 2010; 501 words
...and Markets announced the addition of the "Coin-operated Amusement Devices - Global Strategic Business Report" analyzes the US and German markets for Coin-operated Amusement Devices in US$ Million. The German market is also...
Uspto Issues Trademark: Watiki Indoor Waterpark Resort
US Fed News Service, Including US State News; March 29, 2017; 337 words
...and recreational services, namely, outdoor and indoor water park services, and arcade services featuring coin operated amusement devices. FIRST USE: 20060423. FIRST USE IN COMMERCE: 20060423For any query with respect to this article or any...
Kansas Enacts Tax Legislation Including Sales Tax Increase and Tax Amnesty Program
Mondaq Business Briefing; July 10, 2015; 700+ words
...the rate increase also addresses leases and rentals of tangible personal property; vending machines and coin-operated amusement devices; admission tickets; dry cleaning; installation, application, maintenance and repair services; meals...
Brunswick Plans to Purchase, Revamp Buffalo Grove's eSkape Brunswick Plans to Purchase, Revamp Buffalo Grove's eSkape
Daily Herald (Arlington Heights, IL); August 22, 2012; 700+ words
...whether to allow an increase in the number of "coin-operated amusement devices" from 36 to 60. Trustees seemed open to...whether to allow an increase in the number of "coin-operated amusement devices" from 36 to 60. Trustees seemed open to...
US Fed News Service, Including US State News; July 8, 2011; 293 words
...indoor water park services, amusement parks, cinema and theater services, and arcade services featuring coin operated amusement devices. FIRST USE: 20101109. FIRST USE IN COMMERCE: 20101109 Hotel, resort lodging, and restaurant services...
Uspto Issues Trademark: Beyond Expectations
US Fed News Service, Including US State News; July 31, 2013; 301 words
...indoor water park services, amusement parks, cinema and theater services, and arcade services featuring coin operated amusement devices. FIRST USE: 20101109. FIRST USE IN COMMERCE: 20101109Hotel, resort lodging, and restaurant services...
Brunswick Plans to Buy, Revamp Buffalo Grove's eSkape
Daily Herald (Arlington Heights, IL); September 3, 2012; 494 words
...Among the changes Buffalo Grove trustees must consider is whether to allow an increase in the number of "coin-operated amusement devices" from 36 to 60. Trustees seemed open to the concept, even with the increase in the number of arcade games...
US Fed News Service, Including US State News; February 12, 2007; 603 words
...his staff is auditing video poker and other coin-operated amusement devices whose owners have not set up the proper state...admissions and amusement tax collections from coin-operated amusement devices and a total of more than $8.5 million...

Search all articles about Coin-Operated Amusement Devices