Accel Entertainment (ACEL) Q3 2026 earnings review
Accel revenue rises 10%, while its first Chicago licenses arrive
Accel Entertainment, which runs slot machines in local bars and stores, grew revenue by earning more per Illinois site and expanding in newer states. Total sales rose 10% from a year ago to $364 million, while daily revenue per Illinois venue increased 9%. Chief executive Mark Phelan said the Chicago rollout began with the first licenses, and an $18 million tax-credit refund lifted free cash flow to $62 million.
| Revenue | $363.6M +10.3% from a year ago |
|---|---|
| Illinois daily revenue per site | $957 +9.2% from a year ago |
| Free cash flow | $62.0M $44.0M (+28%) excluding tax credit refund |
| Forward financial outlook | None not provided in the release |
⚖️ Verdict: 🟢 Bullish
The story got better because Illinois venues are generating higher daily play while Nebraska, Georgia and Louisiana expand rapidly. Even without the one-time tax refund, free cash flow jumped 28% by our math and cut net debt to $272 million. One caution: Nevada daily revenue per site dropped 17% as convenience stores joined the route, and the release gave no scope or budget for the permanent Fairmount casino.
The question now is how quickly Chicago city hall will approve licenses and let Accel turn on machines. Either the first licenses mark the start of a steady city rollout, or municipal delays will keep Chicago generating startup losses well into 2027. Management's update on contracted Chicago venues during the conference call will show the pace.
🐂 Bull Case
Illinois Locations Earn More After Closing Weak Spots
Illinois generates 71% of revenue for Accel, which operates slot machines in bars, restaurants and convenience stores. Chief executive Mark Phelan said the gaming operator is improving its home market "by pruning lower-performing locations and allocating resources toward our strongest opportunities." The company also finished installing ticket-in, ticket-out technology, which lets players move between machines using paper vouchers instead of cash.
The strategy raised revenue per venue even as the total number of Illinois sites shrank. Illinois net revenue grew 7.9% from a year ago to $257.9 million, or about 7% excluding the Fairmount Park racetrack casino. Daily gaming revenue per location — which Accel calls location hold-per-day and uses to measure sales at existing sites — rose 9.2% to $957, while total Illinois locations fell 1.6% to 2,685.
Higher revenue per machine helped lift operating income 13.6% to $28.8 million, expanding the operating margin by 0.2 percentage points to 7.9%. General and administrative overhead fell 0.1 percentage points to 16.8% of revenue, and direct gaming costs — mainly state taxes and venue revenue splits — dipped 0.1 percentage points to 68.6%. However, the release does not separate gains at existing bars from the mathematical boost of closing weak ones.
What to watch: whether Illinois location counts stabilize in the fourth quarter while daily revenue per site keeps growing near 9%. A stable site count paired with high daily play would prove that paper vouchers and better machines are driving genuine customer demand.
Newer States Grow Fast as Nevada Adds Machines
Phelan said Accel's growth is becoming more spread out across the country. The company has been buying smaller route operators and placing machines in convenience stores and truck stops outside Illinois to reduce its reliance on a single state.
- Nebraska net revenue: $12.1 million, up 41.8% from a year ago as daily revenue per site jumped 31.9% to $405
- Georgia net revenue: $7.2 million, up 42.3% as daily revenue per site rose 24.7% to $182
- Louisiana net revenue: $11.3 million, up 19.8% with daily revenue per site up 15.1% to $1,125
- Nevada net revenue: $32.9 million, up 25.4% after adding 1,342 machines over the past year
Together, Nebraska, Georgia and Louisiana grew revenue 32.9% by our math, rising from 7.0% to 8.4% of the company total. Georgia also carries a 43.5% regulated gross margin split, compared with 32.5% in Illinois, which lifted gross margin outside Illinois and Georgia by 0.2 percentage points to 28.1%. In Nevada, the 48.7% jump in installed machines easily outweighed lower daily spending per store.
What to watch: state profit tables in the upcoming third-quarter filing. Those figures will show whether revenue growth in Nebraska, Georgia and Louisiana is translating into higher profit margins.
Tax Credit Refund Lifts Cash Flow and Cuts Debt
Accel highlighted $79.4 million in operating cash flow and $62.0 million in free cash flow for the third quarter. The company noted, "We received the related refund in Q3 on the $18 million in federal tax credits that we purchased in Q2 ’26 for $17 million." That tax payment had depressed cash generation in the second quarter and reversed as planned in the third.
By our math, stripping out the $18 million tax refund leaves clean operating cash flow of $61.4 million and clean free cash flow of $44.0 million. Even on that underlying basis, free cash flow grew 27.5% from $34.5 million a year ago, helped by an 11.0% drop in capital spending to $18.7 million. The cash influx pushed net debt — total borrowings minus cash — down 14.5% from last quarter to $271.7 million.
What to watch: fourth-quarter free cash flow without tax-credit timing swings. It will show the company's normal cash generation as it begins paying for gaming machines in Chicago.
🐻 Bear Case
Chicago Licensing Starts, But Early Costs Return
Phelan said Accel has built out its leadership team to pursue growth in Chicago, "where the rollout has now begun with the receipt of our first licenses." Management has pitched the city's legalization of bar and restaurant gaming machines as its largest near-term growth driver, estimating a billion-dollar citywide market once mature.
