In 2011, the Nebraska Supreme Court ruled that slot-like video gambling machines, known as skill games, were legal, since they require skill to win.
At the time, traditional chance-based slot machines were illegal; they were legalized last year. Recently, the number of the so-called skill games more than doubled in the state, increasing from 1,577 in 2018 to 3,878 in November, according to Nebraska Department of Revenue data. They first appeared in bars and restaurants, but now are showing up in convenience stores, supermarkets and stand-alone casinos.
Recently, state Senator Tom Briese announced plans to introduce a bill in the legislature this year to tax skill-games revenue at 20 percent, the same rate as slot machines, with the money going toward property tax credits.
Briese told local outlet KOLN, “As a property-tax relief proponent, I see these machines as another revenue source. If they’re going to be out there, they need to be taxed.”
Lance Morgan, president and chief executive officer at Ho-Chunk Inc., operator of WarHorse Casino in Lincoln, also objects to the spread of untaxed, unregulated skill games. He said Ho-Chunk had to pay $5 million for a state casino license in order to install slot machines, but a business can install a skill machine for a $250 state sticker. In fact, Morgan noted, Lancaster County has more skill games than the WarHorse: 568 compared to 430.
One reason voters approved six casinos last year was analysts’ projection that a portion of revenue would provide $90 million to $100 million in annual property tax relief. Taxing skill games could raise an additional $20 million, according to a Ho-Chunk study.
Morgan also objects to skill games’ lack of oversight. Unlike the close inspection of slot machines at WarHorse Casino, he said he has heard reports of minors playing the skill games, among other infractions. “It’s like the Wild West out there. I don’t understand why the previous administration, which was so anti-gambling, let them proliferate. Now they can’t take them away,” Morgan said, referring to then-Governor Pete Ricketts, who opposed the casino-gambling ballot measure.
Businesses that offer skill games and charities object to taxing the machines. Jim Ritzman, owner of the Sowers Club of Lincoln, said the club makes about $75,000 a year from the dozen games it installs in Lincoln sports bars. Proceeds go toward youth activities and college scholarships, he said. “It’s like they’re going after people who give away money. Our proceeds all go back into the community. A 20 percent tax on revenue would kill us.”
Critics of skill games claim little actual skill is required to play the game, making the machines similar to slots. However, Kent Rogert, a lobbyist for a skill-game distributor, said comparing skill games to slot machines is like comparing apples to oranges. Some skill-game players are expert enough to regularly beat the machines, he said.
Skill games present another problem as well, said David Geier, director of the Nebraska Gamblers Assistance Program. He said the games are very addictive; in fact, the problem-gambling agency handles more calls for help from skill-game players than any other gamblers. Geier told KOLN, “You can play them as fast as you can put money into them.” Their explosive growth has added to the problem.
“There’s no way to take them away now,” Geier said.
