HF 514

2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to gaming; establishing a lottery board;
regulating card clubs and establishing a director of
card clubs; appropriating money; amending Minnesota
Statutes 2004, sections 240.03; 240.04, by adding a
subdivision; 240.155, subdivision 1; 240.23; 240.30,
subdivisions 2, 7; 349A.01, by adding a subdivision;
349A.08, subdivision 7; 349A.11; 349A.14; proposing
coding for new law in Minnesota Statutes, chapter 349A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

LOTTERY BOARD

Section 1.

Minnesota Statutes 2004, section 349A.01, is
amended by adding a subdivision to read:

new text begin Subd. 1a. new text end

new text begin Board. new text end

new text begin "Board" means the State Lottery Board.
new text end

Sec. 2.

new text begin [349A.011] LOTTERY BOARD.
new text end

new text begin Subdivision 1. new text end

new text begin Established. new text end

new text begin There is created a State
Lottery Board comprised of seven members appointed by the
governor with the advice and consent of the senate.
new text end

new text begin Subd. 2. new text end

new text begin Board members. new text end

new text begin Board members must be residents
of Minnesota and at least three members must reside outside the
Twin Cities seven-county metropolitan area. At least one member
must be an attorney licensed to practice law in Minnesota, at
least one member must have demonstrable experience in marketing
or advertising, at least one member must be a licensed certified
public accountant who is qualified as a financial expert, at
least one member must have demonstrable management experience in
retail business, and the remaining three members must have
demonstrable experience in managing complex business enterprises
or have policy making experience in the public sector. No
person may be a member of the board who has been convicted of a
felony, a crime involving fraud or misrepresentation, or a
gambling-related offense.
new text end

new text begin Subd. 3. new text end

new text begin Terms; compensation. new text end

new text begin The terms, removal, and
compensation of board members shall be as provided in section
15.0575, except that board members shall serve a term of three
years.
new text end

new text begin Subd. 4. new text end

new text begin Board organization. new text end

new text begin (a) The board shall elect
from their membership a chair and vice-chair at the first
meeting following the beginning of each fiscal year.
new text end

new text begin (b) The board shall meet at least quarterly or at such
other times at the call of the chair of the board.
new text end

new text begin (c) Notwithstanding chapter 13D, meetings of the board or
any committee of the board that relate to the lottery's
security, information security, or to evaluate the performance
of the director may be closed to the public.
new text end

new text begin (d) The operating expenses of the board relating to its
responsibilities under subdivision 5 shall be paid by the
lottery from the lottery operations account and must be publicly
reported by the board.
new text end

new text begin Subd. 5. new text end

new text begin Board responsibilities. new text end

new text begin The board has the
responsibility to review the overall operation and performance
of the lottery and make recommendations to the director
regarding the operation of the lottery, including identifying
potential improvements that will assist the lottery in
maximizing proceeds to the state and ensuring the integrity and
public confidence in the lottery. The responsibilities of the
board include, but are not limited to:
new text end

new text begin (1) reviewing the annual budget of the lottery;
new text end

new text begin (2) reviewing proposed lottery rules;
new text end

new text begin (3) conducting an annual performance review of the
director; and
new text end

new text begin (4) reviewing the financial affairs of the lottery.
new text end

Sec. 3.

Minnesota Statutes 2004, section 349A.08,
subdivision 7, is amended to read:

Subd. 7.

Payments prohibited.

(a) No prize may be paid
to the director or an employee of the lottery, new text begin member of the
board, new text end or a member of their families residing in the same
household of the member, director, or employee. No prize may be
paid to an officer or employee of a vendor which at the time the
game or drawing was being conducted was involved with providing
goods or services to the lottery under a lottery procurement
contract.

(b) No prize may be paid for a stolen, altered, or
fraudulent ticket.

Sec. 4.

Minnesota Statutes 2004, section 349A.11, is
amended to read:

349A.11 CONFLICT OF INTEREST.

Subdivision 1.

Lottery ticket; retailer.

