Licenses, Permits and Insurance for Arcade Owners

Licenses, Permits and Insurance for Arcade Owners — start right when you ask how to start an arcade game business

Opening an arcade is exciting, but regulatory and insurance details are critical to protect your investment and customers. This guide explains the common licenses, permits and insurance policies arcade owners need, realistic cost and timeline expectations, and a clear checklist so you can move from concept to opening day with confidence.

Why compliance matters for arcade owners

Following local rules and carrying the right insurance lowers legal risk, avoids fines or forced closures, helps secure financing, and improves customer trust. Complying with permits and licensing requirements is a direct part of how to start an arcade game business responsibly and profitably.

Core business licenses and registrations

Every arcade will need a baseline set of business registrations before opening. Exact names and requirements vary by country, state or city, but the items below are common.

Business license / Business registration

What it is: Official permission to operate a business in your municipality or state. Why it matters: Without it you can be fined or ordered to close. How to get it: Apply at city hall, county office or online through state portals.

Sales tax permit / VAT registration

What it is: Authorization to collect sales tax on admissions, merchandise and food/beverages. Why it matters: Required to legally charge and remit tax. How to get it: Apply to the state revenue agency (U.S.) or national tax authority (other countries).

Employer tax ID and payroll registrations

What it is: Federal/ national employer ID (EIN in the U.S.) and state payroll registrations. Why it matters: Necessary if you hire employees for payroll, payroll taxes and unemployment insurance. How to get it: Register with tax authorities before hiring staff.

Zoning, occupancy and certificate of occupancy (CO)

What it is: Zoning clearance ensures the location is allowed for entertainment/commercial use; CO confirms the building is safe for public occupancy. Why it matters: Incorrect zoning or missing CO will stop operations and can require costly remediation. How to get it: Submit floor plans and use applications to city planning and building departments.

Building, electrical and signage permits

What it is: Permits for construction, electrical upgrades and exterior signage. Why it matters: Many arcades need wiring upgrades for game machines, lighting or renovation work—all of which legally require permits. How to get it: Apply through the local building department; inspections are typical.

Health permits (if serving food & drinks)

What it is: Permits for food handling, preparation and beverage service. Why it matters: Food service has strict health codes and inspections to prevent public-health risks. How to get it: Contact your local health department and pass food safety inspections.

Amusement, operator or coin-operated machine licenses

What it is: Many jurisdictions require operators of amusement devices, claw machines or redemption games to register each unit or obtain an operator license. Why it matters: These regulations can include safety standards, age limits and tax/reporting obligations. How to get it: Check with local municipal offices or state departments of gaming/commerce.

Alcohol and late-night operation licenses (if applicable)

What it is: Liquor licenses and any permits for extended hours. Why it matters: Selling alcohol without the right license risks heavy penalties and closure. How to get it: Apply through state liquor authorities and prepare for background checks and public notice requirements.

Music licensing

What it is: Licenses from performing rights organizations (e.g., ASCAP, BMI, SESAC in the U.S.) to play copyrighted music publicly. Why it matters: Unlicensed music playback can lead to infringement claims and fines. How to get it: Contact local collecting societies and secure a public-performance license.

Safety, fire and accessibility permits

Safety inspections are among the most important pre-opening checks because they directly affect your certificate of occupancy, insurance eligibility and customer safety.

Fire department inspection and permits

What it is: Inspections for fire alarm systems, exits, emergency lighting, sprinklers and occupancy load. Why it matters: Fire approvals are typically required before opening and must be maintained. How to get it: Schedule an inspection with the local fire marshal and implement any required corrections.

Accessibility compliance (ADA or local equivalent)

What it is: Requirements for accessible entrances, restrooms and routes for people with disabilities. Why it matters: Accessibility laws are enforced by local and national agencies and noncompliance can lead to legal actions. How to get it: Review standards with a qualified contractor and document your compliance.

Insurance every arcade should carry

Insurance protects assets, covers liability claims and is often required by landlords or lenders. Below is a practical comparison of common insurance types for arcades.

Notes: Annual cost ranges are approximate and depend on location, revenue, payroll and declared values. For arcades with many high-value machines or large customer volumes, High Qualitys may be higher.

How to choose coverage amounts and carriers

Pick coverages based on replacement value of machines, expected revenues, lease requirements and local risks (e.g., flood or seismic exposure). Key tips:

Insure to replacement value

Make a detailed inventory of all machines, cabinets and electronics. Underinsuring machines can leave you with heavy out-of-pocket costs after loss.

Ask for equipment floaters

If you move machines between sites (events or fairs), add a floater that covers machines off-site and in transit.

Bundle when possible (BOP)

A Business Owner’s Policy bundles general liability and property and often saves cost while simplifying claims processes.

Get multiple quotes and review exclusions

Compare carriers that understand amusement/electronic gaming exposures. Carefully read exclusions (e.g., flood, wear-and-tear).

Common legal considerations, contracts and operational policies

Beyond permits and insurance, arcades should address contracts and customer policies to reduce legal exposure.

Lease and landlord obligations

Negotiate who pays for tenant improvements (TI), electrical upgrades and signage. Ensure lease allows gaming/entertainment use and verify responsibilities for repairs and insurance limits.

Vendor and supplier agreements

Document maintenance, warranties and spare parts supply for machines. Clarify who maintains software updates and who is liable for machine downtime.

