Seizure of mechanical amusement device; penalty; determination cash device complies with act; procedure; Tax Commissioner; powers and duties; mechanical amusement device decal; final decision; appeal; retail establishment; limits on devices; annual decal fee; device appearance and advertising; acts prohibited.
Neb. Rev. Stat. § 77-3003.01
in effect77-3003.01. Seizure of mechanical amusement device; penalty; determination cash device complies with act; procedure; Tax Commissioner; powers and duties; mechanical amusement device decal; final decision; appeal; retail establishment; limits on devices; annual decal fee; device appearance and advertising; acts prohibited.
(1)(a) The Tax Commissioner or his or her agents or employees, at the direction of the Tax Commissioner, or any peace officer of this state may seize, without a warrant, any mechanical amusement device if there is cause to believe such mechanical amusement device is not in compliance with the Mechanical Amusement Device Tax Act or any rules and regulations adopted and promulgated under the act or if the department determines the response to a request for information is materially deficient without good cause. In addition to seizure, any person placing in service or operating a cash device constituting an illegal game of chance or an unlicensed cash device of any kind within this state shall be subject to a penalty of up to one thousand dollars for each day of such operation. The Tax Commissioner has the authority to suspend or revoke the license of any operator, manufacturer, or distributor of a cash device that is in violation of this section.
(b) For purposes of this subsection, a mechanical amusement device is subject to seizure and penalties as if it were a game of chance if:
(i) The mechanical amusement device is a cash device; and
(ii) The mechanical amusement device does not bear an unexpired decal as required under the Mechanical Amusement Device Tax Act.
(c) This section does not apply to any device (i) used in any bingo, lottery by the sale of pickle cards, or other lottery, raffle, or gift enterprise conducted in accordance with the Nebraska Bingo Act, Nebraska County and City Lottery Act, Nebraska Lottery and Raffle Act, Nebraska Pickle Card Lottery Act, Nebraska Small Lottery and Raffle Act, State Lottery Act, or section 9-701, (ii) used for a prize contest as defined in section 28-1101, (iii) specifically authorized by the laws of this state, or (iv) regulated under the Nebraska Racetrack Gaming Act.
(2) To receive a determination from the department that a cash device is in compliance with the Mechanical Amusement Device Tax Act and any rules and regulations adopted and promulgated under the act, a manufacturer or distributor of the device shall:
(a) Submit an application to the Tax Commissioner containing information regarding the device's location, software, Internet connectivity, and configuration as may be required by the Tax Commissioner;
(b)(i) Submit an application fee as provided in subdivision (b)(ii) of this subsection.
(ii) The application fee shall be:
(A) Five hundred dollars prior to January 1, 2027; and
(B) Six hundred fifty dollars beginning January 1, 2027;
(c) Provide a specimen of the proposed cash device;
(d) Provide all supporting evidence, including a report by an independent testing laboratory certified by the Tax Commissioner, to the Tax Commissioner indicating that, under all configurations, settings, and modes of operation, operation of the cash device constitutes a game of skill and not a game of chance and the use, operation, sale, or manufacture of the cash device would not constitute a violation of section 28-1107; and
(e) Provide an affidavit from the manufacturer or distributor affirming that no functional changes in hardware or software will be made to the approved cash device without further approval from the Tax Commissioner.
(3) The Tax Commissioner shall issue a response in writing to the applicant within forty-five days after the applicant has completed and submitted all application requirements. The Tax Commissioner's response shall state the reason for any denial or the reasons a determination cannot be made.
(4)(a) A cash device shall not be considered a game of skill if one or more of the following apply:
(i) The ability of any player to succeed at the game played on the cash device is impacted by the number or ratio of prior wins to prior losses of players playing such cash device;
(ii) The ability of the player to succeed at the game played on the cash device is impacted by the ability of any person to set a specified win-loss ratio for the cash device or by the cash device having a predetermined win-loss percentage;
(iii) The outcome of the game played on the cash device can be controlled by a source other than any player playing the cash device;
(iv) The success of any player is or may be determined by a chance event which cannot be altered by player action;
(v) There is no possibility for the player to win every game played on the cash device or there are unwinnable games or game modes on the cash device;
(vi) The ability of any player to succeed at the game played on the cash device requires the exercise of skill that no reasonable player could exercise; or
(vii) The primary determination of the prize amount is determined by the presentation or generation of a particular puzzle or group of symbols dealt to the player and the player does not have control over the puzzle or group of symbols presented.
(b) For purposes of this subsection, reasonable player means a player with an average level of intelligence, physical and mental skills, reaction time, and dexterity.
(5) The department or any court considering whether a gambling device is a game of skill may consider:
(a) The results of an analysis by the independent testing laboratory certified by the Tax Commissioner to evaluate the reaction time required for a player of a particular game on such cash device to perform the tasks required by the game to win; or
(b) The results of an analysis by the independent testing laboratory certified by the Tax Commissioner to evaluate factors set forth by the Tax Commissioner, other than reaction time, required for the player of a particular game on such cash device to perform the tasks required by the game to win.
(6) Factors which are not sufficient indications of a skill-based game include, but are not limited to:
(a) Whether a comprehensive list of prizes or outcomes is offered to the player or whether all outcomes are drawn from a finite pool of predetermined outcomes or starting positions;
(b) Whether a player can increase his or her chance of winning based on knowledge of probabilities in general or the probabilities of any particular prize or outcome in a game or on a cash device;
(c) Whether a player can simply choose not to play before committing money or credits; or
(d) A game task consisting solely of moving a symbol up or down, replacing one symbol with another, or any similar action, with or without a timer.
