1.1                          A bill for an act 
  1.2             relating to the state lottery; authorizing the 
  1.3             director of the state lottery to establish video 
  1.4             lottery terminals; providing duties and powers to the 
  1.5             director of the state lottery; providing for the use 
  1.6             of video lottery revenues; prescribing penalties; 
  1.7             providing for local authority to adopt regulation of 
  1.8             the lottery; amending Minnesota Statutes 2000, 
  1.9             sections 297A.259; 349A.01, subdivisions 10, 11, 12, 
  1.10            by adding subdivisions; 349A.06, subdivisions 1, 5, 8, 
  1.11            by adding subdivisions; 349A.07, subdivision 1; 
  1.12            349A.08, subdivisions 1, 5, 8; 349A.09, subdivision 1; 
  1.13            349A.10, subdivisions 2, 3, 4, 5; 349A.11; 349A.12, 
  1.14            subdivisions 1, 2; 349A.13; 609.651, subdivision 1; 
  1.15            609.75, subdivision 4; 609.761, subdivision 2; 
  1.16            proposing coding for new law in Minnesota Statutes, 
  1.17            chapter 349A; repealing Minnesota Statutes 2000, 
  1.18            section 349A.06, subdivision 10. 
  1.19  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.20                             ARTICLE 1 
  1.21                           VIDEO LOTTERY 
  1.22     Section 1.  Minnesota Statutes 2000, section 297A.259, is 
  1.23  amended to read: 
  1.24     297A.259 [LOTTERY TICKETS; IN LIEU TAX.] 
  1.25     Sales of state lottery tickets are exempt from the tax 
  1.26  imposed under section 297A.02.  The state lottery must on or 
  1.27  before the 20th day of each month transmit to the commissioner 
  1.28  of revenue an amount equal to the gross receipts from the sale 
  1.29  of lottery tickets for the previous month, excluding gross 
  1.30  receipts from the operation of video lottery terminals, 
  1.31  multiplied by the tax rate under section 297A.02, subdivision 
  1.32  1.  The resulting payment is in lieu of the sales tax that 
  2.1   otherwise would be imposed by this chapter.  The commissioner 
  2.2   shall deposit the money transmitted as provided by section 
  2.3   297A.44 and the money must be treated as other proceeds of the 
  2.4   sales tax.  Gross receipts for purposes of this section mean the 
  2.5   proceeds of the sale of tickets before deduction of a commission 
  2.6   or other compensation paid to the vendor or retailer for selling 
  2.7   tickets. 
  2.8      Sec. 2.  Minnesota Statutes 2000, section 349A.01, is 
  2.9   amended by adding a subdivision to read: 
  2.10     Subd. 9a.  [LOTTERY GAME.] "Lottery game" means any game 
  2.11  operated by the lottery where the prize is determined primarily 
  2.12  by chance. 
  2.13     Sec. 3.  Minnesota Statutes 2000, section 349A.01, 
  2.14  subdivision 10, is amended to read: 
  2.15     Subd. 10.  [LOTTERY PROCUREMENT CONTRACT.] "Lottery 
  2.16  procurement contract" means a contract to provide lottery 
  2.17  products, computer hardware and software used to monitor sales 
  2.18  of lottery tickets and sales on a video lottery terminal, and 
  2.19  lottery tickets, video lottery terminals, and maintenance of 
  2.20  video lottery terminals.  "Lottery procurement contract" does 
  2.21  not include a contract to provide an annuity or prize payment 
  2.22  agreement or materials, supplies, equipment, or services common 
  2.23  to the ordinary operation of a state agency. 
  2.24     Sec. 4.  Minnesota Statutes 2000, section 349A.01, 
  2.25  subdivision 11, is amended to read: 
  2.26     Subd. 11.  [LOTTERY RETAILER.] "Lottery retailer" means a 
  2.27  person with whom the director has contracted to sell lottery 
  2.28  tickets to the public.  A lottery retailer includes a person 
  2.29  with whom the director has contracted to place a video lottery 
  2.30  terminal within its premises where video lottery terminal plays 
  2.31  are sold.  
  2.32     Sec. 5.  Minnesota Statutes 2000, section 349A.01, 
  2.33  subdivision 12, is amended to read: 
  2.34     Subd. 12.  [LOTTERY TICKET OR TICKET.] "Lottery ticket" or 
  2.35  "ticket" means any tangible evidence issued by the lottery to 
  2.36  prove participation in a lottery game other than a video lottery 
  3.1   game.  
