1.1 	A bill for an act
1.2 	relating to gambling; providing for lottery gaming
1.3 	machines; authorizing the director of the State
1.4 	Lottery to contract for placement of gaming machines;
1.5 	imposing a tax on gaming machine and card club
1.6 	revenue; providing powers and duties to director;
1.7 	authorizing blackjack and other card games and
1.8 	imposing tax on gross receipts; amending Minnesota
1.9 	Statutes 2004, sections 240.13, by adding a
1.10 	subdivision; 240.15, subdivision 1; 240.30,
1.11 	subdivision 8; 240.35, subdivision 1; 299L.07,
1.12 	subdivisions 2, 2a; 340A.410, subdivision 5; 349A.01,
1.13 	subdivision 10, by adding subdivisions; 349A.10,
1.14 	subdivisions 3, 6; 349A.13; 541.20; 541.21; 609.75,
1.15 	subdivision 3; 609.761, subdivision 2; proposing
1.16 	coding for new law in Minnesota Statutes, chapters
1.17 	297A; 349A.
1.18 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.19 	Section 1. Minnesota Statutes 2004, section 240.13, is
1.20 	amended by adding a subdivision to read:
1.21 		Subd. 5a.Purses; gaming machines. From the compensation
1.22 	received by a licensee pursuant to a gaming machine location
1.23 	contract entered into under section 349A.17, the licensee must
1.24 	set aside at least 7.25 percent of the adjusted gross gaming
1.25 	machine revenue as defined under chapter 349A for purses for
1.26 	live horse races conducted by the licensee.  Purse payments made
1.27 	pursuant to this subdivision are in addition to purse payments
1.28 	otherwise established by law or contract.  Twenty percent of the
1.29 	money set aside for purses pursuant to this subdivision shall be
1.30 	transferred to the commission and used for the purposes in
1.31 	section 240.18, subdivisions 2, paragraph (d), and 3, paragraph
2.1 	(b), subject to the proportionality requirement in section
2.2 	240.18, subdivision 1.  The licensee and the horseperson's
2.3 	organization representing the majority of horsepersons who have
2.4 	raced horses at the racetrack during the preceding 12 months may
2.5 	negotiate percentages different from those stated in this
2.6 	section if the agreement is in writing and filed with the
2.7 	commission.

2.8 	Sec. 2. Minnesota Statutes 2004, section 240.15,
2.9 	subdivision 1, is amended to read:
2.10 		Subdivision 1.Taxes imposed.  (a) There is imposed a tax
2.11 	at the rate of six percent of the amount in excess of
2.12 	$12,000,000 annually withheld from all pari-mutuel pools by the
2.13 	licensee, including breakage and amounts withheld under section
2.14 	240.13, subdivision 4.  For the purpose of this subdivision,
2.15 	"annually" is the period from July 1 to June 30 of the next year.
2.16 	In addition to the above tax, the licensee must designate
2.17 	and pay to the commission a tax of one percent of the total
2.18 	amount bet on each racing day, for deposit in the Minnesota
2.19 	breeders fund.
2.20 	The taxes imposed by this clause must be paid from the
2.21 	amounts permitted to be withheld by a licensee under section
2.22 	240.13, subdivision 4.
2.23 	(b) The commission may impose an admissions tax of not more
2.24 	than ten cents on each paid admission at a licensed racetrack on
2.25 	a racing day if:
2.26 	(1) the tax is requested by a local unit of government
2.27 	within whose borders the track is located;
2.28 	(2) a public hearing is held on the request; and
2.29 	(3) the commission finds that the local unit of government
2.30 	requesting the tax is in need of its revenue to meet
2.31 	extraordinary expenses caused by the racetrack.
2.32 	(c) There is imposed a tax at the rate of five percent on
2.33 	amounts annually received from charges authorized under section
2.34 	240.30, subdivision 4, less amounts set aside for purse payments
2.35 	and the breeders fund, as required by section 240.135.

