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HF 3194

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 1st Engrossment

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A bill for an act
relating to gambling; making various clarifying, technical, and conforming
changes to lawful gambling provisions; modifying expenditure restriction
requirements; amending Minnesota Statutes 2004, sections 349.12, subdivisions
4, 18, 21; 349.1635, subdivision 3; 349.168, subdivision 10; 349.17, subdivision
6; 349.19, subdivisions 2, 3; Minnesota Statutes 2005 Supplement, sections
349.12, subdivisions 12a, 25; 349.15, subdivision 1; 349.151, subdivisions
4, 4c; 349.153; 349.16, subdivision 2; 349.162, subdivisions 4, 5; 349.1635,
subdivision 4; 349.166, subdivisions 1, 2; 349.167, subdivision 1; 349.17,
subdivision 5; 349.173; 349.18, subdivision 1; 349.213, subdivision 1.

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

Section 1.

Minnesota Statutes 2004, section 349.12, subdivision 4, is amended to read:


Subd. 4.

Bingo.

"Bingo" means a game where each player has a bingo hard card
deleted text begin ordeleted text end new text begin ,new text end bingo paper sheet, new text begin or facsimile of a bingo paper sheet when used in conjunction
with an electronic bingo device,
new text end for which a consideration has been paid, and played in
accordance with this chapter and with rules of the board for the conduct of bingo. "Bingo"
also includes a linked bingo game.

Sec. 2.

Minnesota Statutes 2005 Supplement, section 349.12, subdivision 12a, is
amended to read:


Subd. 12a.

Electronic bingo device.

"Electronic bingo device" means an electronic
device used by a bingo player to monitor bingo paper sheets new text begin or facsimile of a bingo paper
sheet when
new text end purchased at the time and place of an organization's bingo occasion and which
(1) provides a means for bingo players to input numbers announced by a bingo caller; (2)
compares the numbers entered by the player to the bingo faces previously stored in the
memory of the device; and (3) identifies a winning bingo pattern.

Electronic bingo device does not mean any device into which coin, currency, or tokens are
inserted to activate play.

Sec. 3.

Minnesota Statutes 2004, section 349.12, subdivision 18, is amended to read:


Subd. 18.

Gambling equipment.

"Gambling equipment" means: bingo hard cards
or paper sheets, linked bingo paper sheets, devices for selecting bingo numbers, new text begin electronic
bingo devices,
new text end pull-tabs, jar tickets, paddlewheels, paddlewheel tables, paddletickets,
paddleticket cards, tipboards, tipboard tickets, and pull-tab dispensing devices.

Sec. 4.

Minnesota Statutes 2004, section 349.12, subdivision 21, is amended to read:


Subd. 21.

Gross receipts.

"Gross receipts" means all receipts derived from lawful
gambling activity including, but not limited to, the following items:

(1) gross sales of bingo hard cards deleted text begin anddeleted text end new text begin ,new text end paper sheetsnew text begin , facsimiles of bingo paper
sheets when used in conjunction with an electronic bingo device, and rental of electronic
bingo devices
new text end before reduction for prizes, expenses, shortages, free plays, or any other
charges or offsets;

(2) the ideal gross of pull-tab and tipboard deals or games less the value of unsold
and defective tickets and before reduction for prizes, expenses, shortages, free plays,
or any other charges or offsets;

(3) gross sales of raffle tickets and paddletickets before reduction for prizes,
expenses, shortages, free plays, or any other charges or offsets;

(4) admission, commission, cover, or other charges imposed on participants in
lawful gambling activity as a condition for or cost of participation; and

(5) interest, dividends, annuities, profit from transactions, or other income derived
from the accumulation or use of gambling proceeds.

Gross receipts does not include proceeds from rental under section deleted text begin 349.164 ordeleted text end
349.18, subdivision 3.

Sec. 5.

Minnesota Statutes 2005 Supplement, section 349.12, subdivision 25, is
amended to read:


Subd. 25.

Lawful purpose.

(a) "Lawful purpose" means one or more of the
following:

(1) any expenditure by or contribution to a 501(c)(3) or festival organization, as
defined in subdivision 15a, provided that the organization and expenditure or contribution
are in conformity with standards prescribed by the board under section 349.154, which
standards must apply to both types of organizations in the same manner and to the same
extent;

(2) a contribution to or expenditure for goods and services for an individual or
family suffering from poverty, homelessness, or disability, which is used to relieve the
effects of that suffering;

(3) a contribution to a program recognized by the Minnesota Department of Human
Services for the education, prevention, or treatment of problem gambling;

(4) a contribution to or expenditure on a public or private nonprofit educational
institution registered with or accredited by this state or any other state;

(5) a contribution to deleted text begin a scholarship fund deleted text end new text begin an individual, public or private nonprofit
educational institution registered or accredited by this state or any other state, or to
a scholarship fund of a nonprofit organization whose primary mission is to award
scholarships,
new text end for defraying the cost of education to individuals where the funds are
awarded through an open and fair selection process;

(6) activities by an organization or a government entity which recognize military
service to the United States, the state of Minnesota, or a community, subject to rules
of the board, provided that the rules must not include mileage reimbursements in the
computation of the per diem reimbursement limit and must impose no aggregate annual
limit on the amount of reasonable and necessary expenditures made to support:

(i) members of a military marching or color guard unit for activities conducted
within the state;

(ii) members of an organization solely for services performed by the members at
funeral services;

