<a id="pl.1.3"></a><var>1.3</var>gaming machines at a licensed racetrack; imposing a fee on gaming machine <br/>
<a id="pl.1.4"></a><var>1.4</var>revenue; providing powers and duties to the director; prohibiting detached <br/>
<a id="pl.1.5"></a><var>1.5</var>facilities at a racetrack licensed for gaming machines: restricting alcohol sales <br/>
<a id="pl.1.6"></a><var>1.6</var>and consumption near gaming machines at licensed racetracks; dedicating funds <br/>
<a id="pl.1.7"></a><var>1.7</var>to reduce the education payment shift and the property tax recognition shift; <br/>
<a id="pl.1.8"></a><var>1.8</var>appropriating money;amending Minnesota Statutes 2010, sections 240.03; <br/>
<a id="pl.1.9"></a><var>1.9</var>240.13, by adding a subdivision; 240.14, by adding a subdivision; 299L.07, <br/>
<a id="pl.1.10"></a><var>1.10</var>subdivisions 2, 2a; 349A.01, subdivision 10, by adding subdivisions; 349A.10, <br/>
<a id="pl.1.11"></a><var>1.11</var>subdivision 3; 349A.13; proposing coding for new law in Minnesota Statutes, <br/>
<a id="pl.1.12"></a><var>1.12</var>chapters 297A; 349A; repealing Minnesota Statutes 2010, section 240.30, <br/>
<a id="pl.1.13"></a><var>1.13</var>subdivisions 3, 8.<br/>
<a id="pl.1.14"></a><var>1.14</var>BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:<br/>
<br/>
<a id="bill.1.0.0"></a>

<a id="bill.1.1.0"></a><a id="pl.1.17"></a><var>1.17</var>    Section 1. <b>[47.522] PROHIBITION NEAR RACINO.</b><br/>
<a id="pl.1.18"></a><var>1.18</var>No detached facility may be located on the premises of a racetrack referenced in <br/>
<a id="pl.1.19"></a><var>1.19</var>section 349A.17, subdivision 1, paragraph (a).<br/>
<br/>
<a id="bill.1.2.0"></a><a id="pl.1.20"></a><var>1.20</var>    Sec. 2. Minnesota Statutes 2010, section 240.03, is amended to read:<br/>
<a id="pl.1.21"></a><var>1.21</var><b>240.03 COMMISSION POWERS AND DUTIES.</b><br/>
<a id="pl.1.22"></a><var>1.22</var>The commission has the following powers and duties:<br/>
<a id="pl.1.23"></a><var>1.23</var>(1) to regulate horse racing in Minnesota to ensure that it is conducted in the public <br/>
<a id="pl.1.24"></a><var>1.24</var>interest;<br/>
<a id="pl.1.25"></a><var>1.25</var>(2) to issue licenses as provided in this chapter;<br/>
<a id="pl.1.26"></a><var>1.26</var>(3) to enforce all laws and rules governing horse racing;<br/>
<a id="pl.2.1"></a><var>2.1</var>(4) to collect and distribute all taxes provided for in this chapter;<br/>
<a id="pl.2.2"></a><var>2.2</var>(5) to conduct necessary investigations and inquiries and compel the submission of <br/>
<a id="pl.2.3"></a><var>2.3</var>information, documents, and records it deems necessary to carry out its duties;<br/>
<a id="pl.2.4"></a><var>2.4</var>(6) to supervise the conduct of pari-mutuel betting on horse racing;<br/>
<a id="pl.2.5"></a><var>2.5</var>(7) to employ and supervise personnel under this chapter;<br/>
<a id="pl.2.6"></a><var>2.6</var>(8) to determine the number of racing days to be held in the state and at each <br/>
<a id="pl.2.7"></a><var>2.7</var>licensed racetrack;<br/>
<a id="pl.2.8"></a><var>2.8</var>(9) to take all necessary steps to ensure the integrity of racing in Minnesota; and<br/>
<a id="pl.2.9"></a><var>2.9</var>(10) to impose fees on the racing and card playing industries sufficient to recover the <br/>
<a id="pl.2.10"></a><var>2.10</var>operating costs of the commission with the approval of the legislature according to section <br/>
<statute_ref><a id="pl.2.11"></a><var>2.11</var>16A.1283
         </statute_ref>. Notwithstanding section 
         <statute_ref>16A.1283</statute_ref>, when the legislature is not in session, the <br/>
<a id="pl.2.12"></a><var>2.12</var>commissioner of management and budget may grant interim approval for any new fees <br/>
<a id="pl.2.13"></a><var>2.13</var>or adjustments to existing fees that are not statutorily specified, until such time as the <br/>
<a id="pl.2.14"></a><var>2.14</var>legislature reconvenes and acts upon the new fees or adjustments. As part of its biennial <br/>
<a id="pl.2.15"></a><var>2.15</var>budget request, the commission must propose changes to its fees that will be sufficient to <br/>
<a id="pl.2.16"></a><var>2.16</var>recover the operating costs of the commission.; and<br/>
<a id="pl.2.17"></a><var>2.17</var>(11) to take all necessary steps to ensure the security of all activities in a class A <br/>
<a id="pl.2.18"></a><var>2.18</var>licensed racetrack. The duties and responsibilities of the commission include but are not <br/>
<a id="pl.2.19"></a><var>2.19</var>limited to licensing employees of a class A licensee and vendors to the class A licensee <br/>
<a id="pl.2.20"></a><var>2.20</var>involved in the conduct of gaming machines authorized by a location contract with the <br/>
<a id="pl.2.21"></a><var>2.21</var>director of the State Lottery under section 349A.17 and overall surveillance and security <br/>
