The legality of electronic amusement devices that offer cash payouts was discussed at last week’s Hall County Board of Supervisors meeting. At question is whether the gaming devices found in area bars, convenience stores, and restaurants meet the test for games of skill, which are legal in Nebraska.
State law prohibits games of chance in which a player must pay to play for the chance of winning money, with the exception of the Nebraska Lottery and keno. However, gaps in state gaming laws have potentially opened the door to unregulated gaming devices.
The conventional wisdom says that if a game in which people can win or lose money has an element of skill in determining the outcome, it must be legal. This precept will be challenged with the passage of Sen. Steve Lathrop’s bill, LB538, which added electronic games of skill to the definition of a mechanical amusement device. It is estimated that more than 4,200 of the touch screen devices are in service across the state.
The new law, which passed on a 44-0 vote, puts the state Department of Revenue in charge of adopting regulations and enforcement.
Under the new regulations, device distributors will pay a $500 application fee, submit a sample game to the department, provide evidence that the device is a game of skill and provide an affidavit to the tax commissioner that no functional changes will be made to the device’s hardware or software without the commissioner’s approval after the license is granted. The tax commissioner will make final determination of whether the games are legal.
Establishments must pay an annual $250 licensure fee per device and comply with the maximum number of devices per establishment as determined by the state. The law sets 19 as the legal age to play devices and prohibits use of credit or debit cards for payment.
The law becomes effective Jan. 1, 2020.
The touch screen games have been compared to keno, a legal game that requires no skill to play. Keno and the Nebraska Lottery are both games of chance sanctioned by the state that generate proceeds that help fund beneficial efforts such as the Nebraska State Fair and city and county government interests.
In Hall County, keno monies collected by the county must be used for charitable purposes or to provide property tax relief. For the 2018-19 budget year, the county applied $340,000 of keno funds toward general tax relief. In addition, $50,000 was granted to the Salvation Army, Crisis Center, Clean Community System, Cairo QuickLibrary, Veterans Park, Senior Citizens Day Care, Wellness Center/Homeless Shelter Response Team, and Wood River assistance. An additional $40,000 in keno proceeds were used in the form of one-time donations.
The county budget lowered the estimate for keno proceeds to just $270,000 for the current fiscal year. The popular, unregulated touch screen devices stand as competition for keno and the profits generated from them are currently retained by the distributors and proprietors of the devices. Is it a coincidence that keno revenues are declining at the same time as the proliferation of the computerized gaming machines?
Next year will be an interesting year for Nebraska, with the new regulations going into effect for the touch screen devices and a new expanded gaming measure facing voters in the fall.