(7) Upon approval of an application based on a determination that the mechanical amusement device is a game of skill and not a game of chance, the Tax Commissioner shall issue a mechanical amusement device decal for the device as configured and as provided in subsection (8) of this section. No mechanical amusement device decal shall be issued for any cash device unless the department has determined that (a) such cash device is a game of skill and not a game of chance and the manufacture, sale, transport, placement, possession, or operation of such cash device does not constitute a violation of section 28-1107 and (b) the appearance of such cash device does not violate subsection (9) of this section. If the Tax Commissioner does not approve the application for the cash device, the application shall be denied and the operator shall have the opportunity for an administrative hearing before the Tax Commissioner at which evidence may be presented on the issue of whether the cash device is specifically authorized by law and is not a gambling device as defined in section 28-1101. After such hearing, the Tax Commissioner shall enter a final decision approving or denying the application. The Tax Commissioner's final decision may be appealed, and the appeal shall be in accordance with the Administrative Procedure Act.
(8)(a) Upon approval of a specimen of a cash device as a game of skill under this section, the department may issue a mechanical amusement device decal for each such cash device:
(i) If certified by the manufacturer to be functionally identical in both hardware and software configurations to the specimen provided to the department; and
(ii) If the application fee described in subdivision (2)(b) of this section and the annual decal fee described in subdivision (c) of this subsection have been paid.
(b)(i) In order for a distributor or operator of a cash device to place a cash device into operation at a retail establishment, other than a retail establishment owned or operated by a fraternal benefit society organized and licensed under sections 44-1072 to 44-10,109 or a recognized veterans organization as defined in section 80-401.01, such retail establishment shall generate at least sixty percent of the gross operating revenue of such retail establishment from sources other than the total gross operating revenue of any cash devices located within the retail establishment.
(ii) The number of cash devices permitted at any retail establishment shall not exceed the lesser of either:
(A) Except for a fraternal benefit society organized and licensed under sections 44-1072 to 44-10,109 or a recognized veterans organization as defined in section 80-401.01, the number of cash devices it takes to generate forty percent of the gross operating revenue of the retail establishment; or
(B) Five cash devices or four cash devices for an establishment located in a qualified census tract, except that an establishment with over four thousand square feet may have one cash device for each one thousand square feet, up to a maximum of fifteen cash devices.
(c)(i) The distributor or operator of a cash device shall pay an annual decal fee as provided in subdivision (c)(ii) of this subsection to the department. The decal issued under this section shall be distinct from other decals issued by the department for mechanical amusement devices that are not required to be evaluated under this section. Regardless of the issuance of a decal by the department, no cash device shall be considered in compliance if it does not bear an unexpired decal in a conspicuous place.
(ii) For each cash device in operation in Nebraska the annual decal fee shall be:
(A) Two hundred fifty dollars prior to January 1, 2027; and
(B) Three hundred fifty dollars beginning January 1, 2027.
(d)(i) A decal issued under this subsection shall be replaced by the department without the payment of an additional fee under the following circumstances:
(A) If the decal is damaged through no fault of the distributor or operator; or
(B) If the cabinet on the cash device is destroyed beyond repair through no fault of the distributor or operator.
(ii) A replacement decal is not required (A) if the internal components of the cash device require replacement due to failure or damage and the replacement of such components does not change the approved cash device software currently on the device or (B) when cash device software is updated to improve security or resolve issues or defects.
(iii) Any replacement decal will be valid for the same time period as the decal that was first issued.
(9)(a) An operator, distributor, or manufacturer of a cash device shall not market, advertise, promote, or make available any cash device in this state if the device or its container, packaging, or advertising materials:
(i) Depict a cartoon-like or fictional character primarily used to appeal to minors; or
(ii) Imitate or mimic the trademark, trade dress, branding, or packaging of products primarily marketed to minors.
(b)(i) No person shall place or permit exterior advertising for a cash device on or about any premises where such device is located except as provided in this section.
(ii) Each premises where a cash device is located may display not more than three exterior signs advertising the availability of a cash device available for play at such location. Any such sign shall:
(A) Not exceed eleven inches in height and seventeen inches in width; and
(B) Be permanently affixed to the exterior of the building that contains a cash device.
(iii) No exterior banner, flag, window wraps, digital display, vehicle wrap, or other exterior advertising media shall be used to advertise a cash device other than the signs permitted pursuant to subdivision (9)(b)(ii) of this section.
(10) The application process described in this section shall not be construed to limit further investigation by the department or the issuance of further regulations to promote compliance after the application process is completed. At any point after a determination of skill by the department, the department may request from the manufacturer, distributor, or operator information about any cash device in operation in this state, including, but not limited to, information regarding currently operable source code, changes to software or hardware, and communications from or to the device over the Internet. A manufacturer, distributor, or operator that receives a request shall respond with all responsive information in its possession or control within fifteen business days.
(11) If a manufacturer or distributor receives a determination from the department that a cash device is not in compliance with the Mechanical Amusement Device Tax Act, such manufacturer or distributor shall have thirty days after the issuance of that determination to (a) provide proof of correction and compliance or (b) remove any such cash device from operation in Nebraska.
(12) Application fees collected under subsection (2) of this section and annual decal fees collected under subsection (8) of this section shall be remitted to the State Treasurer for credit to the Department of Revenue Enforcement Fund.
Laws 2019, LB538, § 3; Laws 2024, LB685, § 8; Laws 2026, LB901, § 30. Operative Date: July 18, 2026
Source: Nebraska Legislature (nebraskalegislature.gov)URL: https://nebraskalegislature.gov/laws/statutes.php?statute=77-3003.01Fetched: 10/20/2026