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Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1989 

                         CHAPTER 334-H.F.No. 66 
           An act relating to gambling; creating a department of 
          gaming; authorizing a state lottery to be conducted by 
          a division of state lottery; creating a division of 
          gambling enforcement in the department of public 
          safety and providing for its duties; prescribing 
          penalties; appropriating money; amending Minnesota 
          Statutes 1988, sections 10A.01, subdivision 18; 
          10A.09, subdivision 1; 15A.081, subdivision 1; 16B.54, 
          subdivision 2; 240.01, by adding subdivisions; 240.02, 
          subdivisions 1 and 2; 240.04, subdivisions 1 and 7; 
          240.06, subdivisions 3 and 8; 240.07, subdivision 2; 
          240.08, subdivision 3; 240.13, by adding a 
          subdivision; 240.21; 240.28; 340A.410, subdivision 5; 
          349.11; 349.12, subdivisions 3, 11, 12, 13, 15, 16, 
          17, 20, and by adding subdivisions; 349.15; 349.151; 
          349.16, subdivisions 3 and 4; 349.161; 349.162; 
          349.163; 349.164; 349.17, subdivision 2a; 349.18, 
          subdivision 1, and by adding a subdivision; 349.19, 
          subdivisions 2, 3, 6, and by adding subdivisions; 
          349.20; 349.21; 349.2121, subdivisions 2, 3, and 10; 
          349.2122; 349.2125, subdivisions 1, 2, and 3; 
          349.2127, subdivision 2; 349.213, subdivisions 1 and 
          2; 349.214, subdivision 2; 349.22, subdivisions 1 and 
          3; 541.20; 541.21; 609.75, subdivision 3; 609.76, 
          subdivision 1; 609.761; 626.05, subdivision 2; 626.13; 
          and 626.84, subdivision 1; Laws 1989, chapter 184, 
          sections 7, by adding a subdivision and 12, by adding 
          a subdivision; proposing coding for new law as 
          Minnesota Statutes, chapters 299K; 349A; and 349B; 
          proposing coding for new law in Minnesota Statutes, 
          chapters 240; 245; 349; and 609; repealing Minnesota 
          Statutes 1988, sections 349.151, subdivisions 3 and 5; 
          and 349.171. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1 

                        PARI-MUTUEL HORSE RACING 
    Section 1.  Minnesota Statutes 1988, section 240.01, is 
amended by adding a subdivision to read: 
    Subd. 14.  [DIRECTOR.] "Director" is the director of 
pari-mutuel racing. 
    Sec. 2.  Minnesota Statutes 1988, section 240.01, is 
amended by adding a subdivision to read: 
    Subd. 15.  [DIVISION.] "Division" is the division of 
pari-mutuel racing in the department of gaming. 
    Sec. 3.  [240.011] [DIVISION OF PARI-MUTUEL RACING.] 
    Subdivision 1.  [DIVISION CREATED.] A division of 
pari-mutuel racing is created in the department of gaming.  The 
division is under the supervision and control of the Minnesota 
racing commission.  
    Subd. 2.  [DIRECTOR OF PARI-MUTUEL RACING.] The governor 
shall appoint the director of pari-mutuel racing, who serves in 
the unclassified service at the governor's pleasure.  The 
director must be a person qualified by experience in the 
administration and regulation of pari-mutuel racing to discharge 
the duties of the director.  The governor must select a director 
from a list of one or more names submitted by the commission.  
    Sec. 4.  Minnesota Statutes 1988, section 240.02, 
subdivision 1, is amended to read: 
    Subdivision 1.  [COMMISSION CREATED.] A Minnesota racing 
commission is established within the division of pari-mutuel 
racing with the powers and duties specified in Laws 1983, 
chapter 214 this section.  Until the effective date of the first 
vacancy on the commission that occurs after the effective date 
of this act, including a vacancy caused by the expiration of a 
term, the commission consists of nine members appointed by the 
governor with the advice and consent of the senate and the 
commissioner of gaming as a nonvoting member.  After the date of 
the first vacancy, the commission consists of eight members 
appointed by the governor with the advice and consent of the 
senate, plus the commissioner as a voting member.  Not more than 
five of the members may belong to the same political party.  The 
governor shall designate the chair of the commission.  Of the 
members first appointed, three are for terms expiring June 30, 
1985, three are for terms expiring June 30, 1987, and three are 
for terms expiring June 30, 1989.  After the expiration of the 
initial term, Appointments by the governor are for terms of six 
years.  An appointment to fill a vacancy in an unexpired term is 
for the remainder of the term and is with the advice and consent 
of the senate.  
    Sec. 5.  Minnesota Statutes 1988, section 240.02, 
subdivision 2, is amended to read: 
    Subd. 2.  [QUALIFICATIONS.] A member of the commission, 
other than the commissioner, must have been a resident of 
Minnesota for at least five years before appointment, and must 
have a background and experience as would qualify for membership 
on the commission.  A member must, before taking a place on the 
commission, file a bond in the principal sum of $100,000 payable 
to the state, conditioned upon the faithful performance of 
duties.  No commissioner, nor any member of the commissioner's 
immediate family residing in the same household, may hold a 
license issued by the commission or have a direct or indirect 
financial interest in a corporation, partnership, or association 
which holds a license issued by the commission.  
    Sec. 6.  Minnesota Statutes 1988, section 240.04, 
subdivision 1, is amended to read: 
    Subdivision 1.  [EXECUTIVE DIRECTOR; DUTIES.] The 
commission shall appoint an executive director, who is its chief 
administrative officer and who serves at its pleasure in the 
unclassified service.  The executive director shall perform the 
following duties:  
    (a) take and preserve records of all proceedings before the 
commission, maintain its books, documents, and records, and make 
them available for public inspection as the commission directs; 
    (b) if so designated by the commission, act as a hearing 
officer in hearings which need not be conducted under the 
administrative procedure act to conduct hearings, receive 
testimony and exhibits, and certify the record of proceedings to 
the commission; 
    (c) act as the commission's chief personnel officer and 
supervise the employment, conduct, duties, and discipline of 
commission employees; and 
    (d) perform other duties as directed by the commission.  
    Sec. 7.  Minnesota Statutes 1988, section 240.04, 
subdivision 7, is amended to read: 
    Subd. 7.  [ASSISTANCE.] The commission and director may 
request assistance from any department or agency of the state in 
fulfilling its duties, and shall make appropriate reimbursement 
for all such assistance.  
    Sec. 8.  Minnesota Statutes 1988, section 240.06, 
subdivision 3, is amended to read: 
    Subd. 3.  [INVESTIGATION.] Before granting a class A 
license the commission shall conduct, or request the bureau of 
criminal apprehension division of gambling enforcement to 
conduct, a comprehensive background and financial investigation 
of the applicant and sources of financing.  The commission may 
charge an applicant an investigation fee to cover the cost of 
the investigation, and shall from this fee reimburse the bureau 
division of gambling enforcement for its share of the cost of 
the investigation.  The commission has access to all criminal 
history data compiled by the bureau of criminal apprehension 
division of gambling enforcement on class A licensees and 
applicants.  
    Sec. 9.  Minnesota Statutes 1988, section 240.06, 
subdivision 8, is amended to read: 
    Subd. 8.  [WORK AREAS.] A class A licensee must provide at 
no cost to the commission division suitable work areas for 
commission members, officers, employees, and agents, including 
agents of the division of gambling enforcement, who are directed 
or requested by the commission to supervise and control racing 
at the licensed racetrack.  
    Sec. 10.  Minnesota Statutes 1988, section 240.07, 
subdivision 2, is amended to read: 
    Subd. 2.  [HEARINGS; INVESTIGATIONS.] Before granting an 
initial class B license the commission shall hold at least one 
public hearing on the license.  Comprehensive investigations 
must be conducted and their costs paid in the manner prescribed 
by section 240.06, subdivision 3.  The commission has access to 
all criminal history data compiled by the bureau of criminal 
apprehension division of gambling enforcement on class B 
licensees and applicants.  
    Sec. 11.  Minnesota Statutes 1988, section 240.08, 
subdivision 3, is amended to read: 
    Subd. 3.  [INVESTIGATIONS.] The commission shall 
investigate each applicant for a class C license to the extent 
it deems necessary, and may request the assistance of and may 
reimburse the bureau of criminal apprehension division of 
gambling enforcement in investigating applicants.  The 
commission may by rule require that an applicant be 
fingerprinted or furnish the applicant's fingerprints. 
Investigations must be conducted and their costs paid in the 
manner prescribed by section 240.06, subdivision 3.  The 
commission may cooperate with national and international 
organizations and agencies in conducting investigations.  The 
commission may by rule provide for examining the qualifications 
of an applicant for the license being applied for.  The 
commission has access to all criminal history data compiled by 
the bureau of criminal apprehension division of gambling 
enforcement on class C applicants and licensees.  
    Sec. 12.  Minnesota Statutes 1988, section 240.13, is 
amended by adding a subdivision to read: 
    Subd. 9.  [TRANSMISSION TO INDIAN LANDS; POOLING OF 
BETS.] A licensed racetrack may, with the approval of the 
horsepersons' organization representing the majority of 
horsepersons racing the breed involved, transmit telecasts of 
races the licensee conducts to sites on Indian lands of tribes 
who are lawfully conducting pari-mutuel wagering authorized by a 
tribal-state compact entered into pursuant to the Indian Gaming 
Regulatory Act, Public Law Number 100-497, or through 
litigation, arbitration, or mediation relative to that act.  
Nothing in this subdivision shall be construed to indicate that 
state policy or law permits or encourages the transmission of 
telecasts to sites on Indian lands.  With prior approval of the 
commission, a licensed racetrack transmitting telecasts of races 
it conducts, to sites on Indian lands within or outside of 
Minnesota or to other locations outside the state, may commingle 
the amounts bet at the receiving entity with the pools at the 
sending licensed racetrack. 
    Sec. 13.  Minnesota Statutes 1988, section 240.21, is 
amended to read: 
    240.21 [RIGHT OF INSPECTION.] 
    The commission and its representatives, including 
representatives of the division of gambling enforcement, have 
the right to inspect the licensed premises of a licensee and to 
examine the licensee's books and other records at any time 
without a search warrant.  
    Sec. 14.  Minnesota Statutes 1988, section 240.28, is 
amended to read: 
    240.28 [CONFLICT OF INTEREST.] 
    Subdivision 1.  [FINANCIAL INTEREST.] No person may serve 
on the commission or be employed by it the division who has an 
interest in any corporation, association, or partnership which 
holds a license from the commission or which holds a contract to 
supply goods or services to a licensee or at a licensed 
racetrack, including concessions contracts.  No member of the 
commission or employee of the commission division may own, 
wholly or in part, or have an interest in a horse which races at 
a licensed racetrack in Minnesota.  No member of the commission 
or employee of the commission division may have a financial 
interest in or be employed in a profession or business which 
conflicts with the performance of duties as a member or employee.
    Subd. 2.  [BETTING.] No member of the commission or 
employee of the commission division may bet or cause a bet to be 
made on a race at a licensed racetrack while serving on the 
commission or being employed by the commission division.  No 
person appointed or approved by the commission director as a 
steward may bet or cause a bet to be made at a licensed 
racetrack during a racing meeting at which the person is serving 
as a steward.  The commission shall by rule prescribe such 
restrictions on betting by its licensees as it deems necessary 
to protect the integrity of racing.  
    Subd. 3.  [VIOLATION.] A violation of subdivisions 1 and 2 
is grounds for removal from the commission or termination of 
employment.  A bet made directly or indirectly by a licensee in 
violation of a rule made by the commission under subdivision 2 
is grounds for suspension or revocation of the license.  
    Sec. 15.  [EFFECTIVE DATE.] 
    Sections 1 to 14 are effective July 1, 1989. 

                               ARTICLE 2 

                            LAWFUL GAMBLING 
    Section 1.  Minnesota Statutes 1988, section 349.11, is 
amended to read: 
    349.11 [PURPOSE.] 
    The purpose of sections 349.11 to 349.22 is to regulate 
legal forms of lawful gambling to prevent their its 
commercialization, to insure integrity of operations, and to 
provide for the use of net profits only for lawful purposes. 
    Sec. 2.  Minnesota Statutes 1988, section 349.12, 
subdivision 3, is amended to read: 
    Subd. 3.  [ACTIVE MEMBER.] "Active member" means a member 
who has paid all dues to the organization, who is 18 years of 
age or older, who has equal voting rights with all other 
members, who has equal opportunity to be an elected officer, who 
has equal right and responsibilities of attendance at the 
regularly scheduled meetings of the organization, whose name and 
membership origination date appear with the member's knowledge 
and consent on a list of members of the organization, and who 
has been a member of the organization for at least six months. 
