1.1 	A bill for an act
1.2 	relating to gaming; establishing a lottery board;
1.3 	regulating card clubs and establishing a director of
1.4 	card clubs; appropriating money; amending Minnesota
1.5 	Statutes 2004, sections 240.03; 240.04, by adding a
1.6 	subdivision; 240.155, subdivision 1; 240.23; 240.30,
1.7 	subdivisions 2, 7; 349A.01, by adding a subdivision;
1.8 	349A.08, subdivision 7; 349A.11; 349A.14; proposing
1.9 	coding for new law in Minnesota Statutes, chapter 349A.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	ARTICLE 1
1.12 	LOTTERY BOARD

1.13 	Section 1. Minnesota Statutes 2004, section 349A.01, is
1.14 	amended by adding a subdivision to read:
1.15 		Subd. 1a.Board. "Board" means the State Lottery Board.

1.16 	Sec. 2. [349A.011] LOTTERY BOARD.
1.17 		Subdivision 1.Established. There is created a State
1.18 	Lottery Board comprised of seven members appointed by the
1.19 	governor with the advice and consent of the senate.
1.20 		Subd. 2.Board members. Board members must be residents
1.21 	of Minnesota and at least three members must reside outside the
1.22 	Twin Cities seven-county metropolitan area.  At least one member
1.23 	must be an attorney licensed to practice law in Minnesota, at
1.24 	least one member must have demonstrable experience in marketing
1.25 	or advertising, at least one member must be a licensed certified
1.26 	public accountant who is qualified as a financial expert, at
1.27 	least one member must have demonstrable management experience in
2.1 	retail business, and the remaining three members must have
2.2 	demonstrable experience in managing complex business enterprises
2.3 	or have policy making experience in the public sector.  No
2.4 	person may be a member of the board who has been convicted of a
2.5 	felony, a crime involving fraud or misrepresentation, or a
2.6 	gambling-related offense.
2.7 		Subd. 3.Terms; compensation. The terms, removal, and
2.8 	compensation of board members shall be as provided in section
2.9 	15.0575, except that board members shall serve a term of three
2.10 	years.
2.11 		Subd. 4.Board organization. (a) The board shall elect
2.12 	from their membership a chair and vice-chair at the first
2.13 	meeting following the beginning of each fiscal year.
2.14 	(b) The board shall meet at least quarterly or at such
2.15 	other times at the call of the chair of the board.
2.16 	(c) Notwithstanding chapter 13D, meetings of the board or
2.17 	any committee of the board that relate to the lottery's
2.18 	security, information security, or to evaluate the performance
2.19 	of the director may be closed to the public.
2.20 	(d) The operating expenses of the board relating to its
2.21 	responsibilities under subdivision 5 shall be paid by the
2.22 	lottery from the lottery operations account and must be publicly
2.23 	reported by the board.
2.24 		Subd. 5.Board responsibilities. The board has the
2.25 	responsibility to review the overall operation and performance
2.26 	of the lottery and make recommendations to the director
2.27 	regarding the operation of the lottery, including identifying
2.28 	potential improvements that will assist the lottery in
2.29 	maximizing proceeds to the state and ensuring the integrity and
2.30 	public confidence in the lottery.  The responsibilities of the
2.31 	board include, but are not limited to:
2.32 	(1) reviewing the annual budget of the lottery;
2.33 	(2) reviewing proposed lottery rules;
2.34 	(3) conducting an annual performance review of the
2.35 	director; and 
2.36 	(4) reviewing the financial affairs of the lottery.

3.1 	Sec. 3. Minnesota Statutes 2004, section 349A.08,
3.2 	subdivision 7, is amended to read:
3.3 		Subd. 7.Payments prohibited.  (a) No prize may be paid
3.4 	to the director or an employee of the lottery, member of the
3.5 	board,or a member of their families residing in the same
3.6 	household of the member, director, or employee.  No prize may be
3.7 	paid to an officer or employee of a vendor which at the time the
3.8 	game or drawing was being conducted was involved with providing
3.9 	goods or services to the lottery under a lottery procurement
3.10 	contract.
3.11 	(b) No prize may be paid for a stolen, altered, or
3.12 	fraudulent ticket.