(iii) members of military marching, color guard, or honor guard units may be
reimbursed for participating in color guard, honor guard, or marching unit events within
the state or states contiguous to Minnesota at a per participant rate of up to $35 per diem; or

(iv) active military personnel and their immediate family members in need of
support services;

(7) recreational, community, and athletic facilities and activities intended primarily
for persons under age 21, provided that such facilities and activities do not discriminate on
the basis of gender and the organization complies with section 349.154;

(8) payment of local taxes authorized under this chapter, taxes imposed by the
United States on receipts from lawful gambling, the taxes imposed by section 297E.02,
subdivisions 1, 4, 5, and 6
, and the tax imposed on unrelated business income by section
290.05, subdivision 3;

(9) payment of real estate taxes and assessments on permitted gambling premises
owned by the licensed organization paying the taxes, or wholly leased by a licensed
veterans organization under a national charter recognized under section 501(c)(19) of the
Internal Revenue Code;

(10) a contribution to the United States, this state or any of its political subdivisions,
or any agency or instrumentality thereof other than a direct contribution to a law
enforcement or prosecutorial agency;

(11) a contribution to or expenditure by a nonprofit organization which is a church
or body of communicants gathered in common membership for mutual support and
edification in piety, worship, or religious observances;

(12) payment of the reasonable costs of an audit required in section 297E.06,
subdivision 4
, provided the annual audit is filed in a timely manner with the Department of
Revenue and paid prior to June 30, 2006;

(13) a contribution to or expenditure on projects or activities approved by the
commissioner of natural resources for:

(i) wildlife management projects that benefit the public at large;

(ii) grant-in-aid trail maintenance and grooming established under sections 84.83
and 84.927, and other trails open to public use, including purchase or lease of equipment
for this purpose; and

(iii) supplies and materials for safety training and educational programs coordinated
by the Department of Natural Resources, including the Enforcement Division;

(14) conducting nutritional programs, food shelves, and congregate dining programs
primarily for persons who are age 62 or older or disabled;

(15) a contribution to a community arts organization, or an expenditure to sponsor
arts programs in the community, including but not limited to visual, literary, performing,
or musical arts;

(16) an expenditure by a licensed veterans organization for payment of water, fuel
for heating, electricity, and sewer costs for a building wholly owned or wholly leased by
and used as the primary headquarters of the licensed veterans organization;

(17) expenditure by a licensed veterans organization of up to $5,000 in a calendar
year in net costs to the organization for meals and other membership events, limited to
members and spouses, held in recognition of military service. No more than $5,000 can be
expended in total per calendar year under this clause by all licensed veterans organizations
sharing the same veterans post home;

(18) payment of fees authorized under this chapter imposed by the state of Minnesota
to conduct lawful gambling in Minnesota; or

(19) a contribution or expenditure to honor an individual's humanitarian service
as demonstrated through philanthropy or volunteerism to the United States, this state,
or local community.

(b) Notwithstanding paragraph (a), "lawful purpose" does not include:

(1) any expenditure made or incurred for the purpose of influencing the nomination
or election of a candidate for public office or for the purpose of promoting or defeating a
ballot question;

(2) any activity intended to influence an election or a governmental decision-making
process;

(3) the erection, acquisition, improvement, expansion, repair, or maintenance of real
property or capital assets owned or leased by an organization, unless the board has first
specifically authorized the expenditures after finding that (i) the real property or capital
assets will be used exclusively for one or more of the purposes in paragraph (a); (ii)
with respect to expenditures for repair or maintenance only, that the property is or will
be used extensively as a meeting place or event location by other nonprofit organizations
or community or service groups and that no rental fee is charged for the use; (iii) with
respect to expenditures, including a mortgage payment or other debt service payment,
for erection or acquisition only, that the erection or acquisition is necessary to replace
with a comparable building, a building owned by the organization and destroyed or
made uninhabitable by fire or catastrophe, provided that the expenditure may be only
for that part of the replacement cost not reimbursed by insurance; (iv) with respect to
expenditures, including a mortgage payment or other debt service payment, for erection or
acquisition only, that the erection or acquisition is necessary to replace with a comparable
building a building owned by the organization that was acquired from the organization by
eminent domain or sold by the organization to a purchaser that the organization reasonably
believed would otherwise have acquired the building by eminent domain, provided
that the expenditure may be only for that part of the replacement cost that exceeds the
compensation received by the organization for the building being replaced; or (v) with
respect to an expenditure to bring an existing building into compliance with the Americans
with Disabilities Act under item (ii), an organization has the option to apply the amount of
the board-approved expenditure to the erection or acquisition of a replacement building
that is in compliance with the Americans with Disabilities Act;

(4) an expenditure by an organization which is a contribution to a parent
organization, foundation, or affiliate of the contributing organization, if the parent
organization, foundation, or affiliate has provided to the contributing organization within
one year of the contribution any money, grants, property, or other thing of value;

(5) a contribution by a licensed organization to another licensed organization unless
the board has specifically authorized the contribution. The board must authorize such a
contribution when requested to do so by the contributing organization unless it makes an
affirmative finding that the contribution will not be used by the recipient organization for
one or more of the purposes in paragraph (a); or

(6) a contribution to a statutory or home rule charter city, county, or town by a
licensed organization with the knowledge that the governmental unit intends to use the
contribution for a pension or retirement fund.

Sec. 6.

Minnesota Statutes 2005 Supplement, section 349.15, subdivision 1, is
amended to read:


Subdivision 1.

