The popularity of skill games in Nebraska spiked after a 2019 ruling by the state legislature. The ruling stated that skill games were not a form of gambling as the outcomes in each game were determined by skill, not solely chance.
This was a monumental shift in the trajectory of the skill gaming industry in the state, as these games had been previously operated within a gray area of the state’s gaming legislation.
A Definitive Answer
Prior to the state’s 2019 ruling that explicitly declared skill gaming to be a non-gambling activity, the terminals and the games provided were unused. The terminals themselves didn’t present much of an issue, but many of the games offered at the time were in question.
Some allowed for multi-credit wagers, while others were mostly or entirely reliant on outcomes decided by chance. Because these games aren’t necessarily designed for a player to influence the outcome in a traditional sense, they are still illegal under the new policies implemented in 2019.
Businesses Take Notice
It didn’t take long for businesses in the Cornhusker state to jump onto the skill gaming wave.
The terminals gradually made their way into various retail establishments, from major chains to small mom-and-pop shop businesses. Last year, a massive spike was recorded – 1,113 skill game terminals were installed between January and October of 2023, marking a 27% growth rate across the state. Roughly 4,750 terminals were estimated to be installed across nearly 1,600 in total.
The trend was in large part driven by the significant revenue generation opportunities the terminals presented business owners. According to the Nebraska state legislature, skill gaming terminals are estimated to generate approximately $1,400 in revenue per week, or $5,600 per month (before fees and taxes).
For small businesses and machine operators, these terminals can help their storefronts reach monthly revenue goals and increase in-store purchases. Players will seek out certain games available in their area and often make purchases from businesses that offer the games they like. As a result, many businesses have begun implementing strategic skill gaming terminal placements to attract new players who have the potential to become loyal customers.
Modern-Day Skill Gaming
The current state of skill gaming is still mired in controversy, but consumer demand and protests from small business owners have breathed new life into its supporter base.
Recent proposals from Nebraska legislators have caused quite a stir.
State senator John Lowe proposed a 5% tax on all operator proceeds from skill-based games in January 2024. Manufacturers, distributors, and operators would all be charged a $5,000 annual fee as well. After an initial pushback from all three groups, Lowe was successful in getting a revised version of his proposal unanimously passed 31-0, and it will now advance to a second debate.
The revised version of the proposal reduced the annual fee from $5,000 to $100 per machine, a change that was likely made to appease smaller business owners who were concerned with the heavy-handed nature of the initial proposal.
Even with the changes, many manufacturers, distributors, and operators voiced their displeasure with the direction Senator Lowe is attempting to sway the state legislature. One of the key pillars from Lowe’s initial proposal that still stands in his revised version is the requirement for operators to generate at least 60% of their total revenue from sources aside from skill game player transactions.
For many small business owners, the production, distribution, and operation of these skill game terminals allow their respective companies to generate revenue and keep employees on their payroll. Many continue to protest against proposals such as Lowe’s because it could reduce the viability of their businesses.
On April 15, 2024, Legislative Bill 685 was approved by Governor Jim Pillen. The bill officially changed the terms of the Mechanical Amusement Device Tax Act. The new annual license fee for a cash device distributor was set to $100 per device up to a maximum of $5,000, while manufacturers face a flat $5,000 fee. The bill also requires terminal owners or operators (other than those belonging to a fraternal organization) to meet the proposed 60% non-gaming revenue requirement. The bill is scheduled to go into effect on January 1, 2025.
INAMAX’s Mission to Serve Nebraskans
INAMAX has partnered with many Nebraskan operators to help maximize the direct and indirect revenue opportunities for their businesses. Our data-driven approach allows our team members to identify inefficiencies and develop actionable strategies for our partners as they navigate their route gaming journey.
If you are interested in learning more about INAMAX or the latest updates regarding skilled gaming policies in Nebraska, please call us at 770.449.0400 ext. 700 or fill out our contact form found here.