Tucked into a corner of Taqueria el Patron in Augusta, Georgia, are a couple of devices that look for all the world like slot machines. But they’re not. They’re “coin-operated amusement machines” (COAMs). Colloquially known as “skill games,” they exist as a state-sanctioned industry in the Peach State, administered by the Georgia Lottery.
Georgia is home to thousands of COAMs, one for every 1,549 state residents, according to Lottery figures. Since the Peach State has a population of 11.4 million, that’s no small amount of COAMs, as many as 7,360.
Unlike Virginia or Pennsylvania where COAMs are a subject of intense legal controversy, Georgia’s industry exists quietly, without dispute. Indeed, it is a key bulwark of the state’s HOPE Scholarship program and pre-kindergarten education funding.
For outgoing state Sen. Bill Cowsert (R), the COAMs aren’t pulling their weight. The solon takes issue with the tax rate paid by the machines: 13 percent. When the industry was brought under the auspices of the Lottery in 2013, it paid 10 percent. That was raised to 13 percent during the 2024 Legislature. Cowsert would have liked to have seen it hiked to 30 percent.
Cowsert’s discontent lies in the fact that the Lottery is statutorily required to pay 35 percent of its proceeds back to the state. (According to the lawmaker, it has never done better than 27 percent.) He would like to see tax parity between the Lottery and its COAM offspring.
“Georgia gets a lower rate of return than almost all our neighboring states,” Cowsert complains. “We essentially cannibalize our own lottery sales by encouraging COAM play — at the expense of lottery play for a lower rate of return.”
He allows, “The pie is growing still. We have greater net profits to the state this year than we did last year. But I felt Georgia could get a greater profitability on COAM sales.”
Industry lobbyist Les Schneider, an Atlanta attorney, takes issue with that. He contends that the COAM industry pays the highest taxes in Georgia, with the master licensee (or supplier) keeping 42.5 percent of the proceeds and the host vendor taking a like amount. “That doesn’t even include the local taxes, the property taxes, sticker fees, and the licenses, which exceed $50 million a year, on top of the gross-receipt tax that we pay,” Schneider argues.
Instead of higher taxes, Schneider continues, Georgia should increase revenue by permitting more devices. “You raise additional revenue by having a regulatory atmosphere that indicates what is and isn’t proper. When the number of locations where the games are increases, the revenue for the state increases,” he says.
Suppliers active in Georgia’s COAM business include Lucky Coin, GA Skill Games, Bulldog Gaming, Pimero Games, and Betson (the latter not to be confused with Swedish igaming firm Betsson). Schneider is careful to differentiate COAMs from slots, which he calls “no-skill games.” “There is no way the player has any impact on the result of the game. The amusement machines in Georgia require some skill in their operation,” he says.
Georgia law also forbids payment in cash to COAM winners. According to Schneider, who represents the Georgia Amusement & Music Operators Association, three forms of reward are possible. Winnings can be traded in for free play, lottery tickets, or gift cards.
Cowsert regards the latter form of payment as tantamount to cash. “If you’re essentially paying a cash equivalent — a debit card can be spent just like a dollar bill — why don’t we increase our percentage closer to the national norms?” However, fellow legislators balked at tripling COAM taxes and would only assent to a three percent hike in 2024.
The retiring senator recalls attending a National Council of Legislators from Gaming State conference and hearing a representative from Illinois saying everyone was happy with the Land of Lincoln’s 33 percent take of slot-route dollars. That got him to wondering why the Peach State couldn’t come in line with national averages.
Schneider, for his part, contrasts the taxpaying COAM industry with prediction markets, which scoff at paying state taxes on their wagering activities. “We expect to pay taxes and, frankly, we’re happy that the revenue that’s generated goes to pre-K and HOPE. Those are two very worthy programs that we’re happy to support,” he states.
The lawyer also feels that other states could benefit from Georgia’s no-cash example, in which awards are capped at $5 per win. “It’s an entertainment issue amusement issue, not a gambling enterprise,” is how Schneider puts it.
Applauding the Georgia Lottery’s regulation of COAMs, Schneider continues, “It’s heavily regulated and licensed. It’s very clear what the rules of the road are, whereas in a lot of other states, the definitions and the back and forth in gray-area games have caused problems for municipalities of the state.”
Schneider’s industry takes a position of strict neutrality on the much-mooted topic of legalized gambling in Georgia. “Obviously, the amusement industry was around before the Lottery was around and we didn’t oppose the Lottery in any way, shape, or form,” he says.
However, Schneider separates COAMs from horse racing, sports betting, and casinos, while Cowsert is skeptical of legalized gambling overall, though he makes an exception for sports betting. “It’s more finite,” he says. However, he notes that sports wagering requires an amendment to Georgia’s Constitution (as would casinos and horse races), which he supports putting to a popular vote.
The legislator also observes, “The revenues to the state from sports betting are minuscule compared to the lottery or the COAMs. … My estimate was it might equal $50 million a year, maybe $100 million a year. When you’re looking at $1.6 billion a year in Lottery revenues, it doesn’t move the needle.”
