How can you open an amusement arcade and how much does it cost to operate?

An amusement arcade is a business whose opening or management requires many general to-dos and must-haves, but also has some special requirements. In principle, almost anyone can start such a gaming operation. The model may initially appear simple and naturally very lucrative. However, there is ultimately much more to it than simply setting up a few machines and making the cash register ring.

At first glance, opening an amusement arcade may seem like a simple business model: a few machines, a suitable location and the money starts flowing. But appearances are deceptive. Behind the operation of an arcade is a complex combination of complying with legal requirements, considering business considerations and implementing industry-specific expertise.

Running an amusement arcade therefore means much more than just opening the doors and welcoming guests. It requires comprehensive planning, financial investment and a deep understanding of the mechanisms of the industry. A successful business model is only created through the professional integration of all these elements. This is quite complex, but also very interesting, which is why we would like to take a closer look at the processes involved below.

What do you need if you want to open an amusement arcade?

Opening an arcade requires careful preparation and the fulfilment of specific requirements for the business area. Economic and legal aspects play a central role in strategic considerations. In principle, founders must outline their project in detail and draw up a detailed business plan for its realisation and, not least, for potential investors.

1. Location analysis and distance regulations

A suitable location is one of the most important factors for success. However, the choice of business premises is restricted by legal distance regulations, which vary from state to state. In particular, these stipulate minimum distances from schools, kindergartens, youth centres and other amusement arcades in order to ensure the protection of minors and fair competition.

1. Minimum distance to youth facilities: In most federal states, the minimum distance is 500 metres, as is the case in Bremen, for example.
2. Distance to other gaming arcades: A minimum distance of 250 to 500 metres is often prescribed in order to avoid concentrations of amusement arcades.

Costs: Finding and securing a suitable location can involve estate agent fees or advance lease payments of 5,000 to 20,000 euros. If a property is purchased or newly built, the financial outlay naturally increases significantly. You can expect to pay several hundred thousand euros.

2. Business permit and licence

Specific licences are required to operate a gaming arcade. The following three are actually always required.

1. Business licence according to § 33i GewO: This authorisation ensures that the operator is reliable and has orderly financial circumstances. A current police clearance certificate and a certificate from the tax office are required.
2. Gaming hall licence: The licence to set up gaming machines is issued in accordance with the provisions of the State Treaty on Gambling. The process includes, among other things, an inspection of the premises and compliance with structural requirements.
3. Building licence: If major alterations to the location are required, a building permit must be obtained from the competent authority.

Costs: The official fees for these authorisations range from 500 to 2,000 euros, depending on the region and the number of documents required.

3. Equipment and gaming devices

The equipment of the arcade must be both functional and visually appealing in order to attract customers and fulfil the legal requirements. This essentially includes the installation of gaming devices that have been tested and approved.

1. Slot machines: Acquisition costs of 8,000 to 10,000 euros must be planned for each machine. For an average arcade with ten machines, this means an investment of 80,000 to 100,000 euros. Incidentally, 45 illegal machines were recently destroyed in Frankfurt am Main to set an example.
2. Furnishings: Stable and comfortable furniture as well as counters and surveillance systems cost an additional 10,000 to 20,000 euros.

Total costs: The complete furnishing of an arcade can easily cost between 90,000 and 150,000 euros.

4. Staff and training

Employees must not only be friendly and reliable, but also have specialised knowledge in the area of player protection and other common legal requirements. Training is required by law for the operation of a gaming centre. It is not uncommon for new employees to undergo appropriate training before starting work, as the shortage of skilled labour is also omnipresent in this industry.

1. Number of employees: As a rule, at least two to three people are required to ensure the operation and monitoring of the vending machines.
2. Training courses: Seminars on dealing with player protection and addiction prevention cost around 500 to 1,000 euros per employee. Incidentally, there are more and more undercover test players from the public order office who also keep an eye on staff.

