ITEM 1. BUSINESS
Who We Are
We are a leading distributed gaming and local entertainment operator in the United States (“U.S.”) and a preferred partner for local business owners in the markets we serve. We offer turnkey, full-service gaming solutions to bars, restaurants, convenience stores, truck stops, and fraternal and veteran establishments across the country. In strategic markets, we are the owner and operator of our own retail establishments, and gaming and entertainment venues.
Our operations offer a complementary source of revenue for our location partners by offering a “one-stop” solution of support, service, and equipment through:
•Providing unmatched customer support, guidance, and expertise so our location partners can grow their businesses with incremental revenue.
•Installing, maintaining, operating and servicing gaming terminals and related equipment for our location partners as well as redemption devices that have automated teller machine (“ATM”) functionality and stand-alone ATMs, driving game play and player loyalty.
•Offering amusement devices, including jukeboxes, dartboards, pool tables, and other entertainment related equipment that enhance customer experience and engagement.
We also design and manufacture gaming terminals and related equipment. We are continuously evaluating additional opportunities that are complementary to our core business.
Where We Operate
State Year Operations Started or Year of Acquisition Branding Operations
Illinois 2012 Accel Entertainment •Establishments with a liquor license (Up to 6 gaming terminals)–Bars/restaurants/retail–Gaming cafes–Fraternal organizations–Veterans’ organizations•Truck stops (Up to 6 gaming terminals)•Large truck stops (Up to 10 gaming terminals)
Illinois 2024 FanDuel Sportsbook and Horse Racing •Operate FanDuel Sportsbook & Racetrack, an active horse racing track in Collinsville, IL with ~50 annual race days •Planned opening of Phase I casino in the second quarter of 2025 with Phase II build out of a permanent facility anticipated to start shortly after the completion of Phase I.•Revenue share agreement with FanDuel to operate a sportsbook at Fairmount Park
Montana 2022 Century Gaming •Business locations licensed to sell alcoholic beverages for on-premises consumption only, including locations restricted to offering a maximum of 20 slot machines
State Year Operations Started or Year of Acquisition Branding Operations
Montana 2022 Grand Vision Gaming •Designs and manufactures gaming terminals and software that are sold to Montana, South Dakota, and West Virginia•Develops proprietary gaming terminals and related software as well as other ancillary equipment for our distributed gaming routes in Montana, Nevada, Nebraska and Georgia
Nevada 2022 Century Gaming •Non-casino locations where gaming is incidental to the primary business being conducted at the location, including:–Grocery/drug/convenience stores–Bars/restaurants/taverns–Liquor stores •Games are generally limited to 15 or fewer slot machines with no other forms of gaming activity permitted
Nebraska 2022 Accel Entertainment •Operate cash devices in retail locations throughout the state•Retail establishments include any business location that is open to the public for the sale of goods other than gaming terminals and that possesses a valid sales tax permit
Georgia 2020 Bulldog Gaming •Operate skill-based coin-operated amusement machines with winnings paid by gift cards through redemption terminals or Bulldog Wallet, launched in October 2024, or for noncash merchandise, prizes, toys, gift cards, or novelties
Louisiana 2024 Toucan Gaming •Truck stop gaming parlors (up to 50 gaming terminals)•Establishments with a liquor license (up to 3 gaming terminals)–Bars/restaurants/retail–Fraternal organizations–Veterans’ organizations
Iowa 2021 Accel Entertainment •Operate amusement concessions, including games of chance and games of skill•Bars, taverns, and restaurants with a certain class of liquor license are permitted to operate up to four electrical or mechanical games of chance
Pennsylvania 2023 Accel Entertainment •Operate gaming terminals at qualified truck stops•We are live with a partner truck stop
Our Strategic Core Competencies
Our strategic core competencies support our local business model and contribute to our industry-leading position:
Gaming-as-a-service platform. Our gaming-as-a-service platform provides our local partners with a turnkey, full-service, capital-efficient gaming solution, including:
•Business-to-business model secured by long-term, exclusive contracts, allowing for predictable, highly recurring revenue streams with strong loyalty and retention.