    Sec. 3.  Minnesota Statutes 1988, section 349.12, 
subdivision 11, is amended to read: 
    Subd. 11.  [LAWFUL PURPOSE.] "Lawful purpose" means one or 
more of the following:  (a) benefiting persons by enhancing 
their opportunity for religious or educational advancement, by 
relieving or protecting them from disease, suffering or 
distress, by contributing to their physical well-being, by 
assisting them in establishing themselves in life as worthy and 
useful citizens, or by increasing their comprehension of and 
devotion to the principles upon which this nation was founded; 
(b) initiating, performing, or fostering worthy public works or 
enabling or furthering the erection or maintenance of public 
structures; (c) lessening the burdens borne by government or 
voluntarily supporting, augmenting or supplementing services 
which government would normally render to the people; or (d) 
payment of taxes imposed under this chapter, and other taxes 
imposed by the state or the United States on receipts from 
lawful gambling; (e) any expenditure by, or any contribution to, 
a hospital or nursing home exempt from taxation under section 
501(c)(3) of the Internal Revenue Code; or (f) payment of 
reasonable costs incurred in complying with the performing of 
annual audits required under section 349.19, subdivision 9. 
    "Lawful purpose" does not include the erection, 
acquisition, improvement, expansion, repair, or maintenance of 
any real property or capital assets owned or leased by the 
organization, other than a hospital or nursing home exempt from 
taxation under section 501(c)(3) of the Internal Revenue Code, 
unless the board specifically authorizes the expenditures after 
finding that the property or capital assets will be used 
exclusively for one or more of the purposes specified in clauses 
(a) to (c).  The board may by rule adopt procedures and 
standards to administer this subdivision. 
    Sec. 4.  Minnesota Statutes 1988, section 349.12, 
subdivision 12, is amended to read: 
    Subd. 12.  [ORGANIZATION.] "Organization" means any 
fraternal, religious, veterans, or other nonprofit organization 
which has been in existence for at least three years and has at 
least 15 active members, and either has been duly incorporated 
as a nonprofit organization for at least three years, or has 
been recognized by the Internal Revenue Service as exempt from 
income taxation for the most recent three years. 
    Sec. 5.  Minnesota Statutes 1988, section 349.12, 
subdivision 13, is amended to read: 
    Subd. 13.  [GROSS PROFIT.] "Gross profit" means the gross 
receipts collected from lawful gambling, less reasonable sums 
necessarily and actually expended for prizes. 
    Sec. 6.  Minnesota Statutes 1988, section 349.12, is 
amended by adding a subdivision to read: 
    Subd. 13a.  [NET PROFIT.] "Net profit" means gross profit 
less reasonable sums actually expended for allowable expenses. 
    Sec. 7.  Minnesota Statutes 1988, section 349.12, 
subdivision 15, is amended to read: 
    Subd. 15.  [GAMBLING EQUIPMENT.] "Gambling equipment" means:
bingo cards and or sheets, devices for selecting bingo numbers, 
pull-tabs, jar tickets, paddlewheels, and tipboards.  
    Sec. 8.  Minnesota Statutes 1988, section 349.12, 
subdivision 16, is amended to read:  
    Subd. 16.  "Board" is the charitable gambling control board.
    Sec. 9.  Minnesota Statutes 1988, section 349.12, 
subdivision 17, is amended to read: 
    Subd. 17.  [DISTRIBUTOR.] "Distributor" is a person who 
sells gambling equipment the distributor manufactures or 
purchases for resale within the state to licensed organizations, 
to organizations conducting exempt activities under section 
349.214, or to other distributors. 
    Sec. 10.  Minnesota Statutes 1988, section 349.12, 
subdivision 20, is amended to read: 
    Subd. 20.  [IDEAL NET.] "Ideal net" means the pull-tab or 
tipboard deal's ideal gross, as defined under subdivision 19, 
less the total predetermined prize amounts available to be paid 
out.  When the prize is not entirely a monetary one, the ideal 
net is 50 percent of the ideal gross. 
    Sec. 11.  Minnesota Statutes 1988, section 349.12, is 
amended by adding a subdivision to read: 
    Subd. 23.  [CAPITAL ASSETS.] "Capital assets" means 
property, real or personal, except gambling equipment, with an 
expected useful life of at least one year.  
    Sec. 12.  Minnesota Statutes 1988, section 349.12, is 
amended by adding a subdivision to read: 
    Subd. 24.  [DIRECTOR.] "Director" is the director of the 
division of gambling control.  
    Sec. 13.  Minnesota Statutes 1988, section 349.12, is 
amended by adding a subdivision to read: 
    Subd. 25.  [MANUFACTURER.] "Manufacturer" means a person or 
entity who assembles from raw materials or subparts a completed 
piece of gambling equipment, and who sells or furnishes the 
equipment for resale or for use in the state.  The term includes 
a person who converts, modifies, adds to, or removes parts or a 
portion from an item, device, or assembly to further its 
promotion, sale, or use as gambling equipment in this state.  A 
person only adding or modifying promotional flares to advise the 
public of the prizes available, the rules of play, and the 
consideration required is not a manufacturer. 
    Sec. 14.  Minnesota Statutes 1988, section 349.12, is 
amended by adding a subdivision to read: 
    Subd. 26.  [PROMOTIONAL TICKET.] A pull-tab or tipboard 
ticket with the words "no purchase necessary" and "for 
promotional use only" and for which no consideration is given is 
a promotional ticket. 
    Sec. 15.  Minnesota Statutes 1988, section 349.12, is 
amended by adding a subdivision to read: 
    Subd. 27.  [DIVISION.] "Division" is the division of 
gambling control in the department of gaming. 
    Sec. 16.  Minnesota Statutes 1988, section 349.15, is 
amended to read: 
    349.15 [USE OF GROSS PROFITS.] 
    (a) Gross profits from lawful gambling may be expended only 
for lawful purposes or allowable expenses as authorized at a 
regular meeting of the conducting organization.  Provided that 
no more than 55 percent of gross profits from bingo, and no more 
than 45 percent for other forms of lawful gambling, may be 
expended for necessary allowable expenses related to lawful 
gambling.  
    (b) The board shall provide by rule for the administration 
of this section, including specifying allowable expenses.  The 
rules must specify that no more than one-third of the annual 
premium on a policy of liability insurance procured by the 
organization may be taken as an allowable expense from the gross 
receipts from lawful gambling.  This expense shall be allowed by 
the board only to the extent that it relates directly to the 
conduct of lawful gambling and is verified in the manner the 
board prescribes by rule.  The rules may provide a maximum 
percentage of gross receipts profits which may be expended for 
certain expenses.  
    (c) Allowable expenses also include reasonable costs of 
bank account service charges, and the reasonable costs of an 
audit required by the board, except an audit required under 
section 349.19, subdivision 9. 
    Sec. 17.  Minnesota Statutes 1988, section 349.151, is 
amended to read: 
    349.151 [CHARITABLE GAMBLING CONTROL BOARD.] 
    Subdivision 1.  [BOARD CREATED.] The charitable gambling 
control board is created with the powers and duties established 
by subdivision 4.  
    Subd. 2.  [MEMBERSHIP.] The board consists of 13 six 
members appointed as follows:  
    (1) eleven persons appointed by the governor with the 
advice and consent of the senate, at least four of whom must 
reside outside of the seven-county metropolitan area; 
    (2) the commissioner of public safety or a designee; and 
    (3) the attorney general or a designee.  
    A member serving on the board by appointment must have been 
a resident of Minnesota for at least five years.  Of the 
appointees of the governor not more than six may belong to the 
same political party.  A member appointed to the board may be 
removed at any time by the appointing authority.  Vacancies on 
the board are filled in the same manner as the original 
appointment.  Of the members appointed by the governor, three 
are for terms expiring June 30, 1985, four are for terms 
expiring June 30, 1986, and four are for terms expiring June 30, 
1987.  After the expiration of the initial terms, appointments 
are for three years.  The governor shall appoint the chair from 
among the governor's appointees and the commissioner of gaming 
as a voting member.  Of the members first appointed, one is for 
a term expiring June 30, 1990, two are for a term expiring June 
30, 1991, two are for a term expiring June 30, 1992, and one is 
for a term expiring June 30, 1993.  After expiration of the 
initial terms, appointments are for four years.  The board shall 
select one of its members, other than the commissioner, to serve 
as chair.  No more than three members appointed by the governor 
under this subdivision may belong to the same political party.  
    Subd. 3.  [COMPENSATION.] The compensation, and removal of 
board members is and filling of membership vacancies are as 
provided in section 15.0575, subdivision 3 except for the 
commissioner of gaming. 
    Subd. 4.  [POWERS AND DUTIES.] (a) The board has the 
following powers and duties:  
    (1) to issue, revoke, and suspend licenses to 
organizations, distributors, bingo halls, and manufacturers 
under sections 349.16, 349.161, and 349.163, and 349.164; 
    (2) to collect and deposit license fees and taxes due under 
this chapter; 
    (3) to receive reports required by this chapter and inspect 
the records, books, and other documents of organizations and 
suppliers to insure compliance with all applicable laws and 
rules; 
    (4) to make rules, including emergency rules, required by 
this chapter; 
    (5) to register gambling equipment and issue registration 
stamps under section 349.162; 
    (6) to provide by rule for the mandatory posting by 
organizations conducting lawful gambling of rules of play and 
the odds and/or house percentage on each form of lawful 
gambling; 
    (7) to report annually to the governor and legislature on 
its activities and on recommended changes in the laws governing 
charitable gambling; and 
    (8) impose civil penalties of not more than $500 per 
violation on organizations, distributors, and manufacturers for 
failure to comply with any provision of sections 349.12 to 
349.23 or any rule of the board; 
    (9) to notify city councils, county boards, and town boards 
before issuing or renewing licenses to organizations and bingo 
halls as specified under section 349.213; and 
    (10) delegate to the director the authority to issue 
licenses under criteria established by the board.  
    (b) Any organization, distributor, bingo hall operator, or 
manufacturer assessed a civil penalty may request a hearing 
before the board.  Hearings conducted on appeals of imposition 
of penalties are not subject to the provisions of the 
administrative procedure act.  
    (c) All fees and penalties received by the board must be 
deposited in the general fund.  
    Subd. 4a.  [ADDITIONAL POWERS.] Whenever it appears to 
the board director that any person has engaged or is about to 
engage in any act or practice constituting a violation of this 
chapter or any rule: 
    (a) The board director has the power to issue and cause to 
be served upon the person an order requiring the person to cease 
and desist from violations of this chapter.  The order must give 
reasonable notice of the rights of the person to request a 
hearing and must state the reason for the entry of the order.  A 
hearing shall be held not later than seven days after the 
request for the hearing is received by the board after which and 
within 20 days of the date of the hearing the board shall issue 
a further an order vacating the cease and desist order or making 
it permanent as the facts require.  All hearings shall be 
conducted in accordance with the provisions of chapter 14.  If 
the person to whom a cease and desist order is issued fails to 
appear at the hearing after being duly notified, the person 
shall be deemed in default, and the proceeding may be determined 
against the person upon consideration of the cease and desist 
order, the allegations of which may be deemed to be true.  
    (b) The board may bring an action in the district court in 
the appropriate county to enjoin the acts or practices and to 
enforce compliance with this chapter or any rule and may refer 
the matter to the attorney general.  Upon a proper showing, a 
permanent or temporary injunction, restraining order, or writ of 
mandamus shall be granted.  The court may not require the board 
to post a bond. 
    Subd. 5.  [EMPLOYEES.] The board shall employ an executive 
secretary in the unclassified service and such other employees 
in the classified service as are required to enable it to carry 
out its functions.  One or more of the employees must be bingo 
inspectors.  
    Subd. 6.  [ATTORNEY GENERAL.] The attorney general is the 
attorney for the board.  
    Sec. 18.  [349.152] [DIRECTOR.] 
    Subdivision 1.  [APPOINTED.] The governor shall appoint, 
with the advice and consent of the senate, a director from a 
list of one or more persons submitted by the board.  The 
director serves in the unclassified service at the pleasure of 
the governor.  
    Subd. 2.  [DUTIES OF THE DIRECTOR.] The director has the 
following duties: 
    (1) to carry out gambling policy established by the board; 
    (2) to employ and supervise personnel of the board; 
    (3) to advise and make recommendations to the board on 
rules; 
    (4) to issue licenses as authorized by the board; 
    (5) to issue cease and desist orders; 
    (6) to make recommendations to the board on license 
issuance, denial, suspension and revocation, and civil penalties 
the board imposes; and 
    (7) to ensure that board rules, policy, and decisions are 
adequately and accurately conveyed to the board's licensees. 
    Sec. 19.  [349.153] [CONFLICT OF INTEREST.] 