  3.2      Sec. 6.  Minnesota Statutes 2000, section 349A.01, is 
  3.3   amended by adding a subdivision to read: 
  3.4      Subd. 14.  [NET TERMINAL INCOME.] "Net terminal income" 
  3.5   means the sum of all money spent for video lottery terminal 
  3.6   plays less the amount paid out to winning players. 
  3.7      Sec. 7.  Minnesota Statutes 2000, section 349A.01, is 
  3.8   amended by adding a subdivision to read: 
  3.9      Subd. 15.  [VIDEO LOTTERY CREDIT.] "Video lottery credit" 
  3.10  means the basic unit of play for a video lottery terminal which 
  3.11  has a value of 25 cents. 
  3.12     Sec. 8.  Minnesota Statutes 2000, section 349A.01, is 
  3.13  amended by adding a subdivision to read: 
  3.14     Subd. 16.  [VIDEO LOTTERY CREDIT RECEIPT.] "Video lottery 
  3.15  credit receipt" means a receipt generated by a video lottery 
  3.16  terminal that provides evidence of cash payment due a player 
  3.17  from play on a video lottery terminal. 
  3.18     Sec. 9.  Minnesota Statutes 2000, section 349A.01, is 
  3.19  amended by adding a subdivision to read: 
  3.20     Subd. 17.  [VIDEO LOTTERY GAME.] "Video lottery game" means 
  3.21  an electronically simulated game authorized by the director that 
  3.22  is displayed and played on a video lottery terminal for 
  3.23  consideration and with prizes awarded for designated results. 
  3.24     Sec. 10.  Minnesota Statutes 2000, section 349A.01, is 
  3.25  amended by adding a subdivision to read: 
  3.26     Subd. 18.  [VIDEO LOTTERY TERMINAL.] "Video lottery 
  3.27  terminal" means an electronic machine that, upon the insertion 
  3.28  of a coin, token, or currency, is available to play or simulate 
  3.29  the play of a game using a video display and microprocessors in 
  3.30  which, primarily by chance, the player may receive free plays or 
  3.31  video lottery credits that can be redeemed for cash. 
  3.32     Sec. 11.  Minnesota Statutes 2000, section 349A.01, is 
  3.33  amended by adding a subdivision to read: 
  3.34     Subd. 19.  [VIDEO LOTTERY TERMINAL PLAY.] "Video lottery 
  3.35  terminal play" means an electronic record that proves 
  3.36  participation in a video lottery game. 
  4.1      Sec. 12.  Minnesota Statutes 2000, section 349A.01, is 
  4.2   amended by adding a subdivision to read: 
  4.3      Subd. 20.  [WIN PERCENTAGE.] "Win percentage" means the 
  4.4   portion of the money wagered by players on a video lottery 
  4.5   terminal that is available for the payment of prizes to winning 
  4.6   players. 
  4.7      Sec. 13.  Minnesota Statutes 2000, section 349A.06, 
  4.8   subdivision 1, is amended to read: 
  4.9      Subdivision 1.  [CONTRACTS.] The director shall sell 
  4.10  tickets and operate video lottery terminals for the lottery 
  4.11  through lottery retailers with whom the director contracts.  
  4.12  Contracts under this section are not subject to the provisions 
  4.13  of sections 16C.03, 16C.05, 16C.06, 16C.08, 16C.09, and 16C.10, 
  4.14  and are valid for a period of one year.  The director may permit 
  4.15  a retailer to sell tickets at more than one business location 
  4.16  under a contract entered into under this section. 
  4.17     Sec. 14.  Minnesota Statutes 2000, section 349A.06, 
  4.18  subdivision 5, is amended to read: 
  4.19     Subd. 5.  [RESTRICTIONS ON LOTTERY RETAILERS.] (a) A 
  4.20  lottery retailer may sell lottery tickets or have a video 
  4.21  lottery terminal placed only on the premises described in the 
  4.22  contract. 
  4.23     (b) A lottery retailer must prominently display a 
  4.24  certificate issued by the director on the premises where lottery 
  4.25  tickets will be sold or where video lottery terminals are 
  4.26  operated. 