3.13 	Sec. 4. Minnesota Statutes 2004, section 349A.11, is
3.14 	amended to read:
3.15 	349A.11 CONFLICT OF INTEREST.
3.16 		Subdivision 1.Lottery ticket; retailer. The director,
3.17 	an employee of the lottery, a board member,a member of the
3.18 	immediate family of the director or ,employee, or board member 
3.19 	residing in the same household may not:
3.20 	(1) purchase a lottery ticket; or
3.21 	(2) have any personal pecuniary interest in any vendor
3.22 	holding a lottery procurement contract, or in any lottery
3.23 	retailer; or
3.24 	(3) receive any gift, gratuity, or other thing of value,
3.25 	excluding food or beverage, from any lottery vendor or lottery
3.26 	retailer, or person applying to be a retailer or vendor, in
3.27 	excess of $100 in any calendar year.
3.28 		Subd. 2.Gifts. The director or ,an employee of the
3.29 	lottery in the unclassified service, or a board member may not
3.30 	accept a gift the acceptance of which by an official would be
3.31 	prohibited by section 10A.071.
3.32 		Subd. 3.Penalty. A violation of subdivision 1, clause
3.33 	(1), is a misdemeanor.  A violation of subdivision 1, clause
3.34 	(2), is a gross misdemeanor.  A violation of subdivision 1,
3.35 	clause (3), is a misdemeanor unless the gift, gratuity, or other
3.36 	item of value received has a value in excess of $500, in which
4.1 	case a violation is a gross misdemeanor.
4.2 		Subd. 4.Future employment. The director or ,an
4.3 	unclassified employee of the lottery, or a board member may not,
4.4 	within two years of terminating employment with the lottery or
4.5 	terminating membership on the board, represent any person,
4.6 	corporation, or entity before the lottery.  A violation of
4.7 	this paragraph subdivision is a misdemeanor.

4.8 	Sec. 5. Minnesota Statutes 2004, section 349A.14, is
4.9 	amended to read:
4.10 	349A.14 AUDIT.
4.11 	The director board shall contract for an annual certified
4.12 	audit of all accounts and transactions of the lottery, including
4.13 	but not limited to an audit of the lottery's information
4.14 	security.  The audit must be conducted by a certified public
4.15 	accountant in accordance with generally accepted accounting
4.16 	standards.  The director board shall file a copy of each audit
4.17 	report of the lottery with the governor and ,the legislature,
4.18 	and the director. The board shall cooperate fully with any
4.19 	audit, evaluation, or investigation initiated by the legislative
4.20 	auditor.

4.21 	Sec. 6. APPOINTMENT OF INITIAL LOTTERY BOARD MEMBERS.
 4.22 	Of the initial members of the State Lottery Board, three
4.23 	shall serve a term of three years, two shall serve a term of two
4.24 	years, and two shall serve a term of one year.  The governor
4.25 	shall select the initial chair of the board who shall serve as
4.26 	the chair until the board elects the chair.

4.27 	Sec. 7. EFFECTIVE DATE.
 4.28 	This article is effective July 1, 2005.

4.29 	ARTICLE 2
4.30 	RACING COMMISSION

4.31 	Section 1. Minnesota Statutes 2004, section 240.03, is
4.32 	amended to read:
4.33 	240.03 COMMISSION POWERS AND DUTIES.
4.34 	The commission has the following powers and duties:
4.35 	(1) to regulate horse racing and card club activities in
4.36 	Minnesota to ensure that it is they are conducted in the public
5.1 	interest;
5.2 	(2) to issue licenses as provided in this chapter;
5.3 	(3) to enforce all laws and rules governing horse
5.4 	racing and card club activities;
5.5 	(4) to collect and distribute all taxes provided for in
5.6 	this chapter;
5.7 	(5) to conduct necessary investigations and inquiries and
5.8 	compel the submission of information, documents, and records it
5.9 	deems necessary to carry out its duties;
5.10 	(6) to supervise the conduct of pari-mutuel betting on
5.11 	horse racing and card club wagering;
5.12 	(7) to employ and supervise personnel under this chapter;
5.13 	(8) to determine the number of racing days to be held in
5.14 	the state and at each licensed racetrack;
5.15 	(9) to take all necessary steps to ensure the integrity of
5.16 	racing and card club activities in Minnesota; and
5.17 	(10) to impose fees on the racing and card playing
5.18 	industries sufficient to recover the operating costs of the
5.19 	commission with the approval of the legislature according to
5.20 	section 16A.1283.  Notwithstanding section 16A.1283, when the
5.21 	legislature is not in session, the commissioner of finance may
5.22 	grant interim approval for any new fees or adjustments to
5.23 	existing fees that are not statutorily specified, until such
5.24 	time as the legislature reconvenes and acts upon the new fees or
5.25 	adjustments.  As part of its biennial budget request, the
5.26 	commission must propose changes to its fees that will be
5.27 	sufficient to recover the operating costs of the commission.

