1.1                          A bill for an act 
  1.2             relating to gambling; changing paddlewheel location 
  1.3             and prize requirements; allowing lawful gambling 
  1.4             organizations to pay for premises; expanding the 
  1.5             definition of lawful purpose; requiring manufacturers 
  1.6             to sell gambling supplies in certain cases; amending 
  1.7             Minnesota Statutes 1998, sections 349.12, subdivisions 
  1.8             19 and 25; 349.15, by adding a subdivision; 349.163, 
  1.9             by adding a subdivision; 349.18, subdivisions 1 and 2; 
  1.10            349.211, subdivision 4; and 349.213, subdivision 1. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 1998, section 349.12, 
  1.13  subdivision 19, is amended to read: 
  1.14     Subd. 19.  [GAMBLING MANAGER.] "Gambling manager" means a 
  1.15  person who has been designated by the organization to supervise 
  1.16  the lawful gambling conducted by it and who: 
  1.17     (1) has been an active member of the organization for at 
  1.18  least two years and has been designated by the organization to 
  1.19  supervise lawful gambling conducted by it; or 
  1.20     (2) meets other qualifications as prescribed by the board 
  1.21  by rule. 
  1.22     Sec. 2.  Minnesota Statutes 1998, section 349.12, 
  1.23  subdivision 25, is amended to read: 
  1.24     Subd. 25.  [LAWFUL PURPOSE.] (a) "Lawful purpose" means one 
  1.25  or more of the following:  
  1.26     (1) any expenditure by or contribution to a 501(c)(3) or 
  1.27  festival organization, as defined in subdivision 15a, provided 
  1.28  that the organization and expenditure or contribution are in 
  2.1   conformity with standards prescribed by the board under section 
  2.2   349.154, which standards must apply to both types of 
  2.3   organizations in the same manner and to the same extent; 
  2.4      (2) a contribution to an individual or family suffering 
  2.5   from poverty, homelessness, or physical or mental disability, 
  2.6   which is used to relieve the effects of that poverty, 
  2.7   homelessness, or disability; 
  2.8      (3) a contribution to an individual for treatment for 
  2.9   delayed posttraumatic stress syndrome or a contribution to a 
  2.10  program recognized by the Minnesota department of human services 
  2.11  for the education, prevention, or treatment of compulsive 
  2.12  gambling; 
  2.13     (4) a contribution to or expenditure on a public or private 
  2.14  nonprofit educational institution registered with or accredited 
  2.15  by this state or any other state; 
  2.16     (5) a contribution to a scholarship fund for defraying the 
  2.17  cost of education to individuals where the funds are awarded 
  2.18  through an open and fair selection process; 
  2.19     (6) activities by an organization or a government entity 
  2.20  which recognize humanitarian or military service to the United 
  2.21  States, the state of Minnesota, or a community, subject to rules 
  2.22  of the board, provided that the rules must not include mileage 
  2.23  reimbursements in the computation of the per occasion 
  2.24  reimbursement limit and must impose no aggregate annual limit on 
  2.25  the amount of reasonable and necessary expenditures made to 
  2.26  support: 
  2.27     (i) members of a military marching or color guard unit for 
  2.28  activities conducted within the state; or 
  2.29     (ii) members of an organization solely for services 
  2.30  performed by the members at funeral services; or 
  2.31     (iii) members of military marching, color guard, or honor 
  2.32  guard units may be reimbursed for participating in color guard, 
  2.33  honor guard, or marching unit events within the state at a per 
  2.34  participant rate of up to $35 per occasion; 
  2.35     (7) recreational, community, and athletic facilities and 
  2.36  activities intended primarily for persons under age 21, provided 
  3.1   that such facilities and activities do not discriminate on the 
  3.2   basis of gender and the organization complies with section 
  3.3   349.154; 
  3.4      (8) payment of local taxes authorized under this chapter, 
  3.5   taxes imposed by the United States on receipts from lawful 
  3.6   gambling, the taxes imposed by section 297E.02, subdivisions 1, 
  3.7   4, 5, and 6, and the tax imposed on unrelated business income by 
  3.8   section 290.05, subdivision 3; 
  3.9      (9) payment of real estate taxes and assessments on 
  3.10  permitted gambling premises wholly owned by the licensed 
  3.11  organization paying the taxes, not to exceed: 
  3.12     (i) for premises used for bingo, the amount that an 
  3.13  organization may expend under board rules on rent for bingo; and 
  3.14     (ii) $35,000 per year for premises used for other forms of 
  3.15  lawful gambling; 
  3.16     (10) a contribution to the United States, this state or any 
  3.17  of its political subdivisions, or any agency or instrumentality 
  3.18  thereof other than a direct contribution to a law enforcement or 
  3.19  prosecutorial agency; 
  3.20     (11) a contribution to or expenditure by a nonprofit 
  3.21  organization which is a church or body of communicants gathered 
  3.22  in common membership for mutual support and edification in 
  3.23  piety, worship, or religious observances; 
  3.24     (12) payment of one-half of the reasonable costs of an 
  3.25  audit required in section 297E.06, subdivision 4; 
  3.26     (13) a contribution to or expenditure on a wildlife 
  3.27  management project that benefits the public at-large, provided 
  3.28  that the state agency with authority over that wildlife 
  3.29  management project approves the project before the contribution 
  3.30  or expenditure is made; 
  3.31     (14) expenditures, approved by the commissioner of natural 
  3.32  resources, by an organization for grooming and maintaining 
  3.33  snowmobile trails that are (1) grant-in-aid trails established 
  3.34  under section 85.019, or (2) other trails open to public use, 
  3.35  including purchase or lease of equipment for this purpose; or 
  3.36     (15) conducting nutritional programs, food shelves, and 
  4.1   congregate dining programs primarily for persons who are age 62 
  4.2   or older or disabled. 
