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LEGISLATURE OF NEBRASKA
ONE HUNDRED NINTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 890
Introduced by Clouse, 37.
Read first time January 08, 2026
Committee: Revenue
A BILL FOR AN ACT relating to the Mechanical Amusement Device Tax Act; to1
amend sections 77-3003.01 and 77-3004, Revised Statutes Cumulative2
Supplement, 2024, and sections 77-3003 and 77-3003.02, Revised3
Statutes Supplement, 2025; to change provisions relating to fees for4
manufacturer and distributor licenses and for cash devices under the5
act; to change provisions relating to occupation taxes for6
mechanical amusement devices that are not cash devices under the7
act; and to repeal the original sections. 8
Be it enacted by the people of the State of Nebraska,9
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Section 1. Section 77-3003, Revised Statutes Supplement, 2025, is1
amended to read: 2
77-3003 (1) Any distributor shall be required to procure a biennial3
license from the Tax Commissioner permitting him or her to place and4
either directly or indirectly control or manage a mechanical amusement5
device within the State of Nebraska. The Tax Commissioner, upon the6
application of any person, may issue a license, subject to the same7
limitations as an operator's license under section 77-3002. If the8
applicant is an individual, the application shall include the applicant's9
social security number. 10
(2)(a) Except for an applicant that holds a liquor license under the11
Nebraska Liquor Control Act, an applicant for or person holding a license12
as a distributor of a cash device shall be subject to a background check13
at any time by the department including fingerprinting and a check of his14
or her criminal history record information maintained by the15
Identification Division of the Federal Bureau of Investigation through16
the Nebraska State Patrol for the purpose of determining whether the17
Department of Revenue has a basis to deny the license application or to18
suspend, cancel, revoke, or terminate the person's license. Each19
applicant for or person holding a license pursuant to this section shall20
also submit a personal history report to the department on a form21
provided by the department and may be subject to a background22
investigation, an inspection of the applicant's or licensee's facilities,23
or both. An applicant or licensee shall pay the costs associated with the24
background check along with any required fees as determined by the25
department. 26
(b) The Tax Commissioner has the authority to deny any application27
for a license as a distributor of a cash device for cause. Cause for28
denial of a license application includes instances in which the applicant29
individually, or in the case of a business entity, any officer, director,30
employee, or limited liability company member of the applicant or31
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licensee other than an employee whose duties are purely ministerial in1
nature: 2
(i) Violated the provisions, requirements, conditions, limitations,3
or duties imposed by the Mechanical Amusement Device Tax Act or any rules4
or regulations adopted and promulgated pursuant to the act;5
(ii) Knowingly caused, aided, abetted, or conspired with another to6
cause any person to violate any of the provisions of the act or any rules7
or regulations adopted and promulgated pursuant to the act;8
(iii) Obtained a license or permit under the act by fraud,9
misrepresentation, or concealment; 10
(iv) Has been convicted of, forfeited bond upon a charge of, or11
pleaded guilty or nolo contendere to any offense or crime, whether a12
felony or a misdemeanor, involving any gambling activity or fraud, theft,13
willful failure to make required payments or reports, or filing false14
reports with a governmental agency at any level; 15
(v) Denied the department or its authorized representatives,16
including authorized law enforcement agencies, access to any place where17
activity required to be licensed under the act is being conducted or18
failed to produce for inspection or audit any book, record, document, or19
item required by law, rule, or regulation; 20
(vi) Made a misrepresentation of or failed to disclose a material21
fact to the department; 22
(vii) Failed to prove by clear and convincing evidence such23
applicant's qualifications to be licensed in accordance with the act;24
(viii) Failed to pay any taxes and additions to taxes, including25
penalties and interest required by the act or any other taxes imposed26
pursuant to the Nebraska Revenue Act of 1967; or 27
(ix) Has been cited for a violation of the Nebraska Liquor Control28
Act and had a liquor license suspended, canceled, or revoked by the29
Nebraska Liquor Control Commission for illegal gambling activities on or30
about the premises licensed by the commission pursuant to the Nebraska31
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Liquor Control Act or the rules and regulations adopted and promulgated1
pursuant to such act. 2
(c) No renewal of a license issued pursuant to this section shall be3
issued when the applicant for renewal would not be eligible for a license4
upon a first application. 5
(3) Beginning January 1, 2025, the biennial license for a6
distributor of a cash device shall be accompanied by a fee of two hundred7
dollars per cash device up to a maximum of ten thousand dollars. The8
Department of Revenue shall remit all license fees collected by the9
department pursuant to this section to the State Treasurer for credit to10
the Department of Revenue Enforcement Fund. 11
