While skilled gaming experiences are known to deliver fun and excitement to end users, you may be surprised to learn the extent of the financial benefits VGT, VLT, and coin-operated amusement machines (COAM) skill games offer to retailers.
In 2022, Fortune Business Insights valued the global skill gaming market size at $30.99 billion, with growth projections estimating the market to reach $85.34 billion by 2030.
COAMs, in particular, serve as a practical and low-effort revenue diversification tool for corporations seeking unique ways to enhance customer engagement through interactive in-store experiences. These machines serve as excellent sources of passive revenue in large part due to the minimal investment and maintenance efforts required for operation.
An Efficiency-Driven Profit Formula
As with any new revenue model, an initial investment is required for retailers to operate skill or redemption games within their storefront locations. That said, the upfront cost for COAMs and other skill game terminals is quite low compared to other models. INAMAX machines, for example, merely require the costs of the gaming license needed to operate said machines in the retailer’s respective state.
In Georgia, the GA COAM Class B license costs $125 per machine, per year. Newly approved operators of machines in Wyoming are charged a $250 annual fee and annual fees of $50 per machine. In comparison, operators in Nebraska only incur a $250 application fee if they operate 10 or more machines in a given year.
For certain retailers, these fees may seem steep at first glance. However, once you calculate the average revenue generated per machine into account, as well as the low maintenance fees that most retailers typically incur each year, the profitability of the model becomes evident rather quickly.
A Game of Numbers—Average Revenue and Profitability
The exact figures for the annual profitability of skill game machines vary by state and the number of terminals installed. On average, INAMAX machines generate retailers $5,000 per month in extra revenue. The location owner retains the profit generated after costs such as annual licensing fees, machine operator fees, and costs mandated by the state government have been paid.
In Georgia, 10% of all revenue generated by licensed skill game terminals is distributed to the Georgia Lottery for the HOPE Scholarship and Pre-K programs. A total of 45% of revenue is paid to the machine operator, leaving location owners with 45% of revenue after fees. With the average INAMAX terminal producing $4,000 per month in revenue (17% more than the state average), installing a skill or redemption-based machine provides Georgia store owners with a lucrative opportunity.
In Nebraska, location owners receive 35% of revenue after licensing and machine operator fees, and 20% of total revenue has been allocated to the Nebraska Department of Revenue. Wyoming location owners receive the same percentage of revenue after fees, and 20% of total revenue is paid to the Wyoming Gaming Commission.
As a result, retail location managers can drive financial growth and meet store profit KPIs through a process requiring little resource allocation. Aside from the previously mentioned upfront investments, store managers only need to dedicate sufficient floor space for the terminal to begin reaping the benefits of skill or redemption games.
With INAMAX, capitalizing on existing space is simple. Because each machine requires just 5-7 square feet of space to operate, INAMAX’s small footprint maximizes profit per square foot without forcing retailers to sacrifice valuable retail areas or reduce brand consistency within their stores.
In addition to direct revenue, skilled gaming terminals can also help retailers increase profit through indirect means. With the attraction of a gaming terminal, businesses can increase the number of potential customers who will enter their doors. Game players may enter a business with the sole intention of playing a few quick games and end up browsing and potentially purchasing items from the store itself.
Profits, Perks, and Potential
Quantifiable reports have highlighted the efficacy of skilled gaming terminals. A prime example can be found in Georgia’s Lottery Corporation, which reported a staggering $141 million in revenue from COAMs in 2022.
In 2019, the Georgia Amusement and Music Operators Association found that the 23,000 COAM games in daily operation in the state of Georgia produced a $95 win per unit, win per unit of $95, yielding approximately $797.5 million.
At INAMAX, we leverage a data-driven approach to maximize the direct revenue your gaming terminals produce. We analyze metrics such as player engagement, playtime duration per session, cash-in, and revenue generation per game, as well as player demographics and preferences (collected anonymously) to identify inefficiencies and develop actionable strategies for our retailers.
Underperforming games can be strategically swapped for more popular options to enhance player engagement. Our team members consistently analyze our retailers’ data and adapt to the changing demands of our customers’ markets to ensure that their route gaming revenue source is optimized and running efficiently.
If you are interested in learning more about INAMAX or implementing a strategic plan to generate extra revenue through route gaming systems, please call us at 770.449.0400 ext. 700 or fill out our contact form found here.