Expenditure restrictions.

Gross profits from lawful gambling
may be expended only for lawful purposes or allowable expenses as authorized by the
membership of the conducting organization at a monthly meeting of the organization's
membership. Provided that no more than 70 percent of the gross profit less the tax imposed
under section 297E.02, subdivision 1, from bingo, and no more than 60 percent of the
gross profit from other forms of lawful gambling, may be expended biennially during the
term of the license for allowable expenses related to lawful gambling. For licenses issued
after June 30, 2006, compliance with this subdivision will be measured on a biennial basis
that is concurrent with the term of the license. Compliance with this subdivision is a
condition for the renewal of any license beginning on July 1, 2008.new text begin For licenses renewed
with an effective date between July 1, 2006, and June 30, 2008, an organization shall
carry forward an amount equal to 15 percent of any positive allowable expense carryover
amount. This balance must be used to offset any future negative expense balance at the
time of license renewal.
new text end

Sec. 7.

Minnesota Statutes 2005 Supplement, section 349.151, subdivision 4c, is
amended to read:


Subd. 4c.

Electronic bingo.

(a) The board may by rule authorize but not require the
use of electronic bingo devices.

(b) Rules adopted under paragraph (a):

(1) must limit the number of bingo faces that can be played using an electronic
bingo device to 36;

(2) must require that an electronic bingo device be used with corresponding bingo
paper sheetsnew text begin or a facsimile, printed at the point of sale, as approved by the boardnew text end ;

(3) must require that the electronic bingo device site system have dial-up capability
to permit the board to remotely monitor the operation of the device and the internal
accounting systems; and

(4) must prohibit the price of a face played on an electronic bingo device from being
less than the price of a face on a bingo paper sheet sold at the same occasion.

Sec. 8.

Minnesota Statutes 2005 Supplement, section 349.153, is amended to read:


349.153 CONFLICT OF INTEREST.

(a) A person may not serve on the board, be the director, or be an employee of the
board who has an interest in any corporation, association, limited liability company, or
partnership that is licensed by the board as a distributor, manufacturer, or linked bingo
game provider deleted text begin under section 349.164deleted text end .

(b) A member of the board, the director, or an employee of the board may not
accept employment with, receive compensation directly or indirectly from, or enter into a
contractual relationship with an organization that conducts lawful gambling, a distributor,
a linked bingo game provider, or a manufacturer while employed with or a member of the
board or within one year after terminating employment with or leaving the board.

(c) A distributor, manufacturer, linked bingo game provider, or organization licensed
to conduct lawful gambling may not hire a former employee, director, or member of
the Gambling Control Board for one year after the employee, director, or member has
terminated employment with or left the Gambling Control Board.

new text begin (d) A member of the board, the director, or an employee of the board may not
purchase any chance in a lawful gambling game unless it is part of an investigation.
new text end

Sec. 9.

Minnesota Statutes 2005 Supplement, section 349.16, subdivision 2, is
amended to read:


Subd. 2.

Issuance of gambling licenses.

(a) Licenses authorizing organizations
to conduct lawful gambling may be issued by the board to organizations meeting the
qualifications in paragraphs (b) to (h) if the board determines that the license is consistent
with the purpose of sections 349.11 to 349.22.

(b) The organization must have been in existence for the most recent three years
preceding the license application as a registered Minnesota nonprofit corporation or as
an organization designated as exempt from the payment of income taxes by the Internal
Revenue Code.

(c) The organization at the time of licensing must have at least 15 active members.

(d) The organization must not be in existence solely for the purpose of conducting
gambling.

(e) The organization has identified in its license application the lawful purposes on
which it proposes to expend net profits from lawful gambling and has identified an annual
goal for charitable contributions, expressed as a percentage of gross profits.

(f) The organization has identified on its license application a gambling manager and
certifies that the manager is qualified under this chapter.

(g) The organization must not, in the opinion of the board after consultation with the
commissioner of revenue, be seeking licensing primarily for the purpose of evading or
reducing the tax imposed by section 297E.02, subdivision 6.

(h) The organization has not exceeded the expenditure restrictions imposed under
section 349.15, subdivision 1, or if the organization has exceeded the expenditure
restrictions under section 349.15, subdivision 1, the organization has reimbursed any
excess expenses from new text begin a source of new text end nongambling funds.new text begin Reimbursement of excess expenses
is a condition for license renewal.
new text end

new text begin The board may by rule impose sanctions or penalties on organizations that exceed
the expenditure restrictions under section 349.15, subdivision 1.
new text end

Sec. 10.

Minnesota Statutes 2005 Supplement, section 349.162, subdivision 4, is
amended to read:


Subd. 4.

Prohibition.

(a) No person other than a licensed distributor may possess
unaffixed registration stamps issued by the board for the purpose of registering gambling
equipment.

(b) Unless otherwise provided in this chapter, no person may possess gambling
equipment that has not been registered.

(c) deleted text begin On and after January 1, 1991,deleted text end No distributor may:

(1) sell a bingo hard card or paper sheet that does not bear an individual number; or

(2) sell a package of bingo paper sheets that does not contain bingo paper sheets
in numerical order.

Sec. 11.

Minnesota Statutes 2005 Supplement, section 349.162, subdivision 5, is
amended to read:


Subd. 5.

Sales from facilities.

