Do You Need a License For a Claw Machine In The USA?
In the United States, claw machines are ubiquitous—from corners of shopping malls, the halls of amusement parks, and even near supermarket checkout lines. These gleaming and alluring machines offer a chance to win prizes with deft manipulation of a mechanical claw. They’re beloved not only by children but also by teenagers and adults. For those planning to introduce claw machines in commercial locations or simply as a collector’s item, a common question arises: Do you need a license to operate or own a claw machine in the United States?
As with many regulatory issues, the answer isn’t a simple “yes” or “no.” Policies vary from state to state and region to region, and even the type of prizes offered in the machine can impact regulations. This article will outline the key points regarding claw machine licensing, helping you understand the basic framework for legal operation and ownership of claw machines in the US market.
Do claw machines require a license in each state?
In the United States, claw machines are typically coin-operated amusement devices. Whether a license is required depends on state laws and city ordinances.
Strictly regulated states, such as Texas and Georgia, require operators to apply for a Coin-Operated Amusement Machine License and pay an annual fee for each device.
Less regulated states, such as California, generally do not require a separate claw machine license as long as the arcade or amusement park already has a license. However, regulations regarding prize value and fairness still apply.
Relatively relaxed states, such as California, generally do not require a separate license for claw machine operations as long as the business already operates in a mall or amusement park. However, regulations regarding prize value and fairness still apply.
States with special regulations: Some states, such as Florida, distinguish between “skill-based games” and “chance-based games.” If a claw machine is considered purely chance-based, it may be subject to stricter regulations and may even require a gambling license.
Therefore, claw machines cannot operate with a single license nationwide; instead, separate licenses must be applied for based on state and city laws.
Do claw machines require a license in each state?
Claw machine license requirements are often influenced by the following factors:
Prize Value
Most states have a limit on the value of a single prize, generally between $5 and $50.
If the limit is exceeded, the claw machine may be considered a “gambling device.” For example, prizes such as high-value mobile phones or luxury goods will be strictly regulated.
Number of Claw Machines
In some states, if you only have one or two claw machines, you may only need a regular business license.
If you exceed a certain number (e.g., five or more), you will need a separate amusement device license and pay a fee based on the number of machines.
Location
Public locations such as shopping malls, arcades, convenience stores, and restaurants generally require a license.
Private residences or private locations generally do not require a license.
Business Entity
If you are a company, you will need to provide your company registration information and tax identification number (EIN).
If you are a sole proprietor, you may need a self-employed business license and comply with local tax regulations.
State Laws Define Skill Games
Some states consider claw machines to be “skill-based entertainment games,” as long as the success rate of grabbing a claw machine is determined by the player’s skill.
Other states consider the machines to involve an element of “luck,” and therefore require stricter approval.
How to Apply for a Claw Machine License?
The general process for applying for a claw machine license is as follows:
Confirm applicable regulations
Go to the state government website or local city government website and search for “Amusement Machine License” or “Coin-Operated Device Permit.”
Some states, such as Texas, provide detailed application instructions on their tax bureau websites.
Prepare application materials
Copy of business license
Tax ID (SSN for individuals or EIN for businesses)
Number and specific models of claw machines
Location (shopping mall/arcade/restaurant, etc.)
Prize types and price range
Submit application
In most states, you can submit directly online.
Some cities may require in-person application submission.
Pay relevant fees
Fees vary significantly across states:
Texas: Approximately $60 per device per year
Georgia: Decal fee approximately $25–$125 per device
Florida: Some counties may charge an amusement tax
Wait for approval and issuance of license
Approval typically takes 1–4 weeks. After approval, you will typically receive a “license sticker” that needs to be affixed to the claw machine to facilitate inspection by law enforcement.
Compliance Tips for Claw Machine Owners
Maintaining Reasonable Prize Values
Strictly control the value of individual prizes to avoid exceeding local regulatory limits.
If offering high-value prizes, consider setting the machine to “points redemption” mode instead of direct prize grabs.
Machine Fairness
Claw machines must ensure “winnability” and cannot be set to never win.
In the US, some states require that the “win probability” of a claw machine be publicly disclosed.
License Renewal and Renewal
Licenses in most states must be renewed annually.
Failure to renew on time may result in fines or even license revocation.
Legal Tax Payments
Claw machine revenue must be reported according to law, and some states also charge an entertainment tax on coin-operated revenue.
It is recommended to install a revenue recorder to store operational data for financial and tax reporting purposes.
Pay Attention to Premises Regulations
Some shopping malls or restaurants may require additional leases or profit-sharing agreements.
It is best to sign a clear contract with the venue before operating a claw machine to avoid disputes.
Frequently Asked Questions
Do home claw machines require a license?
As long as they aren’t used commercially, home-use amusement claw machines generally don’t require a license.
Are claw machines considered gambling?
Most states consider claw machines to be “skill-based amusement devices.” As long as the prizes are reasonable, they are not considered gambling.
However, if the prizes are excessively valuable, or if the machine is set up to rely solely on luck, it may be classified as a gambling device.
What are the consequences of operating without a license?
Consequences include:
Fines (ranging from a few hundred to several thousand dollars)
Seizure of the claw machine by law enforcement
Severe cases may result in the revocation of the business license.
Can foreigners operate claw machines in the United States?
Yes. As long as you register a company in the United States or apply for a business license with legal status, you can operate a claw machine.
Can a single license be used in multiple states?
No. Each state in the United States has its own independent laws, and operating across state lines requires re-licensing in each state.
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