Accel Entertainment, Inc. (ACEL): Business Model Canvas [Dec-2025 Updated]

You're looking for a clear-eyed view of Accel Entertainment, Inc. (ACEL)'s core engine-the Business Model Canvas-and how their recent expansion moves, like the Louisiana and Fairmount Park acquisitions, impact the structure. The direct takeaway is that their model is fundamentally resilient, built on high-volume, recurring revenue from 27,714 distributed gaming terminals, but their 2025 strategy is defintely focused on diversifying risk beyond Illinois. Honestly, the core value proposition is still providing zero-effort, passive revenue for over 4,451 local venues, which drove Q3 2025 Net Gaming Revenue to a strong $308.48 million; but you need to watch the CapEx, which is forecast high at $75 million to $80 million for the full year, plus the integration risk from the $40 million Toucan Gaming deal.

Accel Entertainment, Inc. (ACEL) - Canvas Business Model: Key Partnerships

Accel Entertainment's business model is fundamentally built on a dense network of strategic partnerships, ranging from thousands of local business owners to major regulatory bodies and key acquisition targets. These relationships are the core engine that drives its distributed gaming model, which is why the company reported managing 4,451 locations as of September 30, 2025. You can't scale a route-based business to this size without rock-solid, long-term agreements.

Local Business Establishments: Exclusive, long-term contracts with over 4,451 bars, restaurants, and truck stops

The most critical partnership is with the local establishments themselves. Accel Entertainment operates on a business-to-business (B2B) revenue-sharing model, where the local partner signs an exclusive, long-term contract to host Video Gaming Terminals (VGTs). This arrangement is the company's lifeblood, providing high-margin, recurring revenue. As of the end of Q3 2025, Accel managed 4,451 locations with an installed base of 27,714 gaming terminals across multiple states.

The company provides a full-service, 'turnkey' solution-handling licensing, installation, maintenance, and cash management-in exchange for a cut of the Net Terminal Income (NTI), which is the revenue remaining after player payouts. This level of service is defintely what keeps local businesses from switching operators.

Gaming Equipment Manufacturers: Sourcing Video Gaming Terminals (VGTs) from key suppliers like Scientific Games Corporation

While Accel Entertainment provides a full-service solution that includes its own manufacturing and content capabilities, it still relies on a network of suppliers for the latest hardware and game content. The gaming industry is highly competitive on game themes and technology. Accel must partner with or license content from major providers, such as the type of products offered by companies like Scientific Games Corporation (now known as Light & Wonder), to ensure its 27,714 VGTs offer the most popular and engaging content. This ensures the terminals remain high-yield assets for the location partners.

Regulatory Bodies: Maintaining compliance and licenses across multiple state gaming boards, essential for operation

The distributed gaming industry is intensely regulated, making state gaming boards and commissions a non-negotiable partner. Accel Entertainment must maintain compliance and hold licenses in every jurisdiction it operates in, including the Illinois Gaming Board (IGB), where it is the market leader. The partnership is one of continuous oversight, ensuring all operations-from terminal placement to revenue reporting-adhere to state law. This is a critical risk-mitigation partnership; losing a license means losing the business entirely. Accel currently operates across six states, requiring compliance with diverse regulatory frameworks.

FanDuel: Partnership for retail and online sports betting licenses in the Illinois market

The partnership with FanDuel is a strategic diversification play, moving Accel Entertainment beyond its core VGT business into the more centralized casino and sports betting market. This partnership was secured through the acquisition of Fairmount Holdings, the owner of the FanDuel Sportsbook & Racetrack in Collinsville, Illinois.

The deal provides Accel with a master sports-betting license and a direct partnership with FanDuel for both retail and online sports betting in Illinois. Phase I of the new casino at the racetrack opened in April 2025, and management projects this asset will contribute an Adjusted EBITDA of between $20 million and $25 million within five years.

Acquired Operators: Minority partnerships, such as the 15% stake retained by Toucan Gaming's CEO in Louisiana

Accel Entertainment's growth strategy heavily relies on strategic acquisitions, often structured as majority purchases that retain the local operator as a minority partner. This keeps the entrepreneurial drive and local market expertise intact. A concrete example is the acquisition of Toucan Gaming and LSM Gaming in Louisiana.

This structure, where the former owner keeps a 15% stake, aligns their incentives with Accel Entertainment's long-term growth, which is a smart way to manage post-acquisition integration risk. The Louisiana market alone added 670 gaming terminals across nearly 100 locations to Accel's footprint.