•Technology-enabled gaming equipment from leading manufacturers and our own proprietary Grand Vision Gaming equipment that provide the most captivating titles in slots entertainment; specifically, we offer our players 135 different types of gaming terminal models and almost 2,000 different games, one of the broadest selections of high quality offerings in distributed gaming.
•Data reporting solutions and analytics, offering insight and advice to help maximize revenues and grow.
•Strong marketing, compliance, cash management, financial and technical support systems, all of which remain in-house to boost efficiency and enhance our ability to provide best-in-class service.
Strong relationships with location partners. We have prioritized establishing strong, lasting relationships with our location partners since our inception, providing unparalleled support, such as:
•Dedicated relationship managers assisting with regulatory applications and compliance onboarding, training on how to engage with players and potential players, monitoring individual gaming areas for compliance, cleanliness and comfort and recommend potential changes to improve player gaming.
•Providing individualized weekly gaming revenue reports analyzing and comparing gaming results, which can be used to determine an optimal selection of games, layouts and other ideas to generate foot traffic.
•Offering value-added services such as amusement solutions, dart leagues, prize pools, and ATMs, which are a key competitive advantage.
Dedication to the customer experience. We focus on our customers both the location partners and players to provide a smooth and seamless experience, including:
•Engaging locations through every step of onboarding, including assistance with the license application process and ongoing regulatory compliance support and education.
•Assisting in the design and construction of gaming areas, including the selection of the optimal gaming equipment, which is owned by us and provided at no cost to the location.
•Providing highly secured cash management services through our in-house collections, processing and security personnel.
•Best-in-class customer service, with a dedicated 24/7 call center and highly skilled local technicians who quickly resolve issues and ensure minimal downtime through proactive service and routine maintenance.
Deep industry experience and vendor relationships. Our leading market position has led to strong relationships within the industry and with equipment suppliers, leading to:
•Offering premium, high-quality equipment, which gives our location partners a competitive advantage by limiting downtime to maximize revenue and player retention.
•Receiving favorable pricing and ample supply of key gaming machines.
•Our ability to procure machines and parts easily, so that we are able to rotate machines quickly to our gaming locations on an optimized basis.
•Established proprietary player rewards systems that we continue to enhance to further player retention and engagement across our locations and markets.
Our Growth Opportunities
Our experienced leadership team and motivated sales team, including internal and external sales agents, drive the sourcing of new locations and opportunities for us. When seeking a new opportunity, we employ a data-driven process to identify leads using a variety of digital and traditional strategies to drive organic gaming partnerships and preferences. Our key growth strategies include:
Grow in current markets both organically and inorganically. We believe that there is potential for additional growth in the markets we serve, including:
•Signing competitors’ locations.
•Identifying prospects for engagement after current contracts with other partners expire.
•Optimizing revenues for gaming terminals we currently operate through refined data analysis, marketing and other initiatives.
•Increasing distribution possibilities through corporate partners who operate multiple locations, such as chain stores.
•Driving profitability through operational execution to strategically position ourselves for growth and strong margins.
Our ability to succeed in implementing our growth strategy will depend to some degree upon our ability to grow inorganically. As such, we continue to pursue expansion and acquisition opportunities in gaming and related businesses, as demonstrated by our expansion into the Louisiana market in November 2024 and the successful acquisition in December 2024 of FanDuel Sportsbook and Horse Racing in Illinois, which will expand our operations into local casino gaming and horse racing.
We continually evaluate legislative efforts in states where future opportunities would permit our business to operate in new locations/states/municipalities. We are positioning ourselves to take advantage of, and expand into those new jurisdictions, should the opportunity arise.
Evaluate additional business opportunities. If we are presented with advantageous opportunities, we may acquire or develop other businesses that are complementary to our core gaming business, including:
•Expanding local entertainment where favorable competitive landscape leads to collecting a greater share of location economics through selectively owning establishments through vertical integration.
