Minnesota Legislature
SF 1555
2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to gambling; amending various provisions 1.3 relating to lawful gambling; amending and providing 1.4 definitions; making technical, clarifying, and 1.5 conforming changes; amending Minnesota Statutes 2004, 1.6 sections 349.12, subdivisions 5, 25, 33, by adding 1.7 subdivisions; 349.15, subdivision 1; 349.151, 1.8 subdivisions 4, 4b; 349.152, subdivision 2; 349.153; 1.9 349.155, subdivision 3; 349.16, subdivisions 2, 8; 1.10 349.161, subdivision 5; 349.162, subdivisions 1, 4, 5; 1.11 349.163, subdivision 3; 349.1635, subdivision 4; 1.12 349.166, subdivisions 1, 2; 349.167, subdivision 1; 1.13 349.168, subdivision 8; 349.17, subdivisions 5, 7; 1.14 349.1711, subdivision 1; 349.173; 349.18, subdivision 1.15 1; 349.19, subdivisions 4, 5, 10; 349.211, subdivision 1.16 2c; 349.2125, subdivision 1; 349.213; 609.75, 1.17 subdivision 1; repealing Minnesota Statutes 2004, 1.18 sections 349.162, subdivision 3; 349.164; 349.17, 1.19 subdivision 1. 1.20 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.21 Section 1. Minnesota Statutes 2004, section 349.12, is 1.22 amended by adding a subdivision to read: 1.23 Subd. 3c. [BAR BINGO.] "Bar bingo" is a bingo occasion 1.24 conducted at a permitted premises in an area where intoxicating 1.25 liquor or 3.2 percent malt beverages are sold and where the 1.26 licensed organization conducts another form of lawful gambling. 1.27 Sec. 2. Minnesota Statutes 2004, section 349.12, 1.28 subdivision 5, is amended to read: 1.29 Subd. 5. [BINGO OCCASION.] "Bingo occasion" means a single 1.30 gathering or session at which a series of one or more successive 1.31 bingo games is played. There is no limit on the number of games 1.32 conducted during a bingo occasion but a bingo occasion must not 2.1 last longer than eight consecutive hours. 2.2 Sec. 3. Minnesota Statutes 2004, section 349.12, is 2.3 amended by adding a subdivision to read: 2.4 Subd. 7a. [CHARITABLE CONTRIBUTION.] "Charitable 2.5 contribution" means one or more of the lawful purposes 2.6 expenditures under section 349.12, subdivision 25, paragraph 2.7 (a), clauses (1) to (5), (6), (7), (10), (11), (13) to (15), and 2.8 (19). 2.9 Sec. 4. Minnesota Statutes 2004, section 349.12, 2.10 subdivision 25, is amended to read: 2.11 Subd. 25. [LAWFUL PURPOSE.] (a) "Lawful purpose" means one 2.12 or more of the following: 2.13 (1) any expenditure by or contribution to a 501(c)(3) or 2.14 festival organization, as defined in subdivision 15a, provided 2.15 that the organization and expenditure or contribution are in 2.16 conformity with standards prescribed by the board under section 2.17 349.154, which standards must apply to both types of 2.18 organizations in the same manner and to the same extent; 2.19 (2) a contribution to or expenditure for goods and services 2.20 for an individual or family suffering from poverty, 2.21 homelessness, orphysical or mentaldisability, which is used to 2.22 relieve the effects of thatpoverty, homelessness, or disability2.23 suffering; 2.24 (3)a contribution to an individual for treatment for2.25delayed posttraumatic stress syndrome ora contribution to a 2.26 program recognized by the Minnesota Department of Human Services 2.27 for the education, prevention, or treatment ofcompulsive2.28 problem gambling; 2.29 (4) a contribution to or expenditure on a public or private 2.30 nonprofit educational institution registered with or accredited 2.31 by this state or any other state; 2.32 (5) a contribution to a scholarship fund for defraying the 2.33 cost of education to individuals where the funds are awarded 2.34 through an open and fair selection process; 2.35 (6) activities by an organization or a government entity 2.36 which recognizehumanitarian ormilitary service to the United 3.1 States, the state of Minnesota, or a community, subject to rules 3.2 of the board, provided that the rules must not include mileage 3.3 reimbursements in the computation of the per diem reimbursement 3.4 limit and must impose no aggregate annual limit on the amount of 3.5 reasonable and necessary expenditures made to support: 3.6 (i) members of a military marching or color guard unit for 3.7 activities conducted within the state; 3.8 (ii) members of an organization solely for services 3.9 performed by the members at funeral services;or3.10 (iii) members of military marching, color guard, or honor 3.11 guard units may be reimbursed for participating in color guard, 3.12 honor guard, or marching unit events within the state or states 3.13 contiguous to Minnesota at a per participant rate of up to $35 3.14 per diem; or 3.15 (iv) active military personnel and their immediate family 3.16 members in need of support services; 3.17 (7) recreational, community, and athletic facilities and 3.18 activities intended primarily for persons under age 21, provided 3.19 that such facilities and activities do not discriminate on the 3.20 basis of gender and the organization complies with section 3.21 349.154; 3.22 (8) payment of local taxes authorized under this chapter, 3.23 taxes imposed by the United States on receipts from lawful 3.24 gambling, the taxes imposed by section 297E.02, subdivisions 1, 3.25 4, 5, and 6, and the tax imposed on unrelated business income by 3.26 section 290.05, subdivision 3; 3.27 (9) payment of real estate taxes and assessments on 3.28 permitted gambling premiseswhollyowned by the licensed 3.29 organization paying the taxes, or wholly leased by a licensed 3.30 veterans organization under a national charter recognized under 3.31 section 501(c)(19) of the Internal Revenue Code, not to exceed:3.32(i) for premises used for bingo, the amount that an3.33organization may expend under board rules on rent for bingo; and3.34(ii) $35,000 per year for premises used for other forms of3.35lawful gambling; 3.36 (10) a contribution to the United States, this state or any 4.1 of its political subdivisions, or any agency or instrumentality 4.2 thereof other than a direct contribution to a law enforcement or 4.3 prosecutorial agency; 4.4 (11) a contribution to or expenditure by a nonprofit 4.5 organization which is a church or body of communicants gathered 4.6 in common membership for mutual support and edification in 4.7 piety, worship, or religious observances; 4.8 (12) payment of the reasonable costs of an audit required 4.9 in section 297E.06, subdivision 4, provided the annual audit is 4.10 filed in a timely manner with the Department of Revenue and paid 4.11 prior to June 30, 2006; 4.12(13) a contribution to or expenditure on a wildlife4.13management project that benefits the public at-large, provided4.14that the state agency with authority over that wildlife4.15management project approves the project before the contribution4.16or expenditure is made;4.17(14) expenditures, approved by the commissioner of natural4.18resources, by an organization for grooming and maintaining4.19snowmobile trails and all-terrain vehicle trails that are (1)4.20grant-in-aid trails established under section 85.019, or (2)4.21other trails open to public use, including purchase or lease of4.22equipment for this purpose;4.23 (13) a contribution to or expenditure on projects or 4.24 activities approved by the commissioner of natural resources for: 4.25 (i) wildlife management projects that benefit the public at 4.26 large; 4.27 (ii) grant-in-aid trail maintenance and grooming 4.28 established under sections 84.83 and 84.927 and other trails 4.29 open to public use, including purchase or lease of equipment for 4.30 this purpose; and 4.31 (iii) supplies and materials for safety training and 4.32 educational programs coordinated by the Department of Natural 4.33 Resources including the Enforcement Division; 4.34(15)(14) conducting nutritional programs, food shelves, 4.35 and congregate dining programs primarily for persons who are age 4.36 62 or older or disabled; 5.1(16)(15) a contribution to a community arts organization, 5.2 or an expenditure to sponsor arts programs in the community, 5.3 including but not limited to visual, literary, performing, or 5.4 musical arts; 5.5(17)(16) an expenditure by a licensed veterans 5.6 organization for payment of water, fuel for heating, 5.7 electricity, and sewer costs for a building wholly owned or 5.8 wholly leased by and used as the primary headquarters of the 5.9 licensed veterans organization; 5.10(18)(17) expenditure by a licensed veterans organization 5.11 of up to $5,000 in a calendar year in net costs to the 5.12 organization for meals and other membership events, limited to 5.13 members and spouses, held in recognition of military service. 5.14 No more than $5,000 can be expended in total per calendar year 5.15 under this clause by all licensed veterans organizations sharing 5.16 the same veterans post home;or5.17(19)(18) payment of fees authorized under this chapter 5.18 imposed by the state of Minnesota to conduct lawful gambling in 5.19 Minnesota; or 5.20 (19) a contribution or expenditure to honor an individual's 5.21 humanitarian service as demonstrated through philanthropy or 5.22 volunteerism to the United States, this state, or local 5.23 community. 