LINCOLN, Neb. (KOLN) – Skilled gaming kiosks, slot machine-style devices that have been popping up in gas stations and bars, are now subject to taxation under Nebraska law.
For years, the industry operated without oversight or taxation. That changed following the 2024 legislative session. As of July 1, operators and distributors must pay a 5% tax on revenue generated by the machines. The Nebraska Lottery and Charitable Gaming Division is now responsible for regulating the industry.
According to the Nebraska Lottery, each device brings in about $30 per day after payouts.
“Over the course of the year, you know with 6,000 devices, that’s about $65, $66 million in net operating revenue. (With) the 5% tax applied to that, right now it’s about $3.5 million,” said Brian Rockey with the Nebraska Lottery and Charitable Gaming Division.
The tax revenue will be distributed as follows:
- 20% to the Nebraska Lottery Charitable Gaming Division
- 2.5% to the Compulsive Gamblers Assistance Fund
- 2.5% to the state’s general fund
- 10% to the Nebraska Tourism Commission
- 40% for property tax relief
- 25% to county treasurers
All machines must be connected to a central server, managed by the Nebraska Lottery, to monitor money wagered and paid out. Machines not yet connected may not operate legally.
“Licensees, the operators, distributors understand that they’re responsible for the tax, which started July 1,” Rockey said. “Even if their device isn’t connected right away, they’re still responsible for monitoring that tax based off of their net operating revenue.”
Starting in 2027, winners of $1,200 or more will be required to complete a 1099 tax form. Any back taxes or unpaid child support will be deducted directly from their winnings.
More information on the law’s impact is expected in October, when the state reveals how much was collected during the first quarter.
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