1.1                          A bill for an act 
  1.2             relating to gambling; state lottery; providing for 
  1.3             gaming machines; establishing horse racing purse 
  1.4             payments; amending Minnesota Statutes 2002, sections 
  1.5             240.13, by adding a subdivision; 299L.07, subdivisions 
  1.6             2, 2a; 340A.410, subdivision 5; 349A.01, subdivision 
  1.7             10, by adding subdivisions; 349A.10, subdivision 3; 
  1.8             349A.13; 541.20; 541.21; 609.75, subdivision 3; 
  1.9             609.761, subdivision 2; proposing coding for new law 
  1.10            in Minnesota Statutes, chapters 297A; 349A. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 2002, section 240.13, is 
  1.13  amended by adding a subdivision to read: 
  1.14     Subd. 5a.  [PURSES; GAMING MACHINES.] From the commission 
  1.15  received by a licensee pursuant to a gaming machine location 
  1.16  contract entered into under section 349A.17, the licensee must 
  1.17  set aside an amount equal to not less than 7.25 percent of the 
  1.18  adjusted gross gaming machine revenues as defined under chapter 
  1.19  349A, for purses for live horse races conducted by the 
  1.20  licensee.  Purse payments made pursuant to this subdivision are 
  1.21  in addition to purse payments otherwise established by law or 
  1.22  contract.  Twenty percent of the money set aside for purses 
  1.23  pursuant to this subdivision shall be transferred to the 
  1.24  commission and used for the purposes in section 240.18, 
  1.25  subdivisions 2, paragraph (d), and 3, paragraph (b), subject to 
  1.26  the proportionality requirement in section 240.18, subdivision 
  1.27  1.  The licensee and the horseperson's organization representing 
  1.28  the majority of horsepersons who have raced at the racetrack 
  2.1   during the preceding 12 months may negotiate percentages 
  2.2   different from those stated in this section if the agreement is 
  2.3   in writing and filed with the racing commission. 
  2.4      Sec. 2.  [297A.651] [LOTTERY GAMING MACHINES; IN-LIEU TAX.] 
  2.5      Adjusted gross revenue from the operation of gaming 
  2.6   machines authorized under chapter 349A are exempt from the tax 
  2.7   imposed under section 297A.62.  The state lottery must on or 
  2.8   before the 20th day of each month transmit to the commissioner 
  2.9   an amount equal to the adjusted gross revenue from the operation 
  2.10  of gaming machines, as defined in section 349A.01, for the 
  2.11  previous month multiplied by 40 percent.  The commissioner shall 
  2.12  deposit the money transmitted under this paragraph in the state 
  2.13  treasury in the general fund.  Of the money deposited into the 
  2.14  general fund under this section, an amount equal to one percent 
  2.15  of the adjusted gross revenue from the operation of gaming 
  2.16  machines is annually appropriated to the commissioner of human 
  2.17  services for the compulsive gambling treatment program under 
  2.18  section 245.98. 
  2.19     Sec. 3.  Minnesota Statutes 2002, section 299L.07, 
  2.20  subdivision 2, is amended to read: 
  2.21     Subd. 2.  [EXCLUSIONS.] Notwithstanding subdivision 1, a 
  2.22  gambling device: 
  2.23     (1) may be sold by a person who is not licensed under this 
  2.24  section, if the person (i) is not engaged in the trade or 
  2.25  business of selling gambling devices, and (ii) does not sell 
  2.26  more than one gambling device in any calendar year; 
  2.27     (2) may be sold by the governing body of a federally 
  2.28  recognized Indian tribe described in subdivision 2a, paragraph 
  2.29  (b), clause (1), which is not licensed under this section, if 
  2.30  (i) the gambling device was operated by the Indian tribe, (ii) 
  2.31  the sale is to a distributor licensed under this section, and 
  2.32  (iii) the licensed distributor notifies the commissioner of the 
  2.33  purchase, in the same manner as is required when the licensed 
  2.34  distributor ships a gambling device into Minnesota; 
  2.35     (3) may be possessed by a person not licensed under this 
  2.36  section if the person holds a permit issued under section 
  3.1   299L.08; and 
  3.2      (4) may be possessed by a state agency, with the written 
  3.3   authorization of the director, for display or evaluation 
  3.4   purposes only and not for the conduct of gambling; and 
  3.5      (5) may be possessed by the state lottery as authorized 
  3.6   under chapter 349A. 