5.24 (b) Notwithstanding paragraph (a), "lawful purpose" does 5.25 not include: 5.26 (1) any expenditure made or incurred for the purpose of 5.27 influencing the nomination or election of a candidate for public 5.28 office or for the purpose of promoting or defeating a ballot 5.29 question; 5.30 (2) any activity intended to influence an election or a 5.31 governmental decision-making process; 5.32 (3) the erection, acquisition, improvement, expansion, 5.33 repair, or maintenance of real property or capital assets owned 5.34 or leased by an organization, unless the board has first 5.35 specifically authorized the expenditures after finding that (i) 5.36 the real property or capital assets will be used exclusively for 6.1 one or more of the purposes in paragraph (a); (ii) with respect 6.2 to expenditures for repair or maintenance only, that the 6.3 property is or will be used extensively as a meeting place or 6.4 event location by other nonprofit organizations or community or 6.5 service groups and that no rental fee is charged for the use; 6.6 (iii) with respect to expenditures, including a mortgage payment 6.7 or other debt service payment, for erection or acquisition only, 6.8 that the erection or acquisition is necessary to replace with a 6.9 comparable building, a building owned by the organization and 6.10 destroyed or made uninhabitable by fire ornatural6.11disastercatastrophe, provided that the expenditure may be only 6.12 for that part of the replacement cost not reimbursed by 6.13 insurance; (iv) with respect to expenditures, including a 6.14 mortgage payment or other debt service payment, for erection or 6.15 acquisition only, that the erection or acquisition is necessary 6.16 to replace with a comparable building a building owned by the 6.17 organization that was acquired from the organization by eminent 6.18 domain or sold by the organization to a purchaser that the 6.19 organization reasonably believed would otherwise have acquired 6.20 the building by eminent domain, provided that the expenditure 6.21 may be only for that part of the replacement cost that exceeds 6.22 the compensation received by the organization for the building 6.23 being replaced; or (v) with respect to an expenditure to bring 6.24 an existing building into compliance with the Americans with 6.25 Disabilities Act under item (ii), an organization has the option 6.26 to apply the amount of the board-approved expenditure to the 6.27 erection or acquisition of a replacement building that is in 6.28 compliance with the Americans with Disabilities Act; 6.29 (4) an expenditure by an organization which is a 6.30 contribution to a parent organization, foundation, or affiliate 6.31 of the contributing organization, if the parent organization, 6.32 foundation, or affiliate has provided to the contributing 6.33 organization within one year of the contribution any money, 6.34 grants, property, or other thing of value; 6.35 (5) a contribution by a licensed organization to another 6.36 licensed organization unless the board has specifically 7.1 authorized the contribution. The board must authorize such a 7.2 contribution when requested to do so by the contributing 7.3 organization unless it makes an affirmative finding that the 7.4 contribution will not be used by the recipient organization for 7.5 one or more of the purposes in paragraph (a); or 7.6 (6) a contribution to a statutory or home rule charter 7.7 city, county, or town by a licensed organization with the 7.8 knowledge that the governmental unit intends to use the 7.9 contribution for a pension or retirement fund. 7.10 [EFFECTIVE DATE.] The effective date for paragraph (a), 7.11 clause (9), is January 1, 2006. All other changes in section 4 7.12 are effective the day following final enactment. 7.13 Sec. 5. Minnesota Statutes 2004, section 349.12, 7.14 subdivision 33, is amended to read: 7.15 Subd. 33. [RAFFLE.] "Raffle" means a game in which a 7.16 participant buys a ticketfor a chance at a prize with the7.17winner determined by a random drawing to take place at a7.18location and date printed upon the ticketor other certificate 7.19 of participation in an event where the prize determination is 7.20 based on a method of random selection and all entries have an 7.21 equal chance of selection. The ticket or certificate of 7.22 participation must include the location, date, and time of the 7.23 selection of the winning entries. 7.24 [EFFECTIVE DATE.] This section is effective the day 7.25 following final enactment. 7.26 Sec. 6. Minnesota Statutes 2004, section 349.15, 7.27 subdivision 1, is amended to read: 7.28 Subdivision 1. [EXPENDITURE RESTRICTIONS.] Gross profits 7.29 from lawful gambling may be expended only for lawful purposes or 7.30 allowable expenses as authorized by the membership of the 7.31 conducting organization at a monthly meeting of the 7.32 organization's membership. Provided that no more than 70 7.33 percent of the gross profit less the tax imposed under section 7.34 297E.02, subdivision 1, from bingo, and no more than5560 7.35 percent of the gross profit from other forms of lawful gambling, 7.36 may be expended biennially during the term of the license for 8.1 allowable expenses related to lawful gambling. For licenses 8.2 issued after June 30, 2006, compliance with this subdivision 8.3 will be measured on a biennial basis that is concurrent with the 8.4 term of the license. Compliance with this subdivision is a 8.5 condition for the renewal of any license beginning on July 1, 8.6 2008. 8.7 Sec. 7. Minnesota Statutes 2004, section 349.151, 8.8 subdivision 4, is amended to read: 8.9 Subd. 4. [POWERS AND DUTIES.] (a) The board has the 8.10 following powers and duties: 8.11 (1) to regulate lawful gambling to ensure it is conducted 8.12 in the public interest; 8.13 (2) to issue licenses to organizations, distributors, 8.14 distributor salespersons,bingo halls,manufacturers, linked 8.15 bingo game providers, and gambling managers; 8.16 (3) to collect and deposit license, permit, and 8.17 registration fees due under this chapter; 8.18 (4) to receive reports required by this chapter and inspect 8.19 all premises, records, books, and other documents of 8.20 organizations, distributors, manufacturers, and linked bingo 8.21 game providers, and bingo hallsto insure compliance with all 8.22 applicable laws and rules; 8.23 (5) to make rules authorized by this chapter; 8.24 (6) to register gambling equipment and issue registration 8.25 stamps; 8.26 (7) to provide by rule for the mandatory posting by 8.27 organizations conducting lawful gambling of rules of play and 8.28 the odds and/or house percentage on each form of lawful 8.29 gambling; 8.30 (8) to report annually to the governor and legislature on 8.31 its activities and on recommended changes in the laws governing 8.32 gambling; 8.33 (9) to report annually to the governor and legislature a 8.34 financial summary for each licensed organization identifying the 8.35 gross receipts, prizes paid, operating expenses, lawful purpose 8.36 expenditures including charitable contributions, and the 9.1 percentage of annual gross profit used for lawful purposes; 9.2 (10) to impose civil penalties of not more than $500 per 9.3 violation on organizations, distributors, distributor 9.4 salespersons, manufacturers,bingo halls,linked bingo game 9.5 providers, and gambling managers for failure to comply with any 9.6 provision of this chapter or any rule or order of the board; 9.7(10)(11) to issue premises permits to organizations 9.8 licensed to conduct lawful gambling; 9.9(11)(12) to delegate to the director the authority to 9.10 issue or deny license and premises permit applications and 9.11 renewals under criteria established by the board; 9.12(12)(13) to delegate to the director the authority to 9.13 approve or deny fund loss requests, contribution of gambling 9.14 funds to another licensed organization, and property expenditure 9.15 requests under criteria established by the board; 9.16 (14) to suspend or revoke licenses and premises permits of 9.17 organizations, distributors, distributor salespersons, 9.18 manufacturers,bingo halls,linked bingo game providers, or 9.19 gambling managers as provided in this chapter; 9.20 (15) to approve or deny requests from licensees for: 9.21 (i) waivers from fee requirements as provided in section 9.22 349.16, subdivision 6; and 9.23 (ii) variances from Gambling Control Board rules under 9.24 section 14.055; and 9.25(13)(16) to register employees of organizations licensed 9.26 to conduct lawful gambling; 9.27(14)(17) to require fingerprints from persons determined 9.28 by board rule to be subject to fingerprinting; 9.29(15)(18) to delegate to a compliance review group of the 9.30 board the authority to investigate alleged violations, issue 9.31 consent orders, and initiate contested cases on behalf of the 9.32 board; 9.33(16)(19) to order organizations, distributors, distributor 9.34 salespersons, manufacturers,bingo halls,linked bingo game 9.35 providers, and gambling managers to take corrective actions; and 9.36(17)(20) to take all necessary steps to ensure the 10.1 integrity of and public confidence in lawful gambling. 