The Wisconsin Department of Revenue has released guidance addressing the taxability of video games and amusement devices sold to those in the business of operating places of amusement (operators).
When sold to operators, Wisconsin taxes amusement devices, but exempts video games for exclusive use with amusement devices. Amusement devices include items such as pinball machines, air hockey tables, pool tables, and arcade consoles. When an operator purchases an arcade console or similar device, the seller may separately charge the operator for the video games used on the device.
When an operator purchases an amusement device and a video game for a single charge, the entire charge is taxable. When the charges are separately stated, only the charge for the amusement device is taxable.