This guide is for Texas location owners who host cash-prize machines and route operators who place them. It covers what to ask a broker about insurance for skill game machines before you buy a policy or sign a placement agreement. It is not legal advice. A policy, a Comptroller license or a tax permit doesn't show that a machine is lawful. Occupations Code §2153.003 says the coin-operated machine chapter "does not authorize or permit the keeping, exhibition, operation, display, or maintenance of a machine, device, or table prohibited by the constitution of this state or the Penal Code."
Why does Texas gambling law matter to an insurer?
Texas Penal Code §47.01(4) defines a gambling device as a contrivance that "for a consideration affords the player an opportunity to obtain anything of value, the award of which is determined solely or partially by chance, even though accompanied by some skill, whether or not the prize is automatically paid by the contrivance." The statute excludes devices designed solely for bona fide amusement that reward players only with noncash merchandise prizes, toys or novelties. The wholesale value available from a single play can't be more than 10 times the cost of one play or $5, whichever is less. Possession of a gambling device (§47.06) and keeping a gambling place (§47.04) are each Class A misdemeanors. This guide takes no position on whether any particular machine falls inside or outside those definitions.
Enforcement is uneven. On May 20, 2026, the Dallas Morning News reported that the Sixth Appellate District affirmed, 2-1, a former district judge's ruling that certain machines are games of skill. The paper also reported that, without new legislation, enforcement falls to local police and prosecutors, and that the Legislature is expected to take up the issue when it reconvenes in January. The same reporting said an appeals court ruled eight-liners illegal in a 2022 Fort Worth dispute and that the city then banned them. The seven questions below are meant to show how a specific insurer handles that uncertainty.
1. Should I disclose skill machines on my insurance application?
Ask the broker whether the application asks about coin-operated, amusement or prize-awarding machines, and how to describe yours accurately. The Texas Department of Insurance (TDI) says that once a commercial liability policy has been in force more than 60 days, the insurer may cancel only for listed reasons. One of those reasons is "You purposefully gave them wrong information to get coverage." TDI also says insurers must give at least 10 days' notice before cancellation and at least 60 days' notice before nonrenewal.
2. Does general liability cover injuries in a game area?
TDI's commercial general liability guide says CGL covers claims for bodily injury, property damage, and personal and advertising injury. Premises and operations coverage pays for injury or damage on your premises or caused by your operations. TDI also notes that "Coverage varies by insurer and will include additional exclusions." Ask which exclusions in this policy could apply to activity involving the machines. Ask, too, whether the policy is occurrence or claims-made. Under a claims-made policy the claim has to be reported during the policy period, and TDI describes prior-acts ("nose") and extended reporting ("tail") coverage as ways to avoid gaps.
3. Who insures machines owned by a route operator?
The Texas Comptroller says general business license holders may house machines in another person's business. That leaves a question for both parties: does the location's property policy cover personal property of others, or does the operator have to insure its own equipment? IRMI describes ISO form CP 00 10 as covering "buildings, business personal property, and personal property of others." Whether your quote includes that coverage, and at what limit, is something to confirm with the broker. Operators should also ask whether they need to be named on the location's certificates.
4. Is cash inside the machines covered?
TDI's commercial property guide says crime coverage for robbery, safe burglary, forgery, employee theft and cyber crime can be bought separately. Ask whether cash in machine cabinets or elsewhere on the premises is covered under the property form, only under a crime policy, or not at all. Ask what limits and sublimits apply to money.
5. What happens to coverage if police seize machines or cash?
Ask the broker in writing how the policy treats machines or cash seized by law enforcement, as distinct from stolen property. Under Code of Criminal Procedure Art. 18.18(a), after a final conviction for possession of a gambling device, the court orders the device "destroyed or forfeited to the state," and seized gambling proceeds are forfeited. If there is no prosecution or conviction, Art. 18.18(b) gives the person in possession notice and a chance to show cause why the property should not be destroyed or the proceeds forfeited. Seizure doesn't always end in forfeiture: the Dallas Morning News reported that in Fannin County, a trial court ordered five seized machines and cash returned to a Savoy store, and the appeals court affirmed.
6. Does business interruption cover lost machine income?
TDI describes business interruption as an optional add-on to commercial property insurance. Ask whether income lost because machines are removed, seized or banned by a local ordinance would count as a covered loss, or whether the coverage applies only after physical damage.
7. Which exclusions apply to prize-awarding machines?
Ask for the specific exclusions and endorsements in the quoted policy, and ask how the insurer applies them to prize-awarding machines. TDI lists common property exclusions such as floods, earth movement, wear and tear, and insects or vermin, but the exclusions that matter here will depend on the insurer's own forms. Get the answers in writing.
Contracts between operators and locations
A placement agreement should state who carries which coverage, who indemnifies whom, and which certificates each party provides. As an editorial recommendation, record each answer and the document that supports it. Our vendor comparison checklist is a worksheet for that. It records questions and evidence. It isn't legal approval or vendor verification.
Practical checklist
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Get quotes from more than one insurer and compare similar coverage. TDI advises this and says "Coverage and rates vary by company, so it pays to shop around."
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Ask about a business owner's policy. TDI says many insurers bundle coverages this way, usually for less than buying them separately.
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Confirm that the agent and insurer are licensed through the TDI Consumer Help Line at 800-252-3439.
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Tell the agent about every location you operate, as TDI advises, and keep a record of all your communications with the agent.
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Keep Comptroller licenses current (they're due annually by November 30), and make sure the $60 annual occupation tax permit is "visible and securely attached to every coin-operated machine."
Having coverage doesn't mean any authority has found your machines lawful. Ask a Texas attorney about the legal status of specific equipment before you place or host it.
Related reading
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Buying Used Skill Game Machines in Texas: A Due Diligence Checklist
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Why a Registration Is Not a Safe Harbor: Texas Licenses, Tax Permits and the Penal Code
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What to Do When Police Seize Skill Machines at Your Texas Location
Sources
This article was drafted with AI assistance from the sources listed above. Consult primary sources and qualified counsel for legal decisions.
Reporting is for information, not legal advice. A vendor listing or the term skill game does not establish a machine's legality in any jurisdiction.