The director,
an employee of the lottery, new text begin a board member, new text end a member of the
immediate family of the director deleted text begin or deleted text end new text begin , new text end employee new text begin , or board member
new text end residing in the same household may not:

(1) purchase a lottery ticket; or

(2) have any personal pecuniary interest in any vendor
holding a lottery procurement contract, or in any lottery
retailer; or

(3) receive any gift, gratuity, or other thing of value,
excluding food or beverage, from any lottery vendor or lottery
retailer, or person applying to be a retailer or vendor, in
excess of $100 in any calendar year.

Subd. 2.

Gifts.

The director deleted text begin or deleted text end new text begin , new text end an employee of the
lottery in the unclassified service new text begin , or a board member new text end may not
accept a gift the acceptance of which by an official would be
prohibited by section 10A.071.

Subd. 3.

Penalty.

A violation of subdivision 1, clause
(1), is a misdemeanor. A violation of subdivision 1, clause
(2), is a gross misdemeanor. A violation of subdivision 1,
clause (3), is a misdemeanor unless the gift, gratuity, or other
item of value received has a value in excess of $500, in which
case a violation is a gross misdemeanor.

Subd. 4.

Future employment.

The director deleted text begin or deleted text end new text begin , new text end an
unclassified employee of the lottery new text begin , or a board member new text end may not,
within two years of terminating employment with the lottery new text begin or
terminating membership on the board new text end , represent any person,
corporation, or entity before the lottery. A violation of
this deleted text begin paragraph deleted text end new text begin subdivision new text end is a misdemeanor.

Sec. 5.

Minnesota Statutes 2004, section 349A.14, is
amended to read:

349A.14 AUDIT.

The deleted text begin director deleted text end new text begin board new text end shall contract for an annual certified
audit of all accounts and transactions of the lottery new text begin , including
but not limited to an audit of the lottery's information
security new text end . The audit must be conducted by a certified public
accountant in accordance with generally accepted accounting
standards. The deleted text begin director deleted text end new text begin board new text end shall file a copy of each audit
report of the lottery with the governor deleted text begin and deleted text end new text begin , new text end the legislature new text begin ,
and the director new text end . new text begin The board shall cooperate fully with any
audit, evaluation, or investigation initiated by the legislative
auditor.
new text end

Sec. 6. new text begin APPOINTMENT OF INITIAL LOTTERY BOARD MEMBERS.
new text end

new text begin Of the initial members of the State Lottery Board, three
shall serve a term of three years, two shall serve a term of two
years, and two shall serve a term of one year. The governor
shall select the initial chair of the board who shall serve as
the chair until the board elects the chair.
new text end

Sec. 7. new text begin EFFECTIVE DATE.
new text end

new text begin This article is effective July 1, 2005.
new text end

ARTICLE 2

RACING COMMISSION

Section 1.

Minnesota Statutes 2004, section 240.03, is
amended to read:

240.03 COMMISSION POWERS AND DUTIES.

The commission has the following powers and duties:

(1) to regulate horse racing new text begin and card club activities new text end in
Minnesota to ensure that deleted text begin it is deleted text end new text begin they are new text end conducted in the public
interest;

(2) to issue licenses as provided in this chapter;

(3) to enforce all laws and rules governing horse
racing new text begin and card club activities new text end ;

(4) to collect and distribute all taxes provided for in
this chapter;

(5) to conduct necessary investigations and inquiries and
compel the submission of information, documents, and records it
deems necessary to carry out its duties;

(6) to supervise the conduct of pari-mutuel betting on
horse racing new text begin and card club wagering new text end ;

(7) to employ and supervise personnel under this chapter;

(8) to determine the number of racing days to be held in
the state and at each licensed racetrack;

(9) to take all necessary steps to ensure the integrity of
racing new text begin and card club activities new text end in Minnesota; and

(10) to impose fees on the racing and card playing
industries sufficient to recover the operating costs of the
commission with the approval of the legislature according to
section 16A.1283. Notwithstanding section 16A.1283, when the
legislature is not in session, the commissioner of finance may
grant interim approval for any new fees or adjustments to
existing fees that are not statutorily specified, until such
time as the legislature reconvenes and acts upon the new fees or
adjustments. As part of its biennial budget request, the
commission must propose changes to its fees that will be
sufficient to recover the operating costs of the commission.

Sec. 2.

