Tax on mechanical amusement devices amended, advanced

Operators of mechanical amusement devices would face an additional tax under a bill advanced from select file March 23.

LB70, introduced by Columbus Sen. Paul Schumacher, would impose the tax—10 percent of the gross revenue derived from the operation of the device—on any business operating such a device.

Schumacher said the state has seen a rapid proliferation of machines that could be considered illegal gaming machines under the Nebraska Constitution.

Mechanical amusement device, as defined in state statute, includes any machine in which a person plays a game by inserting some form of currency, a prize is paid and the results are determined by chance. Included are game and draw lotteries and coin-operated automatic musical devices. The bill does not include vending machines or pickle card dispensing machines.

Schumacher introduced an amendment, adopted 32-0, which would allow an operator of a mechanical amusement device to apply for an exemption from the tax. To receive the exemption, an operator would be required to apply to the tax commissioner for a determination that the device does not constitute illegal gaming.

The operator would have to prove by a preponderance of evidence that the device is specifically authorized by state law or does not fall within the definition of a mechanical amusement device.

If the commissioner determines that a device qualifies for the exemption, the determination would be sent to the attorney general for review. If the attorney general does not object within 30 days, the commissioner would grant the exemption.

If a device is declared ineligible for the exemption, the operator could request a hearing before the commissioner. The outcome of the hearing would be final, although the decision could be appealed under the state’s Administrative Procedure Act.

Senators advanced the bill to final reading by voice vote.