<a id="pl.2.22"></a><var>2.22</var>of all conduct on all facilities of a licensed racetrack. The commission shall require that <br/>
<a id="pl.2.23"></a><var>2.23</var>a class A licensed racetrack reimburse it for the commission's actual costs, including <br/>
<a id="pl.2.24"></a><var>2.24</var>personnel costs, for conducting activities provided in this clause and amounts received <br/>
<a id="pl.2.25"></a><var>2.25</var>must be deposited as provided in section 240.155, subdivision 1. The commission shall <br/>
<a id="pl.2.26"></a><var>2.26</var>review procedures of the class A licensee to ensure compliance with section 240.13, <br/>
<a id="pl.2.27"></a><var>2.27</var>subdivision 5a.<br/>
<br/>
<a id="bill.1.3.0"></a><a id="pl.2.28"></a><var>2.28</var>    Sec. 3. Minnesota Statutes 2010, section 240.13, is amended by adding a subdivision <br/>
<a id="pl.2.29"></a><var>2.29</var>to read:<br/>
<a id="pl.2.30"></a><var>2.30</var>    Subd. 5a. <b>Equine industry improvement fund.</b> (a) To compensate the horse <br/>
<a id="pl.2.31"></a><var>2.31</var>racing industry for the presence of lottery gaming machines at class A racing facilities, <br/>
<a id="pl.2.32"></a><var>2.32</var>the commission shall establish and maintain an equine industry improvement fund. <br/>
<a id="pl.2.33"></a><var>2.33</var>Each licensee holding a location contract with the lottery director shall, as directed <br/>
<a id="pl.2.34"></a><var>2.34</var>by the commission, transmit an amount equal to 12 percent of the location contract <br/>
<a id="pl.2.35"></a><var>2.35</var>compensation received from the lottery director to the commission for deposit into the <br/>
<a id="pl.3.1"></a><var>3.1</var>equine industry improvement fund. Seventy-five percent of the funds shall be allocated <br/>
<a id="pl.3.2"></a><var>3.2</var>for purse supplements. The commission shall routinely transfer 80 percent of the fund <br/>
<a id="pl.3.3"></a><var>3.3</var>allocated for purse supplements to a licensee conducting live racing for more than one <br/>
<a id="pl.3.4"></a><var>3.4</var>breed of horse and 20 percent to a licensee conducting live racing for only one breed of <br/>
<a id="pl.3.5"></a><var>3.5</var>horse and direct the licensee to use the funds to supplement purses offered for live races. <br/>
<a id="pl.3.6"></a><var>3.6</var>Purse supplements required under this subdivision are in addition to purse payments <br/>
<a id="pl.3.7"></a><var>3.7</var>otherwise established by law or contract. The location contract holder and the organization <br/>
<a id="pl.3.8"></a><var>3.8</var>representing the majority of horsepersons racing at the location contract holder's racetrack <br/>
<a id="pl.3.9"></a><var>3.9</var>may, by written contract, agree to use a portion of the transferred funds for racing-related <br/>
<a id="pl.3.10"></a><var>3.10</var>purposes other than purse supplementation.<br/>
<a id="pl.3.11"></a><var>3.11</var>(b) The commission shall allocate 20 percent of the fund for breeder's fund purposes <br/>
<a id="pl.3.12"></a><var>3.12</var>and shall transmit that amount to the breeder's fund for the benefit of each breed racing at <br/>
<a id="pl.3.13"></a><var>3.13</var>a class A licensed facility hosting lottery gaming machines. Amounts transferred shall <br/>
<a id="pl.3.14"></a><var>3.14</var>be in the same proportions established, under this subdivision, for purse supplements. <br/>
<a id="pl.3.15"></a><var>3.15</var>Amounts transferred to a breeder's fund shall be used for the purposes of section 240.18, <br/>
<a id="pl.3.16"></a><var>3.16</var>subdivisions 2, paragraph (d), and 3, paragraph (b), subject to the proportionality <br/>
<a id="pl.3.17"></a><var>3.17</var>requirement in section 240.18, subdivision 1.<br/>
<a id="pl.3.18"></a><var>3.18</var>(c) Five percent of the fund shall be placed in an equine industry enhancement fund <br/>
<a id="pl.3.19"></a><var>3.19</var>established by the commission. The commission shall award grants from this account <br/>
<a id="pl.3.20"></a><var>3.20</var>designed to support and improve the nonracing equine industry including, but not limited <br/>
<a id="pl.3.21"></a><var>3.21</var>to, construction of facilities and trails, production of shows, and issues related to retired <br/>
<a id="pl.3.22"></a><var>3.22</var>horses.<br/>
<br/>
<a id="bill.1.4.0"></a><a id="pl.3.23"></a><var>3.23</var>    Sec. 4. Minnesota Statutes 2010, section 240.14, is amended by adding a subdivision <br/>
<a id="pl.3.24"></a><var>3.24</var>to read:<br/>
<a id="pl.3.25"></a><var>3.25</var>    Subd. 5. <b>Lottery contract holder; minimum racing days.</b> Licensees holding <br/>
<a id="pl.3.26"></a><var>3.26</var>location contracts with the director of the lottery, who are authorized to conduct live racing <br/>
<a id="pl.3.27"></a><var>3.27</var>for more than one breed of horse, shall conduct thoroughbred and quarter horse racing. <br/>
<a id="pl.3.28"></a><var>3.28</var>In any year the licensee shall offer the equivalent of at least two quarter horse races for <br/>