Minnesota Statutes 2004, section 240.04, is
amended by adding a subdivision to read:

new text begin Subd. 3a. new text end

new text begin Director of card clubs. new text end

new text begin The commission shall
employ a director of card clubs who serves in the unclassified
service at the commission's pleasure. The director is
responsible for providing independent surveillance and other
daily oversight of card club operations, and shall have expert
knowledge and training in matters relevant to the operation of
card clubs. The director shall perform the following duties:
new text end

new text begin (1) conduct routine compliance checks of card club
activities to ensure compliance with a card club's approved plan
of operation and with all laws and commission rules relating to
the security and integrity of card club activities;
new text end

new text begin (2) oversee surveillance operations in card clubs,
regularly review card club surveillance logs, and analyze on an
annual basis the number and type of surveillance incidents
occurring at card clubs; and
new text end

new text begin (3) regularly review card club finances, ensuring that card
clubs are properly distributing revenue and expenses from the
funds in the player pool.
new text end

Sec. 3.

Minnesota Statutes 2004, section 240.155,
subdivision 1, is amended to read:

Subdivision 1.

Reimbursement account credit.

Money
received by the commission as reimbursement for the costs of
services provided by veterinarians, stewards, and medical
testing of horses must be deposited in the state treasury and
credited to a racing reimbursement account, except as provided
under subdivision 2. Receipts are appropriated to the
commission to pay the costs of providing the services. new text begin Receipts
deposited under section 240.30, subdivision 9, are appropriated
to the commission for the costs of regulation of card club
activities under section 240.03.
new text end

Sec. 4.

Minnesota Statutes 2004, section 240.23, is
amended to read:

240.23 RULEMAKING AUTHORITY.

The commission has the authority, in addition to all other
rulemaking authority granted elsewhere in this chapter to
promulgate rules governing:

(a) the conduct of horse races held at licensed racetracks
in Minnesota, including but not limited to the rules of racing,
standards of entry, operation of claiming races, filing and
handling of objections, carrying of weights, and declaration of
official results;

(b) wire communications between the premises of a licensed
racetrack and any place outside the premises;

(c) information on horse races which is sold on the
premises of a licensed racetrack;

(d) liability insurance which it may require of all class
A, class B, and class D licensees;

(e) the auditing of the books and records of a licensee by
an auditor employed or appointed by the commission;

(f) emergency action plans maintained by licensed
racetracks and their periodic review;

(g) safety, security, and sanitation of stabling facilities
at licensed racetracks;

(h) entry fees and other funds received by a licensee in
the course of conducting racing which the commission determines
must be placed in escrow accounts;

(i) affirmative action in employment and contracting by
class A, class B, and class D licensees; deleted text begin and
deleted text end

(j) any other aspect of horse racing or pari-mutuel betting
which in its opinion affects the integrity of racing or the
public health, welfare, or safety new text begin ; and
new text end

new text begin (k) card club operations, including safety and security,
surveillance, and finances new text end .

Rules of the commission are subject to chapter 14, the
Administrative Procedure Act.

Sec. 5.

Minnesota Statutes 2004, section 240.30,
subdivision 2, is amended to read:

Subd. 2.

Supervision.

The authorized licensee is
responsible for conducting and supervising the card
games, new text begin subject to the oversight of the director of card clubs,
new text end providing all necessary equipment, services, and personnel, and
reimbursing the commission for costs related to card club
regulation and enforcement.

Sec. 6.

Minnesota Statutes 2004, section 240.30,
subdivision 7, is amended to read:

Subd. 7.

Amendments to plan; violations; relation to
other laws.

(a) The licensee may amend the plan of operation
only with the commission's approval. The commission may
withdraw its approval of a plan of operation.

(b) Card club activities are deemed to be relevant to the
integrity of horse racing activities in Minnesota for purposes
of sections deleted text begin 240.03; deleted text end 240.06, subdivision 7; 240.08; and 240.27,
subdivision 1.

(c) A violation of a law or rule relating to card club
operation or a violation of an approved plan of operation is
deemed to be a violation of law or rule for purposes of section
240.22.

(d) A violation of an approved plan of operation is deemed
to be a violation of a rule of the commission for purposes of
section 240.26, subdivision 3.

(e) Card playing at a card club is deemed to be a bet at a
licensed racetrack for purposes of section 240.28, subdivision 2.