(4) The Tax Commissioner has the authority to suspend or revoke the12
license of any distributor that is in violation of the Mechanical13
Amusement Device Tax Act. 14
(5) Beginning on the implementation date designated by the Tax15
Commissioner pursuant to subsection (2) of section 9-1312, prior to the16
winnings payment of any cash device winnings as defined in section17
9-1303, a distributor of a cash device shall check the collection system18
to determine if the winner has a debt or an outstanding state liability19
as required by the Gambling Winnings Setoff for Outstanding Debt Act. If20
such distributor determines that the winner is subject to the collection21
system, the distributor shall deduct the amount of debt and outstanding22
state liability identified in the collection system from the winnings23
payment and shall remit the net winnings payment of cash device winnings,24
if any, to the winner and the amount deducted to the Department of25
Revenue to be credited against such debt or outstanding state liability26
as provided in section 9-1306. 27
Sec. 2. Section 77-3003.01, Revised Statutes Cumulative Supplement,28
2024, is amended to read: 29
77-3003.01 (1)(a) The Tax Commissioner or his or her agents or30
employees, at the direction of the Tax Commissioner, or any peace officer31
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of this state may seize, without a warrant, any mechanical amusement1
device if there is cause to believe such mechanical amusement device is2
not in compliance with the Mechanical Amusement Device Tax Act or any3
rules and regulations adopted and promulgated under the act or if the4
department determines the response to a request for information is5
materially deficient without good cause. In addition to seizure, any6
person placing in service or operating a cash device constituting an7
illegal game of chance or an unlicensed cash device of any kind within8
this state shall be subject to a penalty of up to one thousand dollars9
for each day of such operation. The Tax Commissioner has the authority to10
suspend or revoke the license of any operator, manufacturer, or11
distributor of a cash device that is in violation of this section.12
(b) For purposes of this subsection, a mechanical amusement device13
is subject to seizure and penalties as if it were a game of chance if:14
(i) The mechanical amusement device is a cash device; and15
(ii) The mechanical amusement device does not bear an unexpired16
decal as required under the Mechanical Amusement Device Tax Act.17
(c) This section does not apply to any device (i) used in any bingo,18
lottery by the sale of pickle cards, or other lottery, raffle, or gift19
enterprise conducted in accordance with the Nebraska Bingo Act, Nebraska20
County and City Lottery Act, Nebraska Lottery and Raffle Act, Nebraska21
Pickle Card Lottery Act, Nebraska Small Lottery and Raffle Act, State22
Lottery Act, or section 9-701, (ii) used for a prize contest as defined23
in section 28-1101, (iii) specifically authorized by the laws of this24
state, or (iv) regulated under the Nebraska Racetrack Gaming Act.25
(2) To receive a determination from the department that a cash26
device is in compliance with the Mechanical Amusement Device Tax Act and27
any rules and regulations adopted and promulgated under the act, a28
manufacturer or distributor of the device shall: 29
(a) Submit an application to the Tax Commissioner containing30
information regarding the device's location, software, Internet31
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connectivity, and configuration as may be required by the Tax1
Commissioner; 2
(b)(i) (b) Submit an application fee as provided in subdivision (b)3
(ii) of this subsection. of five hundred dollars; 4
(ii) The application fee shall be: 5
(A) Five hundred dollars prior to January 1, 2027;6
(B) Six hundred fifty dollars beginning January 1, 2027, and prior7
to January 1, 2028; and 8
(C) Beginning January 1, 2028, and January 1 of each year9
thereafter, the fee from the prior calendar year adjusted for inflation10
by the department using a formula tied to the Producer Price Index for11
all commodities, published by the United States Department of Labor,12
Bureau of Labor Statistics. After applying the formula, the Department of13
Revenue shall round the adjusted figure to the nearest number divisible14
by fifty and set such figure as the application fee;15
(c) Provide a specimen of the proposed cash device;16
(d) Provide all supporting evidence, including a report by an17
independent testing laboratory certified by the Tax Commissioner, to the18
Tax Commissioner indicating that, under all configurations, settings, and19
modes of operation, operation of the cash device constitutes a game of20
skill and not a game of chance and the use, operation, sale, or21
manufacture of the cash device would not constitute a violation of22
section 28-1107; and 23
(e) Provide an affidavit from the manufacturer or distributor24
affirming that no functional changes in hardware or software will be made25
to the approved cash device without further approval from the Tax26
Commissioner. 27
(3) The Tax Commissioner shall issue a response in writing to the28
applicant within forty-five days after the applicant has completed and29
submitted all application requirements. The Tax Commissioner's response30
shall state the reason for any denial or the reasons a determination31
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cannot be made. 1
(4)(a) A cash device shall not be considered a game of skill if one2
or more of the following apply: 3