(a) All gambling equipment purchased or possessed
by a licensed distributor for resale to any person for use in Minnesota must, prior to the
equipment's resale, be unloaded into a storage facility located in Minnesota which the
distributor owns or leases; and which has been registered, in advance and in writing, with
the Division of Alcohol and Gambling Enforcement as a storage facility of the distributor.
All unregistered gambling equipment and all unaffixed registration stamps owned by, or
in the possession of, a licensed distributor in the state of Minnesota shall be stored at a
storage facility which has been registered with the Division of Alcohol and Gambling
Enforcement. No gambling equipment may be moved from the facility unless the
gambling equipment has been first registered with the board or the Department of Revenue.

(b) Notwithstanding section 349.163, subdivisions 5, 6, and 8, a licensed
manufacturer may ship into Minnesota approved or unapproved gambling equipment
if the licensed manufacturer ships the gambling equipment to a Minnesota storage
facility that is: (1) owned or leased by the licensed manufacturer; and (2) registered, in
advance and in writing, with the Division of Alcohol and Gambling Enforcement as a
manufacturer's storage facility. No gambling equipment may be shipped into Minnesota
to the manufacturer's registered storage facility unless the shipment of the gambling
equipment is reported to the Department of Revenue in a manner prescribed by the
department. No gambling equipment may be moved from the storage facility unless
the gambling equipment is sold to a licensed distributor and is otherwise in conformity
with this chapter, is shipped to an out-of-state site and the shipment is reported to the
Department of Revenue in a manner prescribed by the department, or is otherwise sold
and shipped as permitted by board rule.

(c) All storage facilities owned, leased, used, or operated by a licensed distributor
or manufacturer may be entered upon and inspected by the employees of the Division of
Alcohol and Gambling Enforcement, the Division of Alcohol and Gambling Enforcement
director's authorized representatives, employees of the Gambling Control Board or its
authorized representatives, employees of the Department of Revenue, or authorized
representatives of the director of the Division of Special Taxes of the Department of
Revenue during reasonable and regular business hours. Obstruction of, or failure to
permit, entry and inspection is cause for revocation or suspension of a manufacturer's or
distributor's licenses and permits issued under this chapter.

(d) Unregistered gambling equipment deleted text begin and unaffixed registration stampsdeleted text end found at
any location in Minnesota other than the manufacturing plant of a licensed manufacturer
or a registered storage facility are contraband under section 349.2125. This paragraph
does not apply:

(1) to unregistered gambling equipment being transported in interstate commerce
between locations outside this state, if the interstate shipment is verified by a bill of lading
or other valid shipping document; and

(2) to gambling equipment registered with the Department of Revenue for
distribution to the tribal casinos.

Sec. 12.

Minnesota Statutes 2004, section 349.1635, subdivision 3, is amended to read:


Subd. 3.

Attachments to application.

An applicant for a linked bingo game
provider license must attach to its application:

(1) evidence of a bond in the principal amount of deleted text begin $250,000deleted text end new text begin $100,000new text end payable to the
state of Minnesota conditioned on the payment of all linked bingo prizes and any other
money due and payable under this chapter;

(2) detailed plans and specifications for the operation of the linked bingo game
and the linked bingo system; and

(3) any other information required by the board by rule.

Sec. 13.

Minnesota Statutes 2005 Supplement, section 349.1635, subdivision 4,
is amended to read:


Subd. 4.

Prohibition.

(a) Except for services associated exclusively with a linked
bingo game, a linked bingo game provider may not participate or assist in the conduct
of lawful gambling by an organization. No linked bingo game providernew text begin or employee,
representative, agent, affiliate, or other employee of a linked bingo game provider
new text end may:

(1) hold any financial or managerial interest in a premises leased for the conduct
of bingo;

(2) also be licensed as a distributor or hold any financial or managerial interest
in a distributor;

(3) sell or lease linked bingo game equipment to any person not licensed as an
organization;

(4) purchase gambling equipment to be used exclusively in a linked bingo game
from any person not licensed as a manufacturer under section 349.163; deleted text begin and
deleted text end

(5) provide deleted text begin an organization,deleted text end a lessor of gambling premisesdeleted text begin ,deleted text end or an appointed official
any compensation, gift, gratuity, premium, or contributiondeleted text begin .deleted text end new text begin ; and
new text end

new text begin (6) provide an employee or agent of the organization any compensation, gift, gratuity,
premium, or other thing of value greater than $25 per organization in a calendar year.
new text end

(b) Employees of the board and the Division of Alcohol and Gambling Enforcement
may inspect the books, records, inventory, and business premises of a licensed linked
bingo game provider without notice during the normal business hours of the linked bingo
game provider. The board may charge a linked bingo game provider for the actual cost of
conducting scheduled or unscheduled inspections of the licensee's facilities.

Sec. 14.

Minnesota Statutes 2005 Supplement, section 349.166, subdivision 1, is
amended to read:


Subdivision 1.

Exclusions.

(a) Bingo, with the exception of linked bingo games,
may be conducted without a license and without complying with sections 349.168,
subdivisions 1 and 2
; 349.17, subdivisions 1, 4, and 5; 349.18, subdivision 1; and 349.19,
if it is conducted:

(1) by an organization in connection with a county fair, the state fair, or a civic
celebration and is not conducted for more than 12 consecutive days and is limited to no
more than four separate applications for activities applied for and approved in a calendar
year; or

(2) by an organization that conductsnew text begin bingo onnew text end four or fewer deleted text begin bingo occasionsdeleted text end new text begin daysnew text end
in a calendar year.