  4.27     (c) A lottery retailer must keep a complete set of books of 
  4.28  account, correspondence, and all other records necessary to show 
  4.29  fully the retailer's lottery transactions, and make them 
  4.30  available for inspection by employees of the lottery at all 
  4.31  times during business hours.  The director may require a lottery 
  4.32  retailer to furnish information as the director deems necessary 
  4.33  to carry out the purposes of this chapter, and may require an 
  4.34  audit to be made of the books of account and records.  The 
  4.35  director may select an auditor to perform the audit and may 
  4.36  require the retailer to pay the cost of the audit.  The auditor 
  5.1   has the same right of access to the books of account, 
  5.2   correspondence, and other records as is given to employees of 
  5.3   the lottery. 
  5.4      (d) A contract issued under this section may not be 
  5.5   transferred or assigned. 
  5.6      (e) The director shall require that lottery tickets may be 
  5.7   sold by retailers only for cash.  
  5.8      (f) A lottery retailer must prominently post at the point 
  5.9   of sale of lottery tickets and the area where video lottery 
  5.10  terminals are located, in a manner approved by the commissioner 
  5.11  of human services, the toll-free telephone number established by 
  5.12  the commissioner of human services in connection with the 
  5.13  compulsive gambling program established under section 245.98. 
  5.14     Sec. 15.  Minnesota Statutes 2000, section 349A.06, is 
  5.15  amended by adding a subdivision to read: 
  5.16     Subd. 5a.  [RESTRICTIONS ON LOTTERY RETAILERS; VIDEO 
  5.17  LOTTERY TERMINALS.] (a) The director may only enter into a 
  5.18  lottery retailer contract for games operated by a video lottery 
  5.19  terminal with a retailer that has a license to sell alcoholic 
  5.20  beverages for consumption on the premises where sold, other than 
  5.21  a retailer: 
  5.22     (1) who has only a temporary on-sale license; 
  5.23     (2) of 3.2 percent malt liquor whose total gross receipts 
  5.24  from the premises were less than 50 percent attributable to the 
  5.25  sale of 3.2 percent malt liquor; or 
  5.26     (3) who has been licensed to sell alcoholic beverages for 
  5.27  consumption on the premises where sold for less than three years.
  5.28     (b) A lottery retailer may have up to five video lottery 
  5.29  terminals on the retailer's premises, as determined by the 
  5.30  director. 
  5.31     (c) A lottery retailer that is authorized to operate a 
  5.32  video lottery terminal may not make reference to the 
  5.33  establishment being a "casino," or use the word "casino" in its 
  5.34  name or in any of its advertisements. 
  5.35     (d) The director, or any employee of the director, may 
  5.36  inspect a video lottery terminal at any time during the hours 
  6.1   when alcoholic beverages may be sold at on-sale under section 
  6.2   340A.504, subdivisions 1, 2, and 3, without notice, to ensure 
  6.3   compliance with this chapter and any rules adopted by the 
  6.4   director. 
  6.5      (e) Any retailer who has committed three or more violations 
  6.6   of a law or rule relating to gambling is prohibited from 
  6.7   entering into a lottery retailer contract for games operated by 
  6.8   a video lottery terminal, at the site or premises where the 
  6.9   violations occurred. 
  6.10     Sec. 16.  Minnesota Statutes 2000, section 349A.06, is 
  6.11  amended by adding a subdivision to read: 
  6.12     Subd. 6a.  [RETENTION BY RETAILERS; VIDEO LOTTERY 
  6.13  TERMINAL.] A lottery retailer who has a contract for placement 
  6.14  of video lottery terminals shall retain ... percent of the net 
  6.15  terminal income from the terminals located within the retailer's 
  6.16  premises. 
  6.17     Sec. 17.  Minnesota Statutes 2000, section 349A.06, 
  6.18  subdivision 8, is amended to read: 
  6.19     Subd. 8.  [PROCEEDS OF SALES.] All proceeds from the sale 
  6.20  of lottery tickets or proceeds from the sale of video lottery 
  6.21  terminal plays received by a lottery retailer constitute a trust 
  6.22  fund until paid to the director.  The lottery retailer is 
  6.23  personally liable for all proceeds. 
  6.24     Sec. 18.  Minnesota Statutes 2000, section 349A.07, 
  6.25  subdivision 1, is amended to read: 
  6.26     Subdivision 1.  [CONTRACTS AUTHORIZED.] The director may 
  6.27  enter into lottery procurement contracts for the purchase, 
  6.28  lease, or lease-purchase of the goods or services.  The director 
  6.29  shall enter into contracts for the maintenance of video lottery 
  6.30  terminals.  In entering into a lottery procurement contract, the 
  6.31  director shall utilize an open bid process and shall take into 
  6.32  account the particularly sensitive nature of the state lottery 
  6.33  and shall consider the competence, quality of product, 
  6.34  experience, and timely performance of each potential vendor in 
  6.35  order to promote and ensure security, honesty, fairness, and 
  6.36  integrity in the operation and administration of the lottery.  
