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SF 3459

as introduced - 91st Legislature (2019 - 2020) Posted on 02/20/2020 03:50pm

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

Current Version - as introduced

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A bill for an act
relating to lawful gambling; modifying definition of lawful purpose; amending
Minnesota Statutes 2019 Supplement, section 349.12, subdivision 25.


Section 1.

Minnesota Statutes 2019 Supplement, section 349.12, subdivision 25, is amended
to read:

Subd. 25.

Lawful purpose.

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

(1) any expenditure by or contribution to a 501(c)(3) or festival organization, as defined
in subdivision 15c, 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

(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 $50 per diem; or

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

(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, subdivision 3a;

(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, 5, and 6, and the tax imposed on unrelated business income by section 290.05, subdivision

(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) an expenditure for citizen monitoring of surface water quality by individuals or
nongovernmental organizations that is consistent with section 115.06, subdivision 4, and
Minnesota Pollution Control Agency guidance on monitoring procedures, quality assurance
protocols, and data management, provided that the resulting data is submitted to the
Minnesota Pollution Control Agency for review and inclusion in the state water quality

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

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

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

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

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

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

(16) an expenditure by a licensed fraternal organization or a licensed veterans organization
for payment of water, fuel for heating, electricity, and sewer costs for:

(i) up to 100 percent for a building wholly owned or wholly leased by and used as the
primary headquarters of the licensed veteran or fraternal organization; or

(ii) a proportional amount subject to approval by the director and based on the portion
of a building used as the primary headquarters of the licensed veteran or fraternal

(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;

(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

(20) a contribution by a licensed organization to another licensed organization with prior
board approval, with the contribution designated to be used for one or more of the following
lawful purposes under this section: clauses (1) to (7), (11) to (15), (19), and (25);

(21) an expenditure that is a contribution to a parent organization, if the parent
organization: (i) has not provided to the contributing organization within one year of the
contribution any money, grants, property, or other thing of value, and (ii) has received prior
board approval for the contribution that will be used for a program that meets one or more
of the lawful purposes under subdivision 7a;

(22) an expenditure for the repair, maintenance, or improvement of real property and
capital assets owned by an organization, or for the replacement of a capital asset that can
no longer be repaired, with a fiscal year limit of five percent of gross profits from the
previous fiscal year, with no carryforward of unused allowances. The fiscal year is July 1
through June 30. Total expenditures for the fiscal year may not exceed the limit unless the
board has specifically approved the expenditures that exceed the limit due to extenuating
circumstances beyond the organization's control. An expansion of a building or bar-related
expenditures are not allowed under this provision.

(i) The expenditure must be related to the portion of the real property or capital asset
that must be made available for use free of any charge to other nonprofit organizations,
community groups, or service groups, and is used for the organization's primary mission or

(ii) An expenditure may be made to bring an existing building that the organization owns
into compliance with the Americans with Disabilities Act.

(iii) An organization may apply the amount that is allowed under item (ii) to the erection
or acquisition of a replacement building that is in compliance with the Americans with
Disabilities Act if the board has specifically approved the amount. The cost of the erection
or acquisition of a replacement building may not be made from gambling proceeds, except
for the portion allowed under this item;

(23) an expenditure for the acquisition or improvement of a capital asset with a cost
greater than $2,000, excluding real property, that will be used exclusively for lawful purposes
under this section if the board has specifically approved the amount;

(24) an expenditure for the acquisition, erection, improvement, or expansion of real
property, if the board has first specifically authorized the expenditure after finding that the
real property will be used exclusively for lawful purpose under this section;

(25) an expenditure, including a mortgage payment or other debt service payment, for
the erection or acquisition of a comparable building to replace an organization-owned
building that was destroyed or made uninhabitable by fire or catastrophe or to replace an
organization-owned building that was taken or sold under an eminent domain proceeding.
The expenditure may be only for that part of the replacement cost not reimbursed by
insurance for the fire or catastrophe or compensation not received from a governmental unit
under the eminent domain proceeding, if the board has first specifically authorized the
expenditure; deleted text beginor
deleted text end

(26) a contribution to a 501(c)(19) organization that does not have an organization license
under section 349.16 and is not affiliated with the contributing organization, and whose
owned or leased property is not a permitted premises under section 349.165. The 501(c)(19)
organization may only use the contribution for lawful purposes under this subdivision or
for the organization's primary mission. The 501(c)(19) organization may not use the
contribution for expansion of a building or for bar-related expenditures. A contribution may
not be made to a statewide organization representing a consortia of 501(c)(19) organizationsdeleted text begin.deleted text endnew text begin;
new text end

new text begin (27) an expenditure related to the performance of an audit required under section 297E.06,
subdivision 4; or
new text end

new text begin (28) an expenditure related to the maintenance of a bond required under section 349.167,
subdivision 1.
new text end

(b) Expenditures authorized by the board under paragraph (a), clauses (24) and (25),
must be 51 percent completed within two years of the date of board approval; otherwise the
organization must reapply to the board for approval of the project. "Fifty-one percent
completed" means that the work completed must represent at least 51 percent of the value
of the project as documented by the contractor or vendor.

(c) 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

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

(3) 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; or

(4) a contribution to a 501(c)(3) organization or other entity with the intent or effect of
not complying with lawful purpose restrictions or requirements.