    (a) A person may not serve on the board, be the director, 
or be an employee of the division who has an interest in any 
corporation, association, or partnership that is licensed by the 
board as a distributor, manufacturer, or a bingo hall under 
section 349.164.  
    (b) A member of the board, the director, or an employee of 
the division may not participate in the conducting of lawful 
gambling.  
    Sec. 20.  Minnesota Statutes 1988, section 349.16, 
subdivision 3, is amended to read: 
    Subd. 3.  [FEES.] The board shall by rule establish a 
schedule of fees for licenses under this section.  The schedule 
must establish may issue four classes of license, licenses:  a 
class A license authorizing all forms of lawful gambling,; a 
class B license authorizing all forms of lawful gambling except 
bingo, raffles; a class C license authorizing bingo only,; 
and bingo a class D license authorizing raffles only.  The 
annual license fee for each class of license is: 
    (1) $200 for a class A license; 
    (2) $125 for a class B license; 
    (3) $100 for a class C license; and 
    (4) $75 for a class D license. 
    Sec. 21.  Minnesota Statutes 1988, section 349.16, 
subdivision 4, is amended to read: 
    Subd. 4.  [LOCAL INVESTIGATION FEE.] A statutory or home 
rule charter city or county notified under section 349.213, 
subdivision 2, may assess an investigation fee on organizations 
or bingo halls applying for or renewing a license to conduct 
lawful gambling or operate a bingo hall.  An investigation fee 
may not exceed the following limits: 
    (1) for cities of the first class, $500; 
    (2) for cities of the second class, $250; and 
    (3) for all other cities and counties, $100; and 
    (4) for counties, $375. 
    Sec. 22.  Minnesota Statutes 1988, section 349.161, is 
amended to read: 
    349.161 [DISTRIBUTOR LICENSES.] 
    Subdivision 1.  [PROHIBITED ACTS; LICENSES REQUIRED.] No 
person may:  
    (1) sell, offer for sale, or furnish gambling equipment for 
use within the state for gambling purposes, other than for 
lawful gambling exempt from licensing under section 349.214, 
except to an organization licensed for lawful gambling; or 
    (2) sell, offer for sale, or furnish gambling equipment to 
an organization licensed for lawful gambling without having 
obtained a distributor license under this section.  
    No licensed organization may purchase gambling equipment 
from any person not licensed as a distributor under this section.
    Subd. 2.  [LICENSE APPLICATION.] The board may issue 
licenses for the sale of gambling equipment to persons who meet 
the qualifications of this section if the board determines that 
a license is consistent with the purpose of sections 349.11 to 
349.22.  Applications must be on a form the board prescribes. 
    Subd. 3.  [QUALIFICATIONS.] A license may not be issued 
under this section to a person, or to a corporation, firm, or 
partnership which has as an officer, director, other person in a 
supervisory or management position, or employee eligible to make 
sales on behalf of the distributor a person, who:  
    (1) has been convicted of a felony in a state or federal 
court within the past five years or who has a felony charge 
pending; 
    (2) has ever been convicted in a state or federal court of 
a gambling-related offense within ten years of the date of 
license application felony involving fraud or misrepresentation 
or a crime involving gambling; or 
    (3) is or has ever been engaged in an illegal business; 
    (4) owes $500 or more in delinquent taxes as defined in 
section 270.72; 
    (5) has had a sales and use tax permit revoked by the 
commissioner of revenue within the last two years; or 
    (6) after demand, has not filed tax returns required by the 
commissioner of revenue. 
    Subd. 4.  [FEES.] The annual fee for a supplier's 
distributor's license is $1,500 $2,500.  
    Subd. 5.  [PROHIBITION.] (a) No distributor, or 
employee eligible to make sales on behalf of a distributor, may 
also be a wholesale distributor of liquor or alcoholic beverages 
or an employee of a wholesale distributor of alcoholic beverages.
    (b) No distributor, distributor's representative, or 
employee authorized to make sales on behalf of a distributor, 
may be involved directly in the operation of lawful gambling 
conducted by an organization. 
    (c) No manufacturer or distributor or person acting as a 
representative, agent, or employee of a manufacturer or 
distributor may provide a lessor of gambling premises any 
compensation, gift, gratuity, premium, or other thing of value. 
    (d) No distributor, distributor's representative, or 
employee of a distributor may participate in any gambling 
activity at any gambling site or premises where gambling 
equipment purchased from that distributor is being used in the 
conduct of lawful gambling. 
    (e) No distributor, distributor's representative, or 
employee of a distributor may alter or modify any gambling 
equipment, except to add a "last ticket sold" prize sticker. 
    Subd. 6.  [REVOCATION AND SUSPENSION.] A license under this 
section may be suspended by the board for a violation of law or 
board rule or for failure to meet the qualifications in 
subdivision 3 at any time or revoked for what the board 
determines to be a pattern of willful violations of law or board 
rule.  A revocation or suspension is a contested case under 
sections 14.57 to 14.69 of the administrative procedure act.  
    Subd. 7.  [CRIMINAL HISTORY.] The board may request the 
assistance of the bureau of criminal apprehension division of 
gambling enforcement in investigating the background of an 
applicant for a distributor's license and may reimburse 
the bureau division of gambling enforcement for the costs 
thereof.  The board has access to all criminal history data 
compiled by the bureau division of gambling enforcement on 
licensees and applicants.  
    Subd. 8.  [EMPLOYEES OF DISTRIBUTORS.] Licensed 
distributors shall provide the board upon request with the names 
and business home addresses of all employees.  Each person 
eligible to conduct sales on behalf of a distributor, employee 
of a distributor, or a person making sales of gambling equipment 
on behalf of a distributor must have in their possession a 
picture identification card approved by the board. 
    Sec. 23.  Minnesota Statutes 1988, section 349.162, is 
amended to read: 
    349.162 [EQUIPMENT REGISTERED.] 
    Subdivision 1.  [STAMP REQUIRED.] A distributor may not 
sell to an organization and an organization may not purchase, 
transfer, furnish, or otherwise provide to a person, 
organization, or distributor, and no person, organization, or 
distributor may purchase, borrow, accept, or acquire from a 
distributor gambling equipment unless the equipment has been 
registered with the board and has a registration stamp affixed.  
The board shall charge a fee of five cents for each stamp.  Each 
stamp must bear a registration number assigned by the board.  A 
distributor is entitled to a refund for unused stamps and 
replacement for stamps which are defective or canceled by the 
distributor. 
    Subd. 2.  [RECORDS REQUIRED.] A distributor must maintain a 
record of all gambling equipment which it sells to 
organizations.  The record must include:  
    (1) the identity of the person or firm from whom the 
equipment was purchased; 
    (2) the registration number of the equipment; 
    (3) the name and address of the organization to which the 
sale was made; and 
    (4) the date of the sale; 
    (5) the name of the person who ordered the equipment; and 
    (6) the name of the person who received the equipment. 
    The invoice for each sale must be retained for at least one 
year two years after the sale is completed and a copy of the 
each invoice is to be delivered to the board in the manner and 
time prescribed by the board.  For purposes of this section, a 
sale is completed when the gambling equipment is physically 
delivered to the purchaser.  
    Each distributor must report monthly to the board, in a 
form the board prescribes, its sales of each type of gambling 
equipment.  Employees of the board division and the division of 
gambling enforcement may inspect the books, records, and other 
documents of a distributor at any reasonable time without notice 
and without a search warrant.  
    Subd. 3.  [EXEMPTION.] For purposes of this section, bingo 
cards intended to be used for more than one game or sheets need 
not be registered stamped.  
    Subd. 4.  [PROHIBITION.] (a) No person other than a 
licensed organization or a licensed distributor may possess 
unaffixed registration stamps issued by the board.  
    (b) Unless otherwise provided in this chapter, no person 
may possess gambling equipment that has not been registered with 
the board.  
    Subd. 5.  [SALES FROM FACILITIES.] (a) All gambling 
equipment purchased or possessed by a licensed distributor for 
resale in Minnesota must, prior to its the equipment's resale, 
be unloaded into a sales or storage facility located in 
Minnesota which the distributor owns or leases; and which has 
been registered, in advance and in writing, with the division of 
gambling enforcement as a sales or storage facility of the 
distributor's.  All unregistered gambling equipment and all 
unaffixed registration stamps owned by, or in the possession of, 
a licensed distributor in the state of Minnesota shall be stored 
at a sales or storage facility which has been registered with 
the division of gambling enforcement.  No gambling equipment may 
be moved from the facility unless the gambling equipment has 
been first registered with the board. 
    (b) All sales and storage facilities owned, leased, used, 
or operated by a licensed distributor may be entered upon and 
inspected by the employees of the division of gambling 
enforcement or the director's authorized representatives during 
reasonable and regular business hours.  Obstruction of, or 
failure to permit, entry and inspection is cause for revocation 
or suspension of a distributor's licenses and permits issued 
under this chapter.  
    (c) Unregistered gambling equipment and unaffixed 
registration stamps found at any location in Minnesota other 
than a registered sales or storage facility are contraband under 
section 349.2125.  
    Sec. 24.  Minnesota Statutes 1988, section 349.163, is 
amended to read: 
    349.163 [REGISTRATION LICENSING OF MANUFACTURERS.] 
    Subdivision 1.  [REGISTRATION LICENSE.] No manufacturer of 
gambling equipment may sell any gambling equipment to any person 
unless the manufacturer has registered with the board and has 
been issued a certificate of registration license by the board 
under objective criteria prescribed by the board by rule. 
    Subd. 2.  [CERTIFICATE LICENSE; FEE.] A certificate license 
under this section is valid for one year.  The annual fee for 
registration the license is $500 $2,500. 
    Subd. 3.  [PROHIBITED SALES.] A manufacturer may not sell 
gambling equipment to any person not licensed as a distributor 
unless the manufacturer is also a licensed distributor. 
    Subd. 4.  [INSPECTION OF MANUFACTURERS.] Employees of the 
division and the division of gambling enforcement may inspect 
the books, records, inventory, and manufacturing operations of a 
licensed manufacturer without notice during the normal business 
hours of the manufacturer.  
    Sec. 25.  Minnesota Statutes 1988, section 349.164, is 
amended to read: 
    349.164 [BINGO HALL LICENSES.] 
    Subdivision 1.  [LICENSE REQUIRED.] No person may lease a 
facility to more than one licensed individual, corporation, 
partnership, or organization to conduct bingo without having 
obtained a bingo hall license under this section, unless 
the person lessor is a licensed organization. 
    Subd. 2.  [LICENSE APPLICATION.] The board may issue a 
bingo hall license to persons who meet the qualifications of 
this section if the board determines that a license is 
consistent with the purpose of sections 349.11 to 349.22.  
Applications must be on a form the board prescribes.  The board 
may not issue or renew a bingo hall license unless the 
conditions of section 349.213, subdivision 2, have been 
satisfied.  
    Subd. 3.  [QUALIFICATIONS.] A license may not be issued 
under this section to a person, or to a corporation, firm, or 
partnership which has as an officer, director, or other person 
in a supervisory or management position, who:  
    (1) has been convicted of a felony in a state or federal 
court within the past five years or who has a felony charge 
pending; or 
    (2) has ever been convicted in a state or federal court of 
a gambling-related offense within ten years of the date of 
license application felony involving fraud or misrepresentation 
or a crime involving gambling; or 
    (3) owes delinquent taxes in excess of $500 as defined in 
section 270.72. 
    Subd. 4.  [FEES.] The annual fee for a bingo hall license 
is $250 $2,500. 
    Subd. 5.  [CRIMINAL HISTORY.] The board may request the 
assistance of the bureau of criminal apprehension division of 
gambling enforcement in investigating the background of an 
applicant for a bingo hall license and may reimburse the bureau 
division of gambling enforcement for the costs.  The board has 
access to all criminal history data compiled by the bureau of 
criminal apprehension and the division of gambling enforcement 
on licensees and applicants.  
    Subd. 6.  [PROHIBITION.] No bingo hall licensee may also be 
a licensed distributor or registered licensed manufacturer or 
affiliate of the distributor or manufacturer under section 
349.161 or 349.163 or a wholesale distributor of alcoholic 
beverages. 
    Subd. 7.  [RESTRICTIONS.] A bingo hall licensee or 
affiliate of the licensee may not: 
    (1) provide any staff to conduct bingo or any other form of 
lawful gambling during the bingo occasion; 
    (2) acquire, provide storage or inventory control, or 
report the use of any gambling equipment used by an organization 
that conducts bingo on the premises; 
    (3) provide accounting services to an organization 
conducting bingo on the premises; 
    (4) make any expenditures of gross receipts of an 
organization from lawful gambling; or 
    (5) charge any fee to a person at a bingo occasion, without 
which the person could not play a bingo game.  