<a id="pl.3.29"></a><var>3.29</var>each racing day granted to the licensee by the commission, however, the licensee and the <br/>
<a id="pl.3.30"></a><var>3.30</var>organization representing the majority of quarter horses owners licensed to race in the <br/>
<a id="pl.3.31"></a><var>3.31</var>state may agree to a different number of live races to be offered. Scheduling of quarter <br/>
<a id="pl.3.32"></a><var>3.32</var>horse races shall be as approved by the commission pursuant to section 240.03, clause (8). <br/>
<a id="pl.3.33"></a><var>3.33</var>Willful failure to offer the races required by this subdivision shall subject the licensee to <br/>
<a id="pl.3.34"></a><var>3.34</var>disciplinary action as deemed appropriate by the commission.<br/>
<br/>
<a id="bill.1.5.0"></a><a id="pl.4.1"></a><var>4.1</var>    Sec. 5. <b>[297A.651] LOTTERY GAMING MACHINES; IN-LIEU FEE.</b><br/>
<a id="pl.4.2"></a><var>4.2</var>Adjusted gross revenue from the operation of gaming machines authorized under <br/>
<a id="pl.4.3"></a><var>4.3</var>chapter 349A is exempt from the tax imposed under section 297A.62 and chapter 297E <br/>
<a id="pl.4.4"></a><var>4.4</var>and any other tax, license, permit, or assessment for conducting a gambling activity that is <br/>
<a id="pl.4.5"></a><var>4.5</var>not imposed by this section. The State Lottery must, on or before the 20th day of each <br/>
<a id="pl.4.6"></a><var>4.6</var>month, transmit to the commissioner an amount equal to the adjusted gross gaming <br/>
<a id="pl.4.7"></a><var>4.7</var>machine revenue from the operation of gaming machines, as defined in section 349A.01, <br/>
<a id="pl.4.8"></a><var>4.8</var>for the previous month multiplied by: (1) 25 percent of annual adjusted gross gaming <br/>
<a id="pl.4.9"></a><var>4.9</var>machine revenue generated by each person that has a location contract under section <br/>
<a id="pl.4.10"></a><var>4.10</var>349A.17, subdivision 1, up to $150,000,000; (2) 30 percent of annual adjusted gross <br/>
<a id="pl.4.11"></a><var>4.11</var>gaming machine revenue generated by each person that has a location contract under <br/>
<a id="pl.4.12"></a><var>4.12</var>section 349A.17, subdivision 1, between $150,000,000 and $200,000,000; and (3) 40 <br/>
<a id="pl.4.13"></a><var>4.13</var>percent of annual adjusted gross gaming machine revenue generated by each person that <br/>
<a id="pl.4.14"></a><var>4.14</var>has a location contract under section 349A.17, subdivision 1, in excess of $200,000,000. <br/>
<a id="pl.4.15"></a><var>4.15</var>The commissioner shall deposit the money transmitted under this section in the state <br/>
<a id="pl.4.16"></a><var>4.16</var>treasury as provided in article 2.<br/>
<br/>
<a id="bill.1.6.0"></a><a id="pl.4.17"></a><var>4.17</var>    Sec. 6. Minnesota Statutes 2010, section 299L.07, subdivision 2, is amended to read:<br/>
<a id="pl.4.18"></a><var>4.18</var>    Subd. 2. <b>Exclusions.</b> Notwithstanding subdivision 1, a gambling device:<br/>
<a id="pl.4.19"></a><var>4.19</var>(1) may be sold by a person who is not licensed under this section, if the person (i) is <br/>
<a id="pl.4.20"></a><var>4.20</var>not engaged in the trade or business of selling gambling devices, and (ii) does not sell <br/>
<a id="pl.4.21"></a><var>4.21</var>more than one gambling device in any calendar year;<br/>
<a id="pl.4.22"></a><var>4.22</var>(2) may be sold by the governing body of a federally recognized Indian tribe <br/>
<a id="pl.4.23"></a><var>4.23</var>described in subdivision 2a, paragraph (b), clause (1), which is not licensed under this <br/>
<a id="pl.4.24"></a><var>4.24</var>section, if (i) the gambling device was operated by the Indian tribe, (ii) the sale is to <br/>
<a id="pl.4.25"></a><var>4.25</var>a distributor licensed under this section, and (iii) the licensed distributor notifies the <br/>
<a id="pl.4.26"></a><var>4.26</var>commissioner of the purchase, in the same manner as is required when the licensed <br/>
<a id="pl.4.27"></a><var>4.27</var>distributor ships a gambling device into Minnesota;<br/>
<a id="pl.4.28"></a><var>4.28</var>(3) may be possessed by a person not licensed under this section if the person holds <br/>
<a id="pl.4.29"></a><var>4.29</var>a permit issued under section 
         <statute_ref>299L.08</statute_ref>; and <br/>
<a id="pl.4.30"></a><var>4.30</var>(4) may be possessed by a state agency, with the written authorization of the director, <br/>
<a id="pl.4.31"></a><var>4.31</var>for display or evaluation purposes only and not for the conduct of gambling.; and<br/>
<a id="pl.4.32"></a><var>4.32</var>(5) may be possessed by the State Lottery or a person who has entered into a location <br/>
<a id="pl.4.33"></a><var>4.33</var>contract with the State Lottery as authorized under chapter 349A.<br/>
<br/>
<a id="bill.1.7.0"></a><a id="pl.4.34"></a><var>4.34</var>    Sec. 7. Minnesota Statutes 2010, section 299L.07, subdivision 2a, is amended to read:<br/>