2.36 	Sec. 3. Minnesota Statutes 2004, section 240.30,
3.1 	subdivision 8, is amended to read:
3.2 		Subd. 8.Limitations.  The commission may not approve any
3.3 	plan of operation under subdivision 6 that exceeds any of the
3.4 	following limitations:
3.5 	(1) the maximum number of tables used for card playing at
3.6 	the card club at any one time, other than tables used for
3.7 	instruction, demonstrations, or tournament play, may not exceed
3.8 	50.  The table limit exception for tournament play is allowed
3.9 	for only one tournament per year that lasts for no longer than
3.10 	14 days;
3.11 	(2) except as provided in clause (3) (2), no wager may
3.12 	exceed $60;
3.13 	(3) (2) for games in which each player is allowed to make
3.14 	only one wager or has a limited opportunity to change that
3.15 	wager, no wager may exceed $300.

3.16 	Sec. 4. Minnesota Statutes 2004, section 240.35,
3.17 	subdivision 1, is amended to read:
3.18 		Subdivision 1.Generally.  A licensee of the commission
3.19 	may detain a person if the licensee has probable cause to
3.20 	believe that the person detained has violated section 609.76
3.21 	while at a card club authorized by section 240.30or at a
3.22 	facility where gaming machines are located under section
3.23 	349A.17.  For purposes of this section, "licensee" means the
3.24 	commission's director of racing security or a security officer
3.25 	licensed under Minnesota Rules, chapter 7878.

3.26 	Sec. 5. [297A.651] LOTTERY GAMING MACHINES; IN-LIEU TAX.
3.27 	Adjusted gross gaming machine revenue is exempt from the
3.28 	tax imposed under section 297A.62.  The State Lottery must on or
3.29 	before the 20th day of each month transmit to the commissioner
3.30 	an amount equal to the adjusted gross gaming machine revenue, as
3.31 	defined in section 349A.01, for the previous month multiplied by
3.32 	35 percent.  The commissioner shall deposit the money
3.33 	transmitted under this section in the state treasury in the
3.34 	general fund.

3.35 	Sec. 6. Minnesota Statutes 2004, section 299L.07,
3.36 	subdivision 2, is amended to read:
4.1 		Subd. 2.Exclusions.  Notwithstanding subdivision 1, a
4.2 	gambling device:
4.3 	(1) may be sold by a person who is not licensed under this
4.4 	section, if the person (i) is not engaged in the trade or
4.5 	business of selling gambling devices, and (ii) does not sell
4.6 	more than one gambling device in any calendar year;
4.7 	(2) may be sold by the governing body of a federally
4.8 	recognized Indian tribe described in subdivision 2a, paragraph
4.9 	(b), clause (1), which is not licensed under this section, if
4.10 	(i) the gambling device was operated by the Indian tribe, (ii)
4.11 	the sale is to a distributor licensed under this section, and
4.12 	(iii) the licensed distributor notifies the commissioner of the
4.13 	purchase, in the same manner as is required when the licensed
4.14 	distributor ships a gambling device into Minnesota;
4.15 	(3) may be possessed by a person not licensed under this
4.16 	section if the person holds a permit issued under section
4.17 	299L.08; and 
4.18 	(4) may be possessed by a state agency, with the written
4.19 	authorization of the director, for display or evaluation
4.20 	purposes only and not for the conduct of gambling; and 
4.21 	(5) may be possessed by the State Lottery as authorized
4.22 	under chapter 349A.