Accel Entertainment, Inc. (ACEL) - Canvas Business Model: Key Activities

Full-Service VGT Management

This is the core of the business, the essential process of running the distributed gaming network. Accel Entertainment provides a full, capital-efficient solution to its partners-bars, restaurants, and truck stops-across 10 states. As of the end of Q3 2025, the company managed 27,714 gaming terminals (VGTs) across 4,451 locations. We're talking about everything from manufacturing and content to cash logistics.

This activity is the primary revenue driver. For example, the core Illinois VGT operations alone generated $245 million in revenue during Q2 2025, a clear sign of the scale and profitability of this key activity. The full-service model is what locks in the long-term contracts, making the revenue stream highly predictable.

• Install and maintain VGTs and redemption devices.
• Provide 24/7 customer service and field support.
• Manage content, payments, and loyalty programs.

Strategic Acquisitions

Accel Entertainment's growth strategy is defintely a roll-up model, meaning they actively identify and integrate smaller, complementary operators to expand their footprint and achieve greater economies of scale. This is a crucial, high-stakes activity that requires disciplined capital allocation. For the full year 2025, the company affirmed a Capital Expenditure (CapEx) forecast of $75 million to $80 million, with a significant portion dedicated to these growth initiatives.

The most recent notable deals, which are now contributing to 2025 results, include the expansion into Louisiana and the new racino operation in Illinois.

Here's the quick math: the Louisiana acquisition alone was expected to generate $25 million of revenue in 2025, proving the immediate financial payoff of this key activity.

Regulatory Compliance

Operating in the distributed gaming space means navigating a fragmented and complex regulatory landscape across multiple states. This activity is non-negotiable and requires constant vigilance to maintain licenses and avoid costly penalties. Accel Entertainment is currently licensed in 10 states, so compliance is a massive, ongoing operational task.

The company is subject to regulatory oversight by various bodies, including the Illinois Gaming Board (IGB). To be fair, this isn't just about following the rules; it's about protecting the business model itself. A single negative regulatory finding can damage their reputation and risk their ability to renew licenses. The company is even involved in an administrative hearing process with the IGB over alleged violations of the Video Gaming Act.

Data Analytics

This is where the company moves beyond simple operations and into optimization. Accel Entertainment uses proprietary platforms for data analysis and reporting, which is a critical function to maximize the return on their terminal investments. They focus on optimizing terminal placement, game mix, and pricing strategies.

The success of this data-driven approach is visible in the unit economics of the core market. In Illinois, Accel Entertainment's revenue per location rose to $15,634 in Q2 FY 2025, up from $14,419 in Q2 FY 2024. This improvement happened even with a slight decrease in the number of locations and terminals, meaning the data-driven optimization of the existing base is working. Their CapEx process is also explicitly 'rigorous and data-driven,' ensuring that the $75 million to $80 million in capital expenditures for 2025 are deployed for the highest incremental return.

Accel Entertainment, Inc. (ACEL) - Canvas Business Model: Key Resources

You're looking at Accel Entertainment, Inc. (ACEL) and trying to map their core assets-the things that actually create their competitive moat and drive revenue. The company's Key Resources are less about real estate and more about a massive, distributed physical footprint, plus the financial and intellectual capital to back it up. Simply put, their resources are built for scale and sticky, recurring cash flow.

Vast VGT Network

The core physical resource is the sheer scale of their distributed gaming network (VGTs), which gives them a dominant market share in their core states. As of the end of Q3 2025, Accel operated 27,714 video gaming terminals. This physical footprint is spread across 4,451 unique neighborhood locations, such as bars, restaurants, and truck stops. This density is what allows them to optimize machine performance and service efficiency.

Here's the quick math: that's an average of about 6.2 VGTs per location, which is a high-yield configuration. The network is concentrated, with Illinois and Montana accounting for 82% of total Q3 2025 revenue.

Proprietary Technology

Accel's intellectual property and proprietary systems are essential for maximizing the yield from their physical assets. They use data analytics platforms to optimize game selection and placement, ensuring the right games are in the right locations to drive player engagement.