  3.7      Sec. 4.  Minnesota Statutes 2002, section 299L.07, 
  3.8   subdivision 2a, is amended to read: 
  3.9      Subd. 2a.  [RESTRICTIONS.] (a) A manufacturer licensed 
  3.10  under this section may sell, offer to sell, lease, or rent, in 
  3.11  whole or in part, a gambling device only to a distributor 
  3.12  licensed under this section or to the state lottery as 
  3.13  authorized under chapter 349A. 
  3.14     (b) A distributor licensed under this section may sell, 
  3.15  offer to sell, market, rent, lease, or otherwise provide, in 
  3.16  whole or in part, a gambling device only to: 
  3.17     (1) the governing body of a federally recognized Indian 
  3.18  tribe that is authorized to operate the gambling device under a 
  3.19  tribal state compact under the Indian Gaming Regulatory Act, 
  3.20  Public Law Number 100-497, and future amendments to it; 
  3.21     (2) a person for use in the person's dwelling for display 
  3.22  or amusement purposes in a manner that does not afford players 
  3.23  an opportunity to obtain anything of value; 
  3.24     (3) another distributor licensed under this section; or 
  3.25     (4) a person in another state who is authorized under the 
  3.26  laws of that state to possess the gambling device; or 
  3.27     (5) the state lottery as authorized under chapter 349A. 
  3.28     Sec. 5.  Minnesota Statutes 2002, section 340A.410, 
  3.29  subdivision 5, is amended to read: 
  3.30     Subd. 5.  [GAMBLING PROHIBITED.] (a) Except as otherwise 
  3.31  provided in this subdivision, no retail establishment licensed 
  3.32  to sell alcoholic beverages may keep, possess, or operate, or 
  3.33  permit the keeping, possession, or operation on the licensed 
  3.34  premises of dice or any gambling device as defined in section 
  3.35  349.30, or permit gambling therein.  
  3.36     (b) Gambling equipment may be kept or operated and raffles 
  4.1   conducted on licensed premises and adjoining rooms when the use 
  4.2   of the gambling equipment is authorized by (1) chapter 349, (2) 
  4.3   a tribal ordinance in conformity with the Indian Gaming 
  4.4   Regulatory Act, Public Law Number 100-497, or (3) a tribal-state 
  4.5   compact authorized under section 3.9221. 
  4.6      (c) Lottery tickets may be purchased and sold within the 
  4.7   licensed premises as authorized by the director of the lottery 
  4.8   under chapter 349A.  
  4.9      (d) Dice may be kept and used on licensed premises and 
  4.10  adjoining rooms as authorized by section 609.761, subdivision 4. 
  4.11     (e) Gambling devices may be operated on the premises of a 
  4.12  licensed racetrack as authorized by chapter 349A. 
  4.13     Sec. 6.  Minnesota Statutes 2002, section 349A.01, 
  4.14  subdivision 10, is amended to read: 
  4.15     Subd. 10.  [LOTTERY PROCUREMENT CONTRACT.] "Lottery 
  4.16  procurement contract" means a contract to provide lottery 
  4.17  products, gaming machines, maintenance of gaming machines, 
  4.18  computer hardware and software used to monitor sales of lottery 
  4.19  tickets and gaming machine plays, and lottery tickets.  "Lottery 
  4.20  procurement contract" does not include a contract to provide an 
  4.21  annuity or prize payment agreement or materials, supplies, 
  4.22  equipment, or services common to the ordinary operation of a 
  4.23  state agency. 
  4.24     Sec. 7.  Minnesota Statutes 2002, section 349A.01, is 
  4.25  amended by adding a subdivision to read: 
  4.26     Subd. 14.  [GAMING MACHINE.] "Gaming machine" means any 
  4.27  machine in which a coin token or other currency is deposited to 
  4.28  play a game that uses a video display and microprocessors or an 
  4.29  electromechanical device with a spinning reel. 