4.23 	Sec. 7. Minnesota Statutes 2004, section 299L.07,
4.24 	subdivision 2a, is amended to read:
4.25 		Subd. 2a.Restrictions.  (a) A manufacturer licensed
4.26 	under this section may sell, offer to sell, lease, or rent, in
4.27 	whole or in part, a gambling device only to a distributor
4.28 	licensed under this section or to the State Lottery as
4.29 	authorized under chapter 349A.
4.30 	(b) A distributor licensed under this section may sell,
4.31 	offer to sell, market, rent, lease, or otherwise provide, in
4.32 	whole or in part, a gambling device only to:
4.33 	(1) the governing body of a federally recognized Indian
4.34 	tribe that is authorized to operate the gambling device under a
4.35 	tribal state compact under the Indian Gaming Regulatory Act,
4.36 	Public Law 100-497, and future amendments to it;
5.1 	(2) a person for use in the person's dwelling for display
5.2 	or amusement purposes in a manner that does not afford players
5.3 	an opportunity to obtain anything of value;
5.4 	(3) another distributor licensed under this section; or 
5.5 	(4) a person in another state who is authorized under the
5.6 	laws of that state to possess the gambling device; or 
5.7 	(5) the State Lottery as authorized under chapter 349A.

5.8 	Sec. 8. Minnesota Statutes 2004, section 340A.410,
5.9 	subdivision 5, is amended to read:
5.10 		Subd. 5.Gambling prohibited.  (a) Except as otherwise
5.11 	provided in this subdivision, no retail establishment licensed
5.12 	to sell alcoholic beverages may keep, possess, or operate, or
5.13 	permit the keeping, possession, or operation on the licensed
5.14 	premises of dice or any gambling device as defined in section
5.15 	349.30, or permit gambling therein.
5.16 	(b) Gambling equipment may be kept or operated and raffles
5.17 	conducted on licensed premises and adjoining rooms when the use
5.18 	of the gambling equipment is authorized by (1) chapter 349, (2)
5.19 	a tribal ordinance in conformity with the Indian Gaming
5.20 	Regulatory Act, Public Law 100-497, or (3) a tribal-state
5.21 	compact authorized under section 3.9221.
5.22 	(c) Lottery tickets may be purchased and sold within the
5.23 	licensed premises as authorized by the director of the lottery
5.24 	under chapter 349A.
5.25 	(d) Dice may be kept and used on licensed premises and
5.26 	adjoining rooms as authorized by section 609.761, subdivision 4.
5.27 	(e) Gambling devices may be operated on the premises of a
5.28 	licensed racetrack as authorized by chapter 349A.

5.29 	Sec. 9. Minnesota Statutes 2004, section 349A.01,
5.30 	subdivision 10, is amended to read:
5.31 		Subd. 10.Lottery procurement contract.  "Lottery
5.32 	procurement contract" means a contract to provide lottery
5.33 	products, gaming machines, maintenance of gaming machines,
5.34 	computer hardware and software used to monitor sales of lottery
5.35 	tickets and gaming machine plays, and lottery tickets.  "Lottery
5.36 	procurement contract" does not include a contract to provide an
6.1 	annuity or prize payment agreement or materials, supplies,
6.2 	equipment, or services common to the ordinary operation of a
6.3 	state agency.

6.4 	Sec. 10. Minnesota Statutes 2004, section 349A.01, is
6.5 	amended by adding a subdivision to read:
6.6 		Subd. 14.Gaming machine. "Gaming machine" means any
6.7 	machine, system, or device which, upon payment of consideration
6.8 	in order to play a game, may award or entitle a player to a
6.9 	prize by reason of skill of the player or application of the
6.10 	element of chance, or both.

6.11 	Sec. 11. Minnesota Statutes 2004, section 349A.01, is
6.12 	amended by adding a subdivision to read:
6.13 		Subd. 15.Gaming machine game. "Gaming machine game"
6.14 	means a game operated by a gaming machine as authorized by the
6.15 	director.

6.16 	Sec. 12. Minnesota Statutes 2004, section 349A.01, is
6.17 	amended by adding a subdivision to read:
6.18 		Subd. 16.Gaming machine play. "Gaming machine play"
6.19 	means an electronic record that proves participation in a gaming
6.20 	machine game.