  4.3      (b) Notwithstanding paragraph (a), "lawful purpose" does 
  4.4   not include: 
  4.5      (1) any expenditure made or incurred for the purpose of 
  4.6   influencing the nomination or election of a candidate for public 
  4.7   office or for the purpose of promoting or defeating a ballot 
  4.8   question; 
  4.9      (2) any activity intended to influence an election or a 
  4.10  governmental decision-making process; 
  4.11     (3) the erection, acquisition, improvement, expansion, 
  4.12  repair, or maintenance of real property or capital assets owned 
  4.13  or leased by an organization, unless the board has first 
  4.14  specifically authorized the expenditures after finding that (i) 
  4.15  the real property or capital assets will be used exclusively for 
  4.16  one or more of the purposes in paragraph (a); (ii) with respect 
  4.17  to expenditures for repair or maintenance only, that the 
  4.18  property is or will be used extensively as a meeting place or 
  4.19  event location by other nonprofit organizations or community or 
  4.20  service groups and that no rental fee is charged for the use; 
  4.21  (iii) with respect to expenditures, including a mortgage payment 
  4.22  or other debt service payment, for erection or acquisition only, 
  4.23  that the erection or acquisition is necessary to replace with a 
  4.24  comparable building, a building owned by the organization and 
  4.25  destroyed or made uninhabitable by fire or natural disaster, 
  4.26  provided that the expenditure may be only for that part of the 
  4.27  replacement cost not reimbursed by insurance; (iv) with respect 
  4.28  to expenditures, including a mortgage payment or other debt 
  4.29  service payment, for erection or acquisition only, that the 
  4.30  erection or acquisition is necessary to replace with a 
  4.31  comparable building a building owned by the organization that 
  4.32  was acquired from the organization by eminent domain or sold by 
  4.33  the organization to a purchaser that the organization reasonably 
  4.34  believed would otherwise have acquired the building by eminent 
  4.35  domain, provided that the expenditure may be only for that part 
  4.36  of the replacement cost that exceeds the compensation received 
  5.1   by the organization for the building being replaced; or (v) with 
  5.2   respect to an expenditure to bring an existing building into 
  5.3   compliance with the Americans with Disabilities Act under item 
  5.4   (ii), an organization has the option to apply the amount of the 
  5.5   board-approved expenditure to the erection or acquisition of a 
  5.6   replacement building that is in compliance with the Americans 
  5.7   with Disabilities Act; 
  5.8      (4) an expenditure by an organization which is a 
  5.9   contribution to a parent organization, foundation, or affiliate 
  5.10  of the contributing organization, if the parent organization, 
  5.11  foundation, or affiliate has provided to the contributing 
  5.12  organization within one year of the contribution any money, 
  5.13  grants, property, or other thing of value; 
  5.14     (5) a contribution by a licensed organization to another 
  5.15  licensed organization unless the board has specifically 
  5.16  authorized the contribution.  The board must authorize such a 
  5.17  contribution when requested to do so by the contributing 
  5.18  organization unless it makes an affirmative finding that the 
  5.19  contribution will not be used by the recipient organization for 
  5.20  one or more of the purposes in paragraph (a); or 
  5.21     (6) a contribution to a statutory or home rule charter 
  5.22  city, county, or town by a licensed organization with the 
  5.23  knowledge that the governmental unit intends to use the 
  5.24  contribution for a pension or retirement fund. 
  5.25     Sec. 3.  Minnesota Statutes 1998, section 349.15, is 
  5.26  amended by adding a subdivision to read: 
  5.27     Subd. 4.  [ALTERNATIVE PREMISES PAYMENT.] An organization 
  5.28  eligible to expend gross profits on real estate taxes and 
  5.29  assessments under section 349.12, subdivision 25, paragraph (a), 
  5.30  clause (9), may in the alternative, elect on a calendar year 
  5.31  basis to pay itself up to $1,000 per month for the use of its 
  5.32  premises for lawful gambling.  Any payments made under this 
  5.33  subdivision shall be considered an allowable expense. 