•Establishing close to home, convenient gaming parlors, casinos, hospitality/retail locations and other gaming operations that highlight our technology-enabled gaming equipment and have an attractive offering of food and beverage options.
•Offering versatile and customer-friendly player rewards programs that can be tailored to the markets we operate in based on statutory regulations, including: bonus games, promotions for players based on the frequency of play, increased daily redemption amounts, and promotions.
•Expanding amusement operations, including jukeboxes, dartboards, pool tables, dart leagues and other amusement equipment to provide our local businesses with a wide array of quality devices to help attract more customers.
Expand into new states that we do not operate in. We continue to evaluate where to expand our distributed gaming operations, including:
•Evaluating other mature gaming jurisdictions where gaming terminals are currently legal, such as Oregon, South Dakota and West Virginia.
•Monitoring various states and other jurisdictions that have proposed legislation to permit gaming terminals or other forms of gaming, such as Alabama, Indiana, Kansas, Maine, Michigan, Missouri, Mississippi, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Virginia and Wyoming.
We believe we would be a preferred partner in any of these markets given our track record of success and compliance in the states in which we currently operate.
Our Industry
Distributed Gaming
We are a leading operator within the U.S. distributed gaming industry, which consists of the installation and service of gaming terminals at non-casino locations. Upon insertion of cash, electronic cards or vouchers, or any combination thereof, the gaming terminal is available to play or simulate the play of a video game such as video poker, slots and keno, and in which players may receive free games or credits that can be redeemed for cash or merchandise.
Distributed gaming operations facilitate a low revenue concentration per gaming location, and low-limit slots are more resilient to economic downturn as consumers typically continue to engage in locally convenient, lower cost forms of entertainment in such circumstances.
Distributed gaming is supported by generally favorable trends, including an increasing number of states contemplating approving gaming to increase tax revenues, broader acceptance in the U.S. of gaming generally, including online and digital gaming, an aging population that appreciates the convenience of gaming entertainment close to home, expected resilience through economic downturns and attractive revenue and return on invested capital profiles.
Casino and Racing
Starting in 2025, we plan to open a casino at the FanDuel Sportsbook and Racktrack in the greater St. Louis/southern Illinois market, with Phase I of the casino opening in second quarter 2025 and the Phase II build out of a permanent facility anticipated to start shortly after the completion of Phase I. The 2025 racing season is planned for April - October 2025. The casino property and associated racetrack will generate revenues and expenses from slot machines, video table games, ancillary food and beverage services, commission on pari-mutuel wagering, racing event-related services, and other miscellaneous operations. The racetrack license supports the casino license.
Competition
Overview
We operate in a highly competitive industry with many participants, some of which have financial and other resources that are greater than ours. The industry faces competition from a variety of sources for discretionary consumer spending, including spectator sports, sports wagering, and other entertainment and gaming options.
The availability of other forms of gaming could increase substantially in the future. Voters and state legislatures may seek to supplement traditional sources of tax revenue by authorizing or expanding gaming. In addition, jurisdictions are considering or have already recently legalized, implemented and expanded gaming, and there are proposals across the country that would legalize Internet poker and other varieties of Internet gaming in a number of states and at the federal level. Established gaming jurisdictions could also award additional gaming licenses or permit the expansion or relocation of existing gaming operations.