• Grand Vision Gaming (GVG): This wholly owned subsidiary acts as Accel's in-house slot machine manufacturer. GVG provides proprietary gaming content and systems, which gives Accel control over its supply chain and allows for rapid deployment of high-performing, localized game titles, especially in markets like Montana. [cite: 10 in step 1]
• AE Player Rewards: This is Accel Entertainment's customer loyalty program, which they market as the only globally recognized Customer Loyalty Program in the route gaming sector. The program helps with player retention and provides valuable data on customer behavior, which feeds back into their optimization strategy.

Long-Term Contracts

The stability of Accel's cash flow is fundamentally tied to its exclusive, long-term contracts with location partners. These agreements are the intangible assets that underpin the entire business model, locking in revenue streams for years.

The typical contract structure is designed for maximum duration and stability. For accounting purposes, the route and customer acquisition costs associated with securing these locations are amortized over a long period, which includes expected renewals. This amortization period is often up to 18 years for organic location contracts and an expected useful life of 15 years for contracts acquired through business combinations. This long-term lock-in is a significant barrier to entry for competitors.

Financial Capital/Liquidity

A strong balance sheet is a critical resource for a business model reliant on capital-intensive expansion and acquisitions. Accel maintains significant financial flexibility to fund its growth strategy of bolt-on acquisitions and new market entry.

As of September 30, 2025, the company reported cash and cash equivalents of $290.2 million. They also successfully completed a major refinancing in Q3 2025, securing a new $900 million senior secured credit facility, which consists of a $600 million term loan and a $300 million revolver. [cite: 10 in step 1] This facility extends maturities all the way to 2030 and enhances their total liquidity to $590 million. That's a lot of dry powder for future growth.

Accel Entertainment, Inc. (ACEL) - Canvas Business Model: Value Propositions

Accel Entertainment's core value proposition is simple: they offer a full-service, capital-light way for local businesses to generate significant, passive revenue. You get the financial benefit of a casino floor without any of the operational headaches or upfront capital. Their model is highly attractive to small business owners because it's truly turnkey.

Passive Revenue for Venues: Providing a significant, zero-effort revenue stream from VGT profit-sharing.

For a local bar, restaurant, or truck stop, Accel provides an essential, non-core revenue stream that requires almost no effort from the owner. This is the definition of passive income. In their core market of Illinois, the structure is clear: after the state and local governments take their cut (which can be substantial, as they contributed $325 million in taxes in 2024), the remaining net gaming revenue is typically split evenly between Accel and the venue partner. Honestly, that split is a huge incentive.

This system lets small business owners focus on their main operation-serving food or selling gas-while the video gaming terminals (VGTs) generate cash flow. Accel manages all the complexity, from regulatory compliance to cash logistics, making it a truly hands-off proposition for the partner.

Engaging Player Experience: Offering a variety of modern, regulated gaming and amusement options in neighborhood settings.

Accel's value to the end-user, the player, is providing a high-quality, regulated gaming experience right in their neighborhood. This isn't just about VGTs (Video Gaming Terminals); it's about a comprehensive entertainment package. As of September 30, 2025, they operated 27,714 gaming terminals across 4,451 locations, solidifying their position as the largest terminal operator in the nation.

They also offer other amusement devices, like jukeboxes, dartboards, and pool tables, helping to create a defintely engaging atmosphere. Plus, the Gamblers Bonus® Loyalty Program helps to build retention and drive repeat visits, which is a key value-add for the venue partner.

Geographic Diversification: Offering shareholders a growth stream beyond the core Illinois market via Louisiana and others.

For investors and business strategists, Accel's value proposition is increasingly about measured, strategic growth outside of their core Illinois market. The company is actively diversifying its revenue base and mitigating regulatory risk from any single state.

The acquisition of Toucan Gaming in Louisiana is a concrete example of this strategy, expected to contribute approximately $25 million in revenue and $6 million in Adjusted EBITDA for the 2025 fiscal year. They also expanded their business model with the opening of Fairmount Park Casino & Racing in Illinois in April 2025, adding a racino stream with over 270 gaming machines.

Accel is now operating in six states, including Montana, Nebraska, Nevada, and Georgia, with the latter two showing impressive growth in developing markets.

Full Operational Service: Handling all licensing, maintenance, and cash management for location partners.

The final, and arguably most important, value proposition for the venue partner is the complete 'Gaming-as-a-Service' platform. This full-service approach removes the administrative and technical burden entirely. Accel handles everything from the initial, complex regulatory licensing to the daily cash logistics.

They provide a turnkey solution that includes:

• Securing and managing all state and local licenses.
• Providing proprietary payment systems and loyalty programs.
• Offering 24/7 field service and maintenance to minimize downtime.
• Managing cash logistics and providing detailed monthly performance reports.

