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
713120 (Amusement Arcades)
713290 (Other Gambling Industries)
713990 (All Other Amusement and Recreation Industries)
Coin-operated amusement devices can be found in a variety of locations. Primary locales include taverns and bars, restaurants, retail stores, and shopping malls, which often include one or more video arcade establishments. Other locales in which coin-operated amusement devices can be found include bus terminals, hotels, grocery stores, and truck stops. In 1997, there were 2,737 amusement arcades across the country, with another 2,668 operators of coin-operated, non-gambling, amusement devices.
The 1990s have seen a dramatic proliferation of indoor amusement facilities, known as "family fun centers," which vary greatly in size and in the activities they offer. The indoor facilities often include bumper car rides, bumper boats, basketball machines, and a variety of video arcade equipment. Many of the family fun centers start small — often with an outdoor miniature golf course — and when they develop inside, sometimes bumper cars become a new attraction, and almost invariably some type of "video arcade" devices are introduced.
The International Association of Family Entertainment Centers (IAFEC) reported 350 members in 1999. Although this group owned establishments at nearly 2,800 locations, 70 percent of their membership owned only one site. These locally-owned establishments faced competition from chains. One of the most ambitious chains to emerge in the late 1990s was Gameworks, a joint venture between Dreamworks, Universal Studios, and the video-game giant Sega. When the first Gameworks opened in 1997, the company announced plans to have 100 locations within five years.
The proliferation of legalized gambling has produced dramatic growth for some participants in another segment of the coin-operated amusements industry. Slot machines have become so popular that they provide 75 percent of casino revenues. Besides the more than 700 casinos operating in the United States in 1997, there were another 328 operators of slot machines. Based on an average cost of roughly $5,000 each, slot machines provide a huge return on investment.
Slot machines have not changed much since the 1980s when electronic mechanisms were added inside the machines. In the United States alone, players fed an estimated $16 billion per year into the machines. Slot machines were the fastest growing segment of legalized gambling.
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.
With the increase in slot machines and the easy access to VLTs, another gambling industry — horse racing — has felt the affects of competition. In response, racetracks have lobbied for permission to operate slots on their premises. States such as Delaware, Iowa, and West Virginia, among others, have passed laws allowing such operations. Many of these laws contain regulations to ensure that the primary focus stays on the races and does not shift to slot machines at these establishments.
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 currently controls more than 75 percent of the U.S. slot machine market and had 1998 revenues of $824 million. Its products include progressive slot machine systems like Fabulous Fifties, High Rollers, and Megabucks; reel-type slot machines like S-Plus; video gaming products; and video gaming terminals for government-sponsored state run lotteries. IGT has benefited from the legalization of gambling on riverboats and Indian reservations and is betting on an increased consumer interest in gambling for future profits. IGT also has an international presence, with nearly 25 percent of its revenue coming from sales to other countries.
State 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 the state of 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. By contrast, some other states regulate less strictly and allow operators wider parameters.
Emmons, Natasha. "Slot Machine Status Main Focus of World Gaming Congress & Expo." Amusement Business, 29 November 1999.
Guier, Cindy Stoohsbury. "Family Entertainment Centers." Amusement Business, 18 March 1998.
——. "Mom & Pops Holding Their Own." Amusement Business, 3 May 1999.
"International Game Technology." Austin, TX: Hoover's, 1999. Available from http://www.hoovers.com .
Lubove, Seth A. "One-Armed Bandits Brawl." Forbes, 11 March 1996.
Turner, Dan. "Here Comes the Super Arcade; Hollywood Studios Debut Digital Thrill Park." Los Angeles Business Journal, 10 March 1997.
U.S. Bureau of the Census. 1997 Economic Census: Arts, Entertainment, and Recreation; Geographic Area Series . Washington, DC: U. S. Bureau of the Census, 1999. Available from http://www.census.gov .
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