(i) The ability of any player to succeed at the game played on the4
cash device is impacted by the number or ratio of prior wins to prior5
losses of players playing such cash device; 6
(ii) The ability of the player to succeed at the game played on the7
cash device is impacted by the ability of any person to set a specified8
win-loss ratio for the cash device or by the cash device having a9
predetermined win-loss percentage; 10
(iii) The outcome of the game played on the cash device can be11
controlled by a source other than any player playing the cash device;12
(iv) The success of any player is or may be determined by a chance13
event which cannot be altered by player action; 14
(v) There is no possibility for the player to win every game played15
on the cash device or there are unwinnable games or game modes on the16
cash device; 17
(vi) The ability of any player to succeed at the game played on the18
cash device requires the exercise of skill that no reasonable player19
could exercise; or 20
(vii) The primary determination of the prize amount is determined by21
the presentation or generation of a particular puzzle or group of symbols22
dealt to the player and the player does not have control over the puzzle23
or group of symbols presented. 24
(b) For purposes of this subsection, reasonable player means a25
player with an average level of intelligence, physical and mental skills,26
reaction time, and dexterity. 27
(5) The department or any court considering whether a gambling28
device is a game of skill may consider: 29
(a) The results of an analysis by the independent testing laboratory30
certified by the Tax Commissioner to evaluate the reaction time required31
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for a player of a particular game on such cash device to perform the1
tasks required by the game to win; or 2
(b) The results of an analysis by the independent testing laboratory3
certified by the Tax Commissioner to evaluate factors set forth by the4
Tax Commissioner, other than reaction time, required for the player of a5
particular game on such cash device to perform the tasks required by the6
game to win. 7
(6) Factors which are not sufficient indications of a skill-based8
game include, but are not limited to: 9
(a) Whether a comprehensive list of prizes or outcomes is offered to10
the player or whether all outcomes are drawn from a finite pool of11
predetermined outcomes or starting positions; 12
(b) Whether a player can increase his or her chance of winning based13
on knowledge of probabilities in general or the probabilities of any14
particular prize or outcome in a game or on a cash device;15
(c) Whether a player can simply choose not to play before committing16
money or credits; or 17
(d) A game task consisting solely of moving a symbol up or down,18
replacing one symbol with another, or any similar action, with or without19
a timer. 20
(7) Upon approval of an application based on a determination that21
the mechanical amusement device is a game of skill and not a game of22
chance, the Tax Commissioner shall issue a mechanical amusement device23
decal for the device as configured and as provided in subsection (8) of24
this section. No mechanical amusement device decal shall be issued for25
any cash device unless the department has determined that such cash26
device is a game of skill and not a game of chance and that the27
manufacture, sale, transport, placement, possession, or operation of such28
cash device does not constitute a violation of section 28-1107. If the29
Tax Commissioner does not approve the application for the cash device,30
the application shall be denied and the operator shall have the31
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opportunity for an administrative hearing before the Tax Commissioner at1
which evidence may be presented on the issue of whether the cash device2
is specifically authorized by law and is not a gambling device as defined3
in section 28-1101. After such hearing, the Tax Commissioner shall enter4
a final decision approving or denying the application. The Tax5
Commissioner's final decision may be appealed, and the appeal shall be in6
accordance with the Administrative Procedure Act. 7
(8)(a) Upon approval of a specimen of a cash device as a game of8
skill under this section, the department may issue a mechanical amusement9
device decal for each such cash device: 10
(i) If certified by the manufacturer to be functionally identical in11
both hardware and software configurations to the specimen provided to the12
department; and 13
(ii) If the application fee described in subdivision (2)(b) of this14
section and the annual decal fee described in subdivision (c) of this15
subsection have been paid. 16
(b)(i) In order for a distributor or operator of a cash device to17
place a cash device into operation at a retail establishment, other than18
a retail establishment owned or operated by a fraternal benefit society19
organized and licensed under sections 44-1072 to 44-10,109 or a20
recognized veterans organization as defined in section 80-401.01, such21
retail establishment shall generate at least sixty percent of the gross22
operating revenue of such retail establishment from sources other than23
the total gross operating revenue of any cash devices located within the24
retail establishment. 25
(ii) The number of cash devices permitted at any retail26
establishment shall not exceed the lesser of either:27
(A) Except for a fraternal benefit society organized and licensed28
under sections 44-1072 to 44-10,109 or a recognized veterans organization29
