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LEGISLATURE OF NEBRASKA
ONE HUNDRED NINTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 920
Introduced by Spivey, 13.
Read first time January 09, 2026
Committee: Revenue
A BILL FOR AN ACT relating to the Mechanical Amusement Device Tax Act; to1
amend sections 77-3003.01, 77-3003.02, 77-3006, 77-3009, and2
77-3012, Revised Statutes Cumulative Supplement, 2024; to change3
provisions relating to the advertisement, operation, and records of4
a cash device under the act; to change provisions relating to5
violations of the act; to change provisions relating to the amount6
and distribution of the tax imposed on the net operating revenue of7
a cash device; to provide powers and duties to the Tax Commissioner8
and the Department of Revenue; to create the Nebraska Child Care Aid9
Fund; to harmonize provisions; and to repeal the original sections.10
Be it enacted by the people of the State of Nebraska,11
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Section 1. Section 77-3003.01, Revised Statutes Cumulative1
Supplement, 2024, is amended to read: 2
77-3003.01 (1)(a) The Tax Commissioner or his or her agents or3
employees, at the direction of the Tax Commissioner, or any peace officer4
of this state may seize, without a warrant, any mechanical amusement5
device if there is cause to believe such mechanical amusement device is6
not in compliance with the Mechanical Amusement Device Tax Act or any7
rules and regulations adopted and promulgated under the act or if the8
department determines the response to a request for information is9
materially deficient without good cause. In addition to seizure, any10
person placing in service or operating a cash device constituting an11
illegal game of chance or an unlicensed cash device of any kind within12
this state shall be subject to a penalty of up to one thousand dollars13
for each day of such operation. The Tax Commissioner has the authority to14
suspend or revoke the license of any operator, manufacturer, or15
distributor of a cash device that is in violation of this section.16
(b) For purposes of this subsection, a mechanical amusement device17
is subject to seizure and penalties as if it were a game of chance if:18
(i) The mechanical amusement device is a cash device; and19
(ii) The mechanical amusement device does not bear an unexpired20
decal as required under the Mechanical Amusement Device Tax Act.21
(c) This section does not apply to any device (i) used in any bingo,22
lottery by the sale of pickle cards, or other lottery, raffle, or gift23
enterprise conducted in accordance with the Nebraska Bingo Act, Nebraska24
County and City Lottery Act, Nebraska Lottery and Raffle Act, Nebraska25
Pickle Card Lottery Act, Nebraska Small Lottery and Raffle Act, State26
Lottery Act, or section 9-701, (ii) used for a prize contest as defined27
in section 28-1101, (iii) specifically authorized by the laws of this28
state, or (iv) regulated under the Nebraska Racetrack Gaming Act.29
(2) To receive a determination from the department that a cash30
device is in compliance with the Mechanical Amusement Device Tax Act and31
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any rules and regulations adopted and promulgated under the act, a1
manufacturer or distributor of the device shall: 2
(a) Submit an application to the Tax Commissioner containing3
information regarding the device's location, software, Internet4
connectivity, and configuration as may be required by the Tax5
Commissioner; 6
(b) Submit an application fee of five hundred dollars;7
(c) Provide a specimen of the proposed cash device;8
(d) Provide all supporting evidence, including a report by an9
independent testing laboratory certified by the Tax Commissioner, to the10
Tax Commissioner indicating that, under all configurations, settings, and11
modes of operation, operation of the cash device constitutes a game of12
skill and not a game of chance and the use, operation, sale, or13
manufacture of the cash device would not constitute a violation of14
section 28-1107; and 15
(e) Provide an affidavit from the manufacturer or distributor16
affirming that no functional changes in hardware or software will be made17
to the approved cash device without further approval from the Tax18
Commissioner. 19
(3) The Tax Commissioner shall issue a response in writing to the20
applicant within forty-five days after the applicant has completed and21
submitted all application requirements. The Tax Commissioner's response22
shall state the reason for any denial or the reasons a determination23
cannot be made. 24
(4)(a) A cash device shall not be considered a game of skill if one25
or more of the following apply: 26
(i) The ability of any player to succeed at the game played on the27
cash device is impacted by the number or ratio of prior wins to prior28
losses of players playing such cash device; 29
(ii) The ability of the player to succeed at the game played on the30
cash device is impacted by the ability of any person to set a specified31
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win-loss ratio for the cash device or by the cash device having a1
predetermined win-loss percentage; 2