An organization that holds a license to conduct lawful gambling under this chapter
may not conduct bingo under this subdivision.

(b) Bingo may be conducted within a nursing home or a senior citizen housing
project or by a senior citizen organization if the prizes for a single bingo game do not
exceed $10, total prizes awarded at a single bingo occasion do not exceed $200, no more
than two bingo occasions are held by the organization or at the facility each week, only
members of the organization or residents of the nursing home or housing project are
allowed to play in a bingo game, no compensation is paid for any persons who conduct the
bingo, and a manager is appointed to supervise the bingo. Bingo conducted under this
paragraph is exempt from sections 349.11 to 349.23, and the board may not require an
organization that conducts bingo under this paragraph, or the manager who supervises the
bingo, to register or file a report with the board. The gross receipts from bingo conducted
under the limitations of this subdivision are exempt from taxation under chapter 297A.

(c) Raffles may be conducted by an organization without registering with the board
if the value of all raffle prizes awarded by the organization in a calendar year does not
exceed $1,500.

(d) Except as provided in paragraph (b), the organization must maintain all required
records of excluded gambling activity for 3-1/2 years.

Sec. 15.

Minnesota Statutes 2005 Supplement, section 349.166, subdivision 2, is
amended to read:


Subd. 2.

Exemptions.

(a) Lawful gambling, with the exception of linked bingo
games, may be conducted by an organization without a license and without complying
with sections 349.168, subdivisions 1 and 2; 349.17, subdivisions 4 and 5; 349.18,
subdivision 1
; and 349.19 if:

(1) the organization conducts lawful gambling on five or fewer days in a calendar
year;

(2) the organization does not award more than $50,000 in prizes for lawful gambling
in a calendar year;

(3) the organization pays a fee of $50 to the board, notifies the board in writing
not less than 30 days before each lawful gambling occasion of the date and location of
the occasion, or 60 days for an occasion held in the case of a city of the first class, the
types of lawful gambling to be conducted, the prizes to be awarded, and receives an
exemption identification number;

(4) the organization notifies the local government unit 30 days before the lawful
gambling occasion, or 60 days for an occasion held in a city of the first class;

(5) the organization purchases all gambling equipment and supplies from a licensed
distributor; and

(6) the organization reports to the board, on a single-page form prescribed by the
board, within 30 days of each gambling occasion, the gross receipts, prizes, expenses,
expenditures of net profits from the occasion, and the identification of the licensed
distributor from whom all gambling equipment was purchased.

(b) If the organization fails to file a timely report as required by paragraph (a), clause
(3) or (6), the board shall not issue any authorization, license, or permit to the organization
to conduct lawful gambling on an exempt, excluded, or licensed basis until the report has
been filed and the organization may be subject to penalty as determined by the board.new text begin The
board may refuse to issue any authorization, license, or permit if a report or application is
determined to be incomplete or knowingly contains false or inaccurate information.
new text end

(c) Merchandise prizes must be valued at their fair market value.

(d) Organizations that qualify to conduct exempt raffles under paragraph (a), are
exempt from section 349.173, paragraph (b), clause (2), if the raffle tickets are sold only
in combination with an organization's membership or a ticket for an organization's
membership dinner and are not included with any other raffle conducted under the exempt
permit.

(e) Unused pull-tab and tipboard deals must be returned to the distributor within
seven working days after the end of the lawful gambling occasion. The distributor must
accept and pay a refund for all returns of unopened and undamaged deals returned under
this paragraph.

(f) An organization that is exempt from taxation on purchases of pull-tabs and
tipboards under section 297E.02, subdivision 4, paragraph (b), clause (4), must return to
the distributor any tipboard or pull-tab deal no part of which is used at the lawful gambling
occasion for which it was purchased by the organization.

(g) The organization must maintain all required records of exempt gambling activity
for 3-1/2 years.

Sec. 16.

Minnesota Statutes 2005 Supplement, section 349.167, subdivision 1, is
amended to read:


Subdivision 1.

Gambling manager required.

(a) All lawful gambling conducted by
a licensed organization must be under the supervision of a gambling manager. A gambling
manager designated by an organization to supervise lawful gambling is responsible for the
new text begin gambling new text end gross receipts of the organization and for its conduct in compliance with all laws
and rules. A person designated as a gambling manager shall maintain a dishonesty bond in
the sum of $10,000 in favor of the organization conditioned on the faithful performance
of the manager's duties. The terms of the bond must provide that notice be given to the
board in writing not less than 30 days before its cancellation.

(b) A person may not act as a gambling manager for more than one organization.

(c) An organization may not conduct lawful gambling without having a gambling
manager.

(d) An organization may not have more than one gambling manager at any time.

Sec. 17.

Minnesota Statutes 2004, section 349.168, subdivision 10, is amended to read:


Subd. 10.

Employment of certain persons.

An organization that deleted text begin sells pull-tabs
and tip boards on leased premises within a booth operation may not employ, other than
as a seller of pull-tabs and tip boards, the lessor of those premises or a person who is
employed by the lessor of those premises
deleted text end new text begin leases a premises may not pay compensation to
the lessor, a member of the lessor's immediate family, or lessor's employees, other than as
a seller of pull-tabs and tipboards within a booth operation on the premises. A member of
the lessor's immediate family may be compensated by an organization for the conduct of
gambling at other sites not owned by the lessor
new text end .

Sec. 18.