<a id="pl.5.1"></a><var>5.1</var>    Subd. 2a. <b>Restrictions.</b> (a) A manufacturer licensed under this section may sell, <br/>
<a id="pl.5.2"></a><var>5.2</var>offer to sell, lease, or rent, in whole or in part, a gambling device only to a distributor <br/>
<a id="pl.5.3"></a><var>5.3</var>licensed under this section or to the State Lottery as authorized under chapter 349A.<br/>
<a id="pl.5.4"></a><var>5.4</var>(b) A distributor licensed under this section may sell, offer to sell, market, rent, <br/>
<a id="pl.5.5"></a><var>5.5</var>lease, or otherwise provide, in whole or in part, a gambling device only to:<br/>
<a id="pl.5.6"></a><var>5.6</var>(1) the governing body of a federally recognized Indian tribe that is authorized <br/>
<a id="pl.5.7"></a><var>5.7</var>to operate the gambling device under a tribal state compact under the Indian Gaming <br/>
<a id="pl.5.8"></a><var>5.8</var>Regulatory Act, Public Law 100-497, and future amendments to it;<br/>
<a id="pl.5.9"></a><var>5.9</var>(2) a person for use in the person's dwelling for display or amusement purposes in a <br/>
<a id="pl.5.10"></a><var>5.10</var>manner that does not afford players an opportunity to obtain anything of value;<br/>
<a id="pl.5.11"></a><var>5.11</var>(3) another distributor licensed under this section; or<br/>
<a id="pl.5.12"></a><var>5.12</var>(4) a person in another state who is authorized under the laws of that state to possess <br/>
<a id="pl.5.13"></a><var>5.13</var>the gambling device.; or<br/>
<a id="pl.5.14"></a><var>5.14</var>(5) the State Lottery as authorized under chapter 349A.<br/>
<br/>
<a id="bill.1.8.0"></a><a id="pl.5.15"></a><var>5.15</var>    Sec. 8. Minnesota Statutes 2010, section 349A.01, is amended by adding a subdivision <br/>
<a id="pl.5.16"></a><var>5.16</var>to read:<br/>
<a id="pl.5.17"></a><var>5.17</var>    Subd. 1a. <b>Adjusted gross gaming machine revenue.</b> "Adjusted gross gaming <br/>
<a id="pl.5.18"></a><var>5.18</var>machine revenue" means the sum of all money received by the lottery for gaming machine <br/>
<a id="pl.5.19"></a><var>5.19</var>plays, other than promotional plays, less the amount paid out in prizes for gaming machine <br/>
<a id="pl.5.20"></a><var>5.20</var>games.<br/>
<br/>
<a id="bill.1.9.0"></a><a id="pl.5.21"></a><var>5.21</var>    Sec. 9. Minnesota Statutes 2010, section 349A.01, is amended by adding a subdivision <br/>
<a id="pl.5.22"></a><var>5.22</var>to read:<br/>
<a id="pl.5.23"></a><var>5.23</var>    Subd. 6a. <b>Gaming machine.</b> "Gaming machine" means any electronic device <br/>
<a id="pl.5.24"></a><var>5.24</var>which, upon insertion of money, coin, token, voucher, electronic card, or other <br/>
<a id="pl.5.25"></a><var>5.25</var>consideration, allows the play of a game, authorized by the director, the outcome of which <br/>
<a id="pl.5.26"></a><var>5.26</var>is determined entirely or partly by chance. A gaming machine may award a player a prize <br/>
<a id="pl.5.27"></a><var>5.27</var>in the form of money, tokens, prize slips, or other authorized consideration.<br/>
<br/>
<a id="bill.1.10.0"></a><a id="pl.5.28"></a><var>5.28</var>    Sec. 10. Minnesota Statutes 2010, section 349A.01, is amended by adding a <br/>
<a id="pl.5.29"></a><var>5.29</var>subdivision to read:<br/>
<a id="pl.5.30"></a><var>5.30</var>    Subd. 6b. <b>Gaming machine area.</b> "Gaming machine area" means an area within <br/>
<a id="pl.5.31"></a><var>5.31</var>ten feet of a gaming machine.<br/>
<br/>
<a id="bill.1.11.0"></a><a id="pl.6.1"></a><var>6.1</var>    Sec. 11. Minnesota Statutes 2010, section 349A.01, is amended by adding a <br/>
<a id="pl.6.2"></a><var>6.2</var>subdivision to read:<br/>
<a id="pl.6.3"></a><var>6.3</var>    Subd. 6c. <b>Gaming machine game.</b> "Gaming machine game" means a game <br/>
<a id="pl.6.4"></a><var>6.4</var>operated by a gaming machine as authorized by the director.<br/>
<br/>
<a id="bill.1.12.0"></a><a id="pl.6.5"></a><var>6.5</var>    Sec. 12. Minnesota Statutes 2010, section 349A.01, is amended by adding a <br/>
<a id="pl.6.6"></a><var>6.6</var>subdivision to read:<br/>
<a id="pl.6.7"></a><var>6.7</var>    Subd. 6d. <b>Gaming machine play.</b> "Gaming machine play" means an electronic <br/>
<a id="pl.6.8"></a><var>6.8</var>record that proves participation in a gaming machine game.<br/>
<br/>
<a id="bill.1.13.0"></a><a id="pl.6.9"></a><var>6.9</var>    Sec. 13. Minnesota Statutes 2010, section 349A.01, subdivision 10, is amended to read:<br/>
<a id="pl.6.10"></a><var>6.10</var>    Subd. 10. <b>Lottery procurement contract.</b> "Lottery procurement contract" means a <br/>
<a id="pl.6.11"></a><var>6.11</var>contract to provide lottery products, gaming machines, maintenance of gaming machines, <br/>
<a id="pl.6.12"></a><var>6.12</var>computer hardware and software used to monitor sales of lottery tickets and gaming <br/>
<a id="pl.6.13"></a><var>6.13</var>machine plays, and lottery tickets. "Lottery procurement contract" does not include <br/>