Distributed Gaming
We compete on the basis of the responsiveness of our service to our locations and players, and the popularity, content, features, quality, functionality and reliability of our products. In the distributed gaming industry, we generally operate in markets where our terminal revenue splits are either statutorily determined or negotiated, as follows:
Statutory Splits Negotiated Splits
Net terminal income splits are statutorily predetermined; minimum and maximum wagers are mandated by the applicable governing bodies Net terminal income splits are negotiated
Pricing is not considered a factor as revenue splits with our locations are mandated by law Pricing is driver in contract negotiations as all revenue splits are negotiated
Location and customer experience are key differentiating factors for selecting us over our competitors Our focus on player appeal, customer service and reputation are also key factors impacting competition
Our markets with statutory splits are: Illinois, Georgia, Pennsylvania Our markets with negotiated splits are: Montana, Nevada, Nebraska, Iowa, Louisiana
We face particularly robust competition from other forms of gaming. The distributed gaming industry is characterized by an increasingly high degree of competition among a large number of participants on both a local and national level, including casinos, Internet gaming, sports betting, sweepstakes and poker machines not located in casinos, horse racetracks (including those
featuring slot machines and/or table games), fantasy sports, real money iGaming, and other forms of gaming. In addition, Internet-based lotteries, sweepstakes, fantasy sports, and Internet-based or mobile-based gaming platforms, which allow their customers to wager on a wide variety of sporting events and/or play casino games from home or in non-casino settings and could divert players from using our products in their locations. Even Internet wagering services that may be illegal under federal and state law but operate from overseas locations, may nevertheless sometimes be accessible to domestic gamblers and divert players from visiting location partners to play on our gaming terminals.
Casino and Racing
Our Fairmount Park (Casino & Racing) property operates in a highly competitive environment and will primarily compete for customers with other casinos in the surrounding regional gaming markets. This property competes to a lesser extent with state-sponsored lotteries, off-track wagering, card parlors, online gambling, and other forms of legalized gaming in the U.S.
As a racetrack operator, we compete for horses with other racetracks running live racing meets at or near the same time as our races. Our ability to compete is substantially dependent on the racing calendar, number of horses racing, and purse sizes.
Suppliers
We purchase multi-game gaming terminals from leading manufacturers such as Light & Wonder, Inc., International Game Technology (“IGT”), Aristocrat and Novomatic. We purchase gaming terminals in upright, slant and bar-top varieties. Games include different varieties of slots, poker, and keno games.
We believe our efforts to procure gaming terminals from various sources better enables us to meet the needs of our location partners and players. We routinely meet with existing and potential manufacturers in the market to discuss performance, service trends, and feedback from location partners and players.
We also purchase redemption terminals, amusement devices and stand-alone ATMs from reputable suppliers such as NRT Technology, Touch Tunes, Arachnid, and Diamond.
Intellectual Property
We own or have the right to use the trademarks, service marks or trade names that we use or will use in conjunction with the operation of our business. In the highly competitive gaming industry, trademarks, service marks, trade names and logos are important to the success of our business. As of December 31, 2024, we owned 432 registered trademarks. We also rely on software or technologies that we license from third parties. These licenses may not continue to be available to us on commercially reasonable terms in the future and as a result, we may be required to obtain substitute software or technologies.
Seasonality
Our results of operations can fluctuate due to seasonal trends and other factors. For example, our operations in colder climates typically experience lower revenues in the summer when players typically spend less time indoors, and higher revenues in cold weather, specifically between February and April, when players will typically spend more time indoors. Our racing operations will only operate during the months where the weather is conducive to racing, which is typically from late spring through the early fall. Holidays, vacation seasons and sporting events may also cause our revenues to fluctuate.
Human Capital Resources
We believe that human capital management, including attracting, developing and retaining a high-quality workforce is critical to our long-term success. Our Board of Directors (the “Board”) is charged with oversight of human capital management. We strive to promote a welcoming workplace that fosters partnership with location owners and encourages our employees to bring their best ideas to work every day. As of December 31, 2024, we employ approximately 1,500 people nationwide, and protecting the safety, health, and well-being of our employees is a top priority. We strive to achieve an injury-free work environment and continue to have zero tolerance for unsafe work conditions for our employees who continue to move, support and sell our products and services. As of December 31, 2024, approximately 220 employees were covered by 11 union contracts and 6 unions
agreements. We have not experienced material interruptions of operations due to disputes with our employees. Our human capital management focuses on the following priorities:
Talent Recruitment and Management
We seek to provide employees with rewarding work, professional growth and educational opportunities. We place an emphasis on training and development for all levels of our workforce to ensure that people of every background have the tools to reach their full potential. All new employees participate in a structured on-boarding experience to provide broad exposure and understanding of all parts of the business and organization before starting their functional training. Formal new hire training ranges from 2 weeks to 6 months, depending on the employee's job function. We leverage a Performance Management Program that supports the unique development of each employee and utilize continuous coaching conversations to help all employees and managers work more effectively together. For further growth and development of our workforce, we broadly make available skill training and development to increase individual productivity. We also offer more targeted training opportunities as part of the Accel Academy that focus on developing our people in our prioritized leadership competencies. These programs include:
•Executive Development Program: This program focuses on accelerating the leadership development of high-potential employees while they remain in their current roles. The goal of this program is to prepare the participants for more complex leadership roles throughout the organization.