Their ability to procure and rotate high-quality, premium equipment quickly is what keeps their partners competitive and maximizes revenue.

Accel Entertainment, Inc. (ACEL) - Canvas Business Model: Customer Relationships

Accel Entertainment's customer relationships are built on a dual-focus model: high-touch, consultative partnerships with their business locations and technology-driven engagement with the end-players. The goal is simple: maximize revenue for the location partners, which in turn secures long-term, exclusive contracts for Accel. This is a business built on partnership, not just placement.

Dedicated Account Management: High-touch, personal service for local business owners to maintain long-term, exclusive contracts.

Every single one of Accel Entertainment's partner locations-which totaled 4,451 by the end of Q3 2025-is assigned a dedicated Relationship Manager. This is the high-touch, personal service that keeps location owners happy and minimizes churn. Their mission is straightforward: maximize the location's video gaming success.

These Relationship Managers are industry professionals who provide hands-on operational guidance and are the primary point of contact for the local business owner. They work closely with Accel's Data Team to track industry trends and use the proprietary Accelerator app data to optimize the selection of Video Gaming Terminals (VGTs) to drive more revenue at that specific location. It's a consultative sale that never really ends.

Automated Service: Remote monitoring and maintenance of VGTs to ensure maximum uptime and performance.

While the relationship managers handle the personal side, technology ensures the machines are running. Accel Entertainment operates a 24-hour in-house Service Solutions Center and employs a best-in-class team of technicians across their operating states. This focus on preventative maintenance and rapid response is critical because, honestly, every minute a VGT is down is lost revenue for both Accel and the location partner.

The company is also implementing technological upgrades like the Ticket-In/Ticket-Out (TITO) systems in Illinois, which streamlines cash handling and enhances the player experience. They also invest in proprietary technology, like the 'Bulldog Wallet' in Georgia, which enables digital payments for skill-based amusement machines. This automation reduces friction and helps keep the 27,714 gaming terminals they operate highly available. That's just smart business.

Loyalty Programs: Enhancing player engagement through in-venue promotions and rewards (indirect relationship).

The relationship with the end-user (the player) is managed indirectly through the AE Player Rewards program, a globally recognized customer loyalty platform. This program is offered for free to patrons and helps drive foot traffic to the partner locations. Players can check in once per hour via the AE Player mobile app or the in-location kiosk to earn status and enter cash giveaways.

Here's the quick math on engagement: Accel's data shows that 90% of check-ins currently come from the physical kiosk rather than the mobile app, highlighting the importance of the in-venue presence. Locations can opt to pay a small $25 monthly fee for a physical kiosk and access to the Accel Loyalty Engine (ALE) for patron data and marketing support, allowing them to run co-operative promotions like a recent giveaway that offered a share of $50,000 in prizes.

• Patrons sign up for a FREE AE Player Rewards Membership.
• Members check in once per hour via app or kiosk to build status.
• Locations receive complimentary promotional marketing materials.
• Locations can access the Accel Loyalty Engine (ALE) for patron data and virtual punch card creation.

Investor Relations: Delivering strong financial performance, including Q3 2025 net income growth of 171.8%.

For the investor segment, the key relationship is maintained through transparency and, more importantly, strong financial results. The company's performance in Q3 2025 was a defintely strong signal to the market, demonstrating the resilience of the distributed gaming model and disciplined execution.

The significant jump in net income was a headline figure for stakeholders. This is what you want to see when you look at a growth-focused operator.

The net income surge to $13.4 million in Q3 2025, representing a 171.8% increase, was partially driven by a gain on the fair value of contingent earnout shares, but it still underscores the company's operational strength and expansion into new markets like Louisiana and the Fairmount Park Casino & Racing operations. The company also returned capital to shareholders, repurchasing 0.6 million shares for approximately $6.8 million in Q3 2025 alone. That's a clear action that speaks to investor confidence.

Accel Entertainment, Inc. (ACEL) - Canvas Business Model: Channels

Accel Entertainment, Inc. uses a multi-pronged channel strategy that moves beyond the traditional route-based model into full-scale casino operations, which diversifies the revenue stream. Your access to the customer base is primarily through two distinct, yet complementary, networks: the vast distributed gaming footprint and the concentrated entertainment complexes acquired in late 2024.