  5.34     Sec. 4.  Minnesota Statutes 1998, section 349.163, is 
  5.35  amended by adding a subdivision to read: 
  5.36     Subd. 9.  [SALES REQUIRED.] No licensed manufacturer may 
  6.1   refuse to sell pull-tab games to a licensed distributor unless: 
  6.2      (1) a specific game sold on an exclusive basis is at issue; 
  6.3      (2) the manufacturer does not sell the pull-tab games to 
  6.4   any distributor in Minnesota; 
  6.5      (3) a Minnesota statute or rule prohibits the sale; or 
  6.6      (4) the distributor is delinquent on any payment owed to 
  6.7   the manufacturer. 
  6.8      Sec. 5.  Minnesota Statutes 1998, section 349.18, 
  6.9   subdivision 1, is amended to read: 
  6.10     Subdivision 1.  [LEASE OR OWNERSHIP REQUIRED.] (a) An 
  6.11  organization may conduct lawful gambling only on premises it 
  6.12  owns or leases.  Leases must be on a form prescribed by the 
  6.13  board.  Except for leases entered into before August 1, 1994, 
  6.14  the term of the lease may not begin before the effective date of 
  6.15  the premises permit and must expire on the same day that the 
  6.16  premises permit expires.  Copies of all leases must be made 
  6.17  available to employees of the board and the division of alcohol 
  6.18  and gambling enforcement on request.  A lease may not provide 
  6.19  for payments determined directly or indirectly by the receipts 
  6.20  or profits from lawful gambling.  The board may prescribe by 
  6.21  rule limits on the amount of rent which an organization may pay 
  6.22  to a lessor for premises leased for lawful gambling provided 
  6.23  that no rule of the board may prescribe a limit of less than 
  6.24  $1,000 per month on rent paid for premises used for lawful 
  6.25  gambling other than bingo.  Any rule adopted by the board 
  6.26  limiting the amount of rent to be paid may only be effective for 
  6.27  leases entered into, or renewed, after the effective date of the 
  6.28  rule. 
  6.29     (b) No person, distributor, manufacturer, lessor, or 
  6.30  organization other than the licensed organization leasing the 
  6.31  space may conduct any activity other than the sale or serving of 
  6.32  food and beverages on the leased premises during times when 
  6.33  lawful gambling is being conducted on the premises. 
  6.34     (c) At a site where the leased premises consists of an area 
  6.35  on or behind a bar at which alcoholic beverages are sold and 
  6.36  employees of the lessor are employed by the organization as 
  7.1   pull-tab sellers at the site, pull-tabs and tipboard tickets may 
  7.2   be sold and redeemed by those employees at any place on or 
  7.3   behind the bar, but the tipboards and receptacles for pull-tabs 
  7.4   and cash drawers for lawful gambling receipts must be maintained 
  7.5   only within the leased premises. 
  7.6      (d) Employees of a lessor may participate in lawful 
  7.7   gambling on the premises provided (1) if pull-tabs or tipboards 
  7.8   are sold, the organization voluntarily posts, or is required to 
  7.9   post, the major prizes as specified in section 349.172; and (2) 
  7.10  any employee of the lessor participating in lawful gambling is 
  7.11  not a gambling employee for the organization conducting lawful 
  7.12  gambling on the premises. 
  7.13     (e) A gambling employee may purchase pull-tabs at the site 
  7.14  of the employee's place of employment provided: 
  7.15     (1) the organization voluntarily posts, or is required to 
  7.16  post, the major prizes for pull-tab or tipboard games as 
  7.17  specified in section 349.172; and 
  7.18     (2) the employee is not involved in the sale of pull-tabs 
  7.19  at that site. 
  7.20     (f) At a leased site where an organization uses a 
  7.21  paddlewheel consisting of 30 numbers or less or a tipboard 
  7.22  consisting of 30 tickets or less, tickets may be sold throughout 
  7.23  the permitted premises, but winning tickets must be redeemed, 
  7.24  the paddlewheel must be located, and the tipboard seal must be 
  7.25  opened within the leased premises. 
  7.26     Sec. 6.  Minnesota Statutes 1998, section 349.18, 
  7.27  subdivision 2, is amended to read: 
  7.28     Subd. 2.  [EXCEPTIONS.] (a) An organization may conduct 
  7.29  raffles on a premise it does not own or lease.  
  7.30     (b) An organization may, with the permission of the board, 
  7.31  conduct bingo on premises it does not own or lease for up to 12 
  7.32  consecutive days in a calendar year, in connection with a county 
  7.33  fair, the state fair, or a civic celebration.  
