May a Nebraska keno lottery stop printing pay tickets, and what does the Department require to authorize it?

Plain-English summary

This is a gaming-operations ruling, not a tax ruling. It answers whether a Nebraska keno lottery can stop printing "pay tickets."

The setup -- two kinds of tickets:

• The outside ticket is the computer-generated ticket the player receives showing the game number, date, wager amount, chosen numbers, and sequence number. This is the statutory "paper ticket" and it keeps being printed.
• The pay ticket is a separate printed receipt the keno system produces when a winner presents a winning outside ticket for payment; it's attached to the outside ticket and retained by the sponsor.

The conclusion: there is no statutory requirement to print a pay ticket, so the Department may authorize a county, city, village, lottery operator, or sales outlet to discontinue printing them. The paper-ticket requirement in Neb. Rev. Stat. § 9-607(1)(c)(ii) refers to the outside (wager) ticket, which continues to be printed -- so eliminating the pay ticket doesn't violate the statute.

What it takes to get approval:

1. Submit a written request to the Department before discontinuing pay-ticket printing.
2. The request must describe an alternative method for documenting the payment of winnings authorized by the keno system, and for the verification of the winning ticket and its authorization by keno management, if required.
3. The player's original outside ticket must still be presented for payment.
4. If the request comes from a lottery operator or sales outlet, it must include the written concurrence of the sponsoring county, city, or village.

What this means for you

Keno sponsors, lottery operators, and sales outlets

Going paperless on pay tickets is allowed, but only after the Department approves your written request describing how you'll otherwise document winning-payment authorization and manager verification. Keep printing the outside (wager) ticket and keep requiring players to present the original outside ticket to collect. If you're an operator or outlet rather than the government sponsor, get the sponsor's written concurrence into the request.

Common questions

Q: Can a keno lottery stop printing pay tickets?
A: Yes, if the Department authorizes it in response to a written request that includes an acceptable alternative documentation method.

Q: Does this let us stop printing the player's ticket too?
A: No. The outside (wager) ticket -- the statutory paper ticket under Neb. Rev. Stat. § 9-607(1)(c)(ii) -- must still be printed, and the player must present the original to be paid.

Q: What has to be in the request?
A: A description of an alternative method for documenting the payment of winnings authorized by the keno system, and for verifying the winning ticket and its authorization by keno management if required.

Q: We're a sales outlet, not the city -- can we apply on our own?
A: A lottery operator's or sales outlet's request must have the written concurrence of the sponsoring county, city, or village.

Citations and references

• Neb. Rev. Stat. § 9-607(1) (Nebraska County and City Lottery Act) -- defines keno and the paper-ticket requirement; subsection (1)(c)(ii)'s paper-ticket requirement refers to the outside (wager) ticket, which is still printed.
• Records Retention Schedule 59 -- governs retention of keno tickets and net-winning-ticket copies (referenced for how pay/outside tickets are retained).

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/rr351001.pdf

Original ruling text

Revenue Ruling 35-10-1
County/City Lottery (Keno)

March 2, 2010
ELIMINATION OF PRINTED PAY TICKETS
Issue:
Is it permissible for a county, city, village, lottery operator, or sales outlet location to eliminate the printing of
pay tickets in a keno lottery?
Conclusion:
The Nebraska Department of Revenue (Department) may authorize a county, city, village, lottery operator, or
sales outlet location to discontinue the printing of pay tickets. Prior to a county, city, village, lottery operator, or
sales outlet location discontinuing the printing of pay tickets, a written request for authorization must be submitted
to the Department. The request must include a description of an alternative method for the documentation of the
payment of winnings authorized by the keno system, and the verification of the winning ticket and its subsequent
authorization by keno management, if required. The original outside ticket issued to the player must still be
presented for payment. A request to discontinue the printing of pay tickets submitted by a lottery operator or
sales outlet location must have the written concurrence of the sponsoring county, city, or village.
Definitions:
Inside Ticket. The ticket completed by the player and given to the keno writer in order to make a wager.
Keno Runner. A licensed lottery worker, other than a keno writer on duty, who accepts an inside ticket and
payment of wager from a player, transports this ticket and wager to a keno writer station to place the wager, and
returns to the player the resulting outside ticket.
Keno Writer. A licensed lottery worker who accepts inside tickets or verbal requests for wagers and payments
of wagers from players or from keno runners, issues outside tickets, voids tickets, and redeems winning tickets.
Outside Ticket. The computer-generated ticket which contains the game number, date, dollar amount of wager,
the numbers chosen by the player, ticket sequence number, writer station number, etc.
Transaction Log. A record of all transactions entered on the keno system. The transaction log includes, but is
not limited to, all outside ticket information, ticket processing, voided tickets, game closing time, game results,
payout, and all other information required by Department regulations to be entered on the transaction log.
Analysis:
Current Statutory and Regulatory Requirements
Neb. Rev. Stat. § 9-607(1) of the Nebraska County and City Lottery Act defines lottery and the types of lotteries
which are authorized under the Act. Subsection (1)(c)(ii) defines keno as follows:
(ii) by use of a game known as keno in which a player selects up to twenty numbers from a total of eighty
numbers on a paper ticket and a computer, other electronic selection device, or electrically operated
blower machine which is not player-activated randomly selects up to twenty numbers from the same
pool of eighty numbers and the winning players are determined by the correct matching of the numbers
on the paper ticket selected by the players with the numbers randomly selected by the computer, other
electronic selection device, or electrically operated blower machine, except that no keno game shall
permit or require player access or activation of lottery equipment and the random selection of numbers
by the computer, other electronic selection device, or electrically operated blower machine shall not
occur within five minutes of the completion of the previous selection of random numbers; and (d) the
holders of the winning paper tickets are to receive cash or prizes redeemable for cash. Selection of a
winner or winners shall be predicated solely on chance. [emphasis added]