6.21 	Sec. 13. Minnesota Statutes 2004, section 349A.01, is
6.22 	amended by adding a subdivision to read:
6.23 		Subd. 17.Adjusted gross gaming machine revenue.
 6.24 	"Adjusted gross gaming machine revenue" means the sum of all
6.25 	money received by the lottery for gaming machine plays, less the
6.26 	amount paid out in prizes for gaming machine games.

6.27 	Sec. 14. Minnesota Statutes 2004, section 349A.10,
6.28 	subdivision 3, is amended to read:
6.29 		Subd. 3.Lottery operations.  (a) The director shall
6.30 	establish a lottery operations account in the lottery fund.  The
6.31 	director shall pay all costs of operating the lottery, including
6.32 	payroll costs or amounts transferred to the state treasury for
6.33 	payroll costs, but not including lottery prizes, from the
6.34 	lottery operating account.  The director shall credit to the
6.35 	lottery operations account amounts sufficient to pay the
6.36 	operating costs of the lottery.
7.1 	(b) Except as provided in paragraph (e), the director may
7.2 	not credit in any fiscal year thereafter amounts to the lottery
7.3 	operations account which when totaled exceed 15 percent of gross
7.4 	revenue to the lottery fund in that fiscal year.  In computing
7.5 	total amounts credited to the lottery operations account under
7.6 	this paragraph the director shall disregard amounts transferred
7.7 	to or retained by lottery retailers as sales commissions or
7.8 	other compensation and amounts transferred or retained by a
7.9 	racetrack pursuant to a location contract under section 349A.17.
7.10 	(c) The director of the lottery may not expend after July
7.11 	1, 1991, more than 2-3/4 percent of gross revenues in a fiscal
7.12 	year for contracts for the preparation, publication, and
7.13 	placement of advertising.
7.14 	(d) Except as the director determines, the lottery is not
7.15 	subject to chapter 16A relating to budgeting, payroll, and the
7.16 	purchase of goods and services.
7.17 	(e) In addition to the amounts credited to the lottery
7.18 	operations account under paragraph (b), the director is
7.19 	authorized, if necessary, to meet the current obligations of the
7.20 	lottery and to credit up to 25 percent of an amount equal to the
7.21 	average annual amount which was authorized to be credited to the
7.22 	lottery operations account for the previous three fiscal years
7.23 	but was not needed to meet the obligations of the lottery.
7.24 	(f) Notwithstanding the provisions of this subdivision, the
7.25 	director may credit up to ten percent of adjusted gross gaming
7.26 	machine revenue to the lottery operations account in a fiscal
7.27 	year.

7.28 	Sec. 15. Minnesota Statutes 2004, section 349A.10,
7.29 	subdivision 6, is amended to read:
7.30 		Subd. 6.Budget; plans.  The director shall prepare and
7.31 	submit a biennial budget plan to the commissioner of finance.
7.32 	The governor shall recommend the maximum amount available for
7.33 	the lottery in the budget the governor submits to the
7.34 	legislature under section 16A.11.  The maximum amount available
7.35 	to the lottery for operating expenses and capital expenditures
7.36 	shall be determined by law.  Operating expenses shall not
8.1 	include expenses that are a direct function of lottery sales,
8.2 	which include the cost of lottery prizes, amounts paid to
8.3 	lottery retailers as sales commissions or other compensation,
8.4 	amounts paid to produce and deliver scratch lottery games, and 
8.5 	amounts paid to an outside vendor to operate and maintain an
8.6 	on-line gaming system, amounts paid to an outside vendor to
8.7 	operate and maintain a central communications system for gaming
8.8 	machines, and amounts paid to acquire and maintain gaming
8.9 	machines.  In addition, the director shall appear at least once
8.10 	each fiscal year before the senate and house of representatives
8.11 	committees having jurisdiction over gambling policy to present
8.12 	and explain the lottery's plans for future games and the related
8.13 	advertising and promotions and spending plans for the next
8.14 	fiscal year.

