The claw games found in many modern arcades were originally steam shovels, modeled after the mechanical steam shovels that excavated the Panama Canal. Photos of work on the Panama Canal in the early 20th century popularized steam shovels, and they began to appear in picture books, as toys, on watch fobs and in arcades, digging up candy instead of Panamanian soil.
To play the original shovel game, people put a nickel into the slot of the machine and cranked a wheel to engage the internal gears. The jaws dropped down, closed over a piece of candy, and then dropped it into a chute, delivering the treat to the player. Players had no control over where or when the claw went down.
During the Great Depression, the machine's popularity grew as casinos filled the shovel and claw games with money instead of candy and people tried to strike it rich. This ended in 1951 when legislation tightened and named the machines gambling devices. The games remained obscure until Federal gambling regulations relaxed in the 1970s and they began to be grow in recognition again. They became filled with stuffed animals and toys starting in the 1980s, helping along the claw machine's road back to popularity in arcades, bars, and even the movie Toy Story.