Prize and redemption compliance

Many areas regulate prize disclosures, age limits and redemption values. Ensure your redemption games comply with local laws to avoid misclassification as illegal gambling.

Surveillance and privacy

Install clear signage about surveillance. If you store customer data (e.g., membership, payment info), ensure compliance with local data protection laws and consider cyber insurance.

Step-by-step checklist to open — practical sequence for how to start an arcade game business

Follow these steps in order to reduce delays and costs.

1. Choose location and confirm zoning for arcade/entertainment use.
2. Register business entity (LLC/Corporation/Sole Proprietorship) and obtain employer/tax IDs.
3. Apply for sales tax permit / VAT registration.
4. Secure lease and confirm tenant improvement allowances and responsibilities.
5. Work with architect/contractor to submit building, electrical and signage permit applications.
6. Schedule fire department and building inspections; obtain certificate of occupancy.
7. Apply for amusement/operator and coin-op registrations if required locally.
8. Apply for food service or alcohol permits if you will provide F&B.
9. Shop for insurance quotes (BOP, equipment floater, workers’ comp, cyber).
10. Install point-of-sale, surveillance and safety systems; complete ADA requirements.
11. Hire and train staff; complete payroll registrations and post required labor notices.
12. Soft-open to test operations before grand opening.

Cost and timeline expectations

Costs and timeline depend heavily on scale, renovation needs and local approvals.

Typical timeline

Small arcade renovation with minimal electrical work: 4–8 weeks to open after permits and inspections. Medium to large builds with TI and electrical upgrades: 8–20+ weeks. Complex locations requiring zoning changes or major construction can take 6 months or longer.

Typical startup cost ranges

Arcade startup costs vary widely. Rough, conservative ranges:

• Small arcade or arcade corner in FEC: $30,000–$100,000
• Mid-size standalone arcade (20–60 machines, modest F&B): $100,000–$350,000
• Large entertainment center (100+ machines, full-scale F&B/party rooms): $350,000–$1M+

These ranges include machines, leasehold improvements, initial rent and deposits, signage, licensing/permit fees and basic insurance. Machine inventory alone can be one of the largest line items; Guangzhou Dinibao’s global reach and competitive pricing can lower this portion of your investment.

How Guangzhou Dinibao helps arcade owners

Guangzhou Dinibao Animation Technology Co., Ltd. is located in Panyu District, Guangzhou City, and has specialized in manufacturing and exporting game machines for 18 years. Provide one-stop purchasing solutions for arcade centers. We are the only game machine company that offers games with cheap prices and the best quality in the market. Quality is the life, and co-development with customers is our company's policy. We have a professional animation team and thus can provide customers with a complete proposal, such as market research, project analysis, planning, program design, theme design, decoration design, operation, and management, to offer you one-stop purchasing and service. Our arcade machines have been exported to more than 180 countries. And more than 10,000 game centers are using our machines. We also cooperate with many large local chains and have overseas branch offices in places such as India, Chile, Thailand, Vietnam, Turkey, and the United Kingdom. and find dealers worldwide.

How this helps your compliance: working with a partner like Dinibao speeds procurement of correctly rated machines and electrical specifications, provides documentation useful for insurance and inspections, and reduces downtime with local service channels—an important part of preparing your insurance and permit applications when learning how to start an arcade game business.

Final practical tips before opening

1) Document everything: permits, inspections, machine serial numbers, and insurance certificates. 2) Keep emergency contact lists for your insurer and machine vendors. 3) Build policies for refunds, prize redemption, and incident reporting. 4) Budget a contingency (10–20%) for permit-related surprises.

FAQ

Do I need a special amusement or arcade license?

Many jurisdictions require a specific amusement or operator license for coin-op or redemption machines. Check with municipal or state authorities early—requirements can include device registration, safety checks and age limitations.

How much insurance will an arcade typically pay per year?

Costs vary by revenue, location, payroll and equipment value. Small arcades might pay under $2,000/year for basic coverage; mid-size operations often pay several thousand to tens of thousands annually. Get multiple quotes and insure to replacement value.

Do I need music licensing for background music or live DJs?

Yes. Public performance of copyrighted music requires licenses from performing rights organizations in most countries. Purchase the proper licenses (e.g., ASCAP/BMI/SESAC in the U.S.) before opening.

Can I insure used or imported arcade machines?

Yes. Insurers typically accept used imported machines, but you must declare accurate values and provide purchase/repair history. Working with an experienced supplier like Guangzhou Dinibao can simplify paperwork for insurers.

What happens if I open without the correct permits?

Consequences vary: fines, forced closure, voided insurance claims, or legal action. Always confirm local requirements before opening to avoid major losses.

How do I find the exact permit list for my city or country?

Start with the local city hall, planning/building department, and health department. For operator-specific rules, consult state or national amusement/gaming agencies. Consider hiring a local consultant or attorney to expedite approvals.

Can Guangzhou Dinibao help with local compliance documentation?

Yes. Dinibao provides detailed product specifications, wiring diagrams, and export documentation that many insurers and local inspectors require. Their experience in 180+ countries means they can advise on typical requirements and local service contacts in several markets.

If you’re planning an arcade, use this guide as a compliance roadmap. Start permit applications early, budget conservatively for insurance and machine coverage, and partner with experienced suppliers and local professionals to smooth the path from concept to grand opening.