•Employee Development Program: This program focuses on creating opportunity and exposure for a broader cross-functional team, while they also remain in their current roles. In this program, individuals focus on individual development and cross-functional collaboration.
•First Time Manager Training: This class is offered to those who are new to managing people or simply new to managing people at Accel. The workshop supports the foundation for building successful teams and reinforces the culture that all our people leaders maintain.
Compensation and benefits programs
We provide compensation and benefits programs designed to support our employees’ health, wealth and life. We seek to provide comprehensive, competitive and equitable pay and benefits to our employees. Our initiatives in this area include offering the following:
•Comprehensive benefits program that provides our employees and their families with the flexibility to choose their preferred medical, dental and vision plans. Our benefits program is designed to help keep our employees and their families healthy and provide important protection in the event of illness or injury.
•Annual bonus program that is applicable to all eligible employees. The program is focused on rewarding employees for company performance and the contributions that each employee has made in delivering those results.
•Paid time off program that balances the needs of our employee population that offers two wellness days and a floating holiday to supplement our paid holiday schedule.
•401(k) company match program helps our employees to achieve their financial retirement goals.
•Union-sponsored multiemployer benefit plans for certain of our union employees, which includes the participation in several multiemployer defined benefit pension plans under terms of a collective bargaining agreement
•Employee assistance program that provides free and confidential counseling to all employees and their families.
•Various employee leave programs including:
◦Fully paid parental/adoption leave
◦Company paid short-term disability for 12-weeks of paid leave at 60% of weekly earnings
◦Voluntary long-term disability benefits
◦FMLA availability
◦Military family leave benefits that support employees whose family members are on active duty or who need to care for a service member
•Adoption assistance which provides for the reimbursement of eligible costs up to a predetermined maximum per adoption
•An employee referral bonus program to incentivize our employees to help us recruit strong candidates in their network
•ACES, a peer-to-peer employee recognition program, rewards individuals who exceed expectations and consistently demonstrate Accel's core values.
•CareShare Program which allows eligible employees to share commissions with other employees.
Culture
Each employee shapes our culture through behaviors and practices. We ask everyone to lead with our core values and behave according to our Code of Conduct. Our Code of Conduct features the fundamental behaviors that help anchor, inform and guide us and applies to all employees.
Our core values and Code of Conduct are aligned with our deep commitment to partnerships with local business owners and our goal of always delivering the best service to our customers and an entertaining experience for our players.
We are an equal opportunity employer. We prohibit unlawful discrimination on the basis of gender, race, color, religion, age, citizenship, sexual orientation, gender identity, gender expression, marital status, pregnancy, national origin, ancestry, physical or mental disability or condition, or any other protected class under applicable federal, state, or local laws. We also prohibit unlawful discrimination based on the perception that anyone has any of those characteristics or is associated with a person who has or is perceived as having any of those characteristics.
Available Information
Our principal executive offices are located at 140 Tower Drive, Burr Ridge, Illinois 60527, and our telephone number is (630) 972-2235. Our website is www.accelentertainment.com. The information contained on our website or that can be accessed through our website is not part of, and is not incorporated by reference into, this Annual Report on Form 10-K or in any other report or document we file with the Securities and Exchange Commission (the “SEC”).
We file reports with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any other filings required by the SEC. Through our website, we make available, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.