<a id="pl.6.14"></a><var>6.14</var>a contract to provide an annuity or prize payment agreement or materials, supplies, <br/>
<a id="pl.6.15"></a><var>6.15</var>equipment, or services common to the ordinary operation of a state agency.<br/>
<br/>
<a id="bill.1.14.0"></a><a id="pl.6.16"></a><var>6.16</var>    Sec. 14. Minnesota Statutes 2010, section 349A.10, subdivision 3, is amended to read:<br/>
<a id="pl.6.17"></a><var>6.17</var>    Subd. 3. <b>Lottery operations.</b> (a) The director shall establish a lottery operations <br/>
<a id="pl.6.18"></a><var>6.18</var>account in the lottery fund. The director shall pay all costs of operating the lottery, <br/>
<a id="pl.6.19"></a><var>6.19</var>including payroll costs or amounts transferred to the state treasury for payroll costs, but <br/>
<a id="pl.6.20"></a><var>6.20</var>not including lottery prizes, from the lottery operating account. The director shall credit to <br/>
<a id="pl.6.21"></a><var>6.21</var>the lottery operations account amounts sufficient to pay the operating costs of the lottery.<br/>
<a id="pl.6.22"></a><var>6.22</var>(b) Except as provided in paragraph (e), the director may not credit in any fiscal <br/>
<a id="pl.6.23"></a><var>6.23</var>year thereafter amounts to the lottery operations account which when totaled exceed <br/>
<a id="pl.6.24"></a><var>6.24</var>nine percent of gross revenue to the lottery fund in that fiscal year. In computing total <br/>
<a id="pl.6.25"></a><var>6.25</var>amounts credited to the lottery operations account under this paragraph the director shall <br/>
<a id="pl.6.26"></a><var>6.26</var>disregard amounts transferred to or retained by lottery retailers as sales commissions or <br/>
<a id="pl.6.27"></a><var>6.27</var>other compensation and amounts transferred or retained by a racetrack under a location <br/>
<a id="pl.6.28"></a><var>6.28</var>contract under section 349A.17.<br/>
<a id="pl.6.29"></a><var>6.29</var>(c) The director of the lottery may not expend after July 1, 1991, more than 2-3/4 <br/>
<a id="pl.6.30"></a><var>6.30</var>percent of gross revenues in a fiscal year for contracts for the preparation, publication, and <br/>
<a id="pl.6.31"></a><var>6.31</var>placement of advertising.<br/>
<a id="pl.6.32"></a><var>6.32</var>(d) Except as the director determines, the lottery is not subject to chapter 16A <br/>
<a id="pl.6.33"></a><var>6.33</var>relating to budgeting, payroll, and the purchase of goods and services.<br/>
<a id="pl.7.1"></a><var>7.1</var>(e) In addition to the amounts credited to the lottery operations account under <br/>
<a id="pl.7.2"></a><var>7.2</var>paragraph (b), the director is authorized, if necessary, to meet the current obligations of <br/>
<a id="pl.7.3"></a><var>7.3</var>the lottery and to credit up to 25 percent of an amount equal to the average annual amount <br/>
<a id="pl.7.4"></a><var>7.4</var>which was authorized to be credited to the lottery operations account for the previous three <br/>
<a id="pl.7.5"></a><var>7.5</var>fiscal years but was not needed to meet the obligations of the lottery.<br/>
<br/>
<a id="bill.1.15.0"></a><a id="pl.7.6"></a><var>7.6</var>    Sec. 15. Minnesota Statutes 2010, section 349A.13, is amended to read:<br/>
<a id="pl.7.7"></a><var>7.7</var><b>349A.13 RESTRICTIONS.</b><br/>
<a id="pl.7.8"></a><var>7.8</var>Nothing in this chapter:<br/>
<a id="pl.7.9"></a><var>7.9</var>(1) authorizes the director to conduct a lottery game or contest the winner or winners <br/>
<a id="pl.7.10"></a><var>7.10</var>of which are determined by the result of a sporting event other than a horse race conducted <br/>
<a id="pl.7.11"></a><var>7.11</var>under chapter 240;<br/>
<a id="pl.7.12"></a><var>7.12</var>(2) authorizes the director to install or operate a lottery device operated by coin or <br/>
<a id="pl.7.13"></a><var>7.13</var>currency which when operated determines the winner of a game, except as authorized <br/>
<a id="pl.7.14"></a><var>7.14</var>under section 349A.17; and<br/>
<a id="pl.7.15"></a><var>7.15</var>(3) authorizes the director to sell pull-tabs as defined under section 
         <statute_ref>349.12, <br/>
<a id="pl.7.16"></a><var>7.16</var>subdivision 32
         </statute_ref>. <br/>
<br/>
<a id="bill.1.16.0"></a><a id="pl.7.17"></a><var>7.17</var>    Sec. 16. <b>[349A.17] GAMING MACHINES.</b><br/>
<a id="pl.7.18"></a><var>7.18</var>    Subdivision 1. <b>Location contract.</b> (a) The director may enter into a contract with <br/>
<a id="pl.7.19"></a><var>7.19</var>a person to provide locations for gaming machines. Contracts entered into under this <br/>
<a id="pl.7.20"></a><var>7.20</var>section are not subject to chapter 16C. The director may only enter a contract under this <br/>
<a id="pl.7.21"></a><var>7.21</var>subdivision with a person who holds a class A license under chapter 240. The gaming <br/>
<a id="pl.7.22"></a><var>7.22</var>machines may only be placed at the racetrack for which the class A license under chapter <br/>
