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Minnesota Legislature

Office of the Revisor of Statutes

SF 1966

2nd Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to gambling; providing and modifying definitions; modifying
expenditure restrictions; clarifying certain game requirements, prize amounts,
and making other changes to lawful gambling; amending Minnesota Statutes
2006, sections 349.12, subdivisions 25, 25d, by adding a subdivision; 349.15,
subdivision 1; 349.163, by adding a subdivision; 349.17, subdivision 8; 349.211;
repealing Minnesota Statutes 2006, section 349.19, subdivision 2b.

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

Section 1.

Minnesota Statutes 2006, section 349.12, is amended by adding a
subdivision to read:


new text begin Subd. 16a. new text end

new text begin Fraternal organization. new text end

new text begin "Fraternal organization" means a nonprofit
organization which is a branch, lodge, or chapter of a national or state organization
registered by the Internal Revenue Services as a 501(c)8 or a 501(c)10 nonprofit
organization and exists for the common business, fraternal, or other interests of its
members. The term does not include college and high school fraternities and sororities.
new text end

Sec. 2.

Minnesota Statutes 2006, section 349.12, subdivision 25, is amended to read:


Subd. 25.

Lawful purpose.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sec. 3.

Minnesota Statutes 2006, section 349.12, subdivision 25d, is amended to read:


Subd. 25d.

Linked bingo prize pool.

"Linked bingo prize pool" means the total
of all prize money that each participating organization has contributed to deleted text beginthedeleted text endnew text begin anew text end linked
bingo game prizenew text begin and includes any portion of the prize pool that is carried over from one
occasion to another in a progressive linked bingo game
new text end. deleted text beginNo participating organization
may contribute more than $300 per bingo occasion to a linked bingo prize pool.
deleted text end

Sec. 4.

Minnesota Statutes 2006, section 349.15, subdivision 1, is amended to read:


Subdivision 1.

Expenditure restrictions.

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

Sec. 5.

Minnesota Statutes 2006, section 349.163, is amended by adding a subdivision
to read:


new text begin Subd. 6b. new text end

new text begin Commercial products. new text end

new text begin The board shall not deny approval of a pull-tab
or tipboard game solely because the game is similar to or bears the name or image of
a licensed commercial product.
new text end

Sec. 6.

Minnesota Statutes 2006, section 349.17, subdivision 8, is amended to read:


Subd. 8.

Linked bingo games.

(a) A licensed organization may conduct or
participate in deleted text beginadeleted text end new text beginnot more than two new text endlinked bingo deleted text begingame in association with one or more other
licensed organizations
deleted text endnew text begin games per occasion, one of which may be a progressive game in
which a portion of the prize is carried over from one occasion to another until won by a
player achieving a bingo within a predetermined amount of bingo numbers called
new text end.

(b) Each participating licensed organization shall contribute to each prize awarded in
a linked bingo game in an amount not to exceed $300 deleted text beginper occasiondeleted text end.

(c) The board may adopt rules to:

(1) specify the manner in which a linked bingo game must be played and how the
linked bingo prizes must be awarded;

(2) specify the records to be maintained by a linked bingo game provider;

(3) require the submission of periodic reports by the linked bingo game provider and
specify the content of the reports;

(4) establish the qualifications required to be licensed as a linked bingo game
provider; and

(5) any other matter involving the operation of a linked bingo game.

Sec. 7.

Minnesota Statutes 2006, section 349.211, is amended to read:


349.211 PRIZE LIMITS.

Subdivision 1.

Bingo.

Except as provided in subdivisions 1a and 2, prizes for a
single bingo game may not exceed $200 except prizes for a cover-all game, which may
exceed $200 if the aggregate value of all cover-all prizes in a bingo occasion does not
exceed $1,000. Total prizes awarded at a bingo occasion may not exceed $2,800, unless a
cover-all game is played in which case the limit is $3,800. A prize may be determined
based on the value of the bingo packet sold to the player. For purposes of this subdivision,
a cover-all game is one in which a player must cover all spaces except a single free space
to winnew text begin and includes a game in which all odd or all even numbers are designated by the
organization as covered prior to the start of the game
new text end.

Subd. 1a.

Linked bingo prizes.

Prizes for a linked bingo game shall be limited
as follows:

(1) no organization may contribute more than $300 per deleted text beginoccasion to adeleted text end linked bingo
game new text beginto a linked bingonew text end prize pool; deleted text beginand
deleted text end

(2) deleted text beginif an organization contributes to a linked bingo game prize pool, the organization's
aggregate value of cover-all prizes available during the bingo occasion must be reduced
by the amount contributed to the linked bingo game prize pool.
deleted text endnew text begin no organization may
award more than $200 for a linked bingo game consolation prize. For purposes of this
subdivision, a linked bingo game consolation prize is a prize awarded by an organization
after a prize from the linked bingo prize pool has been won; and
new text end

new text begin (3) for a progressive linked bingo game, if no player declares a valid bingo within
the predetermined amount of bingo numbers called, a portion of the prize is carried over
to another occasion until the accumulated prize is won. The portion of the prize that is
not carried over must be awarded to the first player or players who declares a valid bingo
as additional numbers are called. If a valid bingo is declared within the predetermined
amount of bingo numbers called, the entire prize pool for that game is awarded to the
winner. The annual limit for progressive bingo game prizes contained in subdivision 2
must be reduced by the amount an organization contributes to progressive linked bingo
games during the same calendar year.
new text end

Subd. 2.

Progressive bingo games.

new text beginExcept as provided in subdivision 1a,new text end a prize
of up to $2,000 may be awarded for a progressive bingo game, including a cover-all
game. The prize for a progressive bingo game may start at $500 and be increased by
up to $100 for each occasion during which the progressive bingo game is played. A
consolation prize of up to $200 for a progressive bingo game may be awarded in each
occasion during which the progressive bingo game is played and the accumulated prize is
not won. The total amount awarded in progressive bingo game prizes in any calendar year
may not exceed $48,000.

Subd. 2a.

Pull-tab prizes.

The maximum prize which may be awarded for any
single pull-tab is $599, not including any cumulative or carryover prizes. Cumulative or
carryover prizes in a pull-tab game shall not exceed $2,500. An organization may not sell
any pull-tab for more than deleted text begin$2deleted text endnew text begin $5new text end.

Subd. 2b.

Paddlewheel prizes.

The maximum cash prize which may be awarded
for a paddleticket is $70. An organization may not sell any paddleticket for more than $2.

Subd. 2c.

Tipboard prizes.

The maximum prize which may be awarded for a
tipboard ticket is $599, not including any cumulative or carryover prizes. Cumulative or
carryover prizes in tipboard games shall not exceed $2,500.new text begin An organization may not sell
any tipboard for more than $5.
new text end

Subd. 3.

Other gambling.

The board by rule shall establish a schedule of prize
limits for all other forms of gambling consistent with the purposes set out in section
349.11. The schedule may include daily and annual prize limits and prize limits for each
game, raffle or operation of a gambling device.

Subd. 4.

Prize value.

(a) Merchandise prizes must be valued at their fair market
value. For purposes of sections 349.11 to 349.22 "prizes" do not include free plays
awarded.

(b) Merchandise prizes for a paddlewheel consisting of 30 numbers or less or a
tipboard consisting of 30 tickets or less may be paid for by the organization up to 30 days
after the prize is received by the organization.

Sec. 8. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, section 349.19, subdivision 2b, new text end new text begin is repealed.
new text end

Sec. 9. new text beginEFFECTIVE DATE.
new text end

new text begin Section 4 is effective July 1, 2007. Sections 5 to 8 are effective the day following
final enactment.
new text end