  7.1   The director shall also consider the extent to which a bidder 
  7.2   for a contract for printing preprinted lottery tickets would 
  7.3   utilize employees and facilities within Minnesota in fulfilling 
  7.4   the contract.  In entering into contracts for the maintenance of 
  7.5   video lottery terminals, the director may only contract with a 
  7.6   person that is a Minnesota resident that uses employees and 
  7.7   facilities within Minnesota to fulfill the contract.  Except for 
  7.8   repairs made under any applicable warranty, the director may not 
  7.9   enter into a contract with a manufacturer of video lottery 
  7.10  terminals or an agent or associate of a manufacturer of video 
  7.11  lottery terminals for the maintenance of video lottery 
  7.12  terminals.  The director shall require all lottery retailers who 
  7.13  have contracts with the director for the placement of video 
  7.14  lottery terminals to obtain maintenance services for those 
  7.15  terminals only with a person with whom the director has entered 
  7.16  into a contract under this subdivision, but the retailer shall 
  7.17  determine which of these contractors shall provide those 
  7.18  maintenance services in the retailer's establishment. 
  7.19     Sec. 19.  [349A.071] [VIDEO LOTTERY TERMINALS.] 
  7.20     Subdivision 1.  [SPECIFICATION.] Each video lottery 
  7.21  terminal must: 
  7.22     (1) maintain on nonresettable meters, which are capable of 
  7.23  printing out, a permanent record of all transactions by the 
  7.24  terminal and all entries into the terminal; and 
  7.25     (2) be capable of being linked electronically to a central 
  7.26  communication system to provide auditing program information as 
  7.27  required by the director. 
  7.28     Subd. 2.  [LIMIT ON AMOUNT PLAYED.] A video lottery 
  7.29  terminal may not allow less than 25 cents and not more than $2 
  7.30  to be played on a single game. 
  7.31     Subd. 3.  [MAXIMUM PRIZE.] The maximum prize on any single 
  7.32  game played on a video lottery terminal may not exceed $1,000. 
  7.33     Subd. 4.  [TESTING AND EXAMINATION OF TERMINALS.] The 
  7.34  director may require working models of a video lottery terminal 
  7.35  transported to the location the director designates for testing, 
  7.36  examination, and analysis.  The manufacturer shall pay all costs 
  8.1   of any testing, examination, analysis, and transportation of the 
  8.2   terminal model. 
  8.3      Subd. 5.  [DEACTIVATION OF TERMINAL.] The director may 
  8.4   deactivate a video lottery terminal without notice if the 
  8.5   lottery retailer has violated any provision of this chapter, or 
  8.6   a rule adopted under it, or provision of its contract with the 
  8.7   director. 
  8.8      Sec. 20.  Minnesota Statutes 2000, section 349A.08, 
  8.9   subdivision 1, is amended to read: 
  8.10     Subdivision 1.  [AGREEMENT BY PLAYERS.] A person who buys a 
  8.11  lottery ticket or plays a video lottery game agrees to be bound 
  8.12  by the rules and game procedures applicable to the that 
  8.13  particular lottery game for which the ticket is purchased.  The 
  8.14  player acknowledges that the determination of whether a 
  8.15  ticket or video lottery credit receipt is a valid winning ticket 
  8.16  is subject to under the rules of and game procedures adopted by 
  8.17  the director, claims procedures established by the director for 
  8.18  that game, and any confidential or public validation tests 
  8.19  established by the director for that game. 
  8.20     Sec. 21.  Minnesota Statutes 2000, section 349A.08, 
  8.21  subdivision 5, is amended to read: 
  8.22     Subd. 5.  [PAYMENT; UNCLAIMED PRIZES.] (a) Except as 
  8.23  provided in this subdivision, a prize in the state lottery must 
  8.24  be claimed by the winner within one year of the date of the 
  8.25  drawing at which the prize was awarded or the last day sales 
  8.26  were authorized for a game where a prize was determined in a 
  8.27  manner other than by means of a drawing.  If a valid claim is 
  8.28  not made for a prize payable directly by the lottery by the end 
  8.29  of this period, the prize money is considered unclaimed and the 
  8.30  winner of the prize shall have no further claim to the prize.  