  7.34     (c) A licensed organization may, after compliance with 
  7.35  section 349.213, conduct lawful gambling on premises other than 
  7.36  the organization's permitted premises for one day per calendar 
  8.1   year for not more than 12 hours that day or up to 12 consecutive 
  8.2   days in a calendar year in connection with a county fair, the 
  8.3   state fair, a church festival, or a civic celebration.  A lease 
  8.4   for that time period for the exempted premises must accompany 
  8.5   the request to the board. 
  8.6      Sec. 7.  Minnesota Statutes 1998, section 349.211, 
  8.7   subdivision 4, is amended to read: 
  8.8      Subd. 4.  [PRIZE VALUE.] (a) Merchandise prizes must be 
  8.9   valued at their fair market value.  For purposes of sections 
  8.10  349.11 to 349.22 "prizes" do not include free plays awarded. 
  8.11     (b) Merchandise prizes for a paddlewheel consisting of 30 
  8.12  numbers or less or a tipboard consisting of 30 tickets or less 
  8.13  may be paid for by the organization up to 30 days after the 
  8.14  prize is received by the organization.  
  8.15     Sec. 8.  Minnesota Statutes 1998, section 349.213, 
  8.16  subdivision 1, is amended to read: 
  8.17     Subdivision 1.  [LOCAL REGULATION.] (a) A statutory or home 
  8.18  rule city or county has the authority to adopt more stringent 
  8.19  regulation of lawful gambling within its jurisdiction, including 
  8.20  the prohibition of lawful gambling, and may require a permit for 
  8.21  the conduct of gambling exempt from licensing under section 
  8.22  349.166.  The fee for a permit issued under this subdivision may 
  8.23  not exceed $100.  The authority granted by this subdivision does 
  8.24  not include the authority to require a license or permit to 
  8.25  conduct gambling by organizations or sales by distributors 
  8.26  licensed by the board.  The authority granted by this 
  8.27  subdivision does not include the authority to require an 
  8.28  organization to make specific expenditures of more than ten 
  8.29  percent from its net profits derived from lawful gambling.  For 
  8.30  the purposes of this subdivision, net profits are gross profits 
  8.31  less amounts expended for allowable expenses and paid in taxes 
  8.32  assessed on lawful gambling.  A statutory or home rule charter 
  8.33  city or a county may not require an organization conducting 
  8.34  lawful gambling within its jurisdiction to make an expenditure 
  8.35  to the city or county as a condition to operate within that city 
  8.36  or county, except as authorized under section 349.16, 
  9.1   subdivision 8, or 297E.02; provided, however, that an ordinance 
  9.2   requirement that such organizations must contribute ten percent 
  9.3   of their net profits derived from lawful gambling conducted at 
  9.4   premises within the city's or county's jurisdiction to a fund 
  9.5   administered and regulated by the responsible local unit of 
  9.6   government without cost to such fund, for disbursement by the 
  9.7   responsible local unit of government of the receipts for (i) 
  9.8   lawful purposes, or (ii) police, fire, and other emergency or 
  9.9   public safety-related services, equipment, and training, 
  9.10  excluding pension obligations, is not considered an expenditure 
  9.11  to the city or county nor a tax under section 297E.02, and is 
  9.12  valid and lawful.  A city or county making expenditures 
  9.13  authorized under this paragraph must by March 15 of each year 
  9.14  file a report with the board, on a form the board prescribes, 
  9.15  that lists all such revenues collected and expenditures for the 
  9.16  previous calendar year. 
  9.17     (b) A statutory or home rule city or county may by 
  9.18  ordinance require that a licensed organization conducting lawful 
  9.19  gambling within its jurisdiction expend all or a portion of its 
  9.20  expenditures for lawful purposes on lawful purposes conducted or 
  9.21  located within the city's or county's trade area.  Such an 
  9.22  ordinance must be limited to lawful purpose expenditures of 
  9.23  gross profits derived from lawful gambling conducted at premises 
  9.24  within the city's or county's jurisdiction, must define the 
  9.25  city's or county's trade area, and must specify the percentage 
  9.26  of lawful purpose expenditures which must be expended within the 
  9.27  trade area.  A trade area defined by a city under this 
  9.28  subdivision must include each city and township contiguous to 
  9.29  the defining city. 
  9.30     (c) A more stringent regulation or prohibition of lawful 
  9.31  gambling adopted by a political subdivision under this 
  9.32  subdivision must apply equally to all forms of lawful gambling 
  9.33  within the jurisdiction of the political subdivision, except a 
  9.34  political subdivision may prohibit the use of paddlewheels. 
  9.35     Sec. 9.  [EFFECTIVE DATE.] 
  9.36     Sections 1 to 8 are effective the day following final 
 10.1   enactment.