5.28 	Sec. 2. Minnesota Statutes 2004, section 240.04, is
5.29 	amended by adding a subdivision to read:
5.30 		Subd. 3a.Director of card clubs. The commission shall
5.31 	employ a director of card clubs who serves in the unclassified
5.32 	service at the commission's pleasure.  The director is
5.33 	responsible for providing independent surveillance and other
5.34 	daily oversight of card club operations, and shall have expert
5.35 	knowledge and training in matters relevant to the operation of
5.36 	card clubs.  The director shall perform the following duties:
6.1 	(1) conduct routine compliance checks of card club
6.2 	activities to ensure compliance with a card club's approved plan
6.3 	of operation and with all laws and commission rules relating to
6.4 	the security and integrity of card club activities;
6.5 	(2) oversee surveillance operations in card clubs,
6.6 	regularly review card club surveillance logs, and analyze on an
6.7 	annual basis the number and type of surveillance incidents
6.8 	occurring at card clubs; and 
6.9 	(3) regularly review card club finances, ensuring that card
6.10 	clubs are properly distributing revenue and expenses from the
6.11 	funds in the player pool.

6.12 	Sec. 3. Minnesota Statutes 2004, section 240.155,
6.13 	subdivision 1, is amended to read:
6.14 		Subdivision 1.Reimbursement account credit.  Money
6.15 	received by the commission as reimbursement for the costs of
6.16 	services provided by veterinarians, stewards, and medical
6.17 	testing of horses must be deposited in the state treasury and
6.18 	credited to a racing reimbursement account, except as provided
6.19 	under subdivision 2.  Receipts are appropriated to the
6.20 	commission to pay the costs of providing the services. Receipts
6.21 	deposited under section 240.30, subdivision 9, are appropriated
6.22 	to the commission for the costs of regulation of card club
6.23 	activities under section 240.03.

6.24 	Sec. 4. Minnesota Statutes 2004, section 240.23, is
6.25 	amended to read:
6.26 	240.23 RULEMAKING AUTHORITY.
6.27 	The commission has the authority, in addition to all other
6.28 	rulemaking authority granted elsewhere in this chapter to
6.29 	promulgate rules governing:
6.30 	(a) the conduct of horse races held at licensed racetracks
6.31 	in Minnesota, including but not limited to the rules of racing,
6.32 	standards of entry, operation of claiming races, filing and
6.33 	handling of objections, carrying of weights, and declaration of
6.34 	official results;
6.35 	(b) wire communications between the premises of a licensed
6.36 	racetrack and any place outside the premises;
7.1 	(c) information on horse races which is sold on the
7.2 	premises of a licensed racetrack;
7.3 	(d) liability insurance which it may require of all class
7.4 	A, class B, and class D licensees;
7.5 	(e) the auditing of the books and records of a licensee by
7.6 	an auditor employed or appointed by the commission;
7.7 	(f) emergency action plans maintained by licensed
7.8 	racetracks and their periodic review;
7.9 	(g) safety, security, and sanitation of stabling facilities
7.10 	at licensed racetracks;
7.11 	(h) entry fees and other funds received by a licensee in
7.12 	the course of conducting racing which the commission determines
7.13 	must be placed in escrow accounts;
7.14 	(i) affirmative action in employment and contracting by
7.15 	class A, class B, and class D licensees; and 
7.16 	(j) any other aspect of horse racing or pari-mutuel betting
7.17 	which in its opinion affects the integrity of racing or the
7.18 	public health, welfare, or safety; and 
7.19 	(k) card club operations, including safety and security,
7.20 	surveillance, and finances.
7.21 	Rules of the commission are subject to chapter 14, the
7.22 	Administrative Procedure Act.

7.23 	Sec. 5. Minnesota Statutes 2004, section 240.30,
7.24 	subdivision 2, is amended to read:
7.25 		Subd. 2.Supervision.  The authorized licensee is
7.26 	responsible for conducting and supervising the card
7.27 	games, subject to the oversight of the director of card clubs,
7.28 	providing all necessary equipment, services, and personnel, and
7.29 	reimbursing the commission for costs related to card club
7.30 	regulation and enforcement.

7.31 	Sec. 6. Minnesota Statutes 2004, section 240.30,
7.32 	subdivision 7, is amended to read:
7.33 		Subd. 7.Amendments to plan; violations; relation to
7.34 	other laws.  (a) The licensee may amend the plan of operation
7.35 	only with the commission's approval.  The commission may
7.36 	withdraw its approval of a plan of operation.
8.1 	(b) Card club activities are deemed to be relevant to the
8.2 	integrity of horse racing activities in Minnesota for purposes
8.3 	of sections 240.03;240.06, subdivision 7; 240.08; and 240.27,
8.4 	subdivision 1.
8.5 	(c) A violation of a law or rule relating to card club
8.6 	operation or a violation of an approved plan of operation is
8.7 	deemed to be a violation of law or rule for purposes of section
8.8 	240.22.
8.9 	(d) A violation of an approved plan of operation is deemed
8.10 	to be a violation of a rule of the commission for purposes of
8.11 	section 240.26, subdivision 3.
8.12 	(e) Card playing at a card club is deemed to be a bet at a
8.13 	licensed racetrack for purposes of section 240.28, subdivision 2.