How is Nebraska's 5% gross receipts tax on MMA, boxing, and wrestling events calculated, including on sponsorship and complimentary tickets?

Plain-English summary

This ruling explains how to calculate Nebraska's 5% gross receipts tax on combat-sports events -- MMA, boxing, and wrestling -- which promoters ("licensees") owe under Neb. Rev. Stat. § 81-8,135. It is issued by the State Athletic Commissioner and published in the Department of Revenue's revenue-rulings series. This is a narrow, event-specific tax, not Nebraska's general sales tax.

The base for regular tickets: total gross receipts equal the cumulative face value of all tickets collected at the event, minus state and federal taxes. Multiply by 5%. (Example from the ruling: 100 tickets collected worth $1,000 total → $50 of tax.)

Sponsorship/advertising packages are the tricky part:

• If a sponsor pays for advertising but receives no tickets, no 5% tax is owed on that payment (Example 2: a $500 ad buy with no tickets → no tax).
• If the package includes tickets ("sponsorship tickets"), the 5% applies to the entire package price -- unless the licensee can demonstrate, to the Commissioner's satisfaction, the tickets' "collective value," in which case the tax applies only to that value. The face value of sponsorship tickets is not what controls.
• Collective value = the number of sponsorship tickets × the highest face value of any non-sponsorship ticket in the same section. (Example 4: 10 sponsorship tickets split between a $20 section and a $10 section → collective value $150 → $7.50 of tax, instead of 5% of the full $1,000 package.)

Ticket rules that go with the tax:

• Complimentary tickets (stamped "complimentary"/"free" or $0.00 face value) must not exceed 5% of the event's seating capacity; tickets for media, Commission representatives, and necessary officials/staff don't count toward that cap. Licensees may not sell, direct the sale of, or share in revenue from any complimentary ticket.
• Every ticket (except complimentary ones and media/official passes) must have a face value of at least $1, and licensees may not sell any ticket -- or direct its sale, or otherwise take revenue from it -- for an amount other than its face value.
• Licensees must disclose in writing the amount received for any sponsorship/advertising package that includes tickets, and on request provide signed contracts and a notarized copy of any payment check. Sponsorship tickets may not be resold.

What this means for you

Promoters and licensees running MMA, boxing, or wrestling events in Nebraska

Budget for 5% of your ticket gross receipts (net of state/federal taxes). If you sell advertising/sponsorship packages that bundle in tickets, the safest assumption is that the whole package price is taxed at 5% -- unless you document the tickets' collective value to the Commissioner, which can substantially lower the tax. Keep clean records: written disclosure of package amounts, signed contracts, and notarized copies of checks are expected. Watch the ticketing rules too -- the 5%-of-capacity cap on complimentary tickets, the $1 minimum face value, and the ban on selling tickets above or below face value.

Sponsors

If your advertising payment comes with event tickets, understand it may increase the promoter's tax (and, indirectly, your package terms). A pure advertising buy with no tickets isn't part of the 5% base.

Common questions

Q: What is taxed at 5%?
A: The cumulative face value of all tickets collected at the event (minus state and federal taxes), plus -- for sponsorship/advertising packages that include tickets -- generally the entire package price, unless the licensee proves the tickets' collective value.

Q: How can a promoter reduce the tax on a sponsorship package?
A: By demonstrating the sponsorship tickets' "collective value" to the Commissioner (number of tickets × the highest non-sponsorship face value in the same section). The 5% then applies only to that collective value rather than the whole package.

Q: Are complimentary tickets taxed, and are there limits?
A: Complimentary tickets can't exceed 5% of seating capacity (media/official passes don't count toward the cap), and licensees can't derive revenue from them. The ruling doesn't tax $0.00 complimentary tickets, but every other ticket must be at least $1 and sold only at face value.

Q: Is this the same as Nebraska sales tax?
A: No. This is a separate 5% gross receipts tax on combat-sports events administered by the State Athletic Commissioner under Neb. Rev. Stat. § 81-8,135, distinct from the general state sales and use tax.

Citations and references

• Neb. Rev. Stat. § 81-8,135 -- imposes the 5% gross receipts tax on MMA, boxing, and wrestling matches.
• Neb. Rev. Stat. § 81-8,136 -- gives the Commissioner control and supervision over ticket sales and the issuing of complimentary tickets.
• Neb. Rev. Stat. § 81-8,139 -- gives the Commissioner authority to issue regulations to administer and enforce the applicable statutes.