<a id="pl.7.23"></a><var>7.23</var>240 was issued. Contracts entered into under this section are void if the racetrack: (1) has <br/>
<a id="pl.7.24"></a><var>7.24</var>not hosted at least 75 days of live racing, authorized by the Minnesota Racing Commission, <br/>
<a id="pl.7.25"></a><var>7.25</var>during the previous year, or (2) has not been approved, unless approval is pending, for at <br/>
<a id="pl.7.26"></a><var>7.26</var>least 75 days of live racing during the present year. In the case of licensees authorized to <br/>
<a id="pl.7.27"></a><var>7.27</var>conduct racing for only one breed of horse, the live racing requirement is 50 days.<br/>
<a id="pl.7.28"></a><var>7.28</var>(b) The director may cancel, suspend, or refuse to renew the location contract <br/>
<a id="pl.7.29"></a><var>7.29</var>if the person:<br/>
<a id="pl.7.30"></a><var>7.30</var>(1) fails to account for proceeds from the gaming machines;<br/>
<a id="pl.7.31"></a><var>7.31</var>(2) fails to remit funds to the director in accordance with the location contract;<br/>
<a id="pl.7.32"></a><var>7.32</var>(3) violates a law, rule, or order of the director;<br/>
<a id="pl.7.33"></a><var>7.33</var>(4) fails to comply with a material term of the location contract; or<br/>
<a id="pl.8.1"></a><var>8.1</var>(5) has acted in a manner prejudicial to the public confidence in the integrity of the <br/>
<a id="pl.8.2"></a><var>8.2</var>operation of the gaming machines.<br/>
<a id="pl.8.3"></a><var>8.3</var>The cancellation, suspension, or refusal to renew the location contract is a contested <br/>
<a id="pl.8.4"></a><var>8.4</var>case under sections 14.57 to 14.69.<br/>
<a id="pl.8.5"></a><var>8.5</var>(c) Contracts entered into under this section must provide for compensation to the <br/>
<a id="pl.8.6"></a><var>8.6</var>licensee in recognition of goods, services, and facilities provided expenses, risk factors, <br/>
<a id="pl.8.7"></a><var>8.7</var>and losses. Compensation shall be in an amount equal to at least the following percentages <br/>
<a id="pl.8.8"></a><var>8.8</var>of adjusted gross gaming machine revenue generated at the licensee's facility:<br/>
<a id="pl.8.9"></a><var>8.9</var>(1) of the first $150,000,000 of annual adjusted gross gaming machine revenue, <br/>
<a id="pl.8.10"></a><var>8.10</var>60 percent; <br/>
<a id="pl.8.11"></a><var>8.11</var>(2) of annual adjusted gross gaming machine revenue between $150,000,000 and <br/>
<a id="pl.8.12"></a><var>8.12</var>$200,000,000, 55 percent; and<br/>
<a id="pl.8.13"></a><var>8.13</var>(3) of annual adjusted gross gaming machine revenue in excess of $200,000,000, <br/>
<a id="pl.8.14"></a><var>8.14</var>45 percent. <br/>
<a id="pl.8.15"></a><var>8.15</var>(d) A licensee must annually remit one percent of the compensation it receives <br/>
<a id="pl.8.16"></a><var>8.16</var>pursuant to this section to the city, and one percent to the county in which the licensee <br/>
<a id="pl.8.17"></a><var>8.17</var>conducts racing.<br/>
<a id="pl.8.18"></a><var>8.18</var>    Subd. 2. <b>Operation.</b> (a) All gaming machines that are placed at a racetrack under <br/>
<a id="pl.8.19"></a><var>8.19</var>subdivision 1 must be operated and controlled by the director.<br/>
<a id="pl.8.20"></a><var>8.20</var>(b) Gaming machines must be owned or leased by the director, however, the financial <br/>
<a id="pl.8.21"></a><var>8.21</var>responsibility for all other activities related to the gaming facility including, but not <br/>
<a id="pl.8.22"></a><var>8.22</var>limited to, advertising, marketing, facility expenses, staffing, security, and surveillance, <br/>
<a id="pl.8.23"></a><var>8.23</var>shall be borne by the holder of the location contract.<br/>
<a id="pl.8.24"></a><var>8.24</var>(c) Gaming machines must be maintained by the lottery, or by a vendor that is under <br/>
<a id="pl.8.25"></a><var>8.25</var>the control and direction of the director.<br/>
<a id="pl.8.26"></a><var>8.26</var>(d) The director must have a central communications system that monitors activities <br/>
<a id="pl.8.27"></a><var>8.27</var>on each gaming machine. The central communications system must be located at a <br/>
<a id="pl.8.28"></a><var>8.28</var>lottery office.<br/>
<a id="pl.8.29"></a><var>8.29</var>(e) The director must approve and oversee the general security arrangements <br/>
<a id="pl.8.30"></a><var>8.30</var>associated with and relating to the operation of the gaming machines and implement <br/>
<a id="pl.8.31"></a><var>8.31</var>procedures as deemed appropriate.<br/>
<a id="pl.8.32"></a><var>8.32</var>(f) Advertising and promotional material produced by the racetrack relating to <br/>
<a id="pl.8.33"></a><var>8.33</var>gaming machines located at the facility must be approved by the director.<br/>
<a id="pl.8.34"></a><var>8.34</var>(g) The director may implement such other controls as are deemed necessary for the <br/>
<a id="pl.8.35"></a><var>8.35</var>operation of gaming machines under this section.<br/>