8.15 	Sec. 16. Minnesota Statutes 2004, section 349A.13, is
8.16 	amended to read:
8.17 	349A.13 RESTRICTIONS.
8.18 	Nothing in this chapter:
8.19 	(1) authorizes the director to conduct a lottery game or
8.20 	contest the winner or winners of which are determined by the
8.21 	result of a sporting event other than a horse race conducted
8.22 	under chapter 240;
8.23 	(2) authorizes the director to install or operate a lottery
8.24 	device operated by coin or currency which when operated
8.25 	determines the winner of a game except as authorized under
8.26 	section 349A.17; and
8.27 	(3) authorizes the director to sell pull-tabs as defined
8.28 	under section 349.12, subdivision 32.

8.29 	Sec. 17. [349A.17] GAMING MACHINES.
8.30 		Subdivision 1.Location contract. (a) The director may
8.31 	enter into a contract with a person to provide a location for
8.32 	gaming machines.  Contracts entered into under this section are
8.33 	not subject to chapter 16C.  The director may only enter a
8.34 	contract under this subdivision with a person that holds a class
8.35 	A license under chapter 240.  The gaming machines may only be
8.36 	placed at the racetrack for which the class A license under
9.1 	chapter 240 was issued.
9.2 	(b) In order to be eligible for a contract under this
9.3 	section, the class A licensee must have conducted at least 50
9.4 	days of live racing at the racetrack each year within the last
9.5 	five preceding calendar years.  A contract under this section
9.6 	must contain a provision under which the contract terminates on
9.7 	the first day of any calendar year following a calendar year
9.8 	during which the class A licensee has not conducted at least 50
9.9 	days of live racing at the licensee's racetrack.
9.10 	(c) Contracts entered into must provide for compensation to
9.11 	the racetrack in an amount equal to at least 55 percent of
9.12 	adjusted gross gaming machine revenue.  From the amount received
9.13 	by the racetrack under this section, the racetrack shall
9.14 	annually remit an amount equal to one percent of the adjusted
9.15 	gross gaming machine revenue to both the city or town and the
9.16 	county where the racetrack is located.
9.17 	(d) The director may cancel, suspend, or refuse to renew
9.18 	the location contract or impose a civil penalty if the licensee:
9.19 	(1) no longer holds a class A license under chapter 240;
9.20 	(2) fails to account for proceeds from the gaming machines;
9.21 	(3) fails to remit funds to the director in accordance with
9.22 	the location contract;
9.23 	(4) violates a law, rule, or order of the director;
9.24 	(5) fails to comply with any of the terms of the location
9.25 	contract; or 
9.26 	(6) has acted in a manner prejudicial to public confidence
9.27 	in the integrity of the operation of the gaming machines.
9.28 	The cancellation, suspension, or refusal to renew the
9.29 	location contract or imposition of a civil penalty under this
9.30 	paragraph is a contested case under sections 14.57 to 14.69.
9.31 	(e) No gaming machines may be located within a statutory or
9.32 	home rule charter city or town, unless the governing body of the
9.33 	city or town adopts a resolution approving the location of the
9.34 	gaming machines within the city or town.
9.35 	(f) As a condition of entering into a contract under this
9.36 	section, the licensee must make to the commission, for deposit
10.1 	in the general fund, a onetime payment of $100,000,000 by June
10.2 	30, 2007.  A contract must include a provision to refund this
10.3 	payment if this section is repealed by the legislature, revoked
10.4 	by constitutional amendment, or held unconstitutional by a court
10.5 	of competent jurisdiction.
10.6 	(g) The contract entered into under this section must
10.7 	include the following provisions:
10.8 	(1) liquidated damages to recover the initial investment by
10.9 	the licensee in the event the state, through legislation or
10.10 	constitutional amendment, revokes all or substantially all of
10.11 	the forms of gambling authorized under this section.  The
10.12 	liquidated damages must include the onetime payment under
10.13 	paragraph (f) and the unpaid balance of costs incurred by the
10.14 	licensee for construction or acquisition of the gaming facility
10.15 	less the present market value of that property.  Any liquidated
10.16 	damages provision must expire within ten years; and 
10.17 	(2) all costs associated with managing the day-to-day
10.18 	activity of gaming machines, including, but not limited to,
10.19 	routine and minor service and maintenance, security monitoring,
10.20 	verifying winners, paying winners, collecting money from gaming
10.21 	machines, and advertising and marketing of gaming machines must