Distributed Gaming Network: Physical placement of VGTs in licensed, non-casino venues (bars, restaurants, truck stops).

This is your foundational channel, representing the core of the business-to-business (B2B) model. It's a high-volume, low-concentration approach that places Video Gaming Terminals (VGTs) in neighborhood locations. As of September 30, 2025, Accel operated a total of 27,714 gaming terminals across 4,451 locations in ten states. This scale is defintely the edge, allowing for significant operational efficiencies.

The channel is heavily concentrated in Illinois, which is the largest distributed gaming market globally and remains the primary revenue engine. For instance, in the second quarter of 2025, Illinois alone generated $245 million in revenue. You have 2,728 locations in Illinois as of Q3 2025, meaning over half of your total footprint is still in the state. This channel is critical because it generates high-margin, recurring revenue through long-term, exclusive agreements with local business partners.

Fairmount Park Casino & Racing: Direct operation of a physical casino and racetrack facility in Illinois.

The Fairmount Park Casino & Racing, acquired in late 2024, represents a strategic shift toward a single, high-concentration entertainment channel. Phase I of the casino opened on April 18, 2025, commencing a new revenue stream that is an adjacency to your core competency. This channel offers a different customer experience-a full-service racino-which is a great way to capture a higher average spend per visit.

The facility currently features over 270 electronic gaming machines, a sportsbook, para-mutuel betting, and food and beverage amenities. The company is forecasting a full-year 2025 capital expenditure (CapEx) of $31 million to $32 million for Fairmount Park, covering the Phase I completion and initial Phase II planning. This investment shows a clear commitment to making this a long-term growth driver, with the first full quarter of casino and racing operations being Q3 2025.

Off-Track Betting (OTB) Locations: Operating three active OTB sites in Illinois via the Fairmount Park acquisition.

Part of the Fairmount Park acquisition includes a network of Off-Track Betting (OTB) sites, which serve as smaller, dedicated horse-racing wagering channels. This channel extends the reach of the racing operations beyond the main track in Collinsville, Illinois, into local communities.

The acquisition scope included three active OTB locations in Illinois. These sites, such as Time Out OTB in Alton and Route 3 OTB in Sauget, provide a lower-cost, high-convenience channel for horse racing enthusiasts. Honestly, this is a smart way to maintain a presence in the pari-mutuel market without the overhead of a full casino build-out at each location.

Acquisition Integration: Leveraging acquired operator networks, like Toucan Gaming in the Louisiana market.

Acquisitions are a fast-track channel for geographic expansion and scale. The late 2024 majority acquisition of Toucan Gaming and LSM Gaming in Louisiana immediately added a new state to your footprint, leveraging an existing, established operator network.

This deal instantly added 73 locations and 630 video poker terminals to the network. The financial impact is clear: Toucan is expected to contribute approximately $25 million in revenue and $6 million in Adjusted EBITDA for the full fiscal year 2025. Here's the quick math on the channel breakdown as of Q3 2025:

Accel Entertainment, Inc. (ACEL) - Canvas Business Model: Customer Segments

Accel Entertainment, Inc. (ACEL) serves a highly specialized and geographically concentrated set of customers. The core of the business remains the local, distributed gaming model, which is a B2B relationship with small businesses that acts as a funnel for the B2C local gaming patron. The late 2025 data shows the company is successfully diversifying, but the local market still drives the vast majority of revenue.

The company's total revenue for the third quarter of 2025 (Q3 '25) hit $329.7 million, with its core markets, Illinois and Montana, accounting for approximately 84.6% of that total. You can see the clear delineation in their customer focus, which is split between the location partners, the players who use the video gaming terminals (VGTs), and the financial stakeholders.

Local Business Establishments

This is the primary business-to-business (B2B) customer segment: the owners of bars, restaurants, truck stops, and fraternal organizations. They are looking for a reliable, passive revenue stream to supplement their core business, and Accel Entertainment provides the turnkey solution-licensing, installation, maintenance, and cash management-in exchange for a cut of the Net Terminal Income (NTI). This segment is the backbone of the company's scale.

As of September 30, 2025, Accel operated across 4,451 locations, a 3.8% increase year-over-year. In the third quarter of 2025, the Illinois market alone generated $239 million in revenue, which is a 7% increase from the prior year, illustrating the health of these location partnerships. This is a high-volume, low-churn segment for the company. They just want the machines to work and the revenue split to be fair.