  8.31     (b) A video lottery credit receipt from a video lottery 
  8.32  terminal must be presented for payment before the close of the 
  8.33  business day on the date the video lottery credit receipt was 
  8.34  printed.  If a valid claim is not made for a prize from a video 
  8.35  lottery terminal by the end of this period, the unclaimed prize 
  8.36  must be paid by the lottery retailer to the lottery. 
  9.1      (c) A prize won by a person who purchased the winning 
  9.2   ticket or played a video lottery game in violation of section 
  9.3   349A.12, subdivision 1, or won by a person ineligible to be 
  9.4   awarded a prize under subdivision 7 must be treated as an 
  9.5   unclaimed prize under this section.  The director shall transfer 
  9.6   70 percent of all unclaimed prize money at the end of each 
  9.7   fiscal year from the lottery cash flow account as follows:  of 
  9.8   the 70 percent, 40 percent must be transferred to the Minnesota 
  9.9   environment and natural resources trust fund and 60 percent must 
  9.10  be transferred to the general fund.  The remaining 30 percent of 
  9.11  the unclaimed prize money must be added by the director to prize 
  9.12  pools of subsequent lottery games. 
  9.13     Sec. 22.  Minnesota Statutes 2000, section 349A.08, 
  9.14  subdivision 8, is amended to read: 
  9.15     Subd. 8.  [WITHHOLDING OF DELINQUENT STATE TAXES OR OTHER 
  9.16  DEBTS.] The director shall report the name, address, and social 
  9.17  security number of each winner of a lottery prize of $600 or 
  9.18  more, excluding any winner of a prize from a video lottery game, 
  9.19  to the department of revenue to determine whether the person who 
  9.20  has won the prize is delinquent in payment of state taxes or 
  9.21  owes a debt as defined in section 270A.03, subdivision 5.  If 
  9.22  the person is delinquent in payment of state taxes or owes a 
  9.23  debt as defined in section 270A.03, subdivision 5, the director 
  9.24  shall withhold the delinquent amount from the person's prize for 
  9.25  remittance to the department of revenue for payment of the 
  9.26  delinquent taxes or distribution to a claimant agency in 
  9.27  accordance with chapter 270A.  Section 270A.10 applies to the 
  9.28  priority of claims. 
  9.29     Sec. 23.  Minnesota Statutes 2000, section 349A.09, 
  9.30  subdivision 1, is amended to read: 
  9.31     Subdivision 1.  [ODDS; REQUIRED INFORMATION.] (a) The 
  9.32  director shall include on each brochure, pamphlet, booklet, or 
  9.33  other similar material the director publishes to promote or 
  9.34  explain any lottery game, a prominent and clear statement of the 
  9.35  approximate odds of winning each prize offered in that lottery 
  9.36  game. 
 10.1      (b) Except for the operation of a video lottery terminal, 
 10.2   each lottery retailer must post prominently at or near the point 
 10.3   of ticket sale a notice or notices printed and provided by the 
 10.4   director of the approximate odds of winning each prize in each 
 10.5   game for which the lottery retailer sells tickets. 
 10.6      (c) The approximate odds of winning a prize from a video 
 10.7   lottery terminal must be displayed on the face or screen of the 
 10.8   video lottery terminal. 
 10.9      Sec. 24.  Minnesota Statutes 2000, section 349A.10, 
 10.10  subdivision 2, is amended to read: 
 10.11     Subd. 2.  [DEPOSIT IN PRIZE FUND.] (a) The director shall 
 10.12  establish a lottery prize fund outside the state treasury.  The 
 10.13  fund consists of all money deposited in it under this 
 10.14  subdivision and all interest earned thereon.  
 10.15     (b) The director shall deposit in the lottery prize fund, 
 10.16  from gross receipts from the sale of lottery tickets, an amount 
 10.17  sufficient to pay lottery prizes from the lottery prize fund 
 10.18  according to the following provisions: 
 10.19     (1) for games which require on-line terminal connections, 
 10.20  the prizes paid in any fiscal year must be at least 45 percent 
 10.21  of gross receipts from those games in that fiscal year; 
 10.22     (2) for games which do not require on-line terminal 
 10.23  connections, the prizes paid in any fiscal year must be at least 
 10.24  the following percentages of gross receipts from those games:  
 10.25     (i) 50 percent through fiscal year 1991; 
 10.26     (ii) 55 percent from July 1, 1991, to June 30, 1992; and 
 10.27     (iii) 60 percent thereafter of gross receipts from those 
 10.28  games in that fiscal year. 