10.2 (b) The board, or director if authorized to act on behalf 10.3 of the board, may by citation assess any organization, 10.4 distributor,employee eligible to make sales on behalf of a10.5 distributor salesperson, manufacturer,bingo hall licensee,10.6 linked bingo game provider, or gambling manager a civil penalty 10.7 of not more than $500 per violation for a failure to comply with 10.8 any provision of this chapter or any rule adopted or order 10.9 issued by the board. Any organization, distributor,bingo hall10.10licenseedistributor salesperson, gambling manager, linked bingo 10.11 game provider, or manufacturer assessed a civil penalty under 10.12 this paragraph may request a hearing before the board. Appeals 10.13 of citations imposing a civil penalty are not subject to the 10.14 provisions of the Administrative Procedure Act. 10.15 (c) All penalties received by the board must be deposited 10.16 in the general fund. 10.17 (d) All fees imposed by the board under sections 349.16 to 10.18 349.167 must be deposited in the state treasury and credited to 10.19 a lawful gambling regulation account in the special revenue 10.20 fund. Receipts in this account are available for the operations 10.21 of the board up to the amount authorized in biennial 10.22 appropriations from the legislature. 10.23 Sec. 8. Minnesota Statutes 2004, section 349.151, 10.24 subdivision 4b, is amended to read: 10.25 Subd. 4b. [PULL-TAB SALES FROM DISPENSING DEVICES.] (a) 10.26 The board may by rule authorize but not require the use of 10.27 pull-tab dispensing devices. 10.28 (b) Rules adopted under paragraph (a): 10.29 (1) must limit the number of pull-tab dispensing devices on 10.30 any permitted premises to three; and 10.31 (2) must limit the use of pull-tab dispensing devices to a 10.32 permitted premises which is (i) a licensed premises for on-sales 10.33 of intoxicating liquor or 3.2 percent malt beverages; or (ii) a 10.34licensed bingo hall that allows gambling only bypremises where 10.35 bingo is conducted and admission is restricted to persons 18 10.36 years or older. 11.1 (c) Notwithstanding rules adopted under paragraph (b), 11.2 pull-tab dispensing devices may be used in establishments 11.3 licensed for the off-sale of intoxicating liquor, other than 11.4 drugstores and general food stores licensed under section 11.5 340A.405, subdivision 1. 11.6 Sec. 9. Minnesota Statutes 2004, section 349.152, 11.7 subdivision 2, is amended to read: 11.8 Subd. 2. [DUTIES OF DIRECTOR.] The director has the 11.9 following duties: 11.10 (1) to carry out gambling policy established by the board; 11.11 (2) to employ and supervise personnel of the board; 11.12 (3) to advise and make recommendations to the board on 11.13 rules, policy, and legislative initiatives; 11.14 (4) to approve or deny operational requests from licensees 11.15 as delegated by the board; 11.16 (5) to issue licenses and premises permits as authorized by 11.17 the board; 11.18(5)(6) to issue cease and desist orders; 11.19(6)(7) to make recommendations to the board on license 11.20 issuance, denial, censure, suspension and revocation, civil 11.21 penalties, and corrective action the board imposes; 11.22(7)(8) to ensure that board rules, policy, and decisions 11.23 are adequately and accurately conveyed to the board's licensees; 11.24(8)(9) to conduct investigations, inspections, compliance 11.25 reviews, and audits under this chapter; and 11.26(9)(10) to issue subpoenas to compel the attendance of 11.27 witnesses and the production of documents, books, records, and 11.28 other evidence relating to an investigation, compliance review, 11.29 or audit the director is authorized to conduct. 11.30 Sec. 10. Minnesota Statutes 2004, section 349.153, is 11.31 amended to read: 11.32 349.153 [CONFLICT OF INTEREST.] 11.33 (a) A person may not serve on the board, be the director, 11.34 or be an employee of the board who has an interest in any 11.35 corporation, association, limited liability company, or 11.36 partnership that is licensed by the board as a distributor, 12.1 manufacturer, or linked bingo game provider, or bingo hallunder 12.2 section 349.164. 12.3 (b) A member of the board, the director, or an employee of 12.4 the board may not accept employment with, receive compensation 12.5 directly or indirectly from, or enter into a contractual 12.6 relationship with an organization that conducts lawful gambling, 12.7 a distributor, a linked bingo game provider,a bingo hall,or a 12.8 manufacturer while employed with or a member of the board or 12.9 within one year after terminating employment with or leaving the 12.10 board. 12.11 (c) A distributor,bingo hall,manufacturer, linked bingo 12.12 game provider, or organization licensed to conduct lawful 12.13 gambling may not hire a former employee, director, or member of 12.14 the Gambling Control Board for one year after the employee, 12.15 director, or member has terminated employment with or left the 12.16 Gambling Control Board. 12.17 Sec. 11. Minnesota Statutes 2004, section 349.155, 12.18 subdivision 3, is amended to read: 12.19 Subd. 3. [MANDATORY DISQUALIFICATIONS.] (a) In the case of 12.20 licenses for manufacturers, distributors, distributor 12.21 salespersons,bingo halls,linked bingo game providers, and 12.22 gambling managers, the board may not issue or renew a license 12.23 under this chapter, and shall revoke a license under this 12.24 chapter, if the applicant or licensee, or a director, officer, 12.25 partner, governor, or person in a supervisory or management 12.26 position of the applicant or licensee: 12.27 (1) has ever been convicted of a felony or a crime 12.28 involving gambling; 12.29 (2) has ever been convicted of (i) assault, (ii) a criminal 12.30 violation involving the use of a firearm, or (iii) making 12.31 terroristic threats; 12.32 (3) is or has ever been connected with or engaged in an 12.33 illegal business; 12.34 (4) owes $500 or more in delinquent taxes as defined in 12.35 section 270.72; 12.36 (5) had a sales and use tax permit revoked by the 13.1 commissioner of revenue within the past two years; or 13.2 (6) after demand, has not filed tax returns required by the 13.3 commissioner of revenue. The board may deny or refuse to renew 13.4 a license under this chapter, and may revoke a license under 13.5 this chapter, if any of the conditions in this paragraph are 13.6 applicable to an affiliate or direct or indirect holder of more 13.7 than a five percent financial interest in the applicant or 13.8 licensee. 13.9 (b) In the case of licenses for organizations, the board 13.10 may not issue or renew a license under this chapter, and shall 13.11 revoke a license under this chapter, if the organization, or an 13.12 officer or member of the governing body of the organization: 13.13 (1) has been convicted of a felony or gross misdemeanor 13.14within the five years before the issuance or renewal of the13.15licenseinvolving theft or fraud; 13.16 (2) has ever been convicted of a crime involving gambling; 13.17 or 13.18 (3) has had a license issued by the board or director 13.19 permanently revoked for violation of law or board rule. 13.20 Sec. 12. Minnesota Statutes 2004, section 349.16, 13.21 subdivision 2, is amended to read: 13.22 Subd. 2. [ISSUANCE OF GAMBLING LICENSES.] (a) Licenses 13.23 authorizing organizations to conduct lawful gambling may be 13.24 issued by the board to organizations meeting the qualifications 13.25 in paragraphs (b) to (h) if the board determines that the 13.26 license is consistent with the purpose of sections 349.11 to 13.27 349.22. 13.28 (b) The organization must have been in existence for the 13.29 most recent three years preceding the license application as a 13.30 registered Minnesota nonprofit corporation or as an organization 13.31 designated as exempt from the payment of income taxes by the 13.32 Internal Revenue Code. 13.33 (c) The organization at the time of licensing must have at 13.34 least 15 active members. 13.35 (d) The organization must not be in existence solely for 13.36 the purpose of conducting gambling. 14.1 (e) The organization has identified in its license 14.2 application the lawful purposes on which it proposes to expend 14.3 net profits from lawful gambling and has identified an annual 14.4 goal for charitable contributions, expressed as a percentage of 14.5 gross profits. 14.6 (f) The organization has identified on its license 14.7 application a gambling manager and certifies that the manager is 14.8 qualified under this chapter. 14.9 (g) The organization must not, in the opinion of the board 14.10 after consultation with the commissioner of revenue, be seeking 14.11 licensing primarily for the purpose of evading or reducing the 14.12 tax imposed by section 297E.02, subdivision 6. 14.13 (h) The organization has not exceeded the expenditure 14.14 restrictions imposed under section 349.15, subdivision 1, or if 14.15 the organization has exceeded the expenditure restrictions under 14.16 section 349.15, subdivision 1, the organization has reimbursed 14.17 any excess expenses from nongambling funds. 14.18 Sec. 13. Minnesota Statutes 2004, section 349.16, 14.19 subdivision 8, is amended to read: 14.20 Subd. 8. [LOCAL INVESTIGATION FEE.] A statutory or home 14.21 rule charter city or county notified under section 349.213, 14.22 subdivision 2, may assess an investigation fee on organizations 14.23or bingo hallsapplying for or renewing a premises permitor a14.24bingo hall license. An investigation fee may not exceed the 14.25 following limits: 14.26 (1) for cities of the first class, $500; 14.27 (2) for cities of the second class, $250; 14.28 (3) for all other cities, $100; and 14.29 (4) for counties, $375. 14.30 Sec. 14. Minnesota Statutes 2004, section 349.161, 14.31 subdivision 5, is amended to read: 14.32 Subd. 5. [PROHIBITION.] (a) No distributor, distributor 14.33 salesperson, or other employee of a distributor, may also be a 14.34 wholesale distributor of alcoholic beverages or an employee of a 14.35 wholesale distributor of alcoholic beverages. 