By: Howard McAuliffe, Pinnacle Entertainment Group

The beauty of operating games is that the cost of goods sold is very low compared to most businesses.  In addition, the labor cost is very low compared to most retail establishments.  However, the upfront capital costs are relatively high, which makes game buying extremely important.  Reinvesting in games should be an annual expense, that must be made to keep sales numbers from deteriorating.  Though games are treated as a capital expense for accounting, it is an expense that cannot be put off for years on end like other capital expenses.  We believe game investment is an operating expense and budget this expense each year.  Buying the wrong games can be a mistake that is difficult to remedy because buying a different game is expensive.  We have made, and seen others make, the mistake of seeing a cool new game on a tradeshow floor and buying it only to find out that it is not a strong earner.  Tradeshows are a great place to see hot new games and other products.  For top earning game locations, it is an acceptable risk to buy the hottest newest games untested, to be the first to market.  These types of locations can afford to be wrong because they have the cash to buy new games, and often multiple locations to rotate the game to.  However, for most locations it is wise to use the tradeshow to find games from reputable manufacturers that have potential, learn about them, and then track them as they are delivered to the first locations.  Reputable consultants, as well as networking with operators who buy them first, will tell you how the game earns.  We have found waiting six months to purchase games that are well tested and proved is worth not making an expensive mistake trying to predict which games will earn by seeing them on a tradeshow floor.