(iii) The outcome of the game played on the cash device can be3
controlled by a source other than any player playing the cash device;4
(iv) The success of any player is or may be determined by a chance5
event which cannot be altered by player action; 6
(v) There is no possibility for the player to win every game played7
on the cash device or there are unwinnable games or game modes on the8
cash device; 9
(vi) The ability of any player to succeed at the game played on the10
cash device requires the exercise of skill that no reasonable player11
could exercise; or 12
(vii) The primary determination of the prize amount is determined by13
the presentation or generation of a particular puzzle or group of symbols14
dealt to the player and the player does not have control over the puzzle15
or group of symbols presented. 16
(b) For purposes of this subsection, reasonable player means a17
player with an average level of intelligence, physical and mental skills,18
reaction time, and dexterity. 19
(5) The department or any court considering whether a gambling20
device is a game of skill may consider: 21
(a) The results of an analysis by the independent testing laboratory22
certified by the Tax Commissioner to evaluate the reaction time required23
for a player of a particular game on such cash device to perform the24
tasks required by the game to win; or 25
(b) The results of an analysis by the independent testing laboratory26
certified by the Tax Commissioner to evaluate factors set forth by the27
Tax Commissioner, other than reaction time, required for the player of a28
particular game on such cash device to perform the tasks required by the29
game to win. 30
(6) Factors which are not sufficient indications of a skill-based31
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game include, but are not limited to: 1
(a) Whether a comprehensive list of prizes or outcomes is offered to2
the player or whether all outcomes are drawn from a finite pool of3
predetermined outcomes or starting positions; 4
(b) Whether a player can increase his or her chance of winning based5
on knowledge of probabilities in general or the probabilities of any6
particular prize or outcome in a game or on a cash device;7
(c) Whether a player can simply choose not to play before committing8
money or credits; or 9
(d) A game task consisting solely of moving a symbol up or down,10
replacing one symbol with another, or any similar action, with or without11
a timer. 12
(7) Upon approval of an application based on a determination that13
the mechanical amusement device is a game of skill and not a game of14
chance, the Tax Commissioner shall issue a mechanical amusement device15
decal for the device as configured and as provided in subsection (8) of16
this section. No mechanical amusement device decal shall be issued for17
any cash device unless the department has determined that (a) such cash18
device is a game of skill and not a game of chance and that the19
manufacture, sale, transport, placement, possession, or operation of such20
cash device does not constitute a violation of section 28-1107 and (b)21
the appearance of such cash device does not violate subsection (9) of22
this section. If the Tax Commissioner does not approve the application23
for the cash device, the application shall be denied and the operator24
shall have the opportunity for an administrative hearing before the Tax25
Commissioner at which evidence may be presented on the issue of whether26
the cash device is specifically authorized by law and is not a gambling27
device as defined in section 28-1101. After such hearing, the Tax28
Commissioner shall enter a final decision approving or denying the29
application. The Tax Commissioner's final decision may be appealed, and30
the appeal shall be in accordance with the Administrative Procedure Act.31
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(8)(a) Upon approval of a specimen of a cash device as a game of1
skill under this section, the department may issue a mechanical amusement2
device decal for each such cash device: 3
(i) If certified by the manufacturer to be functionally identical in4
both hardware and software configurations to the specimen provided to the5
department; and 6
(ii) If the application fee described in subdivision (2)(b) of this7
section and the annual decal fee described in subdivision (c) of this8
subsection have been paid. 9
(b)(i) In order for a distributor or operator of a cash device to10
place a cash device into operation at a retail establishment, other than11
a retail establishment owned or operated by a fraternal benefit society12
organized and licensed under sections 44-1072 to 44-10,109 or a13
recognized veterans organization as defined in section 80-401.01, such14
retail establishment shall generate at least sixty percent of the gross15
operating revenue of such retail establishment from sources other than16
the total gross operating revenue of any cash devices located within the17
retail establishment. 18
(ii) The number of cash devices permitted at any retail19
establishment shall not exceed the lesser of either:20
(A) Except for a fraternal benefit society organized and licensed21
under sections 44-1072 to 44-10,109 or a recognized veterans organization22