10.22 	be borne by the licensee.
10.23 		Subd. 2.Operation. (a) All gaming machines that are
10.24 	placed at a racetrack pursuant to subdivision 1 must be operated
10.25 	and controlled by the director.
10.26 	(b) Gaming machines must be owned or leased by the director.
10.27 	(c) Gaming machines must be maintained by the lottery, or
10.28 	by a vendor that is under the control and direction of the
10.29 	director.
10.30 	(d) The director must have a central communications system
10.31 	that monitors activities on each gaming machine.  The central
10.32 	communications system must be located at a lottery office.
10.33 	(e) The director must approve the general security
10.34 	arrangements associated with and relating to the operation of
10.35 	the gaming machines.
10.36 	(f) Advertising and promotional material produced by the
11.1 	racetrack relating to gaming machines located at its facility
11.2 	must be approved by the director.
11.3 	(g) The director may implement such other controls as are
11.4 	deemed necessary for the operation of gaming machines pursuant
11.5 	to this section.
11.6 		Subd. 3.Games. The director shall specify the games
11.7 	that may be played on a gaming machine according to section
11.8 	349A.04.  Gaming machines may conduct pari-mutuel wagering and
11.9 	display horse races pursuant to the director's specifications.
11.10 		Subd. 4.Prizes. A person who plays a gaming machine
11.11 	agrees to be bound by the rules and game procedures applicable
11.12 	to that particular gaming machine game.  The player acknowledges
11.13 	that the determination of whether the player has won a prize is
11.14 	subject to the rules and game procedures adopted by the
11.15 	director, claim procedures established by the director for the
11.16 	game, and any confidential or public validation tests
11.17 	established by the director for that game.  A prize claimed from
11.18 	the play of a gaming machine game is not subject to the
11.19 	provisions of section 349A.08, subdivision 8.
11.20 		Subd. 5.No credit restriction. The licensee shall
11.21 	require that all gaming at a gaming facility, including
11.22 	participation in a gaming machine game, shall be conducted on a
11.23 	cash basis.  Except as provided in this subdivision, no person
11.24 	may be extended credit for gaming at a gaming facility, and the
11.25 	licensee shall not permit any person or organization to offer
11.26 	such credit for a fee at the gaming facility.  This provision
11.27 	does not restrict the right of the licensee or any other person
11.28 	to offer check cashing or to install or accept bank card or
11.29 	credit card transactions in the same manner as would be normally
11.30 	permitted at any retail business within the state.
11.31 		Subd. 6.Prohibitions. (a) A person under the age of 18
11.32 	years may not play a game on or claim a prize from a gaming
11.33 	machine.
11.34 	(b) The director or any employee of the lottery, or a
11.35 	member of their immediate family residing in the same household,
11.36 	may not play a game on a gaming machine or receive a prize from
12.1 	the operation of a gaming machine.
12.2 		Subd. 7.Compulsive gambling; report. (a) The licensee
12.3 	shall prominently post, in the area where the gaming machines
12.4 	are located, the toll-free telephone number established by the
12.5 	commissioner of human services in connection with the compulsive
12.6 	gambling program established under section 245.98.  The
12.7 	licensee, with the approval of the director, shall establish a
12.8 	proactive plan relating to problem gambling.
12.9 	(b) By January 15 of each year, the director shall submit a
12.10 	report to the legislature, of not more than five pages in
12.11 	length, setting forth the performance objectives of the plan and
12.12 	the progress that was made toward those objectives during the
12.13 	prior calendar year.  The licensee may establish a
12.14 	self-exclusion program by which persons, at their request, may
12.15 	be excluded from the facility where the gaming machines are
12.16 	located.
12.17 		Subd. 8.Local licenses. Except as provided in
12.18 	subdivision 1, no political subdivision may require a license to
12.19 	operate a gaming machine, restrict or regulate the placement of
12.20 	gaming machines, or impose a tax or fee on the business of
12.21 	operating gaming machines.
12.22 		Subd. 9.Reimbursement; racing commission. The Minnesota
12.23 	Racing Commission shall require the licensee to reimburse the
12.24 	commission's actual costs, including personnel costs, of
12.25 	regulating the licensee under this section.  Amounts received
12.26 	under this subdivision must be deposited as provided in section
12.27 	240.155, subdivision 1.