    Subd. 8.  [LEASES.] All of the remuneration to be received 
from the organization for the conduct of lawful gambling must be 
stated in the lease.  No amount may be paid by the organization 
or received by the operator of the bingo hall based on the 
number of participants attending the bingo occasion or on the 
gross receipts or profit received by the organization. 
    Subd. 9.  [REVOCATION AND SUSPENSION.] A license under this 
section may be suspended by the board for a violation of law or 
board rule or for failure to meet the qualifications in 
subdivision 3 at any time or revoked for what the board 
determines to be a pattern of willful violations of law or board 
rule.  A revocation or suspension is a contested case under 
sections 14.57 to 14.69 of the Administrative Procedure Act.  
    Sec. 26.  Minnesota Statutes 1988, section 349.17, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [DISTRIBUTOR LICENSE EXEMPTION FOR LESSOR.] As 
part of a lease agreement on a leased bingo premises, the lessor 
may furnish bingo equipment without being a licensed 
distributor.  For purposes of this section, "furnish" does not 
include the right to sell or offer for sale.  
    Sec. 27.  Minnesota Statutes 1988, section 349.18, 
subdivision 1, is amended to read: 
    Subdivision 1.  [LEASE OR OWNERSHIP REQUIRED.] An 
organization may conduct lawful gambling only on premises it 
owns or leases.  Leases must be for a period of at least one 
year and must be in writing.  Copies of all leases must be made 
available to employees of the board division and the division of 
gambling enforcement on request.  A lease may not provide 
for rental payments based on a percentage of determined directly 
or indirectly by the receipts or profits from lawful gambling.  
The board may prescribe by rule limits on the amount of rent 
which an organization may pay to a lessor for premises leased 
for lawful gambling.  Any rule adopted by the board limiting the 
amount of rent to be paid may only be effective for leases 
entered into, or renewed, after the effective date of the rule. 
    No person, distributor, manufacturer, lessor, or 
organization other than the licensed organization leasing the 
space may conduct any activity in a leased space during times 
when lawful gambling is being conducted in the space. 
    Sec. 28.  Minnesota Statutes 1988, section 349.18, is 
amended by adding a subdivision to read:  
    Subd. 1a.  [STORAGE OF GAMBLING EQUIPMENT.] (a) Gambling 
equipment owned by or in the possession of a licensed 
organization must be kept at a licensed gambling premises owned 
or operated by the organization, or at other storage sites 
within the state that the organization has notified the board 
are being used as gambling equipment storage sites.  At each 
storage site or licensed premises, the organization must have 
the invoices or true and correct copies of the invoices for the 
purchase of all gambling equipment at the site or premises. 
    (b) Gambling equipment, other than devices for selecting 
bingo numbers, owned by a licensed organization must be kept 
separate from gambling equipment owned by other persons, 
organizations, distributors, or manufacturers consistent with 
the organization's internal controls filed with the board. 
    (c) Gambling equipment kept in violation of this 
subdivision is contraband under section 349.2125.  
    (d) A licensed organization may transport gambling 
equipment it owns or possesses between approved gambling 
equipment storage sites and to and from licensed distributors. 
    Sec. 29.  Minnesota Statutes 1988, section 349.19, 
subdivision 2, is amended to read: 
    Subd. 2.  [ACCOUNTS.] Gross receipts from lawful gambling 
by each organization at each licensed premises must be 
segregated from all other revenues of the conducting 
organization and placed in a separate account.  The name and 
address of the bank and the account number for that separate 
account for that licensed premises, and the names of 
organization members authorized as signatories on the separate 
account must be provided to the board when the application is 
submitted.  Changes in the information must be submitted to the 
board at least ten days before the change is made.  Gambling 
receipts must be deposited into the gambling bank account within 
one business day of completion of the bingo occasion, deal, or 
game from which they are received, and deposit records must be 
sufficient to allow determination of deposits made from each 
bingo occasion, deal, or game.  The person who accounts for 
gambling gross receipts and profits may not be the same person 
who accounts for other revenues of the organization. 
    Sec. 30.  Minnesota Statutes 1988, section 349.19, 
subdivision 3, is amended to read: 
    Subd. 3.  [EXPENDITURES.] All expenditures of gross profits 
from lawful gambling must be itemized as to payee, purpose, 
amount, and date of payment.  Authorization of the expenditures 
must be recorded in the regular meeting minutes of the licensed 
organization.  
    Sec. 31.  Minnesota Statutes 1988, section 349.19, 
subdivision 6, is amended to read: 
    Subd. 6.  [PRESERVATION OF RECORDS.] The board may require 
that records required to be kept by this section must be 
preserved by a licensed organization for at least two years and 
may be inspected by employees of the board division and the 
division of gambling enforcement at any reasonable time without 
notice or a search warrant. 
    Sec. 32.  Minnesota Statutes 1988, section 349.19, is 
amended by adding a subdivision to read: 
    Subd. 8.  [TERMINATION PLAN.] Upon termination of a license 
for any reason, a licensed organization must notify the board in 
writing within 15 calendar days of the license termination date 
of its plan for disposal of registered gambling equipment and 
distribution of remaining gambling proceeds.  Before 
implementation, a plan must be approved by the board.  The board 
may accept or reject a plan and order submission of a new plan 
or amend a proposed plan.  The board may specify a time for 
submission of new or amended plans or for completion of an 
accepted plan. 
    Sec. 33.  Minnesota Statutes 1988, section 349.19, is 
amended by adding a subdivision to read: 
    Subd. 9.  [ANNUAL AUDIT; FILING REQUIREMENT.] An 
organization licensed under this chapter must have an annual 
financial audit of its lawful gambling activities and funds 
performed by an independent auditor licensed by the state of 
Minnesota or performed by an independent accountant who has had 
prior approval of the board.  A complete, true, and correct copy 
of the audit report must be filed with the board upon completion 
of the audit. 
    Sec. 34.  Minnesota Statutes 1988, section 349.20, is 
amended to read: 
    349.20 [MANAGERS.] 
    (a) All lawful gambling conducted by a licensed 
organization must be under the supervision of one or more 
gambling managers. A gambling manager designated by an 
organization to supervise a gambling occasion is responsible for 
the gross receipts from the occasion and for its conduct in 
compliance with all laws and rules.  An organization may 
designate a different person to act as manager for each type of 
lawful gambling conducted.  Each person designated as a gambling 
manager must give a fidelity bond in the sum of $10,000 in favor 
of the organization conditioned on the faithful performance of 
the manager's duties, and the terms of the bond must provide 
that notice be given to the board in writing not less than 30 
days before its cancellation. 
    (b) A person may not act as a gambling manager for more 
than one organization.  
    (c) An organization may not conduct lawful gambling without 
having a gambling manager.  The board must be notified in 
writing of a change in gambling managers.  Notification must be 
made within ten days of the date the gambling manager assumes 
the manager's duties. 
    Sec. 35.  Minnesota Statutes 1988, section 349.21, is 
amended to read: 
    349.21 [COMPENSATION.] 
    Subdivision 1.  [TO WHOM PAID.] Compensation to persons who 
participate in the conduct of lawful gambling may be paid only 
to active members of the conducting organization or its 
auxiliary, or the spouse or surviving spouse of an active 
member, except that nonmanagement assistants who are not active 
members or spouses may be hired to assist in the conduct of 
lawful gambling in nonmanagement positions if approved by a 
majority of the organization's members.  
    Subd. 2.  [AMOUNTS PAID.] The amounts of compensation which 
may be paid under this section may be provided for in a schedule 
of compensation adopted by the board by rule.  In adopting a 
schedule the board must consider the nature of the participation 
and the types of lawful gambling participated in. 
    Subd. 3.  [COMPENSATION RECORDS.] An organization paying 
compensation to persons for the conduct of lawful gambling must 
maintain a compensation record.  The record must be retained for 
at least two years after the month in which the compensation is 
paid.  The record must be an itemization of each payment made to 
each recipient of compensation, and must include the amount of 
compensation paid and the full name, home address, and 
membership status of each recipient. 
    Subd. 4.  [COMPENSATION PAID BY CHECK.] Compensation paid 
by an organization in connection with lawful gambling must be in 
the form of a check drawn on the organization's gambling 
account, as specified in section 349.19.  
    Subd. 5.  [PENALTY.] (a) An organization that makes payment 
of compensation, or causes compensation to be made, which 
violates the provisions of subdivision 4 shall be assessed a 
civil penalty not to exceed $1,000 for each violation of 
subdivision 4.  A second violation within 12 months of 
notification by the board to the organization of the first 
violation shall result in suspension of the organization's 
gambling license for a period of three months, in addition to 
any civil penalty assessed.  A third violation within 12 months 
of the board's notification to the organization of the second 
violation shall result in revocation of the organization's 
gambling license in addition to any civil penalty assessed. 
    (b) Upon each violation the director shall notify the 
organization in writing of its violation and of the penalties 
under this subdivision for future violations.  Notification is 
effective upon mailing.  
    (c) For purposes of this subdivision, a violation consists 
of a payroll period or compensation date that includes payments 
made in violation of subdivision 4. 
    Subd. 6.  [PERCENTAGE OF GROSS PROFIT PAID.] A licensed 
organization may pay a percentage of the gross receipts profit 
from raffle ticket sales to a nonprofit organization which sells 
tickets for the licensed organization. 
    Subd. 7.  [DIRECT PAYMENT.] All compensation must be paid 
directly from the organization to the employees of the 
organization. 
    Sec. 36.  Minnesota Statutes 1988, section 349.2121, 
subdivision 2, is amended to read: 
    Subd. 2.  [RECORDS.] A distributor shall keep at each 
licensed place of business complete and accurate records for 
that place of business, including itemized invoices of pull-tabs 
and tipboards held, purchased, manufactured, or brought in or 
caused to be brought in from without this state, and of all 
sales of pull-tabs and tipboards.  The records must show the 
names and addresses of purchasers, the inventory at the close of 
each period for which a return is required of all pull-tab and 
tipboard deals on hand, and other pertinent papers and documents 
relating to the purchase, sale, or disposition of pull-tab and 
tipboard deals.  Books, records, and other papers and documents 
required by this section must be kept for a period of at least 
3-1/2 years after the date of the documents, or the date of the 
entries appearing in the records, unless the commissioner of 
revenue authorizes in writing their destruction or disposal at 
an earlier date.  At any time during usual business hours, the 
commissioner of revenue, executive secretary of the charitable 
gambling control board director of gambling enforcement, or any 
of their duly authorized agents or employees, may enter a place 
of business of a distributor, charitable or organization, or any 
site from which pull-tabs or tipboards or other gambling 
equipment are being sold, or any site at which lawful gambling 
is being conducted, and inspect the premises and the records 
required to be kept under this section to determine whether or 
not all the provisions of this section are being fully complied 
with.  If the commissioner of revenue, executive 
secretary director of gambling enforcement, or their duly 
authorized agents or employees are denied free access to or are 
hindered or interfered with in making an inspection of the 
distributor's place of business, the permit of the distributor 
may be revoked by the commissioner, and the license of the 
distributor may be revoked by the charitable gambling control 
board. 
    Sec. 37.  Minnesota Statutes 1988, section 349.2121, 
subdivision 3, is amended to read: 
    Subd. 3.  [SUSPENSION, REVOCATION.] (a) The commissioner of 
revenue, after giving notice and hearing, may for reasonable 
cause revoke or suspend a permit held by a distributor.  A 
notice must be sent to the distributor at least 30 15 days 
before the hearing and give notice of the time and place of the 
hearing, proposed suspension or revocation is to take effect.  
The notice must give the reason for the proposed suspension or 
revocation, and must require the distributor to show cause why 
the proposed action should not be taken.  The notice may be 
served personally or by mail in the manner prescribed for 
service of notice of a deficiency.  
    (b) The notice must inform the distributor of the right to 
a contested case hearing.  If a request in writing is made to 
the commissioner of revenue within 14 days of the date of the 
notice, the commissioner shall defer action on the suspension or 
revocation and shall refer the case to the office of 
administrative hearings for the scheduling of a contested case 
hearing.  The distributor must be served with 20 days' notice in 
writing specifying the time and place of the hearing and the 
allegations against the distributor. 
    (c) The commissioner of revenue shall issue a final order 
following receipt of the recommendation of the administrative 
law judge. 
    (d) Under section 271.06, subdivision 1, an appeal to the 
tax court may be taken from the commissioner's order of 
revocation or suspension.  The commissioner of revenue may not 
issue a new permit after revocation except upon application 
accompanied by reasonable evidence of the intention of the 
applicant to comply with all applicable laws and rules.  