14.36 (b) No distributor, distributor salesperson, or any 15.1 representative, agent, affiliate, or other employee of a 15.2 distributor, may: (1) be involved in the conduct of lawful 15.3 gambling by an organization; (2) keep or assist in the keeping 15.4 of an organization's financial records, accounts, and 15.5 inventories; or (3) prepare or assist in the preparation of tax 15.6 forms and other reporting forms required to be submitted to the 15.7 state by an organization. 15.8 (c) No distributor, distributor salesperson, or any 15.9 representative, agent, affiliate, or other employee of a 15.10 distributor may provide a lessor of gambling premises any 15.11 compensation, gift, gratuity, premium, or other thing of value. 15.12 (d) No distributor, distributor salesperson, or any 15.13 representative, agent, affiliate, or other employee of a 15.14 distributor may provide an employee or agent of the organization 15.15 any compensation, gift, gratuity, premium, or other thing of 15.16 value greater than $25 per organization in a calendar year. 15.17 (e) No distributor, distributor salesperson, or any 15.18 representative, agent, affiliate, or other employee of a 15.19 distributor may participate in any gambling activity at any 15.20 gambling site or premises where gambling equipment purchased 15.21 from that distributor or distributor salesperson is being used 15.22 in the conduct of lawful gambling. 15.23(e)(f) No distributor, distributor salesperson, or any 15.24 representative, agent, affiliate, or other employee of a 15.25 distributor may alter or modify any gambling equipment, except 15.26 to add a "last ticket sold" prize sticker. 15.27(f)(g) No distributor, distributor salesperson, or any 15.28 representative, agent, affiliate, or other employee of a 15.29 distributor may: (1) recruit a person to become a gambling 15.30 manager of an organization or identify to an organization a 15.31 person as a candidate to become gambling manager for the 15.32 organization; or (2) identify for an organization a potential 15.33 gambling location. 15.34(g)(h) No distributor or distributor salesperson may 15.35 purchase gambling equipment for resale to a person for use 15.36 within the state from any person not licensed as a manufacturer 16.1 under section 349.163, except for gambling equipment returned 16.2 from an organization licensed under section 349.16, or exempt or 16.3 excluded from licensing under section 349.166. 16.4(h)(i) No distributor or distributor salesperson may sell 16.5 gambling equipment to any person for use in Minnesota other than 16.6 (i) a licensed organization or organization excluded or exempt 16.7 from licensing, or (ii) the governing body of an Indian tribe. 16.8(i)(j) No distributor or distributor salesperson may sell 16.9 or otherwise provide a pull-tab or tipboard deal with the symbol 16.10 required by section 349.163, subdivision 5, paragraph(h)(d), 16.11 visible on the flare to any person other than in Minnesota to a 16.12 licensed organization or organization exempt from licensing. 16.13 Sec. 15. Minnesota Statutes 2004, section 349.162, 16.14 subdivision 1, is amended to read: 16.15 Subdivision 1. [STAMPREGISTRATION REQUIRED.](a)A 16.16 distributor may not sell, transfer, furnish, or otherwise 16.17 provide to a person, and no person may purchase, borrow, accept, 16.18 or acquire from a distributor gambling equipment for use within 16.19 the state unless the equipment has been registered with the 16.20 boardand has a registration stamp affixed, except for gambling16.21equipment not stamped by the manufacturer pursuant to section16.22349.163, subdivision 5 or 8. Each stamp must bear a16.23registration number assigned by the board.16.24(b) A manufacturer must return all unused registration16.25stamps in its possession to the board by February 1, 1995. No16.26manufacturer may possess unaffixed registration stamps after16.27February 1, 1995.16.28(c) After February 1, 1996, no person may possess any16.29unplayed pull-tab or tipboard deals with a registration stamp16.30affixed to the flare or any unplayed paddleticket cards with a16.31registration stamp affixed to the master flare. This paragraph16.32does not apply to unplayed pull-tab or tipboard deals with a16.33registration stamp affixed to the flare, or to unplayed16.34paddleticket cards with a registration stamp affixed to the16.35master flare, if the deals or cards are identified on a list of16.36existing inventory submitted by a licensed organization or a17.1licensed distributor, in a format prescribed by the commissioner17.2of revenue, to the commissioner of revenue on or before February17.31, 1996or the Department of Revenue in a manner prescribed by 17.4 the board or the Department of Revenue. Gambling equipment kept 17.5 in violation of thisparagraphsubdivision is contraband under 17.6 section 349.2125. 17.7 Sec. 16. Minnesota Statutes 2004, section 349.162, 17.8 subdivision 4, is amended to read: 17.9 Subd. 4. [PROHIBITION.] (a) No person other than a 17.10 licensed distributoror licensed manufacturermay possess 17.11 unaffixed registration stamps issued by the board for the 17.12 purpose of registering gambling equipment. 17.13 (b) Unless otherwise provided in this chapter, no person 17.14 may possess gambling equipment that has not beenstamped and17.15 registered. 17.16 (c) On and after January 1, 1991, no distributor may: 17.17 (1) sell a bingo hard card or paper sheet that does not 17.18 bear an individual number; or 17.19 (2) sell a package of bingo paper sheets that does not 17.20 contain bingo paper sheets in numerical order. 17.21 Sec. 17. Minnesota Statutes 2004, section 349.162, 17.22 subdivision 5, is amended to read: 17.23 Subd. 5. [SALES FROM FACILITIES.] (a) All gambling 17.24 equipment purchased or possessed by a licensed distributor for 17.25 resale to any person for use in Minnesota must, prior to the 17.26 equipment's resale, be unloaded into a storage facility located 17.27 in Minnesota which the distributor owns or leases; and which has 17.28 been registered, in advance and in writing, with the Division of 17.29 Alcohol and Gambling Enforcement as a storage facility of the 17.30 distributor. All unregistered gambling equipment and all 17.31 unaffixed registration stamps owned by, or in the possession of, 17.32 a licensed distributor in the state of Minnesota shall be stored 17.33 at a storage facility which has been registered with the 17.34 Division of Alcohol and Gambling Enforcement. No gambling 17.35 equipment may be moved from the facility unless the gambling 17.36 equipment has been first registered with the board, except for18.1gambling equipment not stamped by the manufacturer pursuant to18.2section 349.163, subdivision 5 or 8or the Department of Revenue. 18.3 (b) Notwithstanding section 349.163, subdivisions 5, 6, and 18.4 8, a licensed manufacturer may ship into Minnesota approved or 18.5 unapproved gambling equipment if the licensed manufacturer ships 18.6 the gambling equipment to a Minnesota storage facility that is: 18.7 (1) owned or leased by the licensed manufacturer; and (2) 18.8 registered, in advance and in writing, with the Division of 18.9 Alcohol and Gambling Enforcement as a manufacturer's storage 18.10 facility. No gambling equipment may be shipped into Minnesota 18.11 to the manufacturer's registered storage facility unless the 18.12 shipment of the gambling equipment is reported to the Department 18.13 of Revenue in a manner prescribed by the department. No 18.14 gambling equipment may be moved from the storage facility unless 18.15 the gambling equipment is sold to a licensed distributor and is 18.16 otherwise in conformity with this chapter, is shipped to an 18.17 out-of-state site and the shipment is reported to the Department 18.18 of Revenue in a manner prescribed by the department, or is 18.19 otherwise sold and shipped as permitted by board rule. 18.20 (c) All storage facilities owned, leased, used, or operated 18.21 by a licensed distributor or manufacturer may be entered upon 18.22 and inspected by the employees of the Division of Alcohol and 18.23 Gambling Enforcement, the Division of Alcohol and Gambling 18.24 Enforcement director's authorized representatives, employees of 18.25 the Gambling Control Board or its authorized representatives, 18.26 employees of the Department of Revenue, or authorized 18.27 representatives of the director of the Division of Special Taxes 18.28 of the Department of Revenue during reasonable and regular 18.29 business hours. Obstruction of, or failure to permit, entry and 18.30 inspection is cause for revocation or suspension of a 18.31 manufacturer's or distributor's licenses and permits issued 18.32 under this chapter. 18.33 (d) Unregistered gambling equipment and unaffixed 18.34 registration stamps found at any location in Minnesota other 18.35 than the manufacturing plant of a licensed manufacturer or a 18.36 registered storage facility are contraband under section 19.1 349.2125. This paragraph does not apply: 19.2 (1) to unregistered gambling equipment being transported in 19.3 interstate commerce between locations outside this state, if the 19.4 interstate shipment is verified by a bill of lading or other 19.5 valid shipping document; and 19.6 (2) to gambling equipmentnot stamped by the manufacturer19.7pursuant to section 349.163, subdivision 5 or 8registered with 19.8 the Department of Revenue for distribution to the tribal casinos. 