Section 316-35-314 - EXPENSES314.01 A Class II pickle card licensee may not allow more than 30 percent of the definite profit from each pickle card unit sold as commission to the pickle card operator. The pickle card operator's commission must be deducted from the definite profit of each pickle card unit sold in determining the amount to be paid by the pickle card operator to the licensed organization. That amount must be paid by check by the operator in advance of or at the time of delivery of the pickle card unit from the organization to the operator.314.02 All licensed organizations conducting a lottery by the sale of pickle cards may not spend more than 12 percent of the definite profit from a pickle card unit to pay the allowable expenses of operating the lottery by the sale of pickle cards. Pickle card operators' commissions and unit cost are not included within the definition of allowable expenses. The following types of expenses are included within the 12 percent expense limitation:
314.02A All costs associated with the purchasing, printing, or manufacturing of any items to be used or distributed to participants in the lottery by the sale of pickle cards, such as the cost of pickle card dispensing devices and racks if used by the licensed organization and not rented to a pickle card operator for fair market value;314.02B Shipping or delivery charges incurred by the organization for delivery of pickle card units to licensed pickle card operators or any shipping or delivery costs on pickle card units received from a distributor which were not billed by the distributor as part of the unit cost;314.02C All office expenses including, but not limited to, the cost of office supplies and bookkeeping materials, sales invoices, receipt books, postage costs, copying expenses, telephone costs, office equipment, and any other related office expenses incurred which are directly related to the operation of the lottery by pickle card activity;314.02D Promotional expenses such as advertising; any federal gaming license for the organization, any pickle card dispensing device registration fee for the organization, any pickle card dispensing device repairs or maintenance paid by the organization, and any other costs incurred which are directly related to the promotion of the lottery by pickle card activity;314.02E All salaries paid to persons to operate the lottery by the sale of pickle cards, such as salaries, or wages paid to individuals involved with the operation of the pickle card activity, including bookkeepers and other office staff, utilization of funds members, sales agents, whether commissioned or salaried, officers or managers of the organization who are paid for their participation in the pickle card activity, and any other related salaries or wages;314.02F Any rental or lease expense for real or personal property used and directly related to the operation of the pickle card activity, such as office or storage space rental, office equipment rental, car rental, and pickle card dispensing device rental; and314.02G Any fee paid to any person associated with the operation of any lottery by the sale of pickle cards, such as fees to consultants, attorneys, fundraisers, and other professionals for services performed which are directly related to the organization's pickle card activities. This includes payments to an individual, firm, or corporation with whom the licensed organization contracts for services relating to the operation of the lottery by the sale of pickle cards. This also includes any commission or fee paid to a sales agent and any reasonable and necessary expense for which a sales agent is reimbursed.314.03 License fees paid by the organization to license itself, its utilization of funds member, or its sales agents and any actual fees charged for fingerprinting the organization's sales agents are not included in determining the 12-percent limitation on allowable expenses. 314.03A Pickle card operator license fees, federal wagering taxes, costs of a pickle card dispensing device, pickle card dispensing device registration fees, and other expenses incurred by a pickle card operator in connection with the sale of pickle cards are not considered allowable expenses and may not be paid or reimbursed by the licensed organization or any of its members, employees or agents.314.04 A licensed organization may not use pickle card monies to pay any fine imposed pursuant to the Nebraska Bingo Act, Nebraska Pickle Card Lottery Act, or Nebraska Lottery and Raffle Act.314.05 A Class II pickle card licensee may not pay a sales agent more than six percent of the definite profit of a pickle card unit as a commission, salary, or fee for the marketing of the pickle card unit. The six percent sales agent's limitation is included within the 12 percent overall allowable expense limitation. 314.05A For example, if a licensed organization pays its sales agent six percent of the definite profit of a pickle card unit, its remaining allowable expenses may not exceed six percent of the definite profit ( 12% - 6% = 6%). Additionally, if a licensed organization incurs other allowable expenses of seven percent, it cannot pay its sales agent more than five percent of the definite profit of a pickle card unit. Any payments to sales agents in connection with a lottery by the sale of pickle cards must be made by check, from the licensed organization's pickle card bank account and signed by the organization's utilization of funds member.314.05B A licensed organization may reimburse a sales agent for reasonable and necessary expenses incurred while performing the sales agent's duties. Such reimbursed expenses may not be included in the six percent limitation on a sales agent's commission but may be included in the 12 percent overall allowable expense limitation.314.06 To determine whether a licensed organization is within the 12 percent of definite profit allowable expense limitation when an expense cannot be directly attributed to a particular pickle card unit, such as a bookkeeper or consultant fee, the total expense should be allocated to all units sold, either based upon previous experience, or a reasonable projection of sales for the annual reporting period. Salaries and other expenses which are not entirely attributable to the pickle card activity may be allocated on the basis of the percentage of time spent on pickle card activities.314.07 The Nebraska Pickle Card Lottery Act allows a maximum of 12 percent of the definite profit per pickle card unit to pay all allowable expenses. The following formula should be used to calculate the allowable expense limitation: Definite profit x 12% = Allowable Expense Limitation
EXAMPLE:
| Gross proceeds | $3,600 |
| Less prizes | 2,600 |
| Definite profit | $1,000 |
$1,000 (Definite Profit) x .12 = $ 120 (Allowable Expense)
314.08 All allowable expenses paid by a licensed organization in connection with its lottery by the sale of pickle cards must be paid by a check drawn on the organization's pickle card bank account. Checks must be paid directly to the person, firm or corporation with whom the expense was incurred.316 Neb. Admin. Code, 35, § 314
Sections 9 - 1,104, 9 - 304, 9 - 322, 9 - 340.02, 9 - 345.03, 9 - 348 and 9 - 348.01, R.R.S. 2007 and sections 9 - 347, and 9 - 347.01, R.S. Supp., 2009. November 6, 2010