Receiving the first licenses confirms the city process is moving, but the press release gives no count of signed Chicago venues or live machines. Instead, the financial tables show that as of July 2026, Accel reclassified the City of Chicago and Wyoming as developing markets. Those two areas generated $0.6 million in operating losses before interest, taxes and depreciation during the quarter, which the company excluded from its headline profit measure.
The classification rules show how early the rollout remains. Accel treats a jurisdiction as a developing market until it installs 500 gaming machines or operates there for 24 months. Because Chicago is still generating startup losses with fewer than 500 machines and an undisclosed number of city-approved venues, investors cannot yet verify whether the company is maintaining its 44% early share of state-level approvals.
What to watch: the exact number of live and contracted Chicago locations disclosed on the conference call or in the quarterly filing. A small number of city approvals would mean municipal red tape is slowing the rollout into 2027.
Nevada Revenue Per Site Drops Further on Store Mix
Phelan pointed to "continued expansion in Nevada" as a third-quarter highlight after Accel bought route assets and added convenience-store partners over the past year. Total Nevada locations rose 49.5% from a year ago to 553, and gaming machines rose 48.7% to 4,099.
However, daily gaming revenue per Nevada location fell 16.5% from a year ago to $613. That drop worsened from a 15.8% decline in the second quarter and an 11.1% decline in the first quarter. Management has blamed the decline on adding convenience stores, which naturally earn less per day than traditional bars, but the release does not separate store mix from play at older locations.
What to watch: Nevada daily revenue per location in the second half of 2027, once the convenience-store additions are a year old. A continued drop after the store mix stabilizes would mean existing Nevada bars are losing players.
Fairmount Grows Fast Off a Small Base Without a Casino Plan
Phelan cited "significant momentum at Fairmount Park, where gaming revenue increased approximately 84% year-over-year" after the Illinois racetrack casino added table games and began its second racing season in April. However, comparing the 7.9% total Illinois revenue increase with the 7% growth excluding Fairmount implies the property generated only about $5.6 million in third-quarter gaming revenue by our math.
That small revenue base leaves the temporary facility far short of the $20 million to $25 million annual profit target management pitched when buying the asset in late 2024. Furthermore, the press release still provides no budget, size or construction schedule for the permanent casino, a decision management had previously suggested could arrive over the second half of 2026.
What to watch: a concrete capital budget and construction timeline for the permanent Fairmount casino by the fourth-quarter release. Another delay or a large construction bill would weigh on future free cash flow.
Risks this quarter didn't answer
Three standing risks from prior quarters received no new updates in the third-quarter earnings release.
- Illinois tax and regulatory exposure: Illinois still accounts for 71.0% of total revenue under a state-mandated split; any future state tax hike or legalization of online casino gaming would directly pressure route profits.
- Louisiana related-party structure: Chief operating officer Stan Guidroz holds a 15% stake with a buyout right in Accel's Louisiana subsidiary; the quarterly filing's related-party footnote will show if acquisition spending there changed the liability.
- Leadership handover execution: Phelan completed his first quarter as chief executive after succeeding founder Andy Rubenstein in August; future capital allocation choices on Fairmount and acquisitions will test the new team.
👓 Other Themes
Rule Changes Blur Profit Comparisons
Accel reported a 12.3% rise in Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and one-offs) to $57.5 million. Beginning in 2026, the metric adds back losses on equipment sales ($0.6 million this quarter) and startup costs in Chicago and Wyoming ($0.6 million), so by our math like-for-like growth was 10.0%. Conversely, profit excluding one-offs rose 11.9% to $18.2 million, but would have risen 30.5% by our math had Accel not stopped adding back $3.8 million of employee stock pay in 2026.
💲 Other KPIs
Total installed gaming machines rose 6.6% from a year ago and 267 from last quarter, across 4,705 partner locations (up 5.7% from a year ago). Sequential additions slowed from 928 machines in the second quarter, when the gaming operator bought route assets in Nevada, back toward a normal organic pace.
Purchases of property and equipment fell 11.0% from a year ago to 5.1% of revenue, but stepped up from $11.1 million in the second quarter. Through nine months, capital spending is $52.7 million, down 28.7% from last year. By our math, that leaves $12.3 million for the fourth quarter to reach the middle of the prior $60 million to $70 million full-year plan.
Weighted average diluted shares fell 3.1% from a year ago and held steady with the second quarter's 83.4 million. The US company bought back about 624,000 shares for $7.2 million during the third quarter, up from 500,000 shares for $5.6 million in the second quarter.
❓ Key Questions
How many Chicago venues have city licenses and live machines?
Accel said the Chicago rollout began with its first licenses, and it booked $0.6 million in developing-market costs across Chicago and Wyoming. Disclosing how many city licenses have cleared final municipal checks will show whether revenue will build in 2027.
What is the budget and schedule for Fairmount's permanent casino?
Management previously indicated that details on the permanent Fairmount casino would arrive over the second half of 2026, yet the third-quarter release gave no figures. The construction cost will determine how much free cash flow remains for buybacks and route acquisitions.
Why was no full-year capital spending outlook in the release?
On last quarter's call, management maintained a $60 million to $70 million capital spending plan for 2026, but the third-quarter release omitted any forward numbers. Clarifying fourth-quarter spending will show how much equipment is going into Chicago this year.
How do daily gaming revenues compare at existing Nevada bars?
Nevada daily gaming revenue per location dropped 16.5% from a year ago, which management has attributed to adding lower-earning convenience stores. Separating older bars from new convenience stores would prove whether underlying player demand in Nevada is holding up.