Minnesota Statutes 2005 Supplement, section 349.17, subdivision 5, is
amended to read:


Subd. 5.

Bingo cards and sheets.

(a) The board shall by rule require that all
licensed organizations: (1) conduct bingo only using deleted text begin liquid daubers ondeleted text end new text begin anew text end bingo paper
deleted text begin sheetsdeleted text end new text begin sheet or facsimile of a bingo facenew text end that deleted text begin beardeleted text end new text begin bears new text end new text begin new text end an individual number recorded
by the distributor or linked bingo game provider; and (2) use each bingo paper sheet for
no more than one bingo occasion. In lieu of the requirements of clause (2), a licensed
organization may electronically record the sale of each bingo hard card or paper sheet at
each bingo occasion using an electronic recording system approved by the board.

(b) The requirements of paragraph (a) shall only apply to a licensed organization
that received gross receipts from bingo in excess of $150,000 in the organization's last
fiscal year.

Sec. 19.

Minnesota Statutes 2004, section 349.17, subdivision 6, is amended to read:


Subd. 6.

Conduct of bingo.

(a) Each bingo hard card and paper sheets must have
five horizontal rows of spaces with each row except one having five numbers. The center
row must have four numbers and the center space marked "free." Each column must
have one of the letters B-I-N-G-O in order at the top. Bingo paper sheets may also have
numbers that are not preprinted but are filled in by players.

(b) A game of bingo begins with the first letter and number called. Each player must
cover or mark deleted text begin with a liquid dauberdeleted text end the numbers when bingo deleted text begin balls, similarly numbered,deleted text end new text begin
numbers
new text end are randomly deleted text begin drawndeleted text end new text begin selectednew text end , announced, and displayed to the players, either
manually or with a flashboard and monitor. The game is won when a player has covered
or marked a previously designated arrangement of numbers on the card or sheet and
declared bingo. The game is completed when a winning card or sheet is verified and a
prize awarded, except that prizes won in linked bingo games may be awarded pursuant to
subdivision 3.

Sec. 20.

Minnesota Statutes 2005 Supplement, section 349.173, is amended to read:


349.173 CONDUCT OF RAFFLES.

(a) Raffle tickets or certificates of participation at a minimum must list the three
most expensive prizes to be awarded. If additional prizes will be awarded, a complete
list of additional prizes must be publicly posted at the event and copies of the complete
prize list made available upon request. Notwithstanding section 349.12, subdivision 33,
raffles conducted under the exemptions in section 349.166 may use tickets that contain
only the sequential number of the raffle ticket and no other information if the organization
makes a list of prizes and a statement of other relevant information required by rule
available to persons purchasing tickets and if tickets are only sold at the event and on the
date when the tickets are drawn.

(b) Raffles must be conducted in a manner that ensures:

(1) all entries in the raffle have an equal chance of selection;

(2) entry in the raffle is not conditioned upon any other purchasenew text begin , except that a
certificate of participation may be a button with a nominal value of less than $5
new text end ;

(3) the method of selection is conducted in a public forum;

(4) the method of selection cannot be manipulated or based on the outcome of an
event not under the control of the organization;

(5) physical presence at the raffle is not a requirement to win; and

(6) all sold and unsold tickets or certificates of participation are accounted for.

(c) Methods of selecting winning entries from a raffle other than prescribed in rule
may be used with the prior written approval of the board.

Sec. 21.

Minnesota Statutes 2005 Supplement, section 349.18, subdivision 1, is
amended to read:


Subdivision 1.

Lease or ownership required; rent limitations.

(a) An organization
may conduct lawful gambling only on premises it owns or leases. Leases must be on a
form prescribed by the board. deleted text begin Except for leases entered into before August 1, 1994,deleted text end The
term of the lease may not begin before the effective date of the premises permit and must
expire on the same day that the premises permit expires. Leases approved by the board
must specify that the board may authorize an organization to withhold rent from a lessor
for a period of up to 90 days if the board determines that illegal gambling occurred on
the premises and that the lessor or its employees participated in the illegal gambling or
knew of the gambling and did not take prompt action to stop the gambling. The lease must
authorize the continued tenancy of the organization without the payment of rent during
the time period determined by the board under this paragraph. Copies of all leases must
be made available to employees of the board and the Division of Alcohol and Gambling
Enforcement on request. The board may prescribe by rule limits on the amount of rent
which an organization may pay to a lessor for premises leased for bingo. Any rule adopted
by the board limiting the amount of rent to be paid may only be effective for leases entered
into, or renewed, after the effective date of the rule.

(b) Rent paid by an organization for leased premises for the conduct of pull-tabs,
tipboards, and paddlewheels is subject to the following limits:

(1) for booth operations, including booth operations where a pull-tab dispensing
device is located, booth operations where a bar operation is also conducted, and booth
operations where both a pull-tab dispensing device is located and a bar operation is also
conducted, the maximum rent is:

(i) in any month where the organization's gross profit at those premises does not
exceed $4,000, up to $400; and

(ii) in any month where the organization's gross profit at those premises exceeds
$4,000, up to $400 plus not more than ten percent of the gross profit for that month in
excess of $4,000;

(2) for bar operations, including bar operations where a pull-tab dispensing device
is located but not including bar operations subject to clause (1), and for locations where
only a pull-tab dispensing device is located:

(i) in any month where the organization's gross profit at those premises does not
exceed $1,000, up to $200; and

(ii) in any month where the organization's gross profit at those premises exceeds
$1,000, up to $200 plus not more than 20 percent of the gross profit for that month
in excess of $1,000;

(3) a lease not governed by clauses (1) and (2) must be approved by the board
before becoming effective;

(4) total rent paid to a lessor from all organizations from leases governed by clause
(1) may not exceed $1,750 per month. Total rent paid to a lessor from all organizations
from leases governed by clause (2) may not exceed $2,500 per month.