as defined in section 80-401.01, the number of cash devices it takes to23
generate forty percent of the gross operating revenue of the retail24
establishment; or 25
(B) Four cash devices, except that an establishment with over four26
thousand square feet may have one cash device for each one thousand27
square feet, up to a maximum of fifteen cash devices.28
(c) The distributor or operator of a cash device shall pay an annual29
decal fee of two hundred fifty dollars to the department for each cash30
device in operation in Nebraska. The decal issued under this section31
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shall be distinct from other decals issued by the department for1
mechanical amusement devices that are not required to be evaluated under2
this section. Regardless of the issuance of a decal by the department, no3
cash device shall be considered in compliance if it does not bear an4
unexpired decal in a conspicuous place. 5
(9)(a) An operator, distributor, or manufacturer of a cash device6
shall not market, advertise, promote, or make available any cash device7
in this state if the device or its container, packaging, or advertising8
materials: 9
(i) Depict a cartoon-like or fictional character primarily used to10
appeal to minors; or 11
(ii) Imitate or mimic the trademark, trade dress, branding, or12
packaging of products primarily marketed to minors.13
(b)(i) No person shall place or permit exterior advertising for a14
cash device on or about any premises where such device is located except15
as provided in this section. 16
(ii) Each premises where a cash device is located may display not17
more than three exterior signs advertising the availability of a cash18
device available for play at such location. Any such sign shall:19
(A) Not exceed eleven inches in height and ten inches in width; and20
(B) Be permanently affixed to the exterior of the building that21
contains a cash device. 22
(iii) No exterior banner, flag, window wraps, digital display,23
vehicle wrap, or other exterior advertising media shall be used to24
advertise a cash device other than the signs permitted pursuant to25
subdivision (9)(b)(ii) of this section. 26
(10) (9) The application process described in this section shall not27
be construed to limit further investigation by the department or the28
issuance of further regulations to promote compliance after the29
application process is completed. At any point after a determination of30
skill by the department, the department may request from the31
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manufacturer, distributor, or operator information about any cash device1
in operation in this state, including, but not limited to, information2
regarding currently operable source code, changes to software or3
hardware, and communications from or to the device over the Internet. A4
manufacturer, distributor, or operator that receives a request shall5
respond with all responsive information in its possession or control6
within fifteen business days. 7
(11) (10) If a manufacturer or distributor receives a determination8
from the department that a cash device is not in compliance with the9
Mechanical Amusement Device Tax Act, such manufacturer or distributor10
shall have ten thirty days after the issuance of that determination to11
(a) provide proof of correction and compliance or (b) remove any such12
cash device from operation in Nebraska. 13
(12) (11) Application fees collected under subsection (2) of this14
section and annual decal fees collected under subsection (8) of this15
section shall be remitted to the State Treasurer for credit to the16
Department of Revenue Enforcement Fund. 17
Sec. 2. Section 77-3003.02, Revised Statutes Cumulative Supplement,18
2024, is amended to read: 19
77-3003.02 (1) No cash device shall be operated using a credit card,20
charge card, or debit card. 21
(2) No person under twenty-one years of age shall play or22
participate in any way in the operation of a cash device. No distributor,23
operator, or employee or agent of any distributor or operator shall24
knowingly permit any individual under twenty-one years of age to play or25
participate in any way in the operation of a cash device. The26
distributor, operator, or employee or agent shall verify the age of any27
individual requesting to play a cash device and shall comply with28
subsections (3) and (4) of this section. 29
(3) Beginning August 1, 2026, an operator of a cash device shall not30
make such device available for play at a retail establishment unless an31
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attendant is physically present on the premises of such retail1
establishment and capable of actively supervising play of such cash2
device. An attendant shall be considered to be actively supervising play3
of such cash device if the attendant: 4
(a) Visually confirms the age of the player in conjunction with the5
electronic age-verification required pursuant to subsection (4) of this6
section; and 7
(b) Continuously monitors the area in which a cash device is located8
and intervenes to prevent play of a cash device by any person under9
twenty-one years of age. 10
(4)(a) Except as provided in subdivision (c) of this subsection, on11
