For Texas operators, the lease vs buy skill machines decision covers more than the monthly payment. It also settles who the law treats as the machine's owner. Texas Occupations Code Chapter 2153 defines an "owner" as "a person who owns a coin-operated machine in this state" and puts the annual occupation tax on that person (Tex. Occ. Code Ch. 2153). Ownership also decides who loses the asset if machines are seized. This guide sets out the trade-offs. It does not decide whether any machine is lawful.
Three ways to acquire machines
Chapter 2153 recognises three routes: owning machines outright, placing them through a lease or bailment, and buying them under a credit agreement. A bailment means placing a machine with someone under an agreement without selling it. A licence holder may extend credit to "a lessee or bailee" only for a business or commercial purpose (§2153.252). The agreement must be written and signed and must state the "credit amount," the "consideration for the credit transaction" and the "terms governing repayment" (§2153.254).
A third model is free placement, also called a route or revenue-share model. In Pennsylvania, Pace-O-Matic described its skill games in a sponsored Q&A as "owned and maintained by POM," with "installation, maintenance and equipment costs" covered by the company (NACS Magazine, Sept. 2023). A POM spokesperson told iGaming Business (Oct. 28, 2024) that "over 80% of the revenue our games generate flows directly to our small business operators." These are the company's own statements about Pennsylvania. They tell you nothing about Texas terms or legality.
Upfront cost and lifetime cost
The U.S. Small Business Administration gives general equipment guidance. Leasing "needs less cash or credit upfront," but "the lifetime cost is normally higher than buying." Buying usually costs less over the asset's life, but the buyer "could be fully liable for maintenance and replacement." The SBA also separates two kinds of lease. An operating lease works like a traditional rental and stays off the balance sheet. A capital lease works like a loan, and the asset goes on the balance sheet.
We found no independent Texas data on lease rates, purchase prices or payback periods for cash-prize skill machines. The arcade manufacturer JVL, which sells non-cash-prize machines, says most arcade revenue-share agreements "range from a 70/30 to 50/50 split." It says a well-placed machine "typically pays back its purchase price within 12 to 18 months," or 24 to 36 months in lower-traffic venues (JVL, updated Mar. 17, 2026). These are a vendor's claims about arcade equipment and should not be used as benchmarks for skill machines.
Licensing and occupation tax follow the owner
The Texas Comptroller requires a General Business License from anyone who will "manufacture, own, buy, sell, rent, lease, trade, maintain, transport, exhibit or store coin-operated machines in Texas." A business that only owns or exhibits machines at its own place of business, with no machines anywhere else, may qualify for a Registration Certificate instead. The occupation tax is $60 a year per machine, and the permit must be attached to each machine. Renewals are due Nov. 30 each year. Fees depend on the postmark date: $200 to $400 for a General Business licence covering 50 or fewer machines, and $150 to $300 for a Registration Certificate.
Section 2153.205 allows the first money a machine earns to go to the owner to reimburse state and local occupation taxes. The owner may not waive that reimbursement. After reimbursement, the owner may not pay a lessee or bailee more than 50% of gross receipts. The penalty is licence revocation. Any revenue-share offer has to fit inside that limit.
Under 34 Tex. Admin. Code §3.602, a general business licence holder must notify the Comptroller in writing within 10 days of any change in a machine's ownership. A tax permit can be assigned to a buyer by written notice within 10 days of the transfer.
Sales tax
Under the general rules, "receipts from the lease of tangible personal property without an operator are taxable," and the lessor must collect the tax from the lessee (34 TAC §3.294). A lessor buying equipment in order to lease it may give the seller a resale certificate instead of paying sales tax at purchase. Separately, equipment bought "for use in the provision of an amusement service" is subject to sales tax, while amusement services provided through consumer-operated coin machines are exempt (34 TAC §3.298). Ask your tax adviser how these general rules apply to your machines.
Federal tax treatment
According to IRS Publication 946, the Section 179 expensing limit for tax years beginning in 2026 is $2,560,000. The limit is reduced once qualifying property placed in service exceeds $4,090,000. P.L. 119-21 restored 100% bonus depreciation for qualified property "acquired and placed in service after January 19, 2025." A lessee "generally cannot depreciate" leased property, but IRS Publication 334 allows rent to be deducted when the property is used in the business and the rent is reasonable. Have a CPA run your numbers before you commit.
Exit terms and contract protections
JVL says many revenue-share agreements include a buyout clause. Compare buyout prices, termination rights and replacement costs at the end of the lease. Under §2153.359, it is a third-degree felony to tie a real-property lease to limits on where the other party may obtain machines "from any source." It is also a felony to obtain a machine lease or bailment "by coercion, threats, or intimidation." Owners can resell equipment, and a registration certificate holder may make two machine sales in any 12-month period without a general business or import licence (34 TAC §3.602).
The Texas legal-risk overlay
Penal Code §47.01(4) excludes from the definition of "gambling device" machines built solely for bona fide amusement that award only noncash merchandise worth no more than 10 times the cost of one play or $5, whichever is less. Section 47.06 makes it an offense to knowingly own or possess a gambling device "with the intent to further gambling" (Tex. Penal Code Ch. 47). Under Code of Criminal Procedure Art. 18.18, seized gambling devices can be destroyed or forfeited. A person claiming them must prove by a preponderance of the evidence that they are not gambling equipment.
Texas appellate courts have pointed in different directions. The Dallas Morning News reported that the Sixth Court of Appeals in Texarkana affirmed, 2-1, a Fannin County trial ruling that found seized devices to be games of skill and ordered the machines and cash returned. The Galveston County Daily News reported that the Second Court of Appeals in Fort Worth held on March 17, 2026 that eight-liners are illegal lotteries under the Texas Constitution. Owning machines puts the risk of losing them on the owner. Leasing moves title to someone else, but the contract decides who absorbs a seizure loss.
Financing is another factor. SBA business loans are not available to businesses earning more than one-third of gross annual revenue from legal gambling (13 CFR §120.110(g)). No source we reviewed says whether skill-machine revenue counts as gambling under that rule.
Next step: compare offers on paper
This is our editorial recommendation, not a legal requirement: get each lease, purchase or revenue-share offer in writing. Record the payment terms, maintenance commitments, buyout and termination clauses, who bears seizure losses, and who holds each licence and permit. The vendor comparison checklist gives you a place to record that evidence. It does not provide legal approval, verify a vendor or predict profitability.
Related reading
Sources
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Dallas Morning News (May 20, 2026) and Galveston County Daily News (May 1, 2026)
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Vendor sources: NACS Magazine (sponsored), iGaming Business, JVL
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.
AI assistance was used in preparing this article. Consult primary sources and qualified counsel for legal decisions.