How Arcades Make Money: Understanding Arcade Profitability is a practical series built around the real-world operating experience of LAI Games’ David Pascoe. Drawing on more than 15 years in attractions and arcade operations, David shares the strategies, benchmarks and lessons he has used in actual venues—from ticket value and payout to game mix, guest flow and attraction strategy.
In the first article in this series, we looked at the basic economics of an arcade: how dollars become game credits, game credits become play, play becomes tickets, and tickets eventually become prizes. That leads to one of the most important questions an operator can ask:
What is one ticket actually worth?
It sounds basic, but David has found that many operators either do not know the answer immediately or are working from a number that someone else set years ago. And that matters, because ticket value affects nearly every redemption decision in the room.
Every redemption game is giving something back to the guest. That return may be displayed as tickets, points or credits, but eventually those tickets are exchanged for merchandise that has a real cost to the operator. If you do not know what one ticket is worth, you cannot accurately determine what your game is paying out.
David often explains it with a simple example. Imagine a game costs $1.00 to play. If that game awards an average of 25 tickets, and each ticket is worth one cent, the operator has effectively returned 25 cents in merchandise value to the guest.
The basic calculation looks like this:
25 tickets × $0.01 = $0.25 in payout value
That means the game has retained 75 cents before other operating expenses are considered. That is very different from simply looking at a report and seeing that the machine collected $1.00. The ticket value tells you what part of that dollar has already been committed back to the guest.
Who Decided What Your Tickets Are Worth?
This is where things get interesting. In some locations, the operator intentionally establishes a ticket value based on prize costs, pricing strategy and desired payout. In others, the number may have been entered when the cashless system was installed. It may have come from a distributor, a consultant, a redemption supplier or a systems provider.
That does not automatically mean the number is wrong. But David’s point is that the operator should understand where it came from and what it means.
If someone asks, “Why is your ticket worth a penny?” the answer should not be, “That’s just what the system says.” The operator should be able to explain how that value supports the economics of the game room. Because once that number is established, it becomes the measuring stick for a large part of the redemption business.
There Is No Universal Ticket Value
Operators often ask for a standard. What should a ticket be worth? What should the payout percentage be? There are useful benchmarks, but there is no single number that works for every location.
Different operations have different:
play prices
merchandise costs
rent and labor structures
guest expectations
game mixes
prize strategies
average spend per guest
David has historically worked with payout percentages in roughly the 18% to 25% range as a healthy operating target in some environments, but he is careful to frame that as a best-practice benchmark rather than a universal rule.
The important thing is not to copy someone else’s number. It is to understand what your number does to your economics.
Ticket Value Changes How You Read Your Reports
Suppose a game earns $100 and your reporting system says it paid out 25%. That sounds straightforward. But that percentage only becomes meaningful if the underlying ticket value is accurate.
If your system values tickets at one cent, then a 25% payout means the machine effectively returned $25 in prize value. If your true merchandise economics suggest that your tickets are really worth less—or more—then the reported payout may not reflect reality.
That is why David encourages operators to look beyond the report itself. The report is only as useful as the assumptions underneath it. A clean dashboard can still produce misleading conclusions if the ticket value was never established intentionally or has not been reviewed in years.
Ticket value is not just a theoretical accounting number. It connects directly to what is sitting behind the redemption counter.
Prize cost changes. Merchandise mix changes. Freight changes. The types of prizes guests want change. If the cost of merchandise rises while the ticket structure remains untouched, the real economics of the redemption program may shift even if the reports look exactly the same.
That is why ticket value should not be treated as a permanent setting. It should be reviewed periodically alongside:
merchandise cost
average ticket payout
prize mix
game pricing
guest satisfaction
overall redemption performance
The goal is not to constantly change the system. The goal is to know whether the number you are using still reflects the business you are actually running.
A Healthy Payout Has to Work for Both Sides
Redemption has two jobs. It has to feel rewarding to the guest, and it has to remain sustainable for the operator.
If ticket value is set too low or payout is too tight, guests may feel that meaningful prizes are out of reach. If payout becomes too generous, the operator may be giving back more value than the business can comfortably support.
That balance is part of what makes redemption both art and science. The numbers matter, but so does perception.
A guest does not think in terms of payout percentage. They think:
“Was that worth playing?”
“Did I win enough?”
“Can I get something I actually want?”
A strong redemption strategy has to answer those questions positively while still protecting the economics of the room.
Once you know what your tickets are worth, you can make better decisions about game pricing. Suppose two games both pay out heavily, but one costs significantly more to play. The higher-priced game may support that payout comfortably. The lower-priced game may not.
That is why price per play and payout cannot be evaluated separately. They are connected. If a game awards large ticket values, its price needs to support that experience.
If a game is underpriced relative to its payout, a strong earnings number can be misleading. The machine may look busy and popular while still contributing less than expected. That is another reason why ticket value should be understood before making conclusions about which games are performing best.
It Also Changes How You Compare Games
One of the easiest mistakes in arcade operations is comparing games only by gross revenue. A redemption game, a premium racing game and a large attraction may all be doing very different jobs.
A title like Galaxy Hunter or Lost Pirate may be primarily evaluated through a redemption lens. A premium driving game such as Asphalt 9 DX Plus or Moto Blitz DX Plus can be configured with optional redemption, which gives operators flexibility in how they position and monetize the experience.
That means operators need to understand both sides of the equation: What does the game earn? And what does it give back?
The same machine can look very different on paper depending on how it is priced, whether redemption is enabled and what the ticket value is.
The equipment matters. But the operating decisions around the equipment matter just as much.
This is the larger lesson. Ticket value should not be a forgotten number buried in the back end of a cashless system. It should be an intentional operating decision.
An operator should be able to answer:
What is one ticket worth?
Why did we choose that value?
When was it last reviewed?
Does it reflect current merchandise costs?
Does our payout support both profitability and guest satisfaction?
Are our game prices aligned with the value we are paying back?
If those answers are clear, the rest of the redemption data becomes much more useful. If they are not, this is a good place to start.
Because before you can understand whether a redemption game is truly profitable, you need to understand what you are giving back every time the game awards a ticket. And that starts with one simple question:
What is your ticket actually worth?
Next in the series: We’ll look more closely at how to set and manage a healthy ticket payout percentage—and how to balance a rewarding guest experience with sustainable game-room economics.
LAI Games is an arcade experience company that connects people with games. They design unique, accessible, and creative games and experiences for players in arcades and at home, with a portfolio comprised of video games, virtual reality experiences, mobile applications, ticket and prize redemption games and more.
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