(c) Rent paid by an organization for leased premises for the conduct of bingo is
subject to either of the following limits at the option of the parties to the lease:

(1) not more than ten percent of the monthly gross profit from all lawful gambling
activities held during bingo occasions excluding bar bingo or at a rate based on a cost per
square foot not to exceed 110 percent of a comparable cost per square foot for leased space
as approved by the director; and

(2) no rent may be paid for bar bingo.

(d) Amounts paid as rent under leases are all-inclusive. No other services or
expenses provided or contracted by the lessor may be paid by the organization, including,
but not limited to, trash removal, janitorial and cleaning services, snow removal, lawn
services, electricity, heat, security, security monitoring, storage, other utilities or services,
and, in the case of bar operations, cash shortages, unless approved by the director. Any
other expenditure made by an organization that is related to a leased premises must be
approved by the director. An organization may not provide any compensation or thing of
value to a lessor or the lessor's employees from any fund source other than its gambling
account. Rent payments may not be made to an individual.

(e) Notwithstanding paragraph (b), an organization may pay a lessor for food or
beverages or meeting room rental if the charge made is comparable to similar charges
made to other individuals or groups.

(f) No deleted text begin person, distributor, manufacturer, lessor, linked bingo game provider, or
organization
deleted text end new text begin entitynew text end other than the licensed organization deleted text begin leasing the spacedeleted text end may conduct
any activity deleted text begin other than the sale or serving of food and beverages on the leased premises
during times when lawful gambling is being conducted
deleted text end new text begin within a booth operationnew text end on deleted text begin thedeleted text end new text begin
a leased
new text end premises.

deleted text begin (g) At a site where the leased premises consists of an area on or behind a bar at
which alcoholic beverages are sold and employees of the lessor are employed by the
organization as pull-tab sellers at the site, pull-tabs and tipboard tickets may be sold
and redeemed by those employees at any place on or behind the bar, but the tipboards
and receptacles for pull-tabs and cash drawers for lawful gambling receipts must be
maintained only within the leased premises.
deleted text end

deleted text begin (h)deleted text end new text begin (g)new text end Employees of a lessor new text begin not involved in the conduct of lawful gambling on the
premises
new text end ornew text begin nongamblingnew text end employees of an organizationnew text begin conducting lawful gambling on
the premises
new text end may participate in lawful gambling on the premises provided deleted text begin (1)deleted text end if pull-tabs
or tipboards are sold, the organization deleted text begin voluntarily posts, or is required to post,deleted text end new text begin postsnew text end the
major prizes deleted text begin as specified in section 349.172; and (2) any employee participating in lawful
gambling is not a gambling employee for the organization conducting lawful gambling
on the premises
deleted text end new text begin awardednew text end .

deleted text begin (i)deleted text end new text begin (h)new text end A gambling employee may purchase pull-tabs or tipboards at the site of the
employee's place of employment provided:

(1) the organization deleted text begin voluntarilydeleted text end postsdeleted text begin , or is required to post,deleted text end the major prizes for
pull-tab or tipboard games deleted text begin as specified in section 349.172deleted text end ; and

(2) the employee is not involved in the sale of pull-tabs or tipboards at that site.

deleted text begin (j)deleted text end new text begin (i)new text end At a leased site where an organization uses a paddlewheel consisting of
30 numbers or less or a tipboard consisting of 30 tickets or less, tickets may be sold
throughout the permitted premises, but winning tickets must be redeemed, the paddlewheel
must be located, and the tipboard seal must be opened within the leased premises.

deleted text begin (k) A member of the lessor's immediate family may not be a compensated employee
of an organization leasing space at the premises. For purposes of this paragraph, a
"member of the immediate family" is a spouse, parent, child, or sibling.
deleted text end

Sec. 22.

Minnesota Statutes 2004, section 349.19, subdivision 2, is amended to read:


Subd. 2.

Accounts.

Gross receipts from lawful gambling by each organization must
be segregated from all other revenues of the conducting organization and placed in a
separate account. All expenditures for expenses, taxes, and lawful purposes must be made
from the separate account except (1) in the case of expenditures previously approved
by the organization's membership for emergencies as defined by board rule, deleted text begin ordeleted text end (2) as
provided in subdivision 2anew text begin , or (3) when restricted to one electronic fund transaction for
the payment of taxes for the organization as a whole, the organization may transfer the
amount of taxes related to the conduct of gambling to the general account at the time when
due and payable
new text end . The name and address of the bank, the account number for the separate
account, and the names of organization members authorized as signatories on the separate
account must be provided to the board when the application is submitted. Changes in the
information must be submitted to the board at least ten days before the change is made.
Gambling receipts must be deposited into the gambling bank account within four business
days of completion of the bingo occasion, deal, or game from which they are received. A
deal of pull-tabs is considered complete when either the last pull-tab of the deal is sold or
the organization does not continue the play of the deal during the next scheduled period
of time in which the organization will conduct pull-tabs. A tipboard game is considered
complete when the seal on the game flare is uncovered. Deposit records must be sufficient
to allow determination of deposits made from each bingo occasion, deal, or game at each
permitted premises. The person who accounts for gambling gross receipts and profits may
not be the same person who accounts for other revenues of the organization.

