The arcade industry thrives on partnerships between machine owners and location hosts, with revenue-sharing agreements being the cornerstone of these business relationships. Several common models dictate how profits are divided, each with distinct advantages and considerations.

The most prevalent type is the location-based revenue split. In this arrangement, the arcade machine owner (the operator) and the business hosting the machine (the location) agree on a fixed percentage of the gross revenue. A typical and widely accepted split is 50/50, where both parties receive half of the earnings. This model is straightforward and fosters a sense of partnership, as both the operator and the location are equally invested in the machine's success.

Another fundamental model is the straight percentage split. This is similar to the location-based split but can be more flexible. The percentage given to the location can vary, often ranging from 40% to 60%, depending on factors like foot traffic, the location's prominence, and the machine's earning potential. A high-traffic family entertainment center might command a higher percentage than a smaller, quieter establishment.

For operators seeking predictable income and simplified accounting, the fixed-fee or lease agreement is a common choice. Instead of sharing a percentage of revenue, the location pays the operator a set, flat fee weekly or monthly. This model guarantees the operator a consistent income regardless of the machine's daily performance, while the location keeps 100% of the revenue generated, benefiting them if the machine is highly popular.

A hybrid model combines elements of the percentage split and the fixed fee. Here, the location might pay a lower fixed fee to the operator and then a smaller percentage (e.g., 10-20%) of the revenue on top. This structure provides the operator with a stable base income while still allowing them to benefit from the machine's peak performance periods.

Finally, the full profit-sharing partnership is a deeper collaboration, often reserved for high-value or custom machines. In this agreement, the operator and location share not just revenue but also the costs associated with the machine, such as maintenance, repairs, and electricity. The net profit is then split according to a pre-negotiated ratio. This model aligns the interests of both parties completely but requires a high level of trust and transparent financial tracking.

Choosing the right revenue-sharing agreement depends on the specific goals, risk tolerance, and nature of the relationship between the arcade operator and the location host. Understanding these common types is the first step toward establishing a fair and profitable partnership in the coin-operated amusement industry.