Cash amusement device, co-branded alcohol regulations approved

Senators passed a bill April 11 to regulate mechanical amusement devices and co-branded alcohol in Nebraska.

LB685, introduced by Kearney Sen. John Lowe, imposes a 5% annual tax on the net operating revenue of each mechanical amusement device in the state. Such devices are cash video machines that are used for games and contests and are considered games of skill. Fraternal organizations are exempt from the annual revenue tax.

Revenue generated from the tax will be distributed as follows:
• 40% to the Property Tax Credit Cash Fund;
• 10% to the Nebraska Tourism Commission Promotional Cash Fund;
• 2.5% to the state General Fund;
• 2.5% to the Compulsive Gamblers Assistance Fund; and
• 20% to the Charitable Gaming Operations Fund to carry out the bill’s provisions.

The remaining 25% of tax revenue will be split between the cities and counties where mechanical amusement devices are located.

Beginning Jan. 1, 2025, the bill also requires an annual licensing fee of $5,000 for manufacturers of mechanical amusement devices and $100 per device, up to $5,000, for distributors.

In addition, a retail establishment offering cash amusement devices is required to generate at least 60% of their gross operating revenue from other sources under the bill. The state tax commissioner is responsible for establishing a central server to receive accurate revenue and income reporting from cash devices across the state. Once the server is operational, each cash amusement device must be connected to it at all times.

The bill also includes provisions of LB836, introduced by Lowe, which prohibit co-branded alcoholic beverages from being sold immediately adjacent to any non-alcoholic food or drink portraying cartoons or “youth-oriented images.” The bill defines a co-branded alcoholic beverage as one that contains the same or similar brand name, logo or packaging as a non-alcoholic beverage.

Businesses with less than 2,500 square feet of retail space are exempt from the provision but must display a clearly visible sign stating that the co-branded beverage contains alcohol and can be purchased only by persons who are 21 years of age or older.

LB685 passed on a 46-0 vote.