taxes

Coin-Operated Machine Regulation and Taxation

What is a Coin-Operated Machine?

A coin-operated machine is any device that operates when a person inserts a coin, bill, token, metal slug, electronic card, or check. These machines can provide different types of entertainment, such as playing music, offering games of skill, or simply providing amusement or pleasure.

Examples include, but are not limited to, jukeboxes, billiard or pool tables, pinball machines, arcade-style games, miniature sports games, and similar devices. Coin-operated machines do not include amusement machines designed exclusively for children.

Requirements for Coin-Operated Machine Businesses

Businesses that provide coin-operated machines for customer use are required to obtain a license or registration certificate from the Texas Comptroller of Public Accounts’ office. The Comptroller’s office also assesses a state occupation tax on each machine exhibited. Applications for a license or registration certificate must include payment of the applicable fees and tax.

Types of Licenses and Certificates

General Business License

A general business license allows a person to manufacture, own, buy, sell, rent, lease, trade, maintain, transport, exhibit or store coin-operated machines in Texas. This license also authorizes the holder to place and exhibit machines in another person’s business.

Annual general business license fees are:

• $200 for 50 or fewer machines
• $400 for 51 to 200 machines
• $500 for 201 or more machines

Import License

An import license allows a person to import, transport, own, buy, repair, sell or deliver coin-operated machines in Texas. This license is necessary to purchase coin-operated machines from out-of-state to resell in Texas. Import license holders need a general business license to make coin-operated machines available for play, unless the machines are being demonstrated for free.

The annual import license fee is $500.

Repair License

A repair license allows a person to repair coin-operated machines for others. It also allows them to transport or store these machines in Texas.

The annual repair license fee is $50.

Machine owners can repair their own machines without obtaining a repair license.

License Application

To apply for any of the above licenses, submit Form AP-147, Texas Original Application for Coin-Operated Machine General Business License, Import License, and/or Repair License and Tax Permit(s) (PDF).

Registration Certificate

A person qualifies for a registration certificate instead of a general business license if they:

• own or exhibit coin-operated machines only in that person’s own place of business;
• have no machines in another person’s business; and
• have no financial interest in the coin-operated machine industry except for ownership of machines operated in that person’s business.

The annual registration certificate fee is $150.

To apply, submit Form AP-146, Texas Original Application for Coin-Operated Machine Registration Certificate and Tax Permit (PDF).

Exemptions

No license, registration or occupation tax is due on machines if they are:

• operated exclusively in a private residence for personal use;
• transported or stored by common carrier regulated by the Railroad Commission of Texas; or
• owned by, leased, or rented to organizations operated exclusively for charitable, educational, religious, or benevolent purposes. (Eligibility information, as described in Rule 3.602, must be submitted to the Comptroller’s office. An organization with social or fraternal activities does not qualify.)

License and registration certificate fees cannot be prorated. Fees cannot be refunded once a license or certificate has been issued.

Annual Renewals

Licenses and registration certificates must be renewed no later than Nov. 30 each year. A renewal application received after the due date may result in an expired license or registration certificate. The license or certificate must be active to display a coin-operated machine.

Late fees for renewals:

• $50 for a renewal application with a December postmark.
• 1.5 times the annual fee for renewal applications postmarked not more than 90 days after Dec. 31.
• Two times the annual fee for renewal applications postmarked more than 90 days but less than two years after Dec. 31.

In the event, a license or registration certificate has been expired for two years or longer, the holder cannot renew it; they must submit a new application for a license or registration certificate.

Denial of License and Registration Certificates

A general business license cannot be issued to a person convicted of a felony within the past five years, or who has been placed on probation or released on parole for a felony conviction within the past two years.

A general business, import or repair license may not be given to a person who fails to designate a record keeper with records maintained at an office located in Texas and made available for inspection by a representative of the Comptroller’s office.

A license or registration certificate may not be given to anyone who owes outstanding fees, penalties or taxes to Texas.

These restrictions apply to officers, directors, members and shareholders owning 25 percent or more of a company.

Illegal Gambling Devices

The coin-operated machine law does not authorize or allow the possession, operation or display of any machine prohibited under the Texas Constitution or Penal Code.