<a id="pl.9.1"></a><var>9.1</var>(h) The holder of a location contract must make reasonable efforts to prevent <br/>
<a id="pl.9.2"></a><var>9.2</var>drinking or possession of intoxicating beverages in gaming machine areas, and must <br/>
<a id="pl.9.3"></a><var>9.3</var>not serve or allow consumption of intoxicating beverages in gaming machine areas. A <br/>
<a id="pl.9.4"></a><var>9.4</var>violation of this section by location provider is subject to section 340.415. The holder <br/>
<a id="pl.9.5"></a><var>9.5</var>of a location contract is, however, exempt from this provision, and may allow serving <br/>
<a id="pl.9.6"></a><var>9.6</var>and possession of intoxicating beverages in the gaming machine area, if the premises is <br/>
<a id="pl.9.7"></a><var>9.7</var>located within ten miles of a facility conducting class III gambling under section 3.9221 <br/>
<a id="pl.9.8"></a><var>9.8</var>that allows alcohol consumption in its gaming machine area.<br/>
<a id="pl.9.9"></a><var>9.9</var>    Subd. 3. <b>Specifications.</b> Gaming machines must be capable of being linked <br/>
<a id="pl.9.10"></a><var>9.10</var>electronically to a central communications system to provide auditing program information <br/>
<a id="pl.9.11"></a><var>9.11</var>as required by the director.<br/>
<a id="pl.9.12"></a><var>9.12</var>    Subd. 4. <b>Games.</b> The director shall specify the games that may be placed on <br/>
<a id="pl.9.13"></a><var>9.13</var>a gaming machine as provided in section 349A.04. Gaming machines may conduct <br/>
<a id="pl.9.14"></a><var>9.14</var>pari-mutuel wagering and display horse races under specifications provided by the director.<br/>
<a id="pl.9.15"></a><var>9.15</var>    Subd. 5. <b>Examination of machines.</b> The director shall examine prototypes of <br/>
<a id="pl.9.16"></a><var>9.16</var>gaming machines and require that the manufacturer of the machine pay the cost of the <br/>
<a id="pl.9.17"></a><var>9.17</var>examination. The director may contract for the examination of gaming machines.<br/>
<a id="pl.9.18"></a><var>9.18</var>    Subd. 6. <b>Testing of machines.</b> The director may require working models of a <br/>
<a id="pl.9.19"></a><var>9.19</var>gaming machine to be transported to the locations the director designates for testing, <br/>
<a id="pl.9.20"></a><var>9.20</var>examination, and analysis. The manufacturer shall pay all costs for testing, examination, <br/>
<a id="pl.9.21"></a><var>9.21</var>analysis, and transportation of the machine model.<br/>
<a id="pl.9.22"></a><var>9.22</var>    Subd. 7. <b>Prizes.</b> A person who plays a gaming machine agrees to be bound by the <br/>
<a id="pl.9.23"></a><var>9.23</var>rules and game procedures applicable to that particular gaming machine game. The player <br/>
<a id="pl.9.24"></a><var>9.24</var>acknowledges that the determination of whether the player has won a prize is subject to <br/>
<a id="pl.9.25"></a><var>9.25</var>the rules and game procedures adopted by the director, claim procedures established by <br/>
<a id="pl.9.26"></a><var>9.26</var>the director for the game, and any confidential or public validation tests established by <br/>
<a id="pl.9.27"></a><var>9.27</var>the director for the game. A person under 18 years of age may not claim a prize from the <br/>
<a id="pl.9.28"></a><var>9.28</var>operation of a gaming machine. A prize claimed from the play of a gaming machine game <br/>
<a id="pl.9.29"></a><var>9.29</var>is not subject to section 349A.08, subdivision 8.<br/>
<a id="pl.9.30"></a><var>9.30</var>    Subd. 8. <b>Prohibitions.</b> (a) A person under the age of 18 years may not play a <br/>
<a id="pl.9.31"></a><var>9.31</var>game on a gaming machine.<br/>
<a id="pl.9.32"></a><var>9.32</var>(b) The director or any employee of the lottery, or a member of the immediate family <br/>
<a id="pl.9.33"></a><var>9.33</var>residing in the same household, may not play a game on a gaming machine or receive a <br/>
<a id="pl.9.34"></a><var>9.34</var>prize from the operation of a gaming machine.<br/>
<a id="pl.9.35"></a><var>9.35</var>(c) No person shall consume or possess intoxicating beverages within a gaming <br/>
<a id="pl.9.36"></a><var>9.36</var>machine area.<br/>
<a id="pl.10.1"></a><var>10.1</var>    Subd. 9. <b>Compulsive gambling notice.</b> The director shall prominently post, in the <br/>
<a id="pl.10.2"></a><var>10.2</var>area where the gaming machines are located, the toll-free telephone number established <br/>
<a id="pl.10.3"></a><var>10.3</var>by the commissioner of human services in connection with the compulsive gambling <br/>
<a id="pl.10.4"></a><var>10.4</var>program established under section 245.98. The director and the location provider shall <br/>
<a id="pl.10.5"></a><var>10.5</var>establish a responsible gambling plan in consultation with the National Council on <br/>
<a id="pl.10.6"></a><var>10.6</var>Problem Gambling or the Minnesota affiliate. By January 15 of each year, the director <br/>