19.9 Sec. 18. Minnesota Statutes 2004, section 349.163, 19.10 subdivision 3, is amended to read: 19.11 Subd. 3. [PROHIBITED SALES.] (a) A manufacturer may not: 19.12 (1) sell gambling equipment for use or resale within the 19.13 state to any person not licensed as a distributor, except that 19.14 gambling equipment used exclusively in a linked bingo game may 19.15 be sold to a licensed linked bingo provider; or 19.16 (2) sell gambling equipment to a distributor in this state 19.17 that has the same serial number as another item of gambling 19.18 equipment of the same type that is sold by that manufacturer for 19.19 use or resale in this state. 19.20 (b) A manufacturer, affiliate of a manufacturer, or person 19.21 acting as a representative or agent of a manufacturer may not 19.22 provide a lessor of gambling premises or an appointed official 19.23 any compensation, gift, gratuity, premium, contribution, or 19.24 other thing of value. 19.25 (c) A manufacturer may not sell or otherwise provide a 19.26 pull-tab or tipboard deal with the symbol required by 19.27 subdivision 5, paragraph(h)(d), imprinted on the flare to any 19.28 person other than a licensed distributor unless the manufacturer 19.29 first renders the symbol permanently invisible. 19.30 Sec. 19. Minnesota Statutes 2004, section 349.1635, 19.31 subdivision 4, is amended to read: 19.32 Subd. 4. [PROHIBITION.] (a) Except for services associated 19.33 exclusively with a linked bingo game, a linked bingo game 19.34 provider may not participate or assist in the conduct of lawful 19.35 gambling by an organization. No linked bingo game provider may: 19.36 (1)also be licensed as a bingo hall orhold any financial 20.1 or managerial interest in a premises leased for the conduct of 20.2 bingohall; 20.3 (2) also be licensed as a distributor or hold any financial 20.4 or managerial interest in a distributor; 20.5 (3) sell or lease linked bingo game equipment to any person 20.6 not licensed as an organization; 20.7 (4) purchase gambling equipment to be used exclusively in a 20.8 linked bingo game from any person not licensed as a manufacturer 20.9 under section 349.163; and 20.10 (5) provide an organization, a lessor of gambling premises, 20.11 or an appointed official any compensation, gift, gratuity, 20.12 premium, or contribution. 20.13 (b) Employees of the board and the Division of Alcohol and 20.14 Gambling Enforcement may inspect the books, records, inventory, 20.15 and business premises of a licensed linked bingo game provider 20.16 without notice during the normal business hours of the linked 20.17 bingo game provider. The board may charge a linked bingo game 20.18 provider for the actual cost of conducting scheduled or 20.19 unscheduled inspections of the licensee's facilities. 20.20 Sec. 20. Minnesota Statutes 2004, section 349.166, 20.21 subdivision 1, is amended to read: 20.22 Subdivision 1. [EXCLUSIONS.] (a) Bingo, with the exception 20.23 of linked bingo games, may be conducted without a license and 20.24 without complying with sections 349.168, subdivisions 1 and 2; 20.25 349.17, subdivisions 1, 4, and 5; 349.18, subdivision 1; and 20.26 349.19, if it is conducted: 20.27 (1) by an organization in connection with a county fair, 20.28 the state fair, or a civic celebration and is not conducted for 20.29 more than 12 consecutive days and is limited to no more than 20.30 four separate applications for activities applied for and 20.31 approved in a calendar year; or 20.32 (2) by an organization that conducts four or fewer bingo 20.33 occasions in a calendar year. 20.34 An organization that holds a license to conduct lawful 20.35 gambling under this chapter may not conduct bingo under this 20.36 subdivision. 21.1 (b) Bingo may be conducted within a nursing home or a 21.2 senior citizen housing project or by a senior citizen 21.3 organization if the prizes for a single bingo game do not exceed 21.4 $10, total prizes awarded at a single bingo occasion do not 21.5 exceed $200, no more than two bingo occasions are held by the 21.6 organization or at the facility each week, only members of the 21.7 organization or residents of the nursing home or housing project 21.8 are allowed to play in a bingo game, no compensation is paid for 21.9 any persons who conduct the bingo, and a manager is appointed to 21.10 supervise the bingo. Bingo conducted under this paragraph is 21.11 exempt from sections 349.11 to 349.23, and the board may not 21.12 require an organization that conducts bingo under this 21.13 paragraph, or the manager who supervises the bingo, to register 21.14 or file a report with the board. The gross receipts from bingo 21.15 conducted under the limitations of this subdivision are exempt 21.16 from taxation under chapter 297A. 21.17 (c) Raffles may be conducted by an organization withouta21.18license and without complying with sections 349.154 to 349.16521.19and 349.167 to 349.213registering with the board if the value 21.20 of all raffle prizes awarded by the organization in a calendar 21.21 year does not exceed $1,500. 21.22 (d) Except as provided in paragraph (b), the organization 21.23 must maintain all required records of excluded gambling activity 21.24 for 3-1/2 years. 21.25 Sec. 21. Minnesota Statutes 2004, section 349.166, 21.26 subdivision 2, is amended to read: 21.27 Subd. 2. [EXEMPTIONS.] (a) Lawful gambling, with the 21.28 exception of linked bingo games, may be conducted by an 21.29 organization without a license and without complying with 21.30 sections 349.168, subdivisions 1 and 2; 349.17, subdivisions 4 21.31 and 5; 349.18, subdivision 1; and 349.19 if: 21.32 (1) the organization conducts lawful gambling on five or 21.33 fewer days in a calendar year; 21.34 (2) the organization does not award more than $50,000 in 21.35 prizes for lawful gambling in a calendar year; 21.36 (3) the organization pays a fee of $50 to the board, 22.1 notifies the board in writing not less than 30 days before each 22.2 lawful gambling occasion of the date and location of the 22.3 occasion, or 60 days for an occasion held in the case of a city 22.4 of the first class, the types of lawful gambling to be 22.5 conducted, the prizes to be awarded, and receives an exemption 22.6 identification number; 22.7 (4) the organization notifies the local government unit 30 22.8 days before the lawful gambling occasion, or 60 days for an 22.9 occasion held in a city of the first class; 22.10 (5) the organization purchases all gambling equipment and 22.11 supplies from a licensed distributor; and 22.12 (6) the organization reports to the board, on a single-page 22.13 form prescribed by the board, within 30 days of each gambling 22.14 occasion, the gross receipts, prizes, expenses, expenditures of 22.15 net profits from the occasion, and the identification of the 22.16 licensed distributor from whom all gambling equipment was 22.17 purchased. 22.18 (b) If the organization fails to file a timely report as 22.19 required by paragraph (a), clause (3) or (6), the board shall 22.20 not issue any authorization, license, or permit to the 22.21 organization to conduct lawful gambling on an exempt, excluded, 22.22 or licensed basis until the report has been filed and the 22.23 organization may be subject to penalty as determined by the 22.24 board. 22.25 (c) Merchandise prizes must be valued at their fair market 22.26 value. 22.27 (d) Organizations that qualify to conduct exempt raffles 22.28 under paragraph (a) are exempt from section 349.173, paragraph 22.29 (b), clause (2), if the raffle tickets are sold only in 22.30 combination with an organization's membership or a ticket for an 22.31 organization's membership dinner is not included with any other 22.32 raffle conducted under the exempt permit. 22.33 (e) Unused pull-tab and tipboard deals must be returned to 22.34 the distributor within seven working days after the end of the 22.35 lawful gambling occasion. The distributor must accept and pay a 22.36 refund for all returns of unopened and undamaged deals returned 23.1 under this paragraph. 23.2(e)(f) An organization that is exempt from taxation on 23.3 purchases of pull-tabs and tipboards under section 297E.02, 23.4 subdivision 4, paragraph (b), clause (4), must return to the 23.5 distributor any tipboard or pull-tab deal no part of which is 23.6 used at the lawful gambling occasion for which it was purchased 23.7 by the organization. 23.8(f)(g) The organization must maintain all required records 23.9 of exempt gambling activity for 3-1/2 years. 23.10 Sec. 22. Minnesota Statutes 2004, section 349.167, 23.11 subdivision 1, is amended to read: 23.12 Subdivision 1. [GAMBLING MANAGER REQUIRED.] (a) All lawful 23.13 gambling conducted by a licensed organization must be under the 23.14 supervision of a gambling manager. A gambling manager 23.15 designated by an organization to supervise lawful gambling is 23.16 responsible for the gross receipts of the organization and for 23.17 its conduct in compliance with all laws and rules. A person 23.18 designated as a gambling manager shall maintain afidelity23.19 dishonesty bond in the sum of $10,000 in favor of the 23.20 organization conditioned on the faithful performance of the 23.21 manager's duties. The terms of the bond must provide that 23.22 notice be given to the board in writing not less than 30 days 23.23 before its cancellation. 