• Gain supplemental income from video gaming terminals (VGTs).
• Require full-service VGT operation and maintenance.
• Need reliable cash flow from a regulated, high-compliance partner.

Local Gaming Patrons

These are the adult consumers who seek convenient, neighborhood-based gaming entertainment, often as an add-on to a meal or drink. They value accessibility over the traditional casino experience, preferring to play a few hands or spins at their local spot. Accel Entertainment's success is a direct function of this segment's consistent demand.

The company serves this segment through 27,714 gaming terminals across multiple states, up 4.5% year-over-year. The distributed gaming model, which represents the vast majority of their revenue, is resilient because it targets local, habitual play. The rollout of Ticket-In/Ticket-Out (TITO) technology is a key action to improve the experience for this segment, making cash handling easier and faster.

Investors and Shareholders

This segment consists of financial professionals and individual investors seeking returns from a resilient, high-cash-flow business model. They are primarily focused on the company's ability to generate Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and deploy capital effectively, especially in a highly regulated industry.

The company's financial performance in Q3 2025 directly addresses this segment's needs:

Here's the quick math: Adjusted EBITDA grew faster than revenue, at 11.5% versus 9.1%, which shows operating leverage-a strong signal for shareholders. They also closed a new $900 million credit facility, extending maturities to 2030, which gives them defintely more financial flexibility for future growth.

Casino/Sports Betting Patrons

This is the newest, high-growth segment, acquired through the Fairmount Park Casino & Racing operation in Collinsville, Illinois. This customer is looking for a more traditional, larger-scale gaming and entertainment venue that includes a casino floor, horse racing (racino), and sports betting (FanDuel Sportsbook). It's a completely different experience than the VGT in a local bar.

Q3 2025 marked the first full quarter of casino and racing operations at Fairmount Park Casino & Racing. This expansion is a key strategic move to capture a broader gaming dollar. The company is backing this segment with significant capital, forecasting 2025 CapEx of $31 million to $32 million specifically for the Fairmount Park project, covering Phase 1 completion and initial Phase 2 planning. This investment signals a long-term commitment to serving the higher-end, destination-style gaming customer alongside the core local player.

Accel Entertainment, Inc. (ACEL) - Canvas Business Model: Cost Structure

Accel Entertainment's cost structure is a high-CapEx, high-variable-cost model driven by regulatory mandates and aggressive growth. The biggest costs you need to watch are the upfront investment in new machines and the non-negotiable revenue share with location partners and the state.

High Capital Expenditure (CapEx): Significant upfront investment in purchasing and upgrading VGT equipment, forecast at $75 million to $80 million for full-year 2025.

The company's capital expenditures (CapEx) are a major fixed cost, reflecting the need to continuously refresh and expand the Video Gaming Terminal (VGT) fleet. For the full-year 2025, Accel Entertainment's CapEx forecast is substantial, projected to be between $75 million and $80 million. This elevated figure is not just about maintenance; it's a strategic investment in future growth. Here's the quick math on where that capital is going:

• Legacy Markets (Illinois, Montana, etc.): $39 million to $41 million for equipment upgrades and new location installations.
• Fairmount Park Casino & Racing: $31 million to $32 million to complete Phase 1 and begin initial Phase 2 planning for the new casino property.
• Louisiana Operations (including Toucan Gaming integration): $5 million to $7 million for terminal deployment and infrastructure.

What this estimate hides is that this is a temporary spike. Management expects normalized annual CapEx to return to the $40 million to $45 million range once the Fairmount Park development is complete. That's a significant drop-off that will boost future free cash flow.

Revenue Sharing: The primary variable cost, sharing a percentage of net gaming revenue with location partners and the state.

The largest and most critical cost is the revenue share, which is a direct variable expense tied to Net Terminal Income (NTI)-the money played minus the payouts. This cost is non-negotiable and is dictated by state law in the core Illinois market, which still accounts for the majority of Accel Entertainment's revenue. This is a defintely high-cost model.

As of July 1, 2024, the state tax split increased by 1%, directly impacting the company's cost of revenue for the 2025 fiscal year. The NTI is split into four primary buckets, representing Accel Entertainment's cost of doing business:

The total mandatory payout to the state, municipalities, and location partners is approximately 67.96% of the NTI, leaving Accel Entertainment with the remaining 32.04% to cover its operating expenses, including CapEx, before realizing a profit.

Regulatory and Licensing Fees: Costs associated with maintaining compliance and operating licenses across multiple states.