Records Required

Owners of coin-operated machines must maintain a complete and itemized record for each machine for at least four years. If the owner is involved in any matter pending before the Comptroller’s office, or if an administrative hearing or judicial proceeding is ongoing, the records and supporting documentation must be retained for the duration of that process, even if it extends beyond four years.

A license holder must report to the Comptroller’s office identifying information on each machine owned, possessed or controlled, including the location of each machine and any change in machine ownership. The license holder must also keep a separate record showing the distribution of gross receipts on collections from each machine.

Record Keeper

License holders are required to keep their records at the Texas office of a designated record keeper. The records must be made available for inspection, upon request, by a member of the Comptroller’s office or the Office of the Attorney General. The law requires the record keeper to be an owner, partner, officer, trustee, receiver or principal member of the licensed business.

A registration certificate holder is exempt from these record-keeping requirements.

Occupation Tax Permit

Each coin-operated machine offered for use to customers must have an occupation tax permit (decal) visibly and securely attached to the machine.

Occupation tax permits cost $60 per calendar year but can be prorated based on the calendar quarter the machine is first exhibited in Texas. Tax permits are reissued with the license and registration certificate renewals.

To purchase permits for new machines acquired during the year, file Form AP-141, Texas Application for Additional Coin-Operated Machine Tax Permits (PDF).

Permits that are lost, stolen or destroyed may be replaced by filing Form AP-140, Texas Application for Duplicate Coin-Operated Machine Tax Permit(s) (PDF). Duplicate permits cost $5 each.

Permits may be transferred with the sale of a machine during the calendar year by filing Form AP-212, Coin-Operated Machine Tax Permit(s) Ownership Transfer Statement (PDF). There is no cost for the transfer.

Operating Without a Permit

Anyone who displays or exhibits a coin-operated machine without a valid tax permit attached is subject to a civil penalty of $50 to $2000. The Comptroller’s office can assess the penalty for each day a violation occurs.

Local Government Occupation Tax

Cities and counties may impose a coin-operated machine tax in addition to the state tax.

Owner Reimbursement

The first money earned on the exhibition of a coin-operated machine may be paid to reimburse the owner for that year’s machine occupation tax permit. Going forward, each year a portion of the money earned from the machine should be paid to the owner in an amount necessary to reimburse them for the next year’s payment of the permit. By law, the owner cannot waive this reimbursement.

Distribution and Refunds of Receipts

A general business license holder cannot offer a business more than 50% of the gross receipts from a coin-operated machine after tax reimbursement. A business owner cannot have keys or other access to a machine’s cash box unless the machine has an income meter.

Refunds for a malfunctioning machine can be paid to a business owner only when the license holder is given the name, address, and telephone number of the person who deposited money in the machine and the amount of money deposited.

Sales Tax on Machines

State and local sales tax is due on the purchase of all machines, unless purchased exclusively for resale.

Sales of amusement services provided by machines designed exclusively for children are subject to sales tax.

A license or registration certificate holder who does not engage in the business of selling taxable items can sell two machines in a 12-month period without collecting sales tax. Sales tax is due on the third and subsequent sales. The license or registration certificate holder must obtain a general business or import license before selling a third machine.

For information about applying for a sales and use tax permit and filing tax returns, visit our Sales and Use Tax webpage. You can also visit any Comptroller field office in Texas or call 1-800-252-5555.

Machine Receipts Exempt from Sales Tax, Except for Purchase

Machine receipts are exempt from sales taxes except when used as payment for the purchase of a machine, including an agreement in which the license holder is guaranteed a minimum payment regardless of the actual income from the machine.

Changes in Machine Location

A registration certificate holder must notify the Comptroller’s office within 10 days of moving a machine to a different location by filing Form AP-142, Machine Location Amendment for General Business License and Registration Certificate Holders (PDF). The holder should complete a separate form for each location where the machines are moved.

Tax Code Administrative Procedures

The law allows the use of administrative procedures in the Texas Tax Code for the recovery of delinquent taxes, penalties and permit fees. The procedure can include collection activities, tax liens, administrative hearings, and taxpayer lawsuits.

This publication is intended as a general guide and not as a comprehensive resource on the subjects covered. It is not a substitute for legal advice.

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(10-2026)