and after January 1, 2028, an operator shall not make a cash device12
available for play in a retail establishment unless such device is13
equipped with an age-verification mechanism capable of scanning and14
electronically authenticating a government-issued identification card.15
(b) The age-verification mechanism shall meet technical standards16
approved by the department. Such standards shall include, but need not be17
limited to: 18
(i) Age-verification methods that prevent play of such cash device19
until the age of the player has been electronically verified as twenty-20
one years of age or older; and 21
(ii) Requirement of an age-verification identification scan prior to22
each gameplay session on the cash device and prior to each voucher print23
or redemption transaction. 24
(c) This subsection shall not apply to a cash device located in a25
retail establishment that does not allow individuals under twenty-one26
years of age to enter. 27
(5) (2) No distributor or operator shall charge a fee or require a28
gratuity in return for the payment of any prize money won by a player of29
a cash device. 30
(6) (3) The Tax Commissioner has the authority to suspend or revoke31
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the license of any distributor or operator of a cash device for a1
violation of this section. 2
(7) (4) The department shall adopt and promulgate rules and3
regulations for the implementation and enforcement of this section as4
long as such rules and regulations do not restrict how a cash device5
manufacturer, distributor, or operator markets or advertises the6
existence of a cash device, unless the advertiser or marketer of a cash7
device is willfully conflating the cash device play with casino-style8
gambling or slot machine wagering. 9
Sec. 3. Section 77-3006, Revised Statutes Cumulative Supplement,10
2024, is amended to read: 11
77-3006 (1) The administration of the Mechanical Amusement Device12
Tax Act is hereby vested in the Tax Commissioner subject to other13
provisions of law relating to the Tax Commissioner. The Tax Commissioner14
may prescribe, adopt and promulgate, and enforce rules and regulations15
relating to the administration and enforcement of the act and may16
delegate authority to his or her representatives to conduct hearings or17
perform any other duties imposed under the act. The Tax Commissioner18
shall may adopt and promulgate rules and regulations necessary to carry19
out section 77-3003.01. Such rules and regulations shall include20
standards for determining when advertising or packaging is used to appeal21
to minors or primarily marketed to minors. 22
(2) The department has the authority to review all documents between23
a distributor, manufacturer, and operator regarding a cash device. Such24
documents shall include, but not be limited to, any a contract,25
agreement, lease, revenue-sharing agreement, profit-sharing document,26
annual report, tax filing, or bill of sale. 27
(3) The department has the authority to approve all cash device28
locations across the state. No cash device shall be moved from such cash29
device's approved location without the prior approval of the department.30
The department may examine and audit any retail establishment operating a31
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cash device without prior notice to verify compliance with the act.1
(4) The department shall establish retail establishment location2
standards required for the placement of any cash device in this state.3
(5) The following factors shall be considered for the issuance of a4
license to operate a cash device at a particular retail establishment5
location: 6
(a) Whether there are physical walls separating a retail7
establishment operating a cash device from other businesses located in8
the same building; 9
(b) Whether there are dedicated entrances and exits to the retail10
establishment; 11
(c) Whether a separate sales tax permit has been obtained by the12
retail establishment; 13
(d) Whether the retail establishment has separate points of sale;14
(e) Whether the retail establishment has separate points of ticket15
redemption; 16
(f) Whether there is diversity of merchandise for sale in the retail17
establishment; 18
(g) Whether the retail establishment issues a receipt for sales;19
(h) The number of dedicated employees on duty at the same time at20
the retail establishment; 21
(i) The level of business activity being conducted in the retail22
establishment; 23
(j) Whether the physical space for the retail establishment within24
the building is contiguous to other businesses; and25
(k) Whether there are distinct owners or officers of the retail26
establishment within the shared building. 27
Sec. 4. Section 77-3009, Revised Statutes Cumulative Supplement,28
2024, is amended to read: 29
77-3009 (1) Any distributor or operator who places a cash device30
into operation in the State of Nebraska without the necessary decal being31
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placed conspicuously upon it or without having obtained the necessary1
license shall be subject to an administrative penalty of up to one2
thousand dollars per day for each unlicensed cash device.3
