Machine Income
Machine Income
Typical EarningsAmusement machines can provide you with a steady source of income, with the average tenanted and leased pub taking an estimated
£ 70 per week from their amusement machines, and the highest earners taking in the region of
£ 400 per week. (Based on sharing net income on a 50/50 basis with their brewery or pub company.) The majority of your machine income comes from AWP (Amusement with prizes) machines, also known as fruit machines or gaming machines. Added to this, is income you earn from equipment such as video machines, pool tables, jukeboxes and any other types of machine, such as arcade games.
The actual amount of income you make from your machines is determined by the type of customers you attract, the kind of pub you run, how net income is split, and how well you manage your machines. Before taking on your pub, get written confirmation of how much amusement machine income is currently being earned.
Arrangements For Sharing Machine Income
If you are a tenant or lessee, you will probably be required to use machine suppliers recommended by your brewery or pub company, and there may
also be an arrangement to share the net income from your machines with your brewery or pub company. These share arrangements vary; some require you to share only the AWP income (possibly on a 50/50 or 60/40 basis), while others require a share of income from all machines and equipment such as video machines, pool table and jukeboxes. A small number of tenancy and lease agreements allow you to keep all machine income for yourself, ie you retain 100% of the machine income.
Freehold
If you own the freehold of the pub, you will not be tied by an agreement to use particular machine suppliers, or have to share income with a brewery or pub company. You will however, have to monitor machine performance and manage suppliers yourself.
How Your Machine Income Is Calculated
The machine supplier collects their rent from the gross income in their machines when they come to empty the cash on a fortnightly basis (or weekly for high-earning machines). Out of the remaining balance, they deduct an apportioned amount to cover Amusement Machine Licence Duty (AMLD) payable to HM Revenue and Customs, and leave you with your share of the net income. VAT is payable by you on the ‘taxable take’ of amusement machines, that is, the amount put into the machine less the amount returned as winnings to players.
There may be circumstances where a poorly-performing machine does not take enough money to cover the rental and licence duty deductions. This is known as being in ‘shortfall’, and you will owe your supplier money to cover this loss. In this situation, urgent action needs to be taken to prevent its reccurrence. (See section below, on ‘Maximising your AWP and SWP income’.)
Machine Rental
Machine suppliers range from small local operators to national concerns. Each supplier has a portfolio of machines that is available on rental to the pub trade. In a tenanted or leased pub, the rents for each machine will have been previously set through negotiation between the supplier and brewery or pub company. The general principle is that new models have high rents while older style machines have lower rents. If you operate a freehold pub, you must negotiate machine rents directly with your supplier.
Highly-rented machines need to take more money to cover their costs than lower-rented ones. Typically, the newer AWPs are very appealing to machine players (‘gamers’), but must earn enough to cover their high rents. Your pub may not be the appropriate place for this type of machine; a midrange machine, at a lower rental, may be more appropriate for the level of machine-playing demand in your pub. The aim should be to install machines that appeal to your customers at a rent that allows you to make money. Speak to your machine supplier or Machine Controller for advice on choosing the right type of machine for your pub.