«Why Do They Win So Much?» Or Why Your Arcade Business Isn’t Profitable

[Rexmax]

Hello, NLG Users. I understand that for some of you, this article may not offer anything new, but I assure you, many owners of small arcades don’t fully grasp the business they’re running. So let’s dive into the key factors contributing to your business losses:

Machine Setup

Profitability

Foot Traffic

1. Machine Setup Matters

A lot depends on how your machines are configured. Most arcade machines are set according to California Tribal jurisdiction, which starts at a return rate of 88% and typically increases as the denomination goes up. For those unfamiliar with how machines work, think of it like this: if your machine has a payout rate of 95%, it means that for every dollar inserted, the machine will give back 95¢. However, the machine doesn’t return the exact amount every time, because of a built-in random number generator. So, while you might get 90¢ one time, you might get $1 the next. Over the long term, the payout percentage becomes more consistent based on the machine’s overall statistics.Have low profit? Be sure that local laws in your jurisdiction allow you to lower the payout percentage. In some areas, local regulations and game developers eliminate minimum payout rates and allow casino owners to set them as they see fit.

Also, remember that payout rates often increase with higher denominations (this is common for machines from Bally, IGT, and Aristocrat). If you’re running a small casino, it might make sense to keep only low-denomination on your machines to avoid big payouts.

If your machines are used or older, they may have outdated software, which can cause bugs, glitches, or even backdoors. You’ve probably seen or heard of clever casino heists in movies. To avoid becoming the plot of the next blockbuster, make sure your machines are regularly updated and that you follow cybersecurity best practices. If your clientele is mostly local and you suspect someone of cheating, start keeping statistics on that player. A simple Excel spreadsheet can help. You may not be able to identify a cheater after one or two visits, but if someone consistently wins over a long period, that could be a red flag.

For example, if a customer visits regularly for a month and consistently leaves in profit while your business suffers, it might not just be luck. At that point, you need to investigate why only this person keeps winning. Track everything carefully, and report any unusual activity to your technician. In extreme cases, you have the right to ban someone from your business.

2. Profitability

As we all know, arcade machines run on electricity, and different machines consume different amounts. Many businesses don’t turn their machines off (especially older ones that may require repairs if restarted), but let’s focus on the bigger picture. At the end of the month, your business will get bills for rent, electricity, and water. If your machines run 24/7, those bills could easily be in the four- to six-figure range, depending on the size and location of your business.

You should build a business plan that identifies areas where you can reduce costs. For example, renting a space where electricity is cheaper (electricity tends to be more affordable near power plants, but ask yourself: is there enough customer traffic in that area to justify moving?).

3. Foot Traffic

Players are your bread and butter. Your legs, your engine… call them what you will, but your main job is to attract people to your arcade.

First, consider how to bring in new customers. If your business is located in a predominantly Latino area, adapting your arcade to cater to Spanish speakers could bring in more customers. Some small business owners also offer snacks and drinks, either for free or for a small fee.

Promotions are another great way to draw in people. In our region, for instance, there’s the common “match” promotion (once a day, when a customer deposits $10, you give them another $10, with a minimum withdrawal of $30).

Many arcades also host events like spin-the-wheel contests or bingo games. Essentially, you should use whatever budget and creativity you have at your disposal. And don’t forget advertising – it will help your business gain recognition.

That’s all for now. I’ll update this list over time. I welcome feedback and suggestions for improvement.

[Rexmax]

Upd.
Security for You, Your Clients, and Your Business

Continuing with the topic of security, let’s delve deeper into why it’s crucial to not only attract foot traffic but also control it. Ask yourself: why did this person choose your arcade over a large casino? It could be out of convenience, or perhaps there are other motives. For example, it’s easier to rob a small business than a large casino… but does that mean every customer is out to harm your business? Not necessarily, but how can you tell?

There’s no definitive answer to that question, but trusting your instincts and applying basic deductive reasoning can help. Someone who looks unkempt may be just another player, or they might have other intentions. If your business operates late into the night, it might not be worth risking the security of your establishment. Customers carrying weapons are certainly not a good sign for your business’s safety.

Even if you have the bravery of Batman, Superman, and John Wick combined, your customers likely don’t share that same fearlessness. They just want to relax and have fun. A sense of discomfort or danger could easily drive them to seek entertainment elsewhere.

To manage this, many small business owners install camera systems and magnetic doors. While hiring security would be ideal, not everyone can afford that extra expense. If you opt for an open-door policy, remember that it’s only a good idea until the sun sets.