  4.30     Sec. 8.  Minnesota Statutes 2002, section 349A.01, is 
  4.31  amended by adding a subdivision to read: 
  4.32     Subd. 15.  [GAMING MACHINE GAME.] "Gaming machine game" 
  4.33  means a game operated by a gaming machine as authorized by the 
  4.34  director. 
  4.35     Sec. 9.  Minnesota Statutes 2002, section 349A.01, is 
  4.36  amended by adding a subdivision to read: 
  5.1      Subd. 16.  [GAMING MACHINE PLAY.] "Gaming machine play" 
  5.2   means an electronic record that proves participation in a gaming 
  5.3   machine game. 
  5.4      Sec. 10.  Minnesota Statutes 2002, section 349A.01, is 
  5.5   amended by adding a subdivision to read: 
  5.6      Subd. 17.  [ADJUSTED GROSS GAMING MACHINE 
  5.7   REVENUE.] "Adjusted gross gaming machine revenue" means the sum 
  5.8   of all money received by the lottery for gaming machine plays, 
  5.9   less the amount paid out in prizes for gaming machine games. 
  5.10     Sec. 11.  Minnesota Statutes 2002, section 349A.10, 
  5.11  subdivision 3, is amended to read: 
  5.12     Subd. 3.  [LOTTERY OPERATIONS.] (a) The director shall 
  5.13  establish a lottery operations account in the lottery fund.  The 
  5.14  director shall pay all costs of operating the lottery, including 
  5.15  payroll costs or amounts transferred to the state treasury for 
  5.16  payroll costs, but not including lottery prizes, from the 
  5.17  lottery operating account.  The director shall credit to the 
  5.18  lottery operations account amounts sufficient to pay the 
  5.19  operating costs of the lottery. 
  5.20     (b) Except as provided in paragraph (e), the director may 
  5.21  not credit in any fiscal year thereafter amounts to the lottery 
  5.22  operations account which when totaled exceed 15 percent of gross 
  5.23  revenue to the lottery fund in that fiscal year.  In computing 
  5.24  total amounts credited to the lottery operations account under 
  5.25  this paragraph the director shall disregard amounts transferred 
  5.26  to or retained by lottery retailers as sales commissions or 
  5.27  other compensation and amounts transferred or retained by a 
  5.28  racetrack pursuant to a location contract under section 349A.17. 
  5.29     (c) The director of the lottery may not expend after July 
  5.30  1, 1991, more than 2-3/4 percent of gross revenues in a fiscal 
  5.31  year for contracts for the preparation, publication, and 
  5.32  placement of advertising. 
  5.33     (d) Except as the director determines, the lottery is not 
  5.34  subject to chapter 16A relating to budgeting, payroll, and the 
  5.35  purchase of goods and services. 
  5.36     (e) In addition to the amounts credited to the lottery 
  6.1   operations account under paragraph (b), the director is 
  6.2   authorized, if necessary, to meet the current obligations of the 
  6.3   lottery and to credit up to 25 percent of an amount equal to the 
  6.4   average annual amount which was authorized to be credited to the 
  6.5   lottery operations account for the previous three fiscal years 
  6.6   but was not needed to meet the obligations of the lottery. 
  6.7      Sec. 12.  Minnesota Statutes 2002, section 349A.13, is 
  6.8   amended to read: 
  6.9      349A.13 [RESTRICTIONS.] 
  6.10     Nothing in this chapter: 
  6.11     (1) authorizes the director to conduct a lottery game or 
  6.12  contest the winner or winners of which are determined by the 
  6.13  result of a sporting event other than a horse race conducted 
  6.14  under chapter 240; 
  6.15     (2) authorizes the director to install or operate a lottery 
  6.16  device operated by coin or currency which when operated 
  6.17  determines the winner of a game except as authorized under 
  6.18  section 349A.17; and 
  6.19     (3) authorizes the director to sell pull-tabs as defined 
  6.20  under section 349.12, subdivision 32. 
  6.21     Sec. 13.  [349A.17] [GAMING MACHINES.] 
  6.22     Subdivision 1.  [LOCATION CONTRACT.] The director may enter 
  6.23  into a contract with a person to provide locations for gaming 
  6.24  machines.  Contracts entered into under this section are not 
  6.25  subject to chapter 16C.  The director may only enter a contract 
  6.26  under this subdivision with a person that holds a class A 
  6.27  license under chapter 240.  The gaming machines may only be 
  6.28  placed at the racetrack for which the class A license under 
  6.29  chapter 240 was issued.  The racetrack must have been operating 
  6.30  as a racetrack prior to the effective date of this section.  