Costs: Between 1,000 and 3,000 euros should be budgeted for training a small team.

5. Marketing and public image

Before the opening, it is important to make the target group aware of the new offer. A professional public image and targeted advertising measures are nothing less than crucial to success.

1. Advertising: Opening campaigns such as flyers, local adverts or online advertising and, at best, a website for the business cost between 5,000 and 10,000 euros upwards.
2. Signage: Illuminated advertising and signs are also an investment of around €2,000 to €5,000.

Costs: A total of 7,000 to 15,000 euros should be calculated for marketing and public image.

What running costs and organisational expenses should an arcade operator expect?

An amusement arcade is not a sure-fire success. The initial investment merely marks the start of a business that requires constant commitment and ongoing expenditure.

1. Rental and ancillary costs

The choice of location has a considerable influence on the monthly rental costs. Highly frequented commercial premises in urban locations cost significantly more than premises in smaller towns or peripheral areas.

1. Rent or lease: Between 2,000 and 10,000 euros per month, depending on the location and size of the arcade.
2. Ancillary costs: Additional expenses for electricity, water and heating amount to around 500 to 1,500 euros per month. The energy consumption of the machines in particular is a significant item.

2. Personnel costs

Employees are not only responsible for customer service, but also for ensuring compliance with legal regulations and monitoring gaming operations. Naturally, they want or need to be paid appropriately.

1. Wages: An average gross salary per employee is around 2,600 euros. A medium-sized arcade with three to four employees incurs monthly costs of 7,800 to 10,400 euros.
2. Social security contributions: Employer contributions for health, pension and unemployment insurance increase personnel costs by around 20 per cent.

3. Taxes

Gaming arcades are subject to several types of tax, which contribute significantly to the running costs.

1. Amusement tax: This municipal tax is levied per machine or its turnover and varies between 100 and 500 euros per month depending on the location. There are really big fluctuations here from region to region. In Frankfurt am Main, the so-called gaming machine tax will be raised to 7.5 percent on 1 January 2025, which has caused quite a stir. In other cities, however, the rate is significantly higher, such as in Berlin at 20 per cent.
2. VAT: Gaming arcade turnover is subject to the regular VAT rate of 19 per cent.
3. Trade tax: This tax also varies considerably depending on the trade income and the municipal assessment rate.

4. Maintenance and repairs

The machines and other equipment in an arcade must be regularly serviced or maintained to ensure smooth operation.

1. Maintenance costs: Annual maintenance and repair costs of around 500 to 1,000 euros should be budgeted for each machine. For ten machines, this results in monthly expenses of around 400 to 800 euros.
2. Maintenance of the equipment: Furniture, lighting and other equipment cause additional costs of around 200 to 500 euros per month.

5. Insurance

Various types of insurance are required to operate an amusement arcade. These cover risks such as vandalism, burglary or liability claims.

1. Public liability insurance: This costs around 100 to 200 euros per month.
2. Contents insurance: This type of cover requires additional premiums of 50 to 150 euros per month. A good insurance policy will also cover losses from robberies, such as the robbery in an amusement arcade in Ahlen in September of this year.

6. Marketing and promotion

A successful amusement arcade not only needs to open, but also needs regular advertising measures to attract new customers and maintain the attractiveness of the offer for existing players.

1. Online and offline marketing: Costs for local adverts, flyers or social media campaigns range from 500 to 2,000 euros per month.
2. Customer loyalty programmes: Promotions or bonus programmes can require an additional €200 to €500 or more per month.

7. Other operating costs

In addition to the main costs, there are other ongoing expenses that need to be budgeted for:

1. Cleaning and security services: monthly costs of between €500 and €1,500.
2. Consumables: Costs for paper, receipts, drinks for customers etc. add up to around 100 to 300 euros per month.
3. Administrative costs: Fees for bookkeeping, tax consultants or software licences amount to between 200 and 500 euros.

Conclusion

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