 10.29     (c) For lottery games played on a video lottery terminal, 
 10.30  the win percentage in any fiscal year will be the win percentage 
 10.31  established by the game procedures adopted for the game but must 
 10.32  be at least 80 percent but not more than 95 percent.  
 10.33     Sec. 25.  Minnesota Statutes 2000, section 349A.10, 
 10.34  subdivision 3, is amended to read: 
 10.35     Subd. 3.  [LOTTERY OPERATIONS.] (a) The director shall 
 10.36  establish a lottery operations account in the lottery fund.  The 
 11.1   director shall pay all costs of operating the lottery, including 
 11.2   payroll costs or amounts transferred to the state treasury for 
 11.3   payroll costs, but not including lottery prizes, from the 
 11.4   lottery operating account.  The director shall credit to the 
 11.5   lottery operations account amounts sufficient to pay the 
 11.6   operating costs of the lottery. 
 11.7      (b) Except as provided in paragraph (e) (f), the director 
 11.8   may not credit in any fiscal year thereafter amounts to the 
 11.9   lottery operations account which when totaled exceed 15 percent 
 11.10  of gross revenue, not including net terminal income, to the 
 11.11  lottery fund in that fiscal year.  In computing total amounts 
 11.12  credited to the lottery operations account under this paragraph 
 11.13  the director shall disregard amounts transferred to or retained 
 11.14  by lottery retailers as sales commissions or other compensation. 
 11.15     (c) The director of the lottery may not expend after July 
 11.16  1, 1991, more than 2-3/4 percent of gross revenues, not 
 11.17  including net terminal income, in a fiscal year for contracts 
 11.18  for the preparation, publication, and placement of advertising. 
 11.19     (d) The director may not credit for any fiscal year more 
 11.20  than 30 percent of net terminal income in that fiscal year for 
 11.21  the operation of video lottery terminals.  From the amounts 
 11.22  credited to the operations account for contracts associated with 
 11.23  the maintenance of video lottery terminals, the director shall 
 11.24  expend at least three-tenths of one cent but not more than 
 11.25  seven-tenths of one cent for each video lottery credit played on 
 11.26  each video lottery terminal. 
 11.27     (e) Except as the director determines, the lottery is not 
 11.28  subject to chapter 16A relating to budgeting, payroll, and the 
 11.29  purchase of goods and services. 
 11.30     (e) (f) In addition to the amounts credited to the lottery 
 11.31  operations account under paragraph (b), the director is 
 11.32  authorized, if necessary, to meet the current obligations of the 
 11.33  lottery and to credit up to 25 percent of an amount equal to the 
 11.34  average annual amount which was authorized to be credited to the 
 11.35  lottery operations account for the previous three fiscal years 
 11.36  but was not needed to meet the obligations of the lottery. 
 12.1      Sec. 26.  Minnesota Statutes 2000, section 349A.10, 
 12.2   subdivision 4, is amended to read: 
 12.3      Subd. 4.  [DEPOSIT OF RECEIPTS.] (a) The director may 
 12.4   require lottery retailers to: 
 12.5      (1) deposit in a separate account to the credit of the 
 12.6   lottery fund, in banks designated by the director, all money 
 12.7   received by the lottery retailer from the sale of lottery 
 12.8   tickets and video lottery terminal plays, less money retained as 
 12.9   the lottery retailer's commission and for payment of prizes; 
 12.10     (2) file with the director reports of the lottery 
 12.11  retailer's receipts and transactions in ticket sales and video 
 12.12  lottery terminal plays in a form that the director prescribes; 
 12.13  and 
 12.14     (3) allow money deposited by the lottery retailer from the 
 12.15  sale of lottery tickets and video lottery terminal plays to be 
 12.16  transferred to the lottery through electronic fund transfer. 
 12.17     (b) The director may make arrangements for any person, 
 12.18  including a financial institution, to perform functions, 
 12.19  activities, or services in connection with the receipt and 
 12.20  distribution of lottery revenues. 
 12.21     (c) A lottery retailer who fails to pay any money due to 
 12.22  the director within the time prescribed by the director shall 
 12.23  pay interest on the amount owed at the rate determined by rule. 
