NE Code § 77-3003.01 (2021)
2021 Nebraska Revised Statutes|Chapter 77 - Revenue and Taxation|77-3003.01 - 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.

77-3003.01.  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.(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 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 a game of chance within this state shall be subject to a penalty of one thousand dollars for each day of such operation.(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, or (iii) specifically authorized by the laws of this state.(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) Submit an application fee of five hundred dollars;(c) Provide a specimen of the proposed device;(d) Provide all supporting evidence, including a report by an independent testing authority preapproved by the Tax Commissioner, to the Tax Commissioner indicating that, under all configurations, settings, and modes of operation, operation of the device constitutes a game of skill and not a game of chance and the use, operation, sale, or manufacture of the device would not constitute a violation of section 28-1107; and(e) Provide an affidavit from the distributor affirming that no functional changes in hardware or software will be made to the approved 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 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 device is impacted by the number or ratio of prior wins to prior losses of players playing such device;(ii) The ability of the player to succeed at the game played on the device is impacted by the ability of any person to set a specified win-loss ratio for the device or by the device having a predetermined win-loss percentage;(iii) The outcome of the game played on the device can be controlled by a source other than any player playing the 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 device or there are unwinnable games or game modes on the device;(vi) The ability of any player to succeed at the game played on the 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 any independent testing authority preapproved by the Tax Commissioner to evaluate the reaction time required for a player of a particular game on such device to perform the tasks required by the game to win; or(b) The results of an analysis by any independent testing authority preapproved 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 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 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 such device is a game of skill and not a game of chance and that the manufacture, sale, transport, placement, possession, or operation of such device does not constitute a violation of section 28-1107. If the Tax Commissioner does not approve the application for the 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 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 mechanical amusement device as a game of skill under this section, the department may issue a mechanical amusement device decal for each such 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) An owner or operator of a retail establishment shall operate no more than four cash devices, 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) The owner or operator of a cash device shall pay an annual decal fee of two hundred fifty dollars to the department for each device in operation in Nebraska. 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 device shall be considered in compliance if it does not bear an unexpired decal in a conspicuous place.(9) 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 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.(10)(a) Before any rules and regulations adopted and promulgated to carry out this section become effective, any manufacturer, distributor, or owner may continue to manufacture, sell, transport, place, possess, or enter into a transaction involving (i) cash devices already in operation at an establishment as of May 1, 2019, or (ii) other cash devices that are functionally identical to those already in operation at an establishment as of May 1, 2019.(b) After any rules and regulations adopted and promulgated to carry out this section become effective, until any determination of compliance or noncompliance by the department, any manufacturer, distributor, or owner may continue to manufacture, sell, transport, place, possess, or enter into a transaction involving cash devices described in subdivision (10)(a) of this section if, within ninety days after the date when any such rules and regulations become effective, the manufacturer or distributor files an application with the department for such a determination.(c) If a manufacturer or distributor receives a determination from the department that a device described in subdivision (10)(a) of this section 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 remove any such device from operation in Nebraska.(11) 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.Source Laws 2019, LB538, § 3. Cross References   Administrative Procedure Act, see section 84-920.  Nebraska Bingo Act, see section 9-201.  Nebraska County and City Lottery Act, see section 9-601.  Nebraska Lottery and Raffle Act, see section 9-401.  Nebraska Pickle Card Lottery Act, see section 9-301.  Nebraska Small Lottery and Raffle Act, see section 9-501.  State Lottery Act, see section 9-801.