Skill games continue to proliferate in the Cornhusker State. State Sen. Tom Briese (R-Albion) says it’s past time that the state reaps a benefit.
A man plays a skill game in a Nebraska bar. Nebraska skill games remain untaxed, but a state lawmaker hopes to change that during the state’s 2023 legislative session. (Image: Omaha World-Herald)
Briese plans to introduce legislation this year to tax the controversial gaming machines that have become fixtures in convenience stores, supermarkets, bars, and restaurants. Briese wants to tax skill gaming devices the same as slot machines at the state’s newly opened commercial casinos.
Currently, skill gaming proceeds are split between the host establishment, machine manufacturer, and route distributor. Advocates of the machines say the revenue from the terminals provides critical revenue for small businesses.
Skill gaming opponents argue the devices are nothing more than cleverly designed slot machines. But the Nebraska Supreme Court had the final say back in December 2011. That’s when the state’s highest court ruled that the machines do not constitute gambling because of the element of skill involved.
Unlike a traditional slot machine, which automatically reveals the outcome of a spin and credits the player appropriately, a skill gaming machine requires the player to identify a winning spin.
The issue of skill gaming in Nebraska was heightened in 2020 when Cornhusker voters legalized commercial casinos through a statewide referendum. The ballot question amended the Nebraska Constitution to permit the state’s licensed horse racetracks to function as full-scale commercial casinos with slots, table games, and in-person sports betting.
The firms investing in transforming Nebraska’s decaying racetracks into casinos want skill gaming regulated and taxed to level the playing field.
Lance Morgan, president and CEO of Ho-Chunk, Inc., the parent entity of WarHorse Gaming that’s spending $700 million to turn three tracks into casinos, said it “galls” him that his company had to pay $15 million for three casino licenses. Businesses that wish to place skill gaming devices in their establishments can do so by paying the state less than $1,000 for up to four machines.
And unlike the slots at the temporary WarHorse Casino Lincoln facility, which share 20% of their gross gaming revenue with the state, the skill gaming devices pay a 0% state tax.
According to the Nebraska Department of Revenue (DOR), in Lancaster County, home to the Lincoln casino, there are more skill gaming machines (568) than there are slots at the WarHorse Casino (430).
The DOR says there are about 3,900 skill games operating statewide. That’s up from about 1,600 in 2018. Many small businesses ventured into skill gaming amid the pandemic to generate supplemental revenue.
Though skill gaming machines are regulated in Nebraska by the state’s DOR for fair play, Morgan believes more oversight is needed. He recently sent an employee to canvass the state to inspect how skill gaming machines are operating.
Morgan says his staffer observed a minor playing a skill game, and various ways that businesses offered players their winnings. Nebraska skill games are supposed to dispense vouchers that players redeem for cash at the host business.
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