  6.31  Contracts entered into must provide for compensation to the 
  6.32  racetrack in an amount equal to at least 45 percent of adjusted 
  6.33  gross gaming machine revenue.  From the amount received by the 
  6.34  lottery under this section, the racetrack shall annually remit 
  6.35  an amount equal to one-half of one percent of the adjusted gross 
  6.36  gaming machine revenue to both the city and the county where the 
  7.1   racetrack is located.  
  7.2      Subd. 2.  [SPECIFICATIONS.] Gaming machines must: 
  7.3      (1) maintain on nonresettable meters a permanent record, 
  7.4   capable of being printed out, of all transactions by the machine 
  7.5   and all entries into the machine; and 
  7.6      (2) be capable of being linked electronically to a central 
  7.7   communication system to provide auditing program information as 
  7.8   required by the director. 
  7.9      Subd. 3.  [GAMES.] The director shall specify the games 
  7.10  that may be placed on a gaming machine as set forth under 
  7.11  section 349A.04.  Gaming machines may conduct pari-mutuel 
  7.12  wagering and display horse races pursuant to specifications set 
  7.13  forth by the director. 
  7.14     Subd. 4.  [EXAMINATION OF MACHINES.] The director shall 
  7.15  examine prototypes of gaming machines and require that the 
  7.16  manufacturer of the machine pay the cost of the examination.  
  7.17  The director may contract for the examination of gaming machines.
  7.18     Subd. 5.  [TESTING OF MACHINES.] The director may require 
  7.19  working models of a gaming machine to be transported to the 
  7.20  locations the director designates for testing, examination, and 
  7.21  analysis.  The manufacturer shall pay all costs for testing, 
  7.22  examination, analysis, and transportation of the machine model. 
  7.23     Subd. 6.  [PRIZES.] A person who plays a gaming machine 
  7.24  agrees to be bound by the rules and game procedures applicable 
  7.25  to that particular gaming machine game.  The player acknowledges 
  7.26  that the determination of whether the player has won a prize is 
  7.27  subject to the rules and game procedures adopted by the 
  7.28  director, claim procedures established by the director for the 
  7.29  game, and any confidential or public validation tests 
  7.30  established by the director for that game.  A person under 18 
  7.31  years of age may not claim a prize from the operation of a 
  7.32  gaming machine.  A prize claimed from the play of a gaming 
  7.33  machine game is not subject to the provisions of section 
  7.34  349A.08, subdivision 8.  
  7.35     Subd. 7.  [PROHIBITIONS.] (a) A person under the age of 18 
  7.36  years may not play a game on a gaming machine. 
  8.1      (b) The director or any employee of the lottery, or a 
  8.2   member of their immediate family residing in the same household, 
  8.3   may not play a game on a gaming machine or receive a prize from 
  8.4   the operation of a gaming machine. 
  8.5      Subd. 8.  [COMPULSIVE GAMBLING NOTICE.] The director shall 
  8.6   prominently post, in the area where the gaming machines are 
  8.7   located, the toll-free telephone number established by the 
  8.8   commissioner of human services in connection with the compulsive 
  8.9   gambling program established under section 245.98.  The director 
  8.10  and the location provider shall establish a proactive plan to 
  8.11  identify problem gamblers and take appropriate action. 
  8.12     Subd. 9.  [LOCAL LICENSES.] Except as provided in 
  8.13  subdivision 1, no political subdivision may require a license to 
  8.14  operate a gaming machine, restrict or regulate the placement of 
  8.15  gaming machines, or impose a tax or fee on the business of 
  8.16  operating gaming machines. 
  8.17     Sec. 14.  Minnesota Statutes 2002, section 541.20, is 
  8.18  amended to read: 
  8.19     541.20 [RECOVERY OF MONEY LOST.] 