Beyond the direct tax on NTI, Accel Entertainment faces a constant stream of regulatory costs, which are a mix of fixed annual fees and variable tax headwinds. The Illinois market is particularly sensitive to legislative changes. For example, the 2024 1% tax increase on distributed gaming revenue, which became effective July 1, 2024, was a direct hit to the bottom line. Accel Entertainment chose to absorb half of this increase, creating a measurable $4 million headwind on the company's financials over a 12-month period. This shows how quickly regulatory shifts can become a material operating cost.

Other recurring costs include:

• Annual $100 per VGT State fee in Illinois.
• Licensing fees for the company, its employees, and the locations across all operating states.
• Compliance costs for the Ticket In, Ticket Out (TITO) technology rollout in Illinois, which is designed to reduce cash handling costs but requires initial investment and regulatory approval.

Acquisition Costs: Capital deployed for strategic M&A, such as the $40 million Toucan Gaming deal.

A key element of Accel Entertainment's growth strategy is inorganic expansion, which creates a significant, albeit periodic, capital deployment cost. The acquisition of 85% of Toucan Gaming and LSM Gaming, two Louisiana-based route operators, was completed for approximately $40 million. While this was a 2024 event, the integration and associated costs are a major factor in the 2025 financial picture, contributing to the elevated CapEx in Louisiana.

This type of acquisition cost is a necessary investment to diversify away from the heavy Illinois concentration, but it introduces integration risk and the need for new capital facilities. Accel Entertainment recently closed a new $900 million senior secured credit facility, which provides the liquidity to fund both this kind of M&A and the high CapEx demands through 2030.

Accel Entertainment, Inc. (ACEL) - Canvas Business Model: Revenue Streams

Net Gaming Revenue

The vast majority of Accel Entertainment's income comes from Net Gaming Revenue (NGR), which is the money generated from Video Gaming Terminals (VGTs) after payouts to players and taxes are deducted. This is the core engine of the business, and it continues to show strong growth, driven by expansion into new licensed locations and increased player engagement.

For the third quarter of 2025, NGR was a robust $308.48 million. This figure is split between the company, the location partners, and the state/local governments, but it represents the gross economic activity from the VGTs under Accel Entertainment's management. Honestly, this is the number that tells you the most about the company's health.

Here's the quick math on the primary revenue source:

• VGTs: Generate over 90% of total revenue.
• Growth Driver: Increase in VGT count and same-store sales.
• Key Risk: Regulatory changes to VGT tax rates or maximum bets.

Amusement and Manufacturing Sales

While VGTs dominate, Accel Entertainment still generates meaningful revenue from its legacy business lines, specifically amusement and manufacturing sales. This stream includes non-VGT amusement devices, like jukeboxes and pool tables, placed in partner locations. Plus, the company has a smaller, but strategic, terminal manufacturing component.

This revenue stream provides a defintely useful diversification, even if it's a small slice of the pie. It helps maintain relationships with location partners by offering a full suite of entertainment options. What this estimate hides is the higher margin potential of some manufactured components, which can sometimes offset the lower volume.

ATM and Other Income

A simple but effective revenue stream comes from fees generated by Automated Teller Machines (ATMs) placed within partner locations. This is a classic 'bolt-on' revenue stream. The logic is straightforward: VGT players need cash, so providing an on-site ATM captures a small transaction fee that might otherwise go to an external bank.

It's not a massive stream, but it's high-margin, and it's a necessary part of the ecosystem. This income also helps increase the 'stickiness' of Accel Entertainment's offering to its location partners, making their full-service package more compelling. It's a low-effort way to boost the total take.

Casino and Racing Operations

The acquisition and development of the Casino and Racing Operations, specifically the Fairmount Park racetrack in Illinois, represents a significant new revenue vector. This is a strategic move to expand beyond the VGT-only model and capture a larger share of the overall gaming market. It's a long-term play, but the runway is clear.

This operation is expected to generate between $20 million and $25 million in Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) within five years of full operation. That's a substantial boost to the company's bottom line, and it's a different risk profile than the VGT business. The key actions here are:

• Capitalize: Complete the necessary infrastructure upgrades.
• Diversify: Add a new, larger-scale gaming vertical.
• Target: Achieve the $20 million to $25 million EBITDA target.

To be fair, the initial ramp-up will be capital-intensive, but the long-term potential for this new stream to complement the stable NGR is significant.