<a id="pl.10.7"></a><var>10.7</var>shall submit a report to the legislature, of not more than five pages in length, setting forth <br/>
<a id="pl.10.8"></a><var>10.8</var>the status of the responsible gambling plan.<br/>
<a id="pl.10.9"></a><var>10.9</var>    Subd. 10. <b>Local licenses.</b> Except as provided in subdivision 1, paragraph (d), <br/>
<a id="pl.10.10"></a><var>10.10</var>no political subdivision may require a license to operate a gaming machine, restrict or <br/>
<a id="pl.10.11"></a><var>10.11</var>regulate the placement of gaming machines, or impose a tax or fee on the business of <br/>
<a id="pl.10.12"></a><var>10.12</var>operating gaming machines.<br/>
<br/>
<a id="bill.1.17.0"></a><a id="pl.10.13"></a><var>10.13</var>    Sec. 17. <b>LOTTERY BUDGET.</b><br/>
<a id="pl.10.14"></a><var>10.14</var>The director of the State Lottery shall submit a budget for the operation and control <br/>
<a id="pl.10.15"></a><var>10.15</var>of gaming machines to the commissioner of management and budget. Notwithstanding <br/>
<a id="pl.10.16"></a><var>10.16</var>Minnesota Statutes, section 349A.10, subdivision 6, the director of the State Lottery <br/>
<a id="pl.10.17"></a><var>10.17</var>may expend amounts necessary to operate and control the gaming machines. Amounts <br/>
<a id="pl.10.18"></a><var>10.18</var>expended by the director of the State Lottery for the operation and control of the gaming <br/>
<a id="pl.10.19"></a><var>10.19</var>machines in fiscal years 2013 and 2014 are not subject to the maximum amount set in law <br/>
<a id="pl.10.20"></a><var>10.20</var>for the operation of the lottery.<br/>
<br/>
<a id="bill.1.18.0"></a><a id="pl.10.21"></a><var>10.21</var>    Sec. 18. <b> REPEALER.</b><br/>
<a id="pl.10.22"></a><var>10.22</var>Minnesota Statutes 2010, section 240.30, subdivisions 3 and 8, are repealed.<br/>
<br/>
<a id="bill.2.0.0"></a>

<a id="bill.2.1.0"></a><a id="pl.10.25"></a><var>10.25</var>    Section 1. <b>RACINO REVENUE.</b><br/>
<a id="pl.10.26"></a><var>10.26</var>    Subdivision 1. <b>Allocation.</b>  Revenue transmitted to the commissioner under <br/>
<a id="pl.10.27"></a><var>10.27</var>Minnesota Statutes, section 297A.651, must be deposited in a special account in the <br/>
<a id="pl.10.28"></a><var>10.28</var>state treasury as provided in subdivision 2.<br/>
<a id="pl.10.29"></a><var>10.29</var>    Subd. 2. <b>Education.</b> A special account is established in the state treasury, consisting <br/>
<a id="pl.10.30"></a><var>10.30</var>of money deposited under Minnesota Statutes, section 297A.651, and any interest earned <br/>
<a id="pl.10.31"></a><var>10.31</var>thereon. Money in this account is appropriated for the following purposes in priority order:<br/>
<a id="pl.10.32"></a><var>10.32</var>(1) to increase the aid payment schedule for school district aids and credits payments <br/>
<a id="pl.10.33"></a><var>10.33</var>in section 127A.45, to not more than 90 percent rounded to the nearest tenth of a percent <br/>
<a id="pl.11.1"></a><var>11.1</var>without exceeding the amount available and with any remaining funds deposited in the <br/>
<a id="pl.11.2"></a><var>11.2</var>budget reserve; and <br/>
<a id="pl.11.3"></a><var>11.3</var>(2) to restore all or a portion of the net aid reduction under section 127A.441, and to <br/>
<a id="pl.11.4"></a><var>11.4</var>reduce the property tax revenue recognition shift under section 123B.75, subdivision 5, <br/>
<a id="pl.11.5"></a><var>11.5</var>paragraph (a).<br/>
<a id="pl.11.6"></a><var>11.6</var>    Subd. 3. <b>Bonding.</b> When the purposes of subdivision 2 have been satisfied, money <br/>
<a id="pl.11.7"></a><var>11.7</var>in the account is appropriated to pay, redeem, or defease bonds of the state sold and <br/>
<a id="pl.11.8"></a><var>11.8</var>issued pursuant to Minnesota Statutes, sections 16A.631 to 16A.675, and the Minnesota <br/>
<a id="pl.11.9"></a><var>11.9</var>Constitution, article XI, sections 4 to 7.<br/>
<br/>
<a id="bill.3.0.0"></a>

<a id="bill.3.1.0"></a><a id="pl.11.12"></a><var>11.12</var>    Section 1. <b>SEVERABILITY; SAVINGS.</b><br/>
<a id="pl.11.13"></a><var>11.13</var>If any provision of this act is found to be invalid because it is in conflict with a <br/>
<a id="pl.11.14"></a><var>11.14</var>provision of the Minnesota Constitution or the Constitution of the United States, or for any <br/>
<a id="pl.11.15"></a><var>11.15</var>other reason, all other provisions of this act shall remain valid and any rights, remedies, <br/>
<a id="pl.11.16"></a><var>11.16</var>and privileges that have been otherwise accrued by this act, shall remain in effect and may <br/>
<a id="pl.11.17"></a><var>11.17</var>be proceeded with and concluded under this act.<br/>
<br/>
<a id="bill.3.2.0"></a><a id="pl.11.18"></a><var>11.18</var>    Sec. 2. <b>EFFECTIVE DATE.</b><br/>
<a id="pl.11.19"></a><var>11.19</var>This act is effective the day following final enactment.<br/>