12.28 	Sec. 18. Minnesota Statutes 2004, section 541.20, is
12.29 	amended to read:
12.30 	541.20 RECOVERY OF MONEY LOST.
12.31 	Every person who, by playing at cards, dice, or other game,
12.32 	or by betting on the hands or sides of such as are gambling,
12.33 	shall lose to any person so playing or betting any sum of money
12.34 	or any goods, and pays or delivers the same, or any part
12.35 	thereof, to the winner, may sue for and recover such money by a
12.36 	civil action, before any court of competent jurisdiction.  For
13.1 	purposes of this section, gambling shall not include pari-mutuel
13.2 	wagering or other wagering conducted under a license issued
13.3 	pursuant to chapter 240, purchase or sale of tickets in the
13.4 	state lottery, or gambling authorized under chapters 349 and
13.5 	349A.

13.6 	Sec. 19. Minnesota Statutes 2004, section 541.21, is
13.7 	amended to read:
13.8 	541.21 COMMITMENTS FOR GAMBLING DEBT VOID.
13.9 	Every note, bill, bond, mortgage, or other security or
13.10 	conveyance in which the whole or any part of the consideration
13.11 	shall be for any money or goods won by gambling or playing at
13.12 	cards, dice, or any other game whatever, or by betting on the
13.13 	sides or hands of any person gambling, or for reimbursing or
13.14 	repaying any money knowingly lent or advanced at the time and
13.15 	place of such gambling or betting, or lent and advanced for any
13.16 	gambling or betting to any persons so gambling or betting, shall
13.17 	be void and of no effect as between the parties to the same, and
13.18 	as to all persons except such as hold or claim under them in
13.19 	good faith, without notice of the illegality of the
13.20 	consideration of such contract or conveyance.  The provisions of
13.21 	this section shall not apply to:  (1) pari-mutuel or other 
13.22 	wagering conducted under a license issued pursuant to chapter
13.23 	240; (2) purchase of tickets in the state lottery or other
13.24 	wagering authorized under chapter 349A; (3) gaming activities
13.25 	conducted pursuant to the Indian Gaming Regulatory Act, 25
13.26 	U.S.C. 2701 et seq.; or (4) lawful gambling activities permitted
13.27 	under chapter 349.

13.28 	Sec. 20. Minnesota Statutes 2004, section 609.75,
13.29 	subdivision 3, is amended to read:
13.30 		Subd. 3.What are not bets.  The following are not bets:
13.31 	(1) A contract to insure, indemnify, guarantee or otherwise
13.32 	compensate another for a harm or loss sustained, even though the
13.33 	loss depends upon chance.
13.34 	(2) A contract for the purchase or sale at a future date of
13.35 	securities or other commodities.
13.36 	(3) Offers of purses, prizes or premiums to the actual
14.1 	contestants in any bona fide contest for the determination of
14.2 	skill, speed, strength, endurance, or quality or to the bona
14.3 	fide owners of animals or other property entered in such a
14.4 	contest.
14.5 	(4) The game of bingo when conducted in compliance with
14.6 	sections 349.11 to 349.23.
14.7 	(5) A private social bet not part of or incidental to
14.8 	organized, commercialized, or systematic gambling.
14.9 	(6) The operation of equipment or the conduct of a raffle
14.10 	under sections 349.11 to 349.22, by an organization licensed by
14.11 	the Gambling Control Board or an organization exempt from
14.12 	licensing under section 349.166.
14.13 	(7) Pari-mutuel betting on horse racing when the betting is
14.14 	conducted under chapter 240.
14.15 	(8) The purchase and sale of state lottery tickets and
14.16 	plays on a gaming machine under chapter 349A.