as defined in section 80-401.01, the number of cash devices it takes to30
generate forty percent of the gross operating revenue of the retail31
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establishment; or 1
(B) Four cash devices, except that an establishment with over four2
thousand square feet may have one cash device for each one thousand3
square feet, up to a maximum of fifteen cash devices.4
(c)(i) (c) The distributor or operator of a cash device shall pay an5
annual decal fee as provided in subdivision (c)(ii) of this subsection of6
two hundred fifty dollars to the department for each cash device in7
operation in Nebraska. The decal issued under this section shall be8
distinct from other decals issued by the department for mechanical9
amusement devices that are not required to be evaluated under this10
section. Regardless of the issuance of a decal by the department, no cash11
device shall be considered in compliance if it does not bear an unexpired12
decal in a conspicuous place. 13
(ii) For each cash device in operation in Nebraska the annual decal14
fee shall be: 15
(A) Two hundred fifty dollars prior to January 1, 2027;16
(B) Three hundred fifty dollars beginning January 1, 2027, and prior17
to January 1, 2028; and 18
(C) Beginning January 1, 2028, and January 1 of each year19
thereafter, the fee from the prior calendar year adjusted for inflation20
by the department using a formula tied to the Producer Price Index for21
all commodities, published by the United States Department of Labor,22
Bureau of Labor Statistics. After applying the formula, the Department of23
Revenue shall round the adjusted figure to the nearest number divisible24
by fifty and set such figure as the annual decal fee.25
(9) The application process described in this section shall not be26
construed to limit further investigation by the department or the27
issuance of further regulations to promote compliance after the28
application process is completed. At any point after a determination of29
skill by the department, the department may request from the30
manufacturer, distributor, or operator information about any cash device31
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in operation in this state, including, but not limited to, information1
regarding currently operable source code, changes to software or2
hardware, and communications from or to the device over the Internet. A3
manufacturer, distributor, or operator that receives a request shall4
respond with all responsive information in its possession or control5
within fifteen business days. 6
(10) If a manufacturer or distributor receives a determination from7
the department that a cash device is not in compliance with the8
Mechanical Amusement Device Tax Act, such manufacturer or distributor9
shall have thirty days after the issuance of that determination to remove10
any such cash device from operation in Nebraska. 11
(11) Application fees collected under subsection (2) of this section12
and annual decal fees collected under subsection (8) of this section13
shall be remitted to the State Treasurer for credit to the Department of14
Revenue Enforcement Fund. 15
Sec. 3. Section 77-3003.03, Revised Statutes Supplement, 2025, is16
amended to read: 17
77-3003.03 (1) A manufacturer of a cash device shall be required to18
procure a biennial license from the Tax Commissioner permitting such19
manufacturer to place any cash devices in the State of Nebraska for sale,20
lease, or distribution through a third party. The Tax Commissioner, upon21
the application of any person, may issue a license subject to the same22
limitations as an operator's license under section 77-3002. If the23
applicant is an individual, the application shall include the applicant's24
social security number. The license fee for a manufacturer of a cash25
device shall be ten thousand dollars. The Department of Revenue shall26
remit all license fees collected by the department pursuant to this27
section to the State Treasurer for credit to the Department of Revenue28
Enforcement Fund. 29
(2)(a) Each applicant for or person holding a license as a30
manufacturer of a cash device shall be subject to a background check at31
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any time by the department including fingerprinting and a check of his or1
her criminal history record information maintained by the Identification2
Division of the Federal Bureau of Investigation through the Nebraska3
State Patrol for the purpose of determining whether the Department of4
Revenue has a basis to deny the license application or to suspend,5
cancel, revoke, or terminate the person's license. Each applicant for or6
person holding a license pursuant to this section shall also submit a7
personal history report to the department on a form provided by the8
department and may be subject to a background investigation, an9
inspection of the applicant's or licensee's facilities, or both. An10
applicant or licensee shall pay the costs associated with the background11
check and any required fees as determined by the department.12
(b) The Tax Commissioner has the authority to deny a license for a13
manufacturer of a cash device for cause. Cause for denial of a license14
application includes instances in which the applicant individually, or in15
the case of a business entity, any officer, director, employee, or16
limited liability company member of the applicant or licensee other than17
an employee whose duties are purely ministerial in nature:18
(i) Violated the provisions, requirements, conditions, limitations,19
or duties imposed by the Mechanical Amusement Device Tax Act or any rules20