(2) Any cash device which (a) does not have the necessary decal4
conspicuously displayed upon it or (b) does not comply with the age-5
verification requirements of subsection (4) of section 77-3003.02 shall6
be subject to being sealed by the Tax Commissioner or his or her7
delegate. If such seal is broken prior to payment of the occupation tax8
upon such cash device, the cash device shall be subject to forfeiture and9
sale by the Tax Commissioner. 10
(3) Any person violating the Mechanical Amusement Device Tax Act11
shall be guilty of a Class II misdemeanor. Each day on which any person12
engages in or conducts the business of operating or distributing the13
mechanical amusement devices subject to the Mechanical Amusement Device14
Tax Act, without having paid the tax or obtained the required license as15
provided, shall constitute a separate offense. 16
(4) The department has the authority to levy an administrative17
penalty of up to one thousand dollars per day for any other violation of18
the act. 19
Sec. 5. Section 77-3012, Revised Statutes Cumulative Supplement,20
2024, is amended to read: 21
77-3012 (1) Except as otherwise provided in subsection (5) of this22
section, a tax is hereby imposed and levied, in the amount and in23
accordance with this section, upon the net operating revenue of all cash24
devices operating within the State of Nebraska for profit or gain either25
directly or indirectly received. The tax shall be paid in the amount and26
manner specified in this section. 27
(2) Except as otherwise provided in subsection (5) of this section,28
beginning on and after July 1, 2025, any distributor of a cash device,29
and any operator of a cash device if the operator is not subject to a30
revenue-sharing or other agreement with a distributor who is paying the31
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tax, shall pay a tax for each cash device in operation each calendar1
quarter during the taxable year. The tax shall be collected by the2
department and due and payable on January 1, April 1, July 1, and October3
1 of each year on each cash device in operation during the preceding4
calendar quarter. For each cash device put into operation on a date5
subsequent to a quarterly due date that has not been included in6
computing the tax imposed and levied by the Mechanical Amusement Device7
Tax Act, the tax shall be due and payable on the immediately succeeding8
quarterly due date. 9
(3) The amount of the tax imposed and levied under this section10
shall be fifteen five percent of the net operating revenue for each cash11
device. The quarterly tax shall be submitted on a form prescribed by the12
Tax Commissioner documenting the total gross and net operating revenue13
for that quarter. 14
(4) The Tax Commissioner shall remit the taxes collected pursuant to15
this section to the State Treasurer for credit as follows:16
(a) Two and one-half Twenty percent to the Charitable Gaming17
Operations Fund for enforcement of the act and maintenance of the central18
server; 19
(b) Two and one-half percent to the Compulsive Gamblers Assistance20
Fund; 21
(c) Nine-tenths of a Two and one-half percent to the General Fund;22
(d) Three and four-tenths Ten percent to the Nebraska Tourism23
Commission Promotional Cash Fund; 24
(e) Thirteen and thirty-five hundredths Forty percent to the25
Property Tax Credit Cash Fund; and 26
(f) Sixty-eight and ninety-five hundredths percent to the Nebraska27
Child Care Aid Fund; and 28
(g) (f) The remaining eight and four-tenths twenty-five percent to29
the county treasurer of the county in which the cash device is located to30
be distributed as follows: (i) If the cash device is located completely31
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within an unincorporated area of a county, the remaining eight and four-1
tenths twenty-five percent shall be distributed to the county in which2
the cash device is located, or (ii) if the cash device is located within3
the limits of a city or village in such county, one-half of the remaining4
eight and four-tenths twenty-five percent shall be distributed to such5
county and one-half of the remaining eight and four-tenths twenty-five6
percent shall be distributed to the city or village in which such cash7
device is located. 8
(5) This section does not apply to cash devices operated by a9
fraternal benefit society organized and licensed under sections 44-107210
to 44-10,109 or a recognized veterans organization as defined in section11
80-401.01. 12
Sec. 6. The Nebraska Child Care Aid Fund is created. The fund shall13
consist of funds received pursuant to section 77-3012, any money14
transferred by the Legislature, and any gifts, grants, or bequests from15
any source, including federal, state, public, and private sources. The16
fund shall be used for state child care subsidies within the State of17
Nebraska. Any money in the fund available for investment shall be18
invested by the state investment officer pursuant to the Nebraska Capital19
Expansion Act and the Nebraska State Funds Investment Act.20
Sec. 7. Original sections 77-3003.01, 77-3003.02, 77-3006, 77-3009,21
and 77-3012, Revised Statutes Cumulative Supplement, 2024, are repealed.22
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