    Sec. 38.  Minnesota Statutes 1988, section 349.2121, 
subdivision 10, is amended to read: 
    Subd. 10.  [UNTAXED PULL-TABS OR TIPBOARDS GAMBLING 
EQUIPMENT.] It is a gross misdemeanor for any person to 
possess pull-tabs or tipboards gambling equipment for resale in 
this state that have has not been registered with the board, for 
which a registration stamp has not been affixed to the flare, 
and upon which the taxes imposed by section 349.212, subdivision 
4, or chapter 297A have not been paid.  The executive secretary 
of the charitable gambling control board director of gambling 
enforcement or the commissioner of revenue or their designated 
inspectors and employees may seize in the name of the state of 
Minnesota any unregistered or untaxed pull-tabs or tipboards 
gambling equipment. 
    Sec. 39.  Minnesota Statutes 1988, section 349.2122, is 
amended to read: 
    349.2122 [MANUFACTURERS; REPORTS TO THE COMMISSIONER OF 
REVENUE; PENALTY.] 
    A manufacturer registered licensed with the board who sells 
pull-tabs and tipboards to a distributor licensed by the board 
must file with the commissioner of revenue, on a form prescribed 
by the commissioner, a report of pull-tabs and tipboards sold to 
licensed distributors.  The report must be filed monthly on or 
before the 25th day of the month succeeding the month in which 
the sale was made.  The commissioner of revenue may inspect the 
books, records, and inventory of a licensed manufacturer without 
notice during the normal business hours of the manufacturer.  
Any person violating this section shall be guilty of a 
misdemeanor. 
    Sec. 40.  Minnesota Statutes 1988, section 349.2125, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CONTRABAND DEFINED.] The following are 
contraband: 
    (1) all pull-tab or tipboard deals that do not have stamps 
affixed to them as provided in section 349.162; 
    (2) all pull-tab or tipboard deals in the possession of any 
unlicensed person, firm, or organization, whether stamped or 
unstamped; 
    (3) any container used for the storage and display of any 
contraband pull-tab or tipboard deals as defined in clauses (1) 
and (2); 
    (4) all currency, checks, and other things of value used 
for pull-tab or tipboard transactions not expressly permitted 
under this chapter, and any cash drawer, cash register, or any 
other container used for illegal pull-tab or tipboard 
transactions including its contents; and 
    (5) any device including, but not limited to, motor 
vehicles, trailers, snowmobiles, airplanes, and boats used, with 
the knowledge of the owner or of a person operating with the 
consent of the owner, for the storage or transportation of more 
than five pull-tab or tipboard deals that are contraband under 
this subdivision.  When pull-tabs and tipboards are being 
transported in the course of interstate commerce, or from one 
distributor to another, the pull-tab and tipboard deals are not 
contraband, notwithstanding the provisions of clause (1); 
    (6) any unaffixed registration stamps except as provided in 
section 349.162, subdivision 4; 
    (7) any prize used or offered in a game utilizing 
contraband as defined in this subdivision; 
    (8) any altered, modified, or counterfeit pull-tab or 
tipboard ticket; 
    (9) any unregistered gambling equipment except as permitted 
by this chapter; and 
    (10) any gambling equipment kept in violation of section 
349.18. 
    Sec. 41.  Minnesota Statutes 1988, section 349.2125, 
subdivision 2, is amended to read: 
    Subd. 2.  [SEIZURE.] Pull-tabs or tipboards or other 
Property made contraband by subdivision 1 may be seized by the 
commissioner of revenue or the executive secretary of the 
charitable gambling control board director of gambling 
enforcement or their authorized agents or by any sheriff or 
other police officer, hereinafter referred to as the seizing 
authority, with or without process, and shall be subject to 
forfeiture as provided in subdivisions 3 and 4. 
    Sec. 42.  Minnesota Statutes 1988, section 349.2125, 
subdivision 3, is amended to read: 
    Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
DISPOSITION OF SEIZED PROPERTY.] Within two days after the 
seizure of any alleged contraband, the person making the seizure 
shall deliver an inventory of the property seized to the person 
from whom the property was seized, if known, and file a copy 
with the commissioner of revenue or the executive secretary of 
the charitable gambling control board director of gambling 
enforcement.  Within ten days after the date of service of the 
inventory, the person from whom the property was seized or any 
person claiming an interest in the property may file with the 
seizing authority a demand for judicial determination of whether 
the property was lawfully subject to seizure and forfeiture.  
Within 30 days after the date of filing of the demand, the 
seizing authority must bring an action in the district court of 
the county where seizure was made to determine the issue of 
forfeiture.  The action must be brought in the name of the state 
and be prosecuted by the county attorney or by the attorney 
general.  The court shall hear the action without a jury and 
determine the issues of fact and laws involved.  When a judgment 
of forfeiture is entered, the seizing authority may, unless the 
judgment is stayed pending an appeal, either (1) cause the 
forfeited property to be destroyed; or (2) cause it to be sold 
at a public auction as provided by law.  
     If demand for judicial determination is made and no action 
is commenced as provided in this subdivision, the property must 
be released by the seizing authority and delivered to the person 
entitled to it.  If no demand is made, the property seized is 
considered forfeited to the state by operation of law and may be 
disposed of by the seizing authority as provided where there has 
been a judgment of forfeiture.  When the seizing authority is 
satisfied that a person from whom property is seized was acting 
in good faith and without intent to evade the tax imposed by 
section 349.2121, subdivision 4, the seizing authority shall 
release the property seized without further legal proceedings.  
    Sec. 43.  Minnesota Statutes 1988, section 349.2127, 
subdivision 2, is amended to read: 
    Subd. 2.  [PROHIBITION AGAINST POSSESSION.] (a) No person, 
other than a licensed distributor, shall sell, offer for sale, 
or have in possession with intent to sell or offer for sale, a 
pull-tab or tipboard deal not stamped in accordance with the 
provisions of this chapter.  
    (b) No person other than a licensed distributor or licensed 
or exempt organization under section 349.214 may possess with 
the intent to sell or offer to sell gambling equipment, except 
(1) equipment exempt from taxation, or (2) equipment put into 
play by a licensed or exempt organization. 
    (c) No person, firm, or organization may possess altered, 
modified, or counterfeit pull-tabs or tipboard tickets with 
intent to sell, redeem, or exchange them. 
    Sec. 44.  Minnesota Statutes 1988, section 349.213, 
subdivision 1, is amended to read: 
    Subdivision 1.  [LOCAL REGULATION.] A statutory or home 
rule city or county has the authority to adopt more stringent 
regulation of any form of lawful gambling within its 
jurisdiction, including the prohibition of any form of lawful 
gambling, and may require a permit for the conduct of gambling 
exempt from licensing under section 349.214.  The fee for a 
permit issued under this subdivision may not exceed $100.  The 
authority granted by this subdivision does not include the 
authority to require a license or permit to conduct gambling by 
organizations or sales by distributors licensed by the board.  
The authority granted by this subdivision does not include the 
authority to require an organization to make specific 
expenditures of more than ten percent from its net profits 
derived from lawful gambling.  For the purposes of this 
subdivision, net profits are profits less amounts expended for 
allowable expenses.  A statutory or home rule charter city or a 
county may not require an organization conducting lawful 
gambling within its jurisdiction to make an expenditure to the 
city or county as a condition to operate within that city or 
county, except as authorized under section 349.16, subdivision 
4, or section 349.212.  
    A statutory or home rule city or county may by ordinance 
require that a licensed organization conducting lawful gambling 
within its jurisdiction expend all or a portion of its 
expenditures for lawful purposes on lawful purposes conducted or 
located within the city's or county's trade area.  Such an 
ordinance must define the city's or county's trade area and must 
specify the percentage of lawful purpose expenditures which must 
be expended within the trade area. 
    Sec. 45.  Minnesota Statutes 1988, section 349.213, 
subdivision 2, is amended to read: 
    Subd. 2.  [LOCAL APPROVAL.] Before issuing or renewing an 
organization license or bingo hall license, the board must 
notify the city council of the statutory or home rule city in 
which the organization's premises are or the bingo hall is 
located or, if the premises are or hall is located outside a 
city, by the county board of the county and the town board of 
the town where the premises are or hall is located.  The board 
may require organizations to notify the appropriate local 
government at the time of application.  This required 
notification is sufficient to constitute the notice required by 
this subdivision.  If the city council or county board adopts a 
resolution disapproving the license and so informs the board 
within 60 days of receiving notice of the license application, 
the license may not be issued or renewed. 
    Sec. 46.  Minnesota Statutes 1988, section 349.214, 
subdivision 2, is amended to read: 
    Subd. 2.  [LAWFUL GAMBLING.] (a) Raffles may be conducted 
by an organization as defined in section 349.12, subdivision 12, 
without complying with sections 349.11 to 349.14 and 349.151 to 
349.213 if the value of all raffle prizes awarded by the 
organization in a calendar year does not exceed $750.  
    (b) Lawful gambling may be conducted by an organization as 
defined in section 349.12, subdivision 12, without complying 
with sections 349.11 to 349.14 and 349.151 to 349.16; 349.171 to 
349.21; and 349.212 if: 
    (1) the organization conducts lawful gambling on five or 
fewer days in a calendar year; 
    (2) the organization does not award more than $50,000 in 
prizes for lawful gambling in a calendar year; 
    (3) the organization pays a fee of $25 to the board, 
notifies the board in writing not less than 30 days before each 
lawful gambling occasion of the date and location of the 
occasion, or 60 days for an occasion held in the case of a city 
of the first class, the types of lawful gambling to be 
conducted, the prizes to be awarded, and receives an exemption 
identification number; 
    (4) the organization notifies the local government unit 30 
days before the lawful gambling occasion, or 60 days for an 
occasion held in a city of the first class; 
    (5) the organization purchases all gambling equipment and 
supplies from a licensed distributor; and 
    (6) the organization reports to the board, on a single page 
form prescribed by the board, within 30 days of each gambling 
occasion, the gross receipts, prizes, expenses, expenditures of 
net profits from the occasion, and the identification of the 
licensed distributor from whom all gambling equipment was 
purchased.  
    (c) If the organization fails to file a timely report as 
required by paragraph (b), clause (3) or (6), a $250 penalty is 
imposed on the organization.  Failure to file a timely report 
does not disqualify the organization as exempt under this 
paragraph if a report is subsequently filed and the penalty paid.
    (d) Merchandise prizes must be valued at their fair market 
value. 
    (e) Unused pull-tab and tipboard deals must be returned to 
the distributor within seven working days after the end of the 
lawful gambling occasion.  The distributor must accept and pay a 
refund for all returns of unopened and undamaged deals returned 
under this paragraph. 
    Sec. 47.  Minnesota Statutes 1988, section 349.22, 
subdivision 1, is amended to read: 
    Subdivision 1.  [GROSS MISDEMEANOR.] A person who in any 
manner violates sections 349.11 to 349.214 349.23 to evade the a 
tax imposed by a provision of this chapter, or who aids and 
abets evasion of the a tax, or hinders or interferes with a 
seizing authority when a seizure is made as provided by section 
349.2125, is guilty of a gross misdemeanor.  
    Sec. 48.  Minnesota Statutes 1988, section 349.22, 
subdivision 3, is amended to read: 
    Subd. 3.  [FELONY.] (a) A person violating section 
349.2127, subdivision 1 or 3, is guilty of a felony.  
    (b) A person violating section 349.2127, subdivisions 2 and 
subdivision 2 or 4, by possessing, receiving, or transporting 
more than ten pull-tab or tipboard deals not stamped in 
accordance with this chapter, or a combination of more than ten 
deals of pull-tabs or tipboards, is guilty of a felony.  
    Sec. 49.  Laws 1989, chapter 184, section 7, is amended by 
adding a subdivision to read:  
    Subd. 4.  [DISCLOSURE TO GAMBLING CONTROL BOARD.] The 
commissioner may disclose return information for the purpose of 
and to the extent necessary to administer sections 349.161, 
subdivision 3, and 349.164, subdivision 3.  
    Sec. 50.  [GAMBLING CONTROL BOARD.] 
    The terms of all members serving on the gambling control 
board on June 30, 1989, expire on that date.  
    Sec. 51.  [INSTRUCTION TO REVISOR.] 
    In the next edition of Minnesota Statutes, the revisor of 
statutes shall alphabetize the definitions in Minnesota 
Statutes, section 349.12, and make all appropriate 
cross-reference changes in Minnesota Statutes and Minnesota 
Rules.  
    Sec. 52.  [REPEALER.] 
    Minnesota Statutes 1988, sections 349.151, subdivisions 3 
and 5; and 349.171, are repealed.  Minnesota Rules, part 
7860.0030, is repealed.  
    Sec. 53.  [EFFECTIVE DATE.] 