23.24 (b) A person may not act as a gambling manager for more 23.25 than one organization. 23.26 (c) An organization may not conduct lawful gambling without 23.27 having a gambling manager. 23.28 (d) An organization may not have more than one gambling 23.29 manager at any time. 23.30 Sec. 23. Minnesota Statutes 2004, section 349.168, 23.31 subdivision 8, is amended to read: 23.32 Subd. 8. [PERCENTAGE OF GROSS PROFIT PAID.] (a) A licensed 23.33 organization may pay a percentage of the gross profit from 23.34 raffle ticket sales to a nonprofit organization that sells 23.35 raffle tickets for the licensed organization. 23.36 (b) A licensed organization may compensate an employee of 24.1 the organization for the sale of gambling equipment at a bar 24.2 operation if the frequency of the activity is one day or less 24.3 per week and the games are limited to 32 chances or less per 24.4 game. For purposes of this paragraph, an employee shall not be 24.5 a lessor, employee of the lessor, or an immediate family member 24.6 of the lessor. 24.7 Sec. 24. Minnesota Statutes 2004, section 349.17, 24.8 subdivision 5, is amended to read: 24.9 Subd. 5. [BINGO CARDS AND SHEETS.] (a) The board shall by 24.10 rule require that all licensed organizations: (1) conduct bingo 24.11 only using liquid daubers on bingo paper sheets that bear an 24.12 individual number recorded by the distributor or linked bingo 24.13 game provider; and (2) use each bingo paper sheet for no more 24.14 than one bingo occasion. In lieu of the requirements of clause 24.15 (2), a licensed organization may electronically record the sale 24.16 of each bingo hard card or paper sheet at each bingo occasion 24.17 using an electronic recording system approved by the board. 24.18 (b) The requirements of paragraph (a) shall only apply to a 24.19 licensed organization that received gross receipts from bingo in 24.20 excess of $150,000 in the organization's last fiscal year. 24.21 Sec. 25. Minnesota Statutes 2004, section 349.17, 24.22 subdivision 7, is amended to read: 24.23 Subd. 7. [NOON HOURBAR BINGO.]Notwithstanding24.24subdivisions 1 and 3,An organization may conduct bar bingo 24.25 subject to the following restrictions: 24.26 (1)the bingo is conducted only between the hours of 11:0024.27a.m. and 2:00 p.m.;24.28(2)the bingo is conducted at a site the organization owns 24.29 or leases and which has a license for the sale of intoxicating 24.30 beverages on the premises under chapter 340A; 24.31(3) the bingo is limited to one progressive bingo game per24.32site as defined by section 349.211, subdivision 2;24.33(4)(2) the bingo is conducted using only bingo paper 24.34 sheets purchased from a licensed distributor; 24.35(5) if the premises are leased, the(3) no rent maynot24.36exceed $25 per day for each day bingo is conductedbe paid for a 25.1 bar bingo occasion; and 25.2(6)(4) linked bingo games may not be conducted at anoon25.3hourbar bingo occasion. 25.4 Sec. 26. Minnesota Statutes 2004, section 349.1711, 25.5 subdivision 1, is amended to read: 25.6 Subdivision 1. [SALE OF TICKETS.] Tipboard games must be 25.7 played using only tipboard tickets that are either (1) attached 25.8 to a placard and arranged in columns or rows, or (2) separate 25.9 from the placard and contained in a receptacle while the game is 25.10 in play. The placard serves as the game flare. The placard 25.11 must contain a seal that conceals the winning number or symbol. 25.12 When a tipboard ticket is purchased and opened from a game 25.13 containing more than 32 tickets, each player having a tipboard 25.14 ticket with one or more predesignated numbers or symbols must 25.15 sign the placard at the line indicated by the number or symbol 25.16 on the tipboard ticket. 25.17 Sec. 27. Minnesota Statutes 2004, section 349.173, is 25.18 amended to read: 25.19 349.173 [CONDUCT OF RAFFLES.] 25.20 (a) Raffle tickets or certificates of participation at a 25.21 minimum must list the three most expensive prizes to be 25.22 awarded. If additional prizes will be awardedthat are not25.23contained on the raffle ticket, the raffle ticket must contain25.24the statement "A complete list of additional prizes is available25.25upon request.", a complete list of additional prizes must be 25.26 publicly posted at the event and copies of the complete prize 25.27 list made available upon request. Notwithstanding section 25.28 349.12, subdivision 33, raffles conducted under the exemptions 25.29 in section 349.166 may use tickets that contain only the 25.30 sequential number of the raffle ticket and no other information 25.31 if the organization makes a list of prizes and a statement of 25.32 other relevant information required by rule available to persons 25.33 purchasing tickets and if tickets are only sold at the event and 25.34 on the date when the tickets are drawn. 25.35 (b) Raffles must be conducted in a manner that ensures: 25.36 (1) all entries in the raffle have an equal chance of 26.1 selection; 26.2 (2) entry in the raffle is not conditioned upon any other 26.3 purchase; 26.4 (3) the method of selection is conducted in a public forum; 26.5 (4) the method of selection cannot be manipulated or based 26.6 on the outcome of an event not under the control of the 26.7 organization; 26.8 (5) physical presence at the raffle is not a requirement to 26.9 win; and 26.10 (6) all sold and unsold tickets or certificates of 26.11 participation are accounted for. 26.12 (c) Methods of selecting winning entries from a raffle 26.13 other than prescribed in rule may be used with the prior written 26.14 approval of the board. 26.15 [EFFECTIVE DATE.] This section is effective the day 26.16 following final enactment. 26.17 Sec. 28. Minnesota Statutes 2004, section 349.18, 26.18 subdivision 1, is amended to read: 26.19 Subdivision 1. [LEASE OR OWNERSHIP REQUIRED; RENT 26.20 LIMITATIONS.] (a) An organization may conduct lawful gambling 26.21 only on premises it owns or leases. The board may prohibit an 26.22 organization from renting premises from a lessor if illegal 26.23 gambling occurred on the premises and the lessor or its 26.24 employees knew of or participated in the illegal gambling. 26.25 Leases must be on a form prescribed by the board. Except for 26.26 leases entered into before August 1, 1994, the term of the lease 26.27 may not begin before the effective date of the premises permit 26.28 and must expire on the same day that the premises permit 26.29 expires. Copies of all leases must be made available to 26.30 employees of the board and the Division of Alcohol and Gambling 26.31 Enforcement on request. The board may prescribe by rule limits 26.32 on the amount of rent which an organization may pay to a lessor 26.33 for premises leased for bingo. Any rule adopted by the board 26.34 limiting the amount of rent to be paid may only be effective for 26.35 leases entered into, or renewed, after the effective date of the 26.36 rule. 27.1 (b) Rent paid by an organization for leased premises for 27.2 the conduct of pull-tabs, tipboards, and paddlewheels is subject 27.3 to the following limits: 27.4 (1) for booth operations, including booth operations where 27.5 a pull-tab dispensing device is located, booth operations where 27.6 a bar operation is also conducted, and booth operations where 27.7 both a pull-tab dispensing device is located and a bar operation 27.8 is also conducted, the maximum rent is: 27.9 (i) in any month where the organization's gross profit at 27.10 those premises does not exceed $4,000, up to $400; and 27.11 (ii) in any month where the organization's gross profit at 27.12 those premises exceeds $4,000, up to $400 plus not more than ten 27.13 percent of the gross profit for that month in excess of $4,000; 27.14 (2) for bar operations, including bar operations where a 27.15 pull-tab dispensing device is located but not including bar 27.16 operations subject to clause (1), and for locations where only a 27.17 pull-tab dispensing device is located: 27.18 (i) in any month where the organization's gross profit at 27.19 those premises does not exceed $1,000, up to $200; and 27.20 (ii) in any month where the organization's gross profit at 27.21 those premises exceeds $1,000, up to $200 plus not more than 20 27.22 percent of the gross profit for that month in excess of $1,000; 27.23 (3) a lease not governed by clauses (1) and (2) must be 27.24 approved by the board before becoming effective; 27.25 (4) total rent paid to a lessor from all organizations from 27.26 leases governed by clause (1) may not exceed $1,750 per month. 27.27 Total rent paid to a lessor from all organizations from leases 27.28 governed by clause (2) may not exceed $2,500 per month. 27.29 (c) Rent paid by an organization for leased premises for 27.30 the conduct of bingo is subject to the following limits: 27.31 (1) not more than ten percent of the monthly gross profit 27.32 from all lawful gambling activities held during bingo occasions 27.33 excluding bar bingo, or a rate based on a cost per square foot 27.34 not to exceed 110 percent of a comparable cost per square foot 27.35 for leased space as approved by the director; and 27.36 (2) no rent may be paid for bar bingo. 28.1 (d) Amounts paid as rent under leases are all-inclusive. 