Sec. 23.

Minnesota Statutes 2004, section 349.19, subdivision 3, is amended to read:


Subd. 3.

Expenditures.

(a) All expenditures of gross profits from lawful gambling
must be itemized as to payee, purpose, amount, and date of payment, and must be in
compliance with section 349.154. Authorization of the expenditures must be recorded
in the monthly meeting minutes of the licensed organization. Checks or authorizations
for electronic fund transfers for expenditures of gross profits must be signed by at least
two persons authorized by board rules to sign the checks. Expenditures of gross profits
from lawful gambling for local, state, and federal taxes as identified in section 349.12,
subdivision 25
, paragraph (a), clause (8), may be: (1) transferred electronically from
the organization's gambling account directly to bank accounts identified by local, state,
or federal agencies if the organization's gambling account monthly bank statement
specifically identifies the payee by name, the amount transferred, and the date of
the transaction; or (2) transferred electronically to and from the account of a payroll
processing firm that meets the criteria for such a firm established under section 349.168,
subdivision 6
. Expenditures of gross profits from lawful gambling as identified in section
349.12, subdivision 3a, and as authorized by section 349.15, subdivision 1, for payments
for deleted text begin utilities, insurance, and payroll processing chargesdeleted text end new text begin taxes and allowable expensesnew text end
may be transferred electronically from the organization's gambling account directly to
bank accounts identified by the vendor if the organization's gambling account monthly
bank statement specifically identifies the payee by name, the amount transferred, the
account number of the account into which the funds were transferred, and the date of the
transaction. Electronic payments of deleted text begin local, state, and federaldeleted text end taxes and deleted text begin utility, payroll
processing, or insurance payments
deleted text end new text begin allowable expensesnew text end are permitted only if they have
been authorized by the membership, the organization maintains supporting documentation,
and the expenditures can be verified.

(b) Expenditures authorized by the board according to section 349.12, subdivision
25
, paragraph (b), clause (3), must be 51 percent completed within two years of the date
of board approval. "Fifty-one percent completed" means that the work completed must
represent at least 51 percent of the value of the project as documented by the contractor
or vendor. An organization that fails to comply with this paragraph shall reapply to the
board for approval of the project.

Sec. 24.

Minnesota Statutes 2005 Supplement, section 349.213, subdivision 1, is
amended to read:


Subdivision 1.

Local regulation.

(a) A statutory or home rule city or county has the
authority to adopt more stringent regulation of lawful gambling within its jurisdiction,
including the prohibition of lawful gambling, and may require a permit for the conduct
of gambling exempt from licensing under section 349.166. The fee for a permit issued
under deleted text begin this subdivisiondeleted text end new text begin section 349.166new text end may not exceed $100. The authority granted by
this subdivision does not include the authority to require a new text begin license or fee for a new text end license or
permit to conduct gambling by organizationsnew text begin , gambling managers, gambling employees,new text end
or sales by distributors or linked bingo game providers licensed by new text begin or registered with
new text end the board. The authority granted by this subdivision does not include the authority to
require an organization to make specific expenditures of more than ten percent per year
from its net profits derived from lawful gambling. For the purposes of this subdivision,
net profits are gross profits less amounts expended for allowable expenses and paid in
taxes assessed on lawful gambling. A statutory or home rule charter city or a county may
not require an organization conducting lawful gambling within its jurisdiction to make
an expenditure to the city or county as a condition to operate within that city or county,
except as authorized under section 349.16, subdivision 8, or 297E.02; provided, however,
that an ordinance requirement that such organizations must contribute ten percent per
year of their net profits derived from lawful gambling conducted at premises within the
city's or county's jurisdiction to a fund administered and regulated by the responsible
local unit of government without cost to such fund, for disbursement by the responsible
local unit of government of the receipts for (i) deleted text begin lawful purposesdeleted text end new text begin charitable contributions
as defined in section 349.12, subdivision 7a
new text end , or (ii) police, fire, and other emergency or
public safety-related services, equipment, and training, excluding pension obligations, is
not considered an expenditure to the city or county nor a tax under section 297E.02, and is
valid and lawful. A city or county making expenditures authorized under this paragraph
must by March 15 of each year file a report with the board, on a form the board prescribes,
that lists all such revenues collected and expenditures for the previous calendar year.

(b) A statutory or home rule city or county may by ordinance require that a licensed
organization conducting lawful gambling within its jurisdiction expend all or a portion
of its expenditures for lawful purposes on lawful purposes conducted or located within
the city's or county's trade area. Such an ordinance must be limited to lawful purpose
expenditures of gross profits derived from lawful gambling conducted at premises within
the city's or county's jurisdiction, must define the city's or county's trade area, and must
specify the percentage of lawful purpose expenditures which must be expended within the
trade area. A trade area defined by a city under this subdivision must include each city and
township contiguous to the defining city.

(c) A more stringent regulation or prohibition of lawful gambling adopted by a
political subdivision under this subdivision must apply equally to all forms of lawful
gambling within the jurisdiction of the political subdivision, except a political subdivision
may prohibit the use of paddlewheels.

Sec. 25. new text begin EFFECTIVE DATE.
new text end

new text begin This act is effective the day following final enactment.
new text end