14.17 	Sec. 21. Minnesota Statutes 2004, section 609.761,
14.18 	subdivision 2, is amended to read:
14.19 		Subd. 2.State lottery.  Sections 609.755 and 609.76 do
14.20 	not prohibit the operation of the state lottery or the sale,
14.21 	possession, or purchase of tickets for the state lottery under
14.22 	chapter 349A, or the manufacture, possession, sale, or operation
14.23 	of a gaming machine under chapter 349A.

14.24 	Sec. 22. OTHER GAMES.
 14.25 	(a) The Minnesota Racing Commission may authorize a person
14.26 	with a gaming machine location contract under Minnesota
14.27 	Statutes, section 349A.17, to conduct other card games that
14.28 	Indian gaming casinos within this state are authorized by
14.29 	compact or law to conduct.  The Minnesota Racing Commission
14.30 	shall adopt game procedures and take other actions necessary to
14.31 	regulate the conduct and ensure the integrity of the games.  A
14.32 	tax is imposed on games conducted under this section at the rate
14.33 	of 20 percent of the gross gaming receipts.  For purposes of
14.34 	this section, "gross gaming receipts" means all revenue received
14.35 	by the licensee from card games authorized under this section,
14.36 	less winnings paid to players.
15.1 	(b) Of the gross gaming receipts, the licensee must set
15.2 	aside at least 7.25 percent for purses for live horse races
15.3 	conducted by the licensee.  Purse payments under this section
15.4 	are in addition to any other purse payments established by law
15.5 	or contract.  Twenty percent of the amount set aside for purses
15.6 	shall be transferred to the Minnesota Racing Commission and used
15.7 	for the purposes in Minnesota Statutes, section 240.18.  The
15.8 	licensee and the horseperson's organization representing the
15.9 	majority of horsepersons who have raced horses at the racetrack
15.10 	during the preceding 12 months may negotiate percentages
15.11 	different from those stated in this section if the agreement is
15.12 	in writing and filed with the racing commission.

15.13 	Sec. 23. LOTTERY BUDGET; GAMING MACHINES.
 15.14 	The director of the State Lottery shall submit a budget for
15.15 	the operation of gaming machines authorized under Minnesota
15.16 	Statutes, section 349A.17, to the commissioner of finance.
15.17 	Notwithstanding Minnesota Statutes, section 349A.10, subdivision
15.18 	6, the director of the State Lottery may expend amounts
15.19 	necessary to operate the gaming machines.  Amounts expended by
15.20 	the director of the State Lottery for the operation of gaming
15.21 	machines in fiscal years 2006 and 2007 are not subject to the
15.22 	maximum amount set in law for the operation of the lottery.

15.23 	Sec. 24. SEVERABILITY; SAVINGS.
 15.24 	If any part of this act is found to be invalid because it
15.25 	is in conflict with a provision of the Constitution of the state
15.26 	of Minnesota or the Constitution of the United States, or for
15.27 	any other reason, all other provisions of this act shall remain
15.28 	valid and any rights, remedies, and privileges that have been
15.29 	otherwise accrued by this act, shall remain in effect and may be
15.30 	proceeded with and concluded under the provisions of this act.

15.31 	Sec. 25. EFFECTIVE DATE.
 15.32 	This act is effective the day following final enactment.