Former Sen. Loran Schmit of Bellwood is urging state senators to turn to newly authorized mechanical amusement devices, including electronic video games, that dispense cash or other awards with cash value as a new revenue source to fund property tax relief.
"These machines are thinly disguised slot machines," Schmit said Monday.
"You will see a massive increase in those machines in Nebraska and tens of millions of dollars will be moved through those machines" as they become a new source of activity or amusement in bars and other establishments throughout the state, he said.
The legal issue in play is determining whether specific devices are a game of chance, and therefore an unauthorized new form of gambling, or whether they meet the definition of a lawful game of skill.
A bill (LB538) enacted by the 2019 Legislature would leave that judgment to the Nebraska Department of Revenue.
Rural senators should be alert to the revenue that could be raised for property tax relief if those machines would be recognized and authorized as new forms of legalized gambling and taxed accordingly, Schmit said.
"They have no idea of the amount of revenue that those machines would generate," he said.
His ballpark figure is an eventual $200 million to $300 million a year.
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Schmit, who served in the Legislature from 1969 to 1993, said he has written Gov. Pete Ricketts and state senators to urge them to consider tapping gambling revenue to fund local property tax relief.
"I operated legal video lottery machines in the state 35 years ago," Schmit wrote. Those machines were taxed at a rate of 5.4 percent, he said, with revenue divided between cities and the state.
The 1984 Legislature subsequently outlawed video lottery machines, which were later declared legal by the Nebraska Supreme Court, he said.
"It is not a question of whether we have gambling or not," Schmit said.
"It is a question of whether we will have untaxed, uncontrolled, unregulated gambling or whether Nebraska will have legal, taxed, regulated and controlled gambling.
"I have met gamblers who stopped gambling because of losses," Schmit said. "I have never met one who stopped gambling because of excessive taxes.
"Any tax placed on gambling is a completely voluntary tax," he said.