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/ath_com_2011-1.pdf

Original ruling text

Athletic Commission Ruling 2011-1
August 19, 2011
DETERMINING THE 5% GROSS RECEIPTS TAX
Issue:
How is the 5% gross receipts tax, required under Neb. Rev. Stat. § 81-8,135 for mixed martial
arts (MMA), boxing, and wrestling matches or exhibitions, calculated?
Conclusion:
The 5% gross receipts tax applies to the cumulative face value of all tickets collected at an
event, except for sponsorship tickets, minus state and federal taxes. The 5% tax will also be
applied to the entire amount paid for any sponsorship or advertising package that includes
sponsorship tickets, unless the licensee can demonstrate, to the satisfaction of the State Athletic
Commissioner (Commissioner), the collective value of all sponsorship tickets, in which case
the tax will be applied only to the collective value.
In addition, the number of complimentary tickets must not exceed 5% of the seating capacity of
an event. Licensees may not sell, direct the sale of, or otherwise share in any revenue derived
from the sale of any complimentary ticket. No ticket, except for complimentary tickets, may
be sold for less than $1.
Definitions:
Collective value. Collective value means the total number of all sponsorship tickets provided
by any person or entity, multiplied by the highest face value of any non-sponsorship ticket in
the same section.
Complimentary ticket. Complimentary ticket means any ticket or pass which is available to
the general public and which is over-stamped “complimentary” or “free,” or where the face
value is indicated as $0.00. A complimentary ticket does not include any “sponsorship ticket.”
Tickets or passes issued to the media, representatives of the Commissioner, or other necessary
officials or event staff are not complimentary tickets.
Event. Event means an MMA, boxing, or wrestling match.
Sponsorship ticket. Sponsorship ticket means any ticket or pass provided as part of a
sponsorship or advertising package.
Sponsorship or advertising package. Sponsorship or advertising package means a transaction
where a person or entity makes a payment to a licensee in return for placing advertising at or
during media coverage of an event.
Analysis:
Neb. Rev. Stat. § 81-8,135 requires licensees to pay a 5% tax on the gross receipts of MMA,
boxing, and wrestling matches.
Neb. Rev. Stat. § 81-8,136 grants the Commissioner control and supervision of the sale of
tickets and the issuing of complimentary tickets.
Nebraska Athletic Commission, 1313 Farnam Street, Omaha, Nebraska 68102

Athletic Commission Ruling 2011-1

August 19, 2011

Page 2 of 3

Neb. Rev. Stat. § 81-8,139 grants the Commissioner the authority to issue regulations for the
administration and enforcement of the applicable statutory sections.
Determining Gross Receipts:
For all tickets except sponsorship tickets, total gross receipts equals the cumulative face value
of all tickets collected at an event, minus state and federal taxes.
Example 1. 100 tickets are collected at an event, none of which are sponsorship tickets.
• 20 have a face value of $5 (20 x $5 = $100);
• 30 have a face value of $10 (30 x $10 = $300); and
• 50 have a face value of $12 (50 x $12 = $600).
Result: The total gross receipts for this event is $1,000. The tax is $50 ($1,000 x .05 = $50).
The 5% tax will also be applied to the entire amount paid for any sponsorship or advertising
package that includes sponsorship tickets, minus state and federal taxes. If the licensee can
demonstrate, to the satisfaction of the Commissioner, the collective value of all sponsorship
tickets, the tax will be applied only to the collective value. The face value of sponsorship
tickets is not determinative.
Example 2. A sponsor pays a promoter $500 to advertise during an event. No tickets are
provided to the sponsor. Because no sponsorship tickets have been provided, no 5% tax is
owed on this transaction.
Example 3. A sponsor pays a promoter $1,000 to advertise at an event. As part of this
advertising package, the sponsor receives 10 tickets. These 10 tickets are sponsorship
tickets. If the promoter cannot demonstrate the collective value of all 10 tickets, the
5% tax will be applied to the entire $1,000 transaction. The 5% tax that is owed is $50
($1,000 x .05 = $50).
Example 4. A sponsor pays a promoter $1,000 to advertise at an event. As part of this
advertising package, the sponsor receives 10 tickets. These 10 tickets are sponsorship
tickets. Of these 10 tickets, five are located in Section A, and five are located in Section
B. The highest non-sponsorship ticket face value in Section A is $20, and the highest nonsponsorship ticket face value in Section B is $10. Therefore, the promoter has established
the sponsorship tickets’ collective value is $150. The 5% tax will be applied only to this
$150. The tax is $7.50 ($150 x .05 = $7.50).
Sponsorship Tickets Requirements:
Licensees must disclose to representatives of the Commissioner, in writing, the amount received
for any sponsorship or advertising package that includes sponsorship tickets, and upon request,
must provide signed copies of all contracts or agreements and a notarized copy of any check
received for payment.
Once sponsorship tickets are provided to the person or entity purchasing advertising at or
during media coverage of an event, these sponsorship tickets may not be resold. Licensees
may not resell, direct the resale of, or otherwise derive any revenue from the resale of any
sponsorship ticket.

Athletic Commission Ruling 2011-1

August 19, 2011

Page 3 of 3

Complimentary Ticket Restrictions:
The number of complimentary tickets must not exceed 5% of the seating capacity of an event.
Tickets or passes issued to the media, representatives of the Commissioner, or other necessary
officials or event staff do not count toward the 5% limitation. All complimentary tickets must
be listed on a form showing the number of complimentary tickets issued and who approved the
issuance. The completed form must be turned over to the supervising inspector with all other
required reports.
Ticket Value Restrictions:
Licensees may not sell, direct the sale of, or otherwise share in any revenue derived from the
sale of any complimentary ticket. All tickets must have a face value of at least $1, except for
complimentary tickets or tickets or passes issued to the media, representatives of Commissioner,
or other necessary officials or event staff. In addition, licensees may not:
•

Sell any ticket for an amount other than the face value;

•

Direct the sale of any ticket for an amount other than face value; or

•

Otherwise derive any revenue from the sale of any ticket sold at an amount other than
face value.

APPROVED:

James M. Haynes
Acting Athletic Commissioner
August 19, 2011