28.2 No other services or expenses provided or contracted by the 28.3 lessor may be paid by the organization, including, but not 28.4 limited to, trash removal, janitorial and cleaning services, 28.5 snow removal, lawn services, electricity, heat, security, 28.6 security monitoring, storage, other utilities or services, and, 28.7 in the case of bar operations, cash shortages, unless approved 28.8 by the director. Any other expenditure made by an organization 28.9 that is related to a leased premises must be approved by the 28.10 director. An organization may not provide any compensation or 28.11 thing of value to a lessor or the lessor's employees from any 28.12 fund source other than its gambling account. Rent payments may 28.13 not be made to an individual. 28.14(d)(e) Notwithstanding paragraph (b), an organization may 28.15 pay a lessor for food or beverages or meeting room rental if the 28.16 charge made is comparable to similar charges made to other 28.17 individuals or groups. 28.18(e)(f) No person, distributor, manufacturer, lessor, 28.19 linked bingo game provider, or organization other than the 28.20 licensed organization leasing the space may conduct any activity 28.21 other than the sale or serving of food and beverages on the 28.22 leased premises during times when lawful gambling is being 28.23 conducted on the premises. 28.24(f)(g) At a site where the leased premises consists of an 28.25 area on or behind a bar at which alcoholic beverages are sold 28.26 and employees of the lessor are employed by the organization as 28.27 pull-tab sellers at the site, pull-tabs and tipboard tickets may 28.28 be sold and redeemed by those employees at any place on or 28.29 behind the bar, but the tipboards and receptacles for pull-tabs 28.30 and cash drawers for lawful gambling receipts must be maintained 28.31 only within the leased premises. 28.32(g)(h) Employees of a lessor or employees of an 28.33 organization may participate in lawful gambling on the premises 28.34 provided (1) if pull-tabs or tipboards are sold, the 28.35 organization voluntarily posts, or is required to post, the 28.36 major prizes as specified in section 349.172; and (2) any 29.1 employeeof the lessorparticipating in lawful gambling is not a 29.2 gambling employee for the organization conducting lawful 29.3 gambling on the premises. 29.4(h)(i) A gambling employee may purchase pull-tabs or 29.5 tipboards at the site of the employee's place of employment 29.6 provided: 29.7 (1) the organization voluntarily posts, or is required to 29.8 post, the major prizes for pull-tab or tipboard games as 29.9 specified in section 349.172; and 29.10 (2) the employee is not involved in the sale of pull-tabs 29.11 or tipboards at that site. 29.12(i)(j) At a leased site where an organization uses a 29.13 paddlewheel consisting of 30 numbers or less or a tipboard 29.14 consisting of 30 tickets or less, tickets may be sold throughout 29.15 the permitted premises, but winning tickets must be redeemed, 29.16 the paddlewheel must be located, and the tipboard seal must be 29.17 opened within the leased premises. 29.18(j)(k) A member of the lessor's immediate family may not 29.19 be a compensated employee of an organization leasing space at 29.20 the premises. For purposes of this paragraph, a "member of the 29.21 immediate family" is a spouse, parent, child, or sibling. 29.22 Sec. 29. Minnesota Statutes 2004, section 349.19, 29.23 subdivision 4, is amended to read: 29.24 Subd. 4. [DISCREPANCIES.] If at a bingo occasion a 29.25 discrepancy of more than$20$50 is found between the gross 29.26 receipts as reported by the checkers and the gross receipts 29.27 determined by adding the cash receipts, the discrepancy must be 29.28 reported to the board within five days of the bingo occasion. 29.29 Sec. 30. Minnesota Statutes 2004, section 349.19, 29.30 subdivision 5, is amended to read: 29.31 Subd. 5. [REPORTS.] A licensed organization must report to 29.32 the Department of Revenue and to its membership monthly, or 29.33 quarterly in the case of a licensed organization which does not 29.34 report more than $1,000 in gross receipts from lawful gambling 29.35 in any calendar quarter, on its gross receipts, expenses, 29.36 profits, and expenditure of profits from lawful gambling. The 30.1 report must include a reconciliation of the organization's 30.2 profit carryover with its cash balance on hand. If the 30.3 organization conducts both bingo and other forms of lawful 30.4 gambling, the figures for both must be reported separately. The 30.5 organization must report annually to its membership and annually 30.6 file with the board a financial summary report in a format 30.7 prescribed by the board that identifies the organization's 30.8 receipt and use of lawful gambling proceeds, including: 30.9 (1) gross receipts; 30.10 (2) prizes paid; 30.11 (3) operating expenses; 30.12 (4) lawful purpose expenditures, including annual totals 30.13 for types of charitable contributions; and 30.14 (5) the percentage of annual gross profits used for 30.15 charitable contributions. 30.16 Sec. 31. Minnesota Statutes 2004, section 349.19, 30.17 subdivision 10, is amended to read: 30.18 Subd. 10. [PULL-TAB RECORDS.] (a) The board shall by rule 30.19 require a licensed organization to require each winner of a 30.20 pull-tab prize of $50 or more to present identification in the 30.21 form of a driver's license, Minnesota identification card, or 30.22 other identification the board deems sufficient to allow the 30.23 identification and tracing of the winner. The rule must require 30.24 the organization to retain winning pull-tabs of $50 or more, and 30.25 the identification of the winner of the pull-tab, for 3-1/2 30.26 years. 30.27 (b) An organization must maintain separate cash banks for 30.28 each deal of pull-tabs unless (1) two or more deals are 30.29 commingled in asingle receptaclepull-tab dispensing device, or 30.30 (2) the organization uses a cash register, of a type approved by 30.31 the board, which records all sales of pull-tabs by separate 30.32 deals. 30.33 (c) The board shall: 30.34 (1) by rule adopt minimum technical standards for cash 30.35 registers that may be used by organizations, and shall approve 30.36 for use by organizations any cash register that meets the 31.1 standards,; and 31.2 (2) before allowing an organization to use a cash register 31.3 that commingles receipts from several different pull-tab games 31.4 in play, adopt rules that define how cash registers may be used 31.5 and that establish a procedure for organizations to reconcile 31.6 all pull-tab games in play at the end of each month. 31.7 Sec. 32. Minnesota Statutes 2004, section 349.211, 31.8 subdivision 2c, is amended to read: 31.9 Subd. 2c. [TIPBOARD PRIZES.] The maximum prize which may 31.10 be awarded for a tipboard ticket is$500$599, not including any 31.11 cumulative or carryover prizes. Cumulative or carryover prizes 31.12 in tipboard games shall not exceed $2,500. 31.13 Sec. 33. Minnesota Statutes 2004, section 349.2125, 31.14 subdivision 1, is amended to read: 31.15 Subdivision 1. [CONTRABAND DEFINED.] The following are 31.16 contraband: 31.17 (1) all pull-tab or tipboard deals or paddleticket cards 31.18 notstamped orbar coded in accordance with this chapter or 31.19 chapter 297E; 31.20 (2) all pull-tab or tipboard deals in the possession of any 31.21 unlicensed person, firm, or organization, whether stamped or31.22unstamped; 31.23 (3) any container used for the storage and display of any 31.24 contraband pull-tab or tipboard deals as defined in clauses (1) 31.25 and (2); 31.26 (4) all currency, checks, and other things of value used 31.27 for pull-tab or tipboard transactions not expressly permitted 31.28 under this chapter, and any cash drawer, cash register, or any 31.29 other container used for illegal pull-tab or tipboard 31.30 transactions including its contents; 31.31 (5) any device including, but not limited to, motor 31.32 vehicles, trailers, snowmobiles, airplanes, and boats used, with 31.33 the knowledge of the owner or of a person operating with the 31.34 consent of the owner, for the storage or transportation of more 31.35 than five pull-tab or tipboard deals that are contraband under 31.36 this subdivision. When pull-tabs and tipboards are being 32.1 transported in the course of interstate commerce between 32.2 locations outside this state, the pull-tab and tipboard deals 32.3 are not contraband, notwithstanding the provisions of clauses 32.4 (1) and (12); 32.5 (6) any unaffixed registration stamps except as provided in 32.6 section 349.162, subdivision 4; 32.7 (7) any prize used or offered in a game utilizing 32.8 contraband as defined in this subdivision; 32.9 (8) any altered, modified, or counterfeit pull-tab or 32.10 tipboard ticket; 32.11 (9) any unregistered gambling equipment except as permitted 32.12 by this chapter; 32.13 (10) any gambling equipment kept in violation of section 32.14 349.18; 32.15 (11) any gambling equipment not in conformity with law or 32.16 board rule; 32.17 (12) any pull-tab or tipboard deal in the possession of a 32.18 person other than a licensed distributor or licensed 32.19 manufacturer for which the person, upon demand of a licensed 32.20 peace officer or authorized agent of the commissioner of revenue 32.21 or director of alcohol and gambling enforcement, does not 32.22 immediately produce for inspection the invoice or a true and 32.23 correct copy of the invoice for the acquisition of the deal from 32.24 a licensed distributor; 32.25 (13) any pull-tab or tipboard deals or portions of deals on 32.26 which the tax imposed under chapter 297E has not been paid; and 32.27 (14) any device prohibited by section 609.76, subdivisions 32.28 4 to 6. 