    Sections 1 to 26 and 28 to 52 are effective July 1, 1989. 
Section 27 is effective July 1, 1989, except that the provisions 
in section 27 relating to rules adopted by the gambling control 
board apply retroactively to November 1, 1988. 

                               ARTICLE 3 

                             STATE LOTTERY 
    Section 1.  [349A.01] [DEFINITIONS.] 
    Subdivision 1.  [TERMS DEFINED.] For the purposes of this 
chapter the terms defined in this section have the meanings 
given them. 
    Subd. 2.  [BOARD.] "Board" is the state lottery board.  
    Subd. 3.  [COMMISSIONER.] "Commissioner" is the 
commissioner of gaming. 
    Subd. 4.  [DEPARTMENT.] "Department" is the department of 
gaming. 
    Subd. 5.  [DIRECTOR.] "Director" is the director of the 
state lottery division. 
    Subd. 6.  [DIVISION.] "Division" is the division of the 
state lottery in the department of gaming. 
    Subd. 7.  [GROSS RECEIPTS.] "Gross receipts" means all 
money received from the sale of lottery tickets less amounts 
transmitted to the commissioner of revenue under section 
297A.259. 
    Subd. 8.  [GROSS REVENUE.] "Gross revenue" means gross 
receipts from the sale of lottery tickets, fees, or other money 
received by the director, and interest earned on money in the 
lottery fund.  
    Subd. 9.  [LOTTERY.] "Lottery" is the state lottery 
operated by the state lottery division of the department. 
    Subd. 10.  [LOTTERY PROCUREMENT CONTRACT.] "Lottery 
procurement contract" means a contract to provide lottery 
products, computer hardware and software used to monitor sales 
of lottery tickets, and lottery tickets.  "Lottery procurement 
contract" does not include a contract to provide an annuity or 
prize payment agreement or materials, supplies, equipment, or 
services common to the ordinary operation of a state agency. 
    Subd. 11.  [LOTTERY RETAILER.] "Lottery retailer" means a 
person with whom the director has contracted to sell lottery 
tickets to the public.  
    Subd. 12.  [LOTTERY TICKET OR TICKET.] "Lottery ticket" or 
"ticket" means any tangible evidence issued by the lottery to 
prove participation in a lottery game.  
    Subd. 13.  [LOTTERY VENDOR OR VENDOR.] "Lottery vendor" or 
"vendor" means a person who has entered into a contract to 
provide equipment, supplies, or services for the division.  A 
lottery vendor does not include a lottery retailer. 
    Sec. 2.  [349A.02] [STATE LOTTERY DIVISION.] 
    Subdivision 1.  [DIRECTOR.] A state lottery division is 
established in the department of gaming, under the supervision 
and control of the director of the state lottery appointed by 
the governor with the advice and consent of the senate.  The 
governor shall appoint the first director from a list of at 
least three persons recommended to the governor by the 
governor's commission on the lottery which was appointed by the 
governor on December 8, 1988.  The director must be qualified by 
experience and training to supervise the lottery.  The director 
serves in the unclassified service.  
    Subd. 2.  [REMOVAL.] (a) The director may be removed from 
that position only by the governor after notice and a hearing if 
requested, only for: 
    (1) violating section 11; 
    (2) malfeasance, nonfeasance, or misfeasance as defined in 
section 351.14, subdivisions 2, 3, and 4; or 
    (3) failure to perform adequately the duties of the 
director.  
    (b) For the purposes of this subdivision, adequate 
performance of the director may be determined by:  
    (1) gross revenue from the sale of lottery tickets; 
    (2) efficiency of the administration of lottery operations; 
    (3) public confidence in the integrity of the lottery; and 
    (4) compliance with advertising requirements in section 9. 
    A hearing under this subdivision must be conducted by the 
governor.  
    Subd. 3.  [POWERS AND DUTIES.] In operating the lottery the 
director shall exercise the following powers and duties: 
    (1) adopt rules and game procedures; 
    (2) issue lottery retailer contracts and rule on appeals of 
decisions relating to those contracts; 
    (3) enter into lottery procurement contracts for the 
provision of goods and services to the lottery; 
    (4) employ personnel as are required to operate the 
lottery; 
    (5) enter into written agreements with one or more states 
for the operation, marketing, and promotion of a joint lottery; 
    (6) adopt and publish advertising and promotional materials 
consistent with section 9; and 
    (7) take all necessary steps to ensure the integrity of, 
and public confidence in, the state lottery. 
    Subd. 4.  [EMPLOYEES; CLASSIFICATION.] The director may 
appoint other personnel as are necessary to operate the state 
lottery.  Employees of the division who are not professional 
employees as defined in section 179A.03, subdivision 13, and 
employees whose primary responsibilities are in data processing 
and accounting, are in the classified service.  All other 
employees of the division are in the unclassified service.  At 
least one position in the division must be an attorney position 
and the director must employ in that position an attorney to 
perform legal services for the division.  
    Subd. 5.  [COMPENSATION.] The compensation of employees in 
the division is as provided in chapter 43A.  The commissioner of 
employee relations may, at the request of the director, develop 
and implement a plan for making incentive payments to employees 
of the division whose primary responsibilities are in marketing. 
    Subd. 6.  [EMPLOYEES; BACKGROUND CHECKS.] The director 
shall conduct background checks, or request the director of 
gambling enforcement to conduct background checks, on all 
prospective employees who are finalists, and shall require that 
all employees of the division be fingerprinted.  No person may 
be employed by the division who has been convicted of a felony 
or a crime involving fraud or misrepresentation within five 
years of starting employment with the division, or has ever been 
convicted of a gambling-related offense.  The director has 
access to all criminal history data compiled by the the division 
of gambling enforcement on employees and prospective employees 
of the lottery.  The director may employ necessary persons 
pending the completion of a background check. 
    Subd. 7.  [ASSISTANCE.] (a) The director may request any 
other department or agency of the state, including the division 
of gambling enforcement, to provide reasonable assistance to the 
director in carrying out the director's duties.  All provision 
of services to the director from another state agency, must be 
by agreement made between the director and the agency.  An 
agreement must include provisions specifying the duration of the 
services, the assignment of personnel of other agencies to 
provide the services, the determination of the cost of the 
services, and the transfer, from the lottery operations account 
to the agency, of funds sufficient to pay the costs of the 
services. 
     (b) The director may enter into agreements with the 
commissioner of finance for the purpose of making payroll and 
other financial transactions.  
    Subd. 8.  [ATTORNEY GENERAL.] The attorney general is the 
attorney for the division.  
    Sec. 3.  [349A.03] [STATE LOTTERY BOARD.] 
    Subdivision 1.  [BOARD CREATED.] There is created within 
the division a state lottery board.  The board consists of six 
members appointed by the governor plus the commissioner as a 
voting member.  Not more than three of the members appointed by 
the governor under this subdivision may belong to the same 
political party and at least three members must reside outside 
the seven-county metropolitan area.  The terms of office, 
removal from office, and compensation of members of the board, 
other than the commissioner, are as provided in section 15.059 
except the board does not expire as provided under section 
15.059, subdivision 5.  The members of the board shall select 
the chair of the board, who shall not be the commissioner.  
    Subd. 2.  [BOARD DUTIES.] The board has the following 
duties: 
    (1) to advise the director on all aspects of the lottery; 
    (2) to review and comment on rules and game procedures 
adopted by the director; 
    (3) review and comment on lottery procurement contracts; 
    (4) review and comment on agreements between the director 
and one or more other lotteries relating to a joint lottery; 
    (5) to review and comment on advertising promulgated by the 
director at least quarterly to ensure that all advertising is 
consistent with the dignity of the state and with section 9; and 
    (6) to approve additional compensation for the director 
under subdivision 3. 
    Subd. 3.  [DIRECTOR; ADDITIONAL COMPENSATION.] The board 
shall adopt objective criteria for evaluating the performance of 
the director.  The criteria must include, but is not limited to, 
the performance factors in section 2, subdivision 2, paragraph 
(b), clauses (1) to (4).  The board may approve, by majority 
vote of all members, compensation for the director in addition 
to the compensation provided under section 15A.081, subdivision 
1, based on the director's performance in office as evaluated 
according to the board's criteria.  The additional compensation 
shall be paid from the lottery operations account.  The board 
may not approve additional compensation under this subdivision 
more often than once in a 12-month period. 
    Sec. 4.  [349A.04] [LOTTERY GAME PROCEDURES.] 
    The director may adopt game procedures governing the 
following elements of the lottery: 
    (1) lottery games; 
    (2) ticket prices; 
    (3) number and size of prizes; 
    (4) methods of selecting winning tickets; and 
    (5) frequency and method of drawings. 
    The adoption of lottery game procedures is not subject to 
chapter 14.  Before adopting a lottery game procedure, the 
director shall submit the procedure to the board for its review 
and comment. 
    Sec. 5.  [349A.05] [RULES.] 
    The director may adopt rules, including emergency rules, 
under chapter 14 governing the following elements of the lottery:
    (1) the number and types of lottery retailers' locations; 
    (2) qualifications of lottery retailers and application 
procedures for lottery retailer contracts; 
    (3) investigation of lottery retailer applicants; 
    (4) appeal procedures for denial, suspension, or 
cancellation of lottery retailer contracts; 
    (5) compensation of lottery retailers; 
    (6) accounting for and deposit of lottery revenues by 
lottery retailers; 
    (7) procedures for issuing lottery procurement contracts 
and for the investigation of bidders on those contracts; 
    (8) payment of prizes; 
    (9) procedures needed to ensure the integrity and security 
of the lottery; and 
    (10) other rules the director considers necessary for the 
efficient operation and administration of the lottery.  
    Before adopting a rule the director shall submit the rule 
to the board for its review and comment.  
    Sec. 6.  [349A.06] [LOTTERY RETAILERS.] 
    Subdivision 1.  [CONTRACTS.] The director shall sell 
tickets for the lottery through lottery retailers with whom the 
director contracts.  Contracts under this section are not 
subject to the provisions of sections 16B.06 to 16B.102, and 
16B.17, and are valid for a period of one year. 
    Subd. 2.  [QUALIFICATIONS.] (a) The director may not 
contract with a retailer who: 
    (1) is under the age of 18; 
    (2) is in business solely as a seller of lottery tickets; 
     (3) owes $500 or more in delinquent taxes as defined in 
section 270.72; 
    (4) has been convicted within the previous five years of a 
felony or gross misdemeanor, any crime involving fraud or 
misrepresentation, or a gambling-related offense; 
    (5) is a member of the immediate family, residing in the 
same household, as the director, board member, or any employee 
of the division; or 
    (6) in the director's judgment does not have the financial 
stability or responsibility to act as a lottery retailer, or 
whose contracting as a lottery retailer would adversely affect 
the public health, welfare, and safety, or endanger the security 
and integrity of the lottery. 
    (b) An organization, firm, partnership, or corporation that 
has a stockholder who owns more than five percent of the 
business or the stock of the corporation, an officer, or 
director, that does not meet the requirements of paragraph (a), 
clause (4), is not eligible to be a lottery retailer under this 
section. 
    (c) The restrictions under paragraph (a), clause (4), do 
not apply to an organization, partnership, or corporation if the 
director determines that the organization, partnership, or firm 
has terminated its relationship with the individual whose 
actions directly contributed to the disqualification under this 
subdivision. 
    Subd. 3.  [BOND.] The director shall require that each 
lottery retailer post a bond, in an amount as the director deems 
necessary, to protect the financial interests of the state. 
    Subd. 4.  [CRIMINAL HISTORY.] The director may request the 
director of gambling enforcement to investigate all applicants 
for lottery retailer contracts to determine their compliance 
with the requirements of subdivision 2.  The director may issue 
a temporary contract, valid for not more than 90 days, to an 
applicant pending the completion of the investigation or a final 
determination of qualifications under this section. 
    Subd. 5.  [RESTRICTIONS ON LOTTERY RETAILERS.] (a) A 
lottery retailer may sell lottery tickets only on the premises 
described in the contract. 
    (b) A lottery retailer must prominently display a 
certificate issued by the director on the premises where lottery 
tickets will be sold. 
    (c) A lottery retailer must keep a complete set of books of 
account, correspondence, and all other records necessary to show 
fully the retailer's lottery transactions, and make them 
available for inspection by employees of the division at all 
times during business hours.  The director may require a lottery 
retailer to furnish information as the director deems necessary 
to carry out the purposes of this chapter, and may require an 
audit to be made of the books of account and records.  The 
director may select an auditor to perform the audit and may 
require the retailer to pay the cost of the audit.  The auditor 
has the same right of access to the books of account, 
correspondence, and other records as is given to employees of 
the division. 
    (d) A contract issued under this section may not be 
transferred or assigned. 