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 35-10-1

March 2, 2010

Page 2 of 3

There is no statutory requirement regarding the printing of pay tickets. The statutory requirement for a paper
ticket in § 9-607(1) would not be compromised if the Department authorized a county, city, village, lottery
operator, or sales outlet location to discontinue the printing of a paper pay ticket as evidence of the payment
of a winning ticket. The paper ticket requirement in § 9-607(1)(c)(ii) relates to the computer-generated ticket
which represents the player’s wager (outside ticket) and it would continue to be printed. Currently, a pay ticket
is printed by the keno system when a player presents his or her winning outside ticket for payment. The printed
pay ticket is attached to the player’s outside ticket and is retained by the sponsoring county, city, or village in
accordance with Records Retention Schedule 59:
59-11 OUTSIDE COPIES OF NET WINNING TICKETS OF $1,500.00 OR MORE WITH PAY
TICKETS AND INSIDE TICKETS
An outside ticket is the computer-generated ticket which contains the game number, date, dollar amount
of wager, the numbers chosen by the player, ticket sequence number, writer station number, etc. An inside
ticket is the ticket completed by the player and given to the keno writer in order to make a wager.
INSIDE TICKETS: May be disposed of at discretion of sponsoring County, City or Village.
OUTSIDE COPIES OF NET WINNING TICKETS OF $1,500.00 OR MORE WITH PAY
TICKETS: Dispose of after 3 years, provided audit has been completed.
The Nebraska County and City Lottery Regulations contain several references to pay tickets:
• 35-613.06C All payments of winnings shall be supported by the outside ticket and a pay ticket generated
by the keno system.
• 35-613.06D A manual report or exception log shall be maintained documenting any winnings paid on
outside tickets which were not authorized by the keno system and are not supported by a pay ticket
generated by the system.
• 35-613.06E Winning outside tickets of $500.00 and over require the keno manager to approve the
payout by entering the appropriate authorization into the keno system.
613.06E(1) In conjunction with the required keno system approval, wins of $500.00 to $2,999.99 require
the signature of the keno manager on the pay ticket.
• 35-613.06G Winning tickets of $3,000.00 or more require approval of the lottery operator or a
keno manager evidenced by his or her signature on the pay ticket to document performance of
the following:
613.06G(1) In the case of a ball draw method of winning number selection, review of the videotape
or digital recording of rabbit ears or receptacle to verify the legitimacy of the draw and the accuracy
of the draw ticket;
613.06G(2) Comparison of the winning outside ticket to the transaction log or proof of win generated
by the keno system; and
613.06G(3) Regrading of the outside ticket using the payout schedule and draw information.
• 35-619.01E If a county, city, village, or lottery operator desires to use keno runners, the county, city, or
village is to approve the use of keno runners as proposed and submit a written request from the county,
city, village, or lottery operator detailing the circumstances under which the keno runners will be used
for the Department’s approval, subject to the following conditions:
619.01E(1) Any keno runner’s activity must be limited to the structural premises where the keno
game is licensed to be conducted.
619.01E(2) If a keno runner functions only as a courier to transport wagers, tickets, and prize payouts,
such runner must obtain the signature of the winning player on any pay ticket acknowledging receipt
of his or her winnings. Such signed pay ticket is to be turned in by the keno runner and attached to

Revenue Ruling 35-10-1

March 2, 2010

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the outside ticket in the same manner as all other pay tickets. The Department may authorize other
methods for receipting payment of winners by keno runners upon written request from a county,
city, village, or lottery operator.
619.01E(3) If the keno runner functions as a keno writer and is authorized to write, void, and pay
tickets, such individual shall comply with all winner verification procedures prescribed in Reg-35613.06 and keno check out standards prescribed in Reg-35-615.
619.01E(4) The location must post rules for wagers placed with keno runners which include a
statement limiting management’s liability with respect to game closings. This is necessary since the
runner cannot always guarantee that the wager will be made on the game number requested by the
player. In the alternative, a game board or video display with a countdown feature posted in each
area serviced by keno runners would notify the players of the amount of time remaining before
game closing to minimize this occurrence.
619.01E(5) A licensed lottery operator for a county, city, or village approved for the use of keno
runners may allow such individuals to make change, pay winning tickets, and such other tasks as
are appropriate for a keno writer.
619.01E(6) Any individual who is designated as a keno runner must be licensed as a lottery worker
and perform all tasks appropriate to the duties the runner is assigned.
Regulation 35-613.07D(3) states:
All ticket processing, game results, pay information, and any other information required by these
regulations to be entered on the transaction log may be kept on paper or on digital, electronic, magnetic,
optical or any other recording medium approved by the county, city, or village and the Department,
so long as the transaction log remains capable of being reviewed and printed. The default method of
recording the transaction log shall be to print the log on paper concurrently with each transaction. If
the county, city, or village approves a method of recording the transaction log other than concurrent
printing, such approval with the specifications of the proposed record keeping system shall be provided
to the Department for approval prior to discontinuing concurrent printing of the transaction log.
Those specifications shall include a plan for making the transaction log available for keno compliance
procedures. The transaction log shall be retained for a minimum of three years and be secured in an area
other than the location where the keno game is conducted.
The purpose for which pay tickets are printed, namely, documenting that the payment of winnings was proper, is
satisfied by other keno system functions, including recording of all keno tickets, wins, and payment of winnings
on the transaction log.
APPROVED:

Douglas A. Ewald
Tax Commissioner
March 2, 2010