or regulations adopted and promulgated pursuant to the act;21
(ii) Knowingly caused, aided, abetted, or conspired with another to22
cause any person to violate any of the provisions of the act or any rules23
or regulations adopted and promulgated pursuant to the act;24
(iii) Obtained a license or permit under the act by fraud,25
misrepresentation, or concealment; 26
(iv) Has been convicted of, forfeited bond upon a charge of, or27
pleaded guilty or nolo contendere to any offense or crime, whether a28
felony or a misdemeanor, involving any gambling activity or fraud, theft,29
willful failure to make required payments or reports, or filing false30
reports with a governmental agency at any level; 31
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(v) Denied the department or its authorized representatives,1
including authorized law enforcement agencies, access to any place where2
activity required to be licensed under the act is being conducted or3
failed to produce for inspection or audit any book, record, document, or4
item required by law, rule, or regulation; 5
(vi) Made a misrepresentation of or failed to disclose a material6
fact to the department; 7
(vii) Failed to prove by clear and convincing evidence such8
applicant's qualifications to be licensed in accordance with the act;9
(viii) Failed to pay any taxes and additions to taxes, including10
penalties and interest required by the act or any other taxes imposed11
pursuant to the Nebraska Revenue Act of 1967; or 12
(ix) Has been cited for a violation of the Nebraska Liquor Control13
Act and had a liquor license suspended, canceled, or revoked by the14
Nebraska Liquor Control Commission for illegal gambling activities on or15
about the premises licensed by the commission pursuant to the Nebraska16
Liquor Control Act or the rules and regulations adopted and promulgated17
pursuant to such act. 18
(c) No renewal of a license pursuant to this section shall be issued19
when the applicant for renewal would not be eligible for a license upon a20
first application. 21
(3) The Tax Commissioner has the authority to suspend or revoke the22
license of any manufacturer of a cash device that is in violation of the23
Mechanical Amusement Device Tax Act. 24
Sec. 4. Section 77-3004, Revised Statutes Cumulative Supplement,25
2024, is amended to read: 26
77-3004 (1) An occupation tax is hereby imposed and levied, in the27
amount and in accordance with the terms and conditions stated in this28
section, upon the business of operating mechanical amusement devices that29
are not cash devices within the State of Nebraska for profit or gain30
either directly or indirectly received. Every person who now or hereafter31
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engages in the business of operating such mechanical amusement devices1
that are not cash devices in the State of Nebraska shall pay such2
occupation tax in the amount and manner specified in this section.3
(2) Any distributor or operator of a mechanical amusement device4
that is not a cash device within the State of Nebraska shall pay an5
occupation tax for each such mechanical amusement device which he or she6
places into operation during all of the taxable year. The occupation tax7
shall be due and payable on January 1 of each year on each mechanical8
amusement device that is not a cash device in operation on that date,9
except that it shall be unlawful to pay any such occupation tax unless10
the sales or use tax has been paid on such mechanical amusement devices.11
For every mechanical amusement device that is not a cash device put into12
operation on a date subsequent to January 1, and which has not been13
included in computing the occupation tax imposed and levied by the14
Mechanical Amusement Device Tax Act, the occupation tax shall be due and15
payable therefor prior to the time the mechanical amusement device is16
placed in operation. All occupation taxes collected pursuant to the act17
shall be remitted to the State Treasurer for credit to the General Fund.18
(3) The amount of the occupation tax for each mechanical amusement19
device that is not a cash device shall be: 20
(a) Thirty-five thirty-five dollars for each mechanical amusement21
device that is not a cash device for any period beginning on or after22
January 1, 2000, and prior to January 1, 2027, except that for such23
mechanical amusement devices placed in operation after July 1, and before24
January 1 of any such each year, the occupation tax shall be twenty25
dollars for each mechanical amusement device; . 26
(b) For calendar year 2027, seventy dollars; and27
(c) For calendar year 2028 and each calendar year thereafter, the28
occupation tax from the prior calendar year adjusted for inflation by the29
department using a formula tied to the Producer Price Index for all30
commodities, published by the United States Department of Labor, Bureau31
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of Labor Statistics. After applying the formula, the Department of1
Revenue shall round the adjusted figure to the nearest number divisible2
by five. 3
(4) The occupation taxes collected pursuant to this section shall be4
remitted to the State Treasurer for credit as follows:5
(a) Twenty percent of such amount to the Department of Revenue6
Enforcement Fund; and 7
(b) Eighty percent of such amount to the General Fund.8
Sec. 5. Original sections 77-3003.01 and 77-3004, Revised Statutes9
Cumulative Supplement, 2024, and sections 77-3003 and 77-3003.03, Revised10
Statutes Supplement, 2025, are repealed. 11
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