    (e) The director shall require that lottery tickets may be 
sold by retailers only for cash.  
    Subd. 6.  [RETENTION BY RETAILERS.] The director may by 
rule provide for: 
    (1) amounts which a lottery retailer may retain from gross 
receipts from the sale of lottery tickets in order to pay prizes 
to holders of winning tickets; and 
    (2) amounts which a lottery retailer may retain from gross 
receipts from the sale of lottery tickets as a commission.  
    Subd. 7.  [RETAILER RENTAL PAYMENTS.] If a lottery 
retailer's rental payments for the business premises are 
contractually computed, in whole or in part, on the basis of a 
percentage of retail sales, and the computation of retail sales 
is not explicitly defined to include the sale of lottery 
tickets, the compensation retained by the sales agent for the 
sale of lottery tickets shall be considered the amount of the 
retail sale for purposes of computing the rental payments. 
    Subd. 8.  [PROCEEDS OF SALES.] All proceeds from the sale 
of lottery tickets received by a lottery retailer constitute a 
trust fund until paid to the director.  The lottery retailer is 
personally liable for all proceeds. 
    Subd. 9.  [FEE.] The director may charge a nonrefundable 
application fee to a person applying for a lottery retailer 
contract, in an amount sufficient to cover the costs of making 
the investigation required under subdivision 4.  The fee 
collected under this subdivision must be deposited in the 
lottery fund. 
    Subd. 10.  [LOCAL LICENSES.] No political subdivision may 
require a local license to operate as a lottery retailer or 
impose a tax or fee on the business of operating as a lottery 
retailer. 
    Subd. 11.  [REVOCATION, SUSPENSION, AND REFUSAL TO RENEW 
LICENSES.] (a) The director shall cancel the contract of any 
lottery retailer who: 
    (1) has been convicted of a felony or gross misdemeanor; 
    (2) has committed fraud, misrepresentation, or deceit; 
    (3) has provided false or misleading information to the 
division; or 
    (4) has acted in a manner prejudicial to public confidence 
in the integrity of the lottery. 
    (b) The director may cancel, suspend, or refuse to renew 
the contract of any lottery retailer who: 
    (1) changes business location; 
    (2) fails to account for lottery tickets received or the 
proceeds from tickets sold; 
    (3) fails to remit funds to the director in accordance with 
the director's rules; 
    (4) violates a law or a rule or order of the director; 
    (5) fails to comply with any of the terms in the lottery 
retailer's contract; 
    (6) fails to comply with bond requirements under this 
section; 
    (7) in the opinion of the director fails to maintain a 
sufficient sales volume to justify continuation as a lottery 
retailer; or 
    (8) has violated section 340A.503, subdivision 2, clause 
(1), two or more times within a two-year period. 
    (c) The director may also cancel, suspend, or refuse to 
renew a lottery retailer's contract if there is a material 
change in any of the factors considered by the director under 
subdivision 2.  
    (d) A contract cancellation, suspension, or refusal to 
renew under this subdivision is a contested case under sections 
14.57 to 14.69 and is in addition to any criminal penalties 
provided for a violation of law or rule. 
    (e) The director may temporarily suspend a contract without 
notice for any of the reasons specified in this subdivision 
provided that a hearing is conducted within seven days after a 
request for a hearing is made by a lottery retailer.  Within 20 
days after receiving the administrative law judge's report, the 
director shall issue an order vacating the temporary suspension 
or making any other appropriate order.  If no hearing is 
requested within 30 days of the temporary suspension taking 
effect, the director may issue an order making the suspension 
permanent.  
    Sec. 7.  [349A.07] [VENDOR CONTRACTS.] 
    Subdivision 1.  [CONTRACTS AUTHORIZED.] The director may 
enter into lottery procurement contracts for the purchase, 
lease, or lease-purchase of the goods or services.  In entering 
into a lottery procurement contract, the director shall utilize 
an open bid process and shall take into account the particularly 
sensitive nature of the state lottery and shall consider the 
competence, quality of product, experience, and timely 
performance of each potential vendor in order to promote and 
ensure security, honesty, fairness, and integrity in the 
operation and administration of the lottery.  The director shall 
also consider the extent to which a bidder for a contract for 
printing preprinted lottery tickets would utilize employees and 
facilities within Minnesota in fulfilling the contract.  
    Subd. 2.  [INVESTIGATION OF POTENTIAL VENDORS.] The 
director shall request the director of the division of gambling 
enforcement to investigate the background, financial 
responsibility, security, and integrity of any person who 
submits a bid, proposal, or offer as part of a lottery 
procurement contract issuance by the director.  The director may 
require the person making the bid, proposal, or offer to pay for 
the cost of the investigation.  Any fee collected under this 
subdivision must be deposited into the lottery fund.  At the 
time of submitting any bid, proposal, or offer, the bidder shall 
disclose to the director the information the director considers 
necessary to carry out the purposes of this section.  The 
director has access to all criminal history data compiled by the 
division of gambling enforcement on all vendors and potential 
vendors who have submitted a bid to the division.  
    Subd. 3.  [PERSONS INELIGIBLE FOR CONTRACT.] (a) The 
director may not enter into a lottery procurement contract with 
an applicant that has been convicted of a felony within the last 
ten years, has been convicted of a gross misdemeanor or 
gambling-related misdemeanor within the last five years, or has 
been found guilty of any crime involving fraud or 
misrepresentation within the last five years. 
    (b) The director may not enter into a lottery procurement 
contract with an applicant that has (1) a person who owns more 
than five percent of the stock in the applicant that does not 
meet the requirements of this subdivision, or (2) a partner, 
officer, or director that does not meet the requirements of this 
subdivision.  
    (c) The restrictions under this subdivision do not apply to 
an applicant for a lottery procurement contract if the director 
determines that the applicant has terminated its relationship 
with the individuals whose actions directly contributed to the 
disqualification of the applicant under this subdivision. 
    Subd. 4.  [CONFLICT OF INTEREST.] The director may not 
enter into a lottery procurement contract with a person to 
supply goods or services if that person has an ownership 
interest in an entity that had supplied consultation services 
under a contract to the lottery regarding the request for 
proposal pertaining to those particular goods or services.  
    Subd. 5.  [BOND.] (a) The director shall require securities 
to be deposited, or a performance bond or a letter of credit to 
be executed by the person or corporation that is awarded a 
lottery procurement contract in an amount as determined by the 
director. 
    (b) Any securities deposited with the director under this 
subdivision must be interest-bearing and limited to: 
    (1) certificates of deposit issued by a solvent bank or 
savings association organized and existing under the laws of 
this state or under the laws of the United States and having its 
principal place of business in this state; 
    (2) United States bonds, notes, and bills, for which the 
full faith and credit of the government of the United States is 
pledged for the payment of principal and interest; and 
    (3) general obligation bonds of any political subdivision 
of this state, or corporate bonds of a corporation that is not 
an affiliate or subsidiary of the vendor, if the general 
obligation bonds or corporate bonds are rated in one of the four 
highest classifications by an established nationally recognized 
investment rating service. 
    (c) Any letter of credit executed under this subdivision 
must provide that:  
    (1) nothing more than a demand for payment is necessary for 
payment and is not conditional on the delivery of any other 
documents or materials; 
    (2) the letter of credit is irrevocable and cannot be 
modified or revoked without the consent of the director; 
    (3) the letter of credit cannot expire without notice from 
the issuer and the notice must occur at least 60 days before the 
expiration date of the letter of credit; 
    (4) the letter of credit is issued by a bank which is a 
member of the federal reserve system which has a long-term debt 
rating by a recognized national rating agency of investment 
grade or better, if no long-term debt rating is available, the 
financial institution must have investment grade financial 
characteristics; 
    (5) the letter of credit is unconditional, is not 
conditional upon reimbursement to the bank or the bank's ability 
to perfect any lien or security interest, and does not contain 
references to any other agreement, document, or entity; and 
    (6) the letter of credit designates the director as 
beneficiary. 
    Subd. 6.  [EXEMPTIONS.] Lottery procurement contracts 
entered into by the director are not subject to the provisions 
of sections 16B.06 to 16B.102 or 16B.17, provided that the 
director must utilize an open and competitive bid process, and 
as nearly as practicable follow the procedures of chapter 16B 
governing contracts, consistent with the provisions of this 
section.  
    Subd. 7.  [ASSIGNMENT.] A lottery procurement contract 
entered into under this section may not be assigned without the 
specific written approval of the director.  
    Sec. 8.  [349A.08] [LOTTERY PRIZES.] 
    Subdivision 1.  [AGREEMENT BY PLAYERS.] A person who buys a 
lottery ticket agrees to be bound by the rules applicable to the 
particular lottery game for which the ticket is purchased.  The 
player acknowledges that the determination of whether a ticket 
is a valid winning ticket is subject to the rules of the 
director, claims procedures established by the director for that 
game, and any confidential or public validation tests 
established by the director for that game. 
    Subd. 2.  [PRIZES NOT ASSIGNABLE.] A prize in the state 
lottery is not assignable except as provided in subdivision 3 
and except that: 
    (1) if a prize winner dies before the prize is paid, the 
director shall pay the prize to the prize winner's estate; and 
    (2) the director may pay a prize to a person other than the 
winner of that prize under an appropriate court order. 
    Subd. 3.  [PRIZES WON BY PERSONS UNDER AGE 18.] The 
following provisions govern the payment of a lottery prize to a 
person under age 18: 
    (1) if the prize is less than $5,000, the director may give 
a draft, payable to the order of the person under age 18, to the 
person's parents, custodial parent if one parent has custody, 
guardian, or other adult member of the person's family; and 
    (2) if the prize is $5,000 or more, the director shall 
deposit the prize with the district court and section 540.08 
applies to the investment and distribution of the money. 
    Subd. 4.  [DISCHARGE OF LIABILITY.] The payment of a prize 
by the director discharges the director and the state of all 
liability for the prize. 
    Subd. 5.  [PAYMENT; UNCLAIMED PRIZES.] A prize in the state 
lottery must be claimed by the winner within one year of the 
date of the drawing at which the prize was awarded or the last 
day sales were authorized for a game where a prize was 
determined in a manner other than by means of a drawing.  If a 
valid claim is not made for a prize payable directly by the 
lottery by the end of this period, the unclaimed prize money 
must be added by the director to prize pools of subsequent 
lottery games and the winner of the prize shall have no further 
claim to the prize.  A prize won by a person who purchased the 
winning ticket in violation of section 12, subdivision 1, or won 
by a person ineligible to be awarded a prize under subdivision 7 
must be treated as an unclaimed prize under this section. 
    Subd. 6.  [INSTALLMENT PAYMENTS.] If the director decides 
to pay all or part of a prize in the form of installments over a 
period of years, the director shall provide for the payment of 
all installments by: 
    (1) entering into a contract with a financially responsible 
person or firm or by purchasing an annuity to provide for the 
payment of the installments; or 
    (2) establishing and maintaining as a separate and 
independent fund outside the state treasury a reserve account 
with sufficient funds for the payment of the installments as 
they become due. 
    Subd. 7.  [PAYMENTS PROHIBITED.] (a) No prize may be paid 
to a member of the board, the director or an employee of the 
division, or a member of their families residing in the same 
household of the member, director, or employee.  No prize may be 
paid to an officer or employee of a vendor which at the time the 
game or drawing was being conducted was involved with providing 
goods or services to the lottery under a lottery procurement 
contract. 
    (b) No prize may be paid for a stolen, altered, or 
fraudulent ticket. 
    Subd. 8.  [WITHHOLDING OF DELINQUENT STATE TAXES OR OTHER 
DEBTS.] The director shall report the name, address, and social 
security number of each winner of a lottery prize of $1,000 or 
more to the department of revenue to determine whether the 
person who has won the prize is delinquent in payment of state 
taxes or owes a debt as defined in section 270A.03, subdivision 
5.  If the person is delinquent in payment of state taxes or 
owes a debt as defined in section 270A.03, subdivision 5, the 
director shall withhold the delinquent amount from the person's 
prize for remittance to the department of revenue for payment of 
the delinquent taxes or distribution to a claimant agency in 
accordance with chapter 270A.  Section 270A.10 applies to the 
priority of claims. 
    Sec. 9.  [349A.09] [LOTTERY ADVERTISING.] 
    Subdivision 1.  [ODDS; REQUIRED INFORMATION.] The director 
shall include on each brochure, pamphlet, booklet, or other 
similar material the director publishes to promote or explain 
any lottery game, a prominent and clear statement of the 
approximate odds of winning each prize offered in that lottery 
game.  Each lottery retailer must post prominently at or near 
the point of ticket sale a notice or notices printed and 
provided by the director of the approximate odds of winning each 
prize in each game for which the lottery retailer sells tickets. 