32.29 Sec. 34. Minnesota Statutes 2004, section 349.213, is 32.30 amended to read: 32.31 349.213 [LOCAL AUTHORITY.] 32.32 Subdivision 1. [LOCAL REGULATION.] (a) A statutory or home 32.33 rule city or county has the authority to adopt more stringent 32.34 regulation of lawful gambling within its jurisdiction, including 32.35 the prohibition of lawful gambling, and may require a permit for 32.36 the conduct of gambling exempt from licensing under section 33.1 349.166. The fee for a permit issued under this subdivision may 33.2 not exceed $100. The authority granted by this subdivision does 33.3 not include the authority to require a license or permit to 33.4 conduct gambling by organizations or sales by distributors or 33.5 linked bingo game providers licensed by the board. The 33.6 authority granted by this subdivision does not include the 33.7 authority to require an organization to make specific 33.8 expenditures of more than ten percent per year from its net 33.9 profits derived from lawful gambling. For the purposes of this 33.10 subdivision, net profits are gross profits less amounts expended 33.11 for allowable expenses and paid in taxes assessed on lawful 33.12 gambling. A statutory or home rule charter city or a county may 33.13 not require an organization conducting lawful gambling within 33.14 its jurisdiction to make an expenditure to the city or county as 33.15 a condition to operate within that city or county, except as 33.16 authorized under section 349.16, subdivision 8, or 297E.02; 33.17 provided, however, that an ordinance requirement that such 33.18 organizations must contribute ten percent per year of their net 33.19 profits derived from lawful gambling conducted at premises 33.20 within the city's or county's jurisdiction to a fund 33.21 administered and regulated by the responsible local unit of 33.22 government without cost to such fund, for disbursement by the 33.23 responsible local unit of government of the receipts for (i) 33.24 lawful purposes, or (ii) police, fire, and other emergency or 33.25 public safety-related services, equipment, and training, 33.26 excluding pension obligations, is not considered an expenditure 33.27 to the city or county nor a tax under section 297E.02, and is 33.28 valid and lawful. A city or county making expenditures 33.29 authorized under this paragraph must by March 15 of each year 33.30 file a report with the board, on a form the board prescribes, 33.31 that lists all such revenues collected and expenditures for the 33.32 previous calendar year. 33.33 (b) A statutory or home rule city or county may by 33.34 ordinance require that a licensed organization conducting lawful 33.35 gambling within its jurisdiction expend all or a portion of its 33.36 expenditures for lawful purposes on lawful purposes conducted or 34.1 located within the city's or county's trade area. Such an 34.2 ordinance must be limited to lawful purpose expenditures of 34.3 gross profits derived from lawful gambling conducted at premises 34.4 within the city's or county's jurisdiction, must define the 34.5 city's or county's trade area, and must specify the percentage 34.6 of lawful purpose expenditures which must be expended within the 34.7 trade area. A trade area defined by a city under this 34.8 subdivision must include each city and township contiguous to 34.9 the defining city. 34.10 (c) A more stringent regulation or prohibition of lawful 34.11 gambling adopted by a political subdivision under this 34.12 subdivision must apply equally to all forms of lawful gambling 34.13 within the jurisdiction of the political subdivision, except a 34.14 political subdivision may prohibit the use of paddlewheels. 34.15 Subd. 2. [LOCAL APPROVAL.] Before issuing or renewing a 34.16 premises permitor bingo hall license, the board must notify the 34.17 city council of the statutory or home rule city in which the 34.18 organization's premisesor the bingo hallis located or, if the 34.19 premisesor hallis located outside a city, the county board of 34.20 the county and the town board of the town where the premisesor34.21hallis located. The board may require organizationsor bingo34.22hallsto notify the appropriate local government at the time of 34.23 application. This required notification is sufficient to 34.24 constitute the notice required by this subdivision. The board 34.25 may not issue or renew a premises permitor bingo hall license34.26 unless the organization submits a resolution from the city 34.27 council or county board approving the premises permitor bingo34.28hall license. The resolution must have been adopted within 90 34.29 days of the date of application for the new or renewed permit or 34.30 license. 34.31 Subd. 3. [LOCAL GAMBLING TAX.] A statutory or home rule 34.32 charter city that has one or more licensed organizations 34.33 operating lawful gambling, and a county that has one or more 34.34 licensed organizations outside incorporated areas operating 34.35 lawful gambling, may impose a local gambling tax on each 34.36 licensed organization within the city's or county's 35.1 jurisdiction. The tax may be imposed only if the amount to be 35.2 received by the city or county is necessary to cover the costs 35.3 incurred by the city or county to regulate lawful gambling. The 35.4 tax imposed by this subdivision may not exceed three percent per 35.5 year of the gross receipts of a licensed organization from all 35.6 lawful gambling less prizes actually paid out by the 35.7 organization. A city or county may not use money collected 35.8 under this subdivision for any purpose other than to regulate 35.9 lawful gambling. All documents pertaining to site inspections, 35.10 fines, penalties, or other corrective action involving local 35.11 lawful gambling regulation must be shared with the board within 35.12 30 days of filing at the city or county of jurisdiction. A tax 35.13 imposed under this subdivision is in lieu of all other local 35.14 taxes and local investigation fees on lawful gambling. A city 35.15 or county that imposes a tax under this subdivision shall 35.16 annually, by March 15, file a report with the board in a form 35.17 prescribed by the board showing (1) the amount of revenue 35.18 produced by the tax during the preceding calendar year, and (2) 35.19 the use of the proceeds of the tax. 35.20 Sec. 35. Minnesota Statutes 2004, section 609.75, 35.21 subdivision 1, is amended to read: 35.22 Subdivision 1. [LOTTERY.] (a) A lottery is a plan which 35.23 provides for the distribution of money, property or other reward 35.24 or benefit to persons selected by chance from among participants 35.25 some or all of whom have given a consideration for the chance of 35.26 being selected. A participant's payment for use of a 900 35.27 telephone number or another means of communication that results 35.28 in payment to the sponsor of the plan constitutes consideration 35.29 under this paragraph. 35.30 (b) An in-package chance promotion is not a lottery if all 35.31 of the following are met: 35.32 (1) participation is available, free and without purchase 35.33 of the package, from the retailer or by mail or toll-free 35.34 telephone request to the sponsor for entry or for a game piece; 35.35 (2) the label of the promotional package and any related 35.36 advertising clearly states any method of participation and the 36.1 scheduled termination date of the promotion; 36.2 (3) the sponsor on request provides a retailer with a 36.3 supply of entry forms or game pieces adequate to permit free 36.4 participation in the promotion by the retailer's customers; 36.5 (4) the sponsor does not misrepresent a participant's 36.6 chances of winning any prize; 36.7 (5) the sponsor randomly distributes all game pieces and 36.8 maintains records of random distribution for at least one year 36.9 after the termination date of the promotion; 36.10 (6) all prizes are randomly awarded if game pieces are not 36.11 used in the promotion; and 36.12 (7) the sponsor provides on request of a state agency a 36.13 record of the names and addresses of all winners of prizes 36.14 valued at $100 or more, if the request is made within one year 36.15 after the termination date of the promotion. 36.16 (c) Except as provided by section 349.40, acts in this 36.17 state in furtherance of a lottery conducted outside of this 36.18 state are included notwithstanding its validity where conducted. 36.19 (d) The distribution of property, or other reward or 36.20 benefit by an employer to persons selected by chance from among 36.21 participantswho, all of whom: 36.22 (1) have made a contribution through a payroll or pension 36.23 deduction campaign to a registered combined charitable 36.24 organization, within the meaning of section 309.501; or 36.25 (2) have paid other consideration to the employer entirely 36.26 for the benefit of such a registered combined charitable 36.27 organization, as a precondition to the chance of being selected, 36.28 is not a lottery if: 36.29(1)(i) all of the persons eligible to be selected are 36.30 employed by or retirees of the employer; and 36.31(2)(ii) the cost of the property or other reward or 36.32 benefit distributed and all costs associated with the 36.33 distribution are borne by the employer. 36.34 Sec. 36. [REPEALER.] 36.35 Minnesota Statutes 2004, sections 349.162, subdivision 3; 36.36 349.164; and 349.17, subdivision 1, are repealed.