  8.20     Every person who, by playing at cards, dice, or other game, 
  8.21  or by betting on the hands or sides of such as are gambling, 
  8.22  shall lose to any person so playing or betting any sum of money 
  8.23  or any goods, and pays or delivers the same, or any part 
  8.24  thereof, to the winner, may sue for and recover such money by a 
  8.25  civil action, before any court of competent jurisdiction.  For 
  8.26  purposes of this section, gambling shall not include pari-mutuel 
  8.27  wagering conducted under a license issued pursuant to chapter 
  8.28  240, purchase or sale of tickets in the state lottery, purchase 
  8.29  of gaming machine plays as authorized under chapter 349A, or 
  8.30  gambling authorized under chapters 349 and 349A. 
  8.31     Sec. 15.  Minnesota Statutes 2002, section 541.21, is 
  8.32  amended to read: 
  8.33     541.21 [COMMITMENTS FOR GAMBLING DEBT VOID.] 
  8.34     Every note, bill, bond, mortgage, or other security or 
  8.35  conveyance in which the whole or any part of the consideration 
  8.36  shall be for any money or goods won by gambling or playing at 
  9.1   cards, dice, or any other game whatever, or by betting on the 
  9.2   sides or hands of any person gambling, or for reimbursing or 
  9.3   repaying any money knowingly lent or advanced at the time and 
  9.4   place of such gambling or betting, or lent and advanced for any 
  9.5   gambling or betting to any persons so gambling or betting, shall 
  9.6   be void and of no effect as between the parties to the same, and 
  9.7   as to all persons except such as hold or claim under them in 
  9.8   good faith, without notice of the illegality of the 
  9.9   consideration of such contract or conveyance.  The provisions of 
  9.10  this section shall not apply to:  (1) pari-mutuel wagering 
  9.11  conducted under a license issued pursuant to chapter 240; (2) 
  9.12  purchase of tickets in the state lottery or other wagering 
  9.13  authorized under chapter 349A; (3) gaming activities conducted 
  9.14  pursuant to the Indian Gaming Regulatory Act, 25 U.S.C. 2701 et 
  9.15  seq.; or (4) lawful gambling activities permitted under chapter 
  9.16  349. 
  9.17     Sec. 16.  Minnesota Statutes 2002, section 609.75, 
  9.18  subdivision 3, is amended to read: 
  9.19     Subd. 3.  [WHAT ARE NOT BETS.] The following are not bets: 
  9.20     (1) A contract to insure, indemnify, guarantee or otherwise 
  9.21  compensate another for a harm or loss sustained, even though the 
  9.22  loss depends upon chance. 
  9.23     (2) A contract for the purchase or sale at a future date of 
  9.24  securities or other commodities. 
  9.25     (3) Offers of purses, prizes or premiums to the actual 
  9.26  contestants in any bona fide contest for the determination of 
  9.27  skill, speed, strength, endurance, or quality or to the bona 
  9.28  fide owners of animals or other property entered in such a 
  9.29  contest. 
  9.30     (4) The game of bingo when conducted in compliance with 
  9.31  sections 349.11 to 349.23. 
  9.32     (5) A private social bet not part of or incidental to 
  9.33  organized, commercialized, or systematic gambling. 
  9.34     (6) The operation of equipment or the conduct of a raffle 
  9.35  under sections 349.11 to 349.22, by an organization licensed by 
  9.36  the gambling control board or an organization exempt from 
 10.1   licensing under section 349.166.  
 10.2      (7) Pari-mutuel betting on horse racing when the betting is 
 10.3   conducted under chapter 240.  
 10.4      (8) The purchase and sale of state lottery tickets and 
 10.5   plays on a gaming machine under chapter 349A.  
 10.6      Sec. 17.  Minnesota Statutes 2002, section 609.761, 
 10.7   subdivision 2, is amended to read: 
 10.8      Subd. 2.  [STATE LOTTERY.] Sections 609.755 and 609.76 do 
 10.9   not prohibit the operation of the state lottery or the sale, 
 10.10  possession, or purchase of tickets for the state lottery under 
 10.11  chapter 349A, or the manufacture, possession, sale, or operation 
 10.12  of a gaming machine under chapter 349A. 
 10.13     Sec. 18.  [EFFECTIVE DATE.] 
 10.14     This act is effective the day following final enactment.