    Subd. 2.  [CONTENT OF ADVERTISING.] (a) Advertising and 
promotional materials for the lottery adopted or published by 
the director must be consistent with the dignity of the state 
and may only: 
    (1) present information on how lottery games are played, 
prizes offered, where and how tickets may be purchased, when 
drawings are held, and odds on the games advertised; 
    (2) identify state programs supported by lottery net 
revenues; 
    (3) present the lottery as a form of entertainment; or 
    (4) state the winning numbers or identity of winners of 
lottery prizes.  
    (b) The director may not adopt or publish any advertising 
for the lottery which: 
    (1) presents directly or indirectly any lottery game as a 
potential means of relieving any person's financial 
difficulties; 
    (2) is specifically targeted with the intent to exploit a 
person, a specific group or an economic class of people; 
    (3) presents the purchase of a lottery ticket as a 
financial investment or a way to achieve financial security; 
    (4) uses the name or picture of a current elected state 
official to promote a lottery game; 
    (5) exhorts the public to bet by directly or indirectly 
misrepresenting a person's chance of winning a prize; or 
    (6) denigrates a person who does not buy a lottery ticket 
or unduly praises a person who does buy a ticket. 
    Subd. 3.  [PRIZES; REQUIRED INFORMATION.] The director must 
include, in any publication or print advertising which refers to 
a prize which is or may be paid in installments, a statement to 
the effect that the prize will be or may be paid in installments.
    Sec. 10.  [349A.10] [LOTTERY FUNDS.] 
    Subdivision 1.  [STATE LOTTERY FUND.] The director shall 
establish a lottery fund outside the state treasury, consisting 
of the gross revenues of the lottery and all other money 
credited or transferred to it by law, except for money set aside 
and deposited in the lottery prize fund under subdivision 2. 
    Subd. 2.  [DEPOSIT IN PRIZE FUND.] (a) The director shall 
establish a lottery prize fund outside the state treasury.  The 
fund consists of all money deposited in it under this 
subdivision and all interest earned thereon.  
    (b) The director shall deposit in the lottery prize fund, 
from gross receipts from the sale of lottery tickets, an amount 
sufficient to pay lottery prizes from the lottery prize fund 
according to the following provisions: 
    (1) for games which require on-line terminal connections, 
the prizes paid in any fiscal year must be at least 45 percent 
of gross receipts from those games in that fiscal year; 
    (2) for games which do not require on-line terminal 
connections, the prizes paid in any fiscal year must be at least 
the following percentages of gross receipts from those games:  
    (i) 50 percent through fiscal year 1991; 
    (ii) 55 percent from July 1, 1991, to June 30, 1992; and 
    (iii) 60 percent thereafter.  
    Subd. 3.  [LOTTERY OPERATIONS.] (a) The director shall 
establish a lottery operations account in the lottery fund.  The 
director shall pay all costs of operating the lottery, including 
payroll costs or amounts transferred to the state treasury for 
payroll costs, but not including lottery prizes, from the 
lottery operating account.  The director shall credit to the 
lottery operations account amounts sufficient to pay the 
operating costs of the lottery. 
    (b) The director may not credit in any fiscal year amounts 
to the lottery operations account which when totaled exceed 15 
percent of gross revenue to the lottery fund in that fiscal 
year.  In computing total amounts credited to the lottery 
operations account under this paragraph the director shall 
disregard amounts transferred to or retained by lottery 
retailers as sales commissions or other compensation. 
    (c) The director of the lottery may not expend after July 
1, 1992, more than 2-3/4 percent of gross revenues in a fiscal 
year for contracts for the preparation, publication, and 
placement of advertising. 
    (d) Except as the director determines, the division is not 
subject to chapter 16A relating to budgeting, payroll, and the 
purchase of goods and services.  
    Subd. 4.  [DEPOSIT OF RECEIPTS.] (a) The director may 
require lottery retailers to: 
    (1) deposit in a separate account to the credit of the 
lottery fund, in banks designated by the director, all money 
received by the lottery retailer from the sale of lottery 
tickets, less money retained as the lottery retailer's 
commission and for payment of prizes; 
    (2) file with the director reports of the lottery 
retailer's receipts and transactions in ticket sales in a form 
that the director prescribes; and 
    (3) allow money deposited by the lottery retailer from the 
sale of lottery tickets to be transferred to the division 
through electronic fund transfer. 
    (b) The director may make arrangements for any person, 
including a financial institution, to perform functions, 
activities, or services in connection with the receipt and 
distribution of lottery revenues. 
    (c) A lottery retailer who fails to pay any money due to 
the director within the time prescribed by the director shall 
pay interest on the amount owed at the rate determined by rule. 
    Subd. 5.  [DEPOSIT OF NET PROCEEDS.] Within 30 days after 
the end of each month, the director shall pay to the state 
treasurer the balance in the lottery fund after transfers to the 
lottery prize fund and credits to the lottery operations account.
    Sec. 11.  [349A.11] [CONFLICT OF INTEREST.] 
    (a) The director, a board member, an employee of the 
division, a member of the immediate family of the director, 
board member, or employee residing in the same household may not:
    (1) purchase a lottery ticket; 
    (2) have any personal pecuniary interest in any vendor 
holding a lottery procurement contract, or in any lottery 
retailer; or 
    (3) receive any gift, gratuity, or other thing of value, 
excluding food or beverage, from any lottery vendor or lottery 
retailer, or person applying to be a retailer or vendor, in 
excess of $100 in any calendar year.  
    (b) A violation of paragraph (a), clause (1), is a 
misdemeanor.  A violation of paragraph (a), clause (2), is a 
gross misdemeanor.  A violation of paragraph (a), clause (3), is 
a misdemeanor unless the gift, gratuity, or other item of value 
received has a value in excess of $500, in which case a 
violation is a gross misdemeanor.  
    (c) The director or an unclassified employee of the 
division may not, within one year of terminating employment with 
the division, accept employment with, act as an agent or 
attorney for, or otherwise represent any person, corporation, or 
entity that had any lottery procurement contract or bid for a 
lottery procurement contract with the division within a period 
of two years prior to the termination of their employment.  A 
violation of this paragraph is a misdemeanor.  
    Sec. 12.  [349A.12] [PROHIBITED ACTS.] 
    Subdivision 1.  [PURCHASE BY MINORS.] A person under the 
age of 18 years may not buy a ticket in the state lottery. 
    Subd. 2.  [SALE TO MINORS.] A lottery retailer may not sell 
a ticket in the state lottery to any person under the age of 18 
years.  It is an affirmative defense to a charge under this 
subdivision for the lottery retailer to prove by a preponderance 
of the evidence that the lottery retailer reasonably and in good 
faith relied upon representation of proof of age described in 
section 340A.503, subdivision 6, in making the sale. 
    Subd. 3.  [PROHIBITED SALES.] (a) A person other than a 
lottery retailer may not sell a ticket in the state lottery. 
    (b) A lottery retailer may not sell a ticket for a price 
other than the price set by the director. 
    Subd. 4.  [LOTTERY RETAILERS AND VENDORS.] A person who is 
a lottery retailer, or is applying to be a lottery retailer, a 
person applying for a contract with the director, or a person 
under contract with the director to supply good or services to 
division may not pay, give, or make any economic opportunity, 
gift, loan, gratuity, special discount, favor, hospitality, or 
service, excluding food or beverage, having an aggregate value 
of over $100 in any calendar year to the director, board member, 
employee of the lottery division, or to a member of the 
immediate family residing in the same household as that person.  
    Subd. 5.  [EXCEPTIONS.] Nothing in this chapter prohibits 
giving a state lottery ticket as a gift, or buying a state 
lottery ticket as a gift for a person under the age of 18. 
    Subd. 6.  [VIOLATIONS.] A violation of subdivision 1 is a 
petty misdemeanor.  A violation of subdivision 2 or a rule 
adopted by the director is a misdemeanor.  A violation of 
subdivision 3 or 4 is a gross misdemeanor. 
    Sec. 13.  [349A.13] [RESTRICTIONS.] 
    Nothing in this chapter: 
    (1) authorizes the director to conduct a lottery game or 
contest the winner or winners of which are determined by the 
result of a sporting event other than a horse race conducted 
under chapter 240; 
    (2) authorizes the director to install or operate a lottery 
device operated by coin or currency which when operated 
determines the winner of a game; and 
    (3) authorizes the director to sell pull-tabs as defined 
under section 349.12, subdivision 10. 
    Sec. 14.  [349A.14] [AUDIT.] 
    The director shall contract for an annual certified audit 
of all accounts and transactions of the lottery.  The audit must 
be conducted by a certified public accountant in accordance with 
generally accepted accounting standards.  The director shall 
file a copy of each audit report of the lottery with the 
governor and the legislature. 
    Sec. 15.  [349A.15] [REPORT.] 
    The director shall file an annual report with the governor 
and legislature which must include a complete statement of 
lottery revenues, administrative and operating costs, net 
proceeds transferred, and other financial transactions for the 
period the report covers. 
    Sec. 16.  [609.651] [STATE LOTTERY FRAUD.] 
    Subdivision 1.  [FELONY.] A person is guilty of a felony 
and may be sentenced under subdivision 4 if the person does any 
of the following with intent to defraud the state lottery: 
    (1) alters or counterfeits a state lottery ticket; 
    (2) knowingly presents an altered or counterfeited state 
lottery ticket for payment; 
    (3) knowingly transfers an altered or counterfeited state 
lottery ticket to another person; or 
    (4) otherwise claims a lottery prize by means of fraud, 
deceit, or misrepresentation. 
    Subd. 2.  [COMPUTER ACCESS.] A person is guilty of a felony 
and may be sentenced under subdivision 4 if the person:  
    (1) obtains access to a computer data base maintained by 
the director without the specific authorization of the director; 
    (2) obtains access to a computer data base maintained by a 
person under contract with the director to maintain the data 
base without the specific authorization of the director and the 
person maintaining the data base. 
    Subd. 3.  [FALSE STATEMENTS.] A person is guilty of a 
felony and may be sentenced under subdivision 4 if the person: 
    (1) makes a materially false or misleading statement, or a 
material omission, in a record required to be submitted under 
chapter 349A; or 
    (2) makes a materially false or misleading statement, or a 
material omission, in information submitted to the commissioner 
of the state lottery in a lottery retailer's application or a 
document related to a bid. 
    Subd. 4.  [PENALTY.] (a) A person who violates subdivision 
1 or 2 may be sentenced to imprisonment for not more than ten 
years or to payment of a fine of not more than $50,000, or both. 
    (b) A person who violates subdivision 1 or 2 and defrauds 
the state lottery of $35,000 or more may be sentenced to 
imprisonment for not more than 20 years or to payment of a fine 
of not more than $100,000, or both.  
    (c) A person who violates subdivision 3 may be sentenced to 
imprisonment for not more than three years or to payment of a 
fine of not more than $25,000, or both. 
    Sec. 17.  Laws 1989, chapter 184, section 12, is amended by 
adding a subdivision to read: 
    Subd. 7.  [LOTTERY DIVISION.] (a) The commissioner of 
revenue may disclose to the lottery the amount of delinquent 
state taxes, or debt as defined in section 270.03, subdivision 
5, of a winner of a lottery prize of $1,000 or more, to the 
extent necessary to administer section 349A.08, subdivision 8. 
    (b) The commissioner of revenue may disclose to the lottery 
division that a retailer owes $500 or more in delinquent taxes 
as defined in section 270.72, to the extent necessary to 
administer section 349A.06, subdivision 2.  
    Sec. 18.  [EFFECTIVE DATE.] 
    Sections 1 to 17 are effective the day following final 
enactment. 

                               ARTICLE 4 

                          DEPARTMENT OF GAMING 
    Section 1.  [349B.01] [DEPARTMENT OF GAMING CREATED; 
COMMISSIONER.] 
    Subdivision 1.  [DEPARTMENT CREATED.] A department of 
gaming is created containing a commissioner of gaming, which 
office is established.  The commissioner of gaming is appointed 
by the governor with the advice and consent of the senate. 
    Subd. 2.  [DUTIES OF COMMISSIONER.] The duties of the 
commissioner are: 
    (1) to sit as a voting member of the Minnesota racing 
commission subject to section 240.02, subdivision 1, the 
gambling control board, and the lottery board; 
    (2) to study the extent and status of legal and illegal 
gambling in Minnesota, and social, economic, and legal problems 
which may result from legal and illegal gambling; and 
    (3) to report annually to the governor and legislature on 
the activities of the commissioner, including studies under 
clause (2), and recommended changes in laws dealing with legal 
and illegal gambling.  
    Subd. 3.  [EMPLOYEES.] The commissioner shall appoint and 
assign duties to employees as the commissioner deems necessary 
to carry out