 12.24     Sec. 27.  Minnesota Statutes 2000, section 349A.10, 
 12.25  subdivision 5, is amended to read: 
 12.26     Subd. 5.  [DEPOSIT OF NET PROCEEDS.] Within 30 days after 
 12.27  the end of each month, the director shall deposit in the state 
 12.28  treasury the net proceeds of the lottery, which is the balance 
 12.29  in the lottery fund after transfers to the lottery prize fund 
 12.30  and credits to the lottery operations account.  Of the net 
 12.31  proceeds, excluding the net proceeds from the operation of video 
 12.32  lottery terminals, 40 percent must be credited to the Minnesota 
 12.33  environment and natural resources trust fund, and during any 
 12.34  period in which bonds are issued and outstanding under section 
 12.35  16A.67, the remainder must be credited to the special revenue 
 12.36  fund created in section 16A.67, subdivision 3, provided that if 
 13.1   bonds are not issued and outstanding under section 16A.67, such 
 13.2   remainder must be credited to the general fund.  Money credited 
 13.3   to the special revenue fund must be transferred to the debt 
 13.4   service fund established in section 16A.67, subdivision 4, at 
 13.5   the times and in the amounts determined by the commissioner of 
 13.6   finance to be necessary to provide for the payment and security 
 13.7   of bonds issued pursuant to section 16A.67.  On or before the 
 13.8   tenth day of each month, any money in the special revenue fund 
 13.9   not required to be transferred to the debt service fund must be 
 13.10  transferred to the general fund.  The net proceeds from the 
 13.11  operation of video lottery terminals must be credited to the 
 13.12  general fund to be used for state and local infrastructure needs.
 13.13     Sec. 28.  Minnesota Statutes 2000, section 349A.11, is 
 13.14  amended to read: 
 13.15     349A.11 [CONFLICT OF INTEREST.] 
 13.16     Subdivision 1.  [LOTTERY TICKET; RETAILER.] The director, 
 13.17  an employee of the lottery, a member of the immediate family of 
 13.18  the director or employee residing in the same household may not: 
 13.19     (1) purchase a lottery ticket or play a game on a video 
 13.20  lottery terminal; or 
 13.21     (2) have any personal pecuniary interest in any vendor 
 13.22  holding a lottery procurement contract, or in any lottery 
 13.23  retailer; or 
 13.24     (3) receive any gift, gratuity, or other thing of value, 
 13.25  excluding food or beverage, from any lottery vendor or lottery 
 13.26  retailer, or person applying to be a retailer or vendor, in 
 13.27  excess of $100 in any calendar year.  
 13.28     Subd. 2.  [GIFTS.] The director or an employee of the 
 13.29  lottery in the unclassified service may not accept a gift the 
 13.30  acceptance of which by an official would be prohibited by 
 13.31  section 10A.071. 
 13.32     Subd. 3.  [PENALTY.] A violation of subdivision 1, clause 
 13.33  (1), is a misdemeanor.  A violation of subdivision 1, clause 
 13.34  (2), is a gross misdemeanor.  A violation of subdivision 1, 
 13.35  clause (3), is a misdemeanor unless the gift, gratuity, or other 
 13.36  item of value received has a value in excess of $500, in which 
 14.1   case a violation is a gross misdemeanor.  
 14.2      Subd. 4.  [FUTURE EMPLOYMENT.] The director or an 
 14.3   unclassified employee of the lottery may not, within two years 
 14.4   of terminating employment with the lottery, represent any 
 14.5   person, corporation, or entity before the lottery.  A violation 
 14.6   of this paragraph is a misdemeanor. 
 14.7      Sec. 29.  Minnesota Statutes 2000, section 349A.12, 
 14.8   subdivision 1, is amended to read: 
 14.9      Subdivision 1.  [PURCHASE BY MINORS.] A person under the 
 14.10  age of 18 years may not buy or redeem for a prize a ticket in 
 14.11  the state lottery, and a person under the age of 21 years may 
 14.12  not play a game on a video lottery terminal. 
 14.13     Sec. 30.  Minnesota Statutes 2000, section 349A.12, 
 14.14  subdivision 2, is amended to read: 
 14.15     Subd. 2.  [SALE TO MINORS.] A lottery retailer may not sell 
 14.16  and a lottery retailer or other person may not furnish or redeem 
 14.17  for a prize a ticket in the state lottery to any person under 
 14.18  the age of 18 years, or allow a person under the age of 21 years 
 14.19  to play a game on a video lottery terminal.  It is an 
 14.20  affirmative defense to a charge under this subdivision for the 
 14.21  lottery retailer or other person to prove by a preponderance of 
 14.22  the evidence that the lottery retailer or other person 
 14.23  reasonably and in good faith relied upon representation of proof 
 14.24  of age described in section 340A.503, subdivision 6, in 
 14.25  making or allowing the sale or play or furnishing or redeeming 
 14.26  the ticket. 
 14.27     Sec. 31.  Minnesota Statutes 2000, section 349A.13, is 
 14.28  amended to read: 
 14.29     349A.13 [RESTRICTIONS.] 
 14.30     Nothing in this chapter: 
 14.31     (1) authorizes the director to conduct a lottery game or 
 14.32  contest the winner or winners of which are determined by the 
 14.33  result of a sporting event other than a horse race conducted 
 14.34  under chapter 240; or 
 14.35     (2) authorizes the director to install or operate a lottery 
 14.36  device operated by coin or currency which when operated 
 15.1   determines the winner of a game; and 
 15.2      (3) authorizes the director to sell pull-tabs as defined 
 15.3   under section 349.12, subdivision 32. 
 15.4      Sec. 32.  Minnesota Statutes 2000, section 609.651, 
 15.5   subdivision 1, is amended to read: 
 15.6      Subdivision 1.  [FELONY FRAUD.] A person is guilty of a 
 15.7   felony and may be sentenced under subdivision 4 if the person 
 15.8   does any of the following with intent to defraud the state 
 15.9   lottery: 
 15.10     (1) alters or counterfeits a state lottery ticket or a 
 15.11  video lottery credit receipt from a state lottery video lottery 
 15.12  terminal; 
 15.13     (2) knowingly presents an altered or counterfeited state 
 15.14  lottery ticket or video lottery credit receipt from a state 
 15.15  lottery video lottery terminal for payment; 
 15.16     (3) knowingly transfers an altered or counterfeited state 
 15.17  lottery ticket or video lottery credit receipt from a state 
 15.18  lottery video lottery terminal to another person; or 
 15.19     (4) tampers with or manipulates the outcome, prize payable, 
 15.20  or operation of a state lottery video lottery terminal; or 
 15.21     (5) otherwise claims a lottery prize by means of fraud, 
 15.22  deceit, or misrepresentation. 
 15.23     Sec. 33.  Minnesota Statutes 2000, section 609.75, 
 15.24  subdivision 4, is amended to read: 
 15.25     Subd. 4.  [GAMBLING DEVICE.] A gambling device is a 
 15.26  contrivance which for a consideration affords the player an 
 15.27  opportunity to obtain something of value, other than free plays, 
 15.28  automatically from the machine or otherwise, the award of which 
 15.29  is determined principally by chance.  "Gambling device" also 
 15.30  includes a video game of chance, as defined in subdivision 8, 
 15.31  but does not include a video lottery terminal operated by the 
 15.32  state lottery under chapter 349A. 
 15.33     Sec. 34.  Minnesota Statutes 2000, section 609.761, 
 15.34  subdivision 2, is amended to read: 
 15.35     Subd. 2.  [STATE LOTTERY.] Sections 609.755 and 609.76 do 
 15.36  not prohibit the operation of the state lottery or; the sale, 
 16.1   possession, or purchase of tickets for the state lottery; or the 
 16.2   manufacture, possession, or operation of a video lottery 
 16.3   terminal for the state lottery under chapter 349A.  
 16.4      Sec. 35.  [EFFECTIVE DATE.] 
 16.5      Sections 1 to 34 are effective the day following final 
 16.6   enactment. 
 16.7      Sec. 36.  [EXPIRATION.] 
 16.8      Sections 1 to 34 expire June 1, 2011. 
 16.9                              ARTICLE 2 
 16.10                          LOCAL AUTHORITY 
 16.11     Section 1.  [349A.19] [LOCAL REGULATION.] 
 16.12     A statutory or home rule city or county has the authority 
 16.13  to adopt more stringent regulation of the state lottery within 
 16.14  its jurisdiction, including the prohibition of the sale of 
 16.15  lottery tickets, the operation of video lottery terminals, or 
 16.16  lottery games, and may require a license to operate as a lottery 
 16.17  retailer.  The fee for a license issued under this subdivision 
 16.18  may not exceed $100. 
 16.19     Sec. 2.  [REPEALER.] 
 16.20     Minnesota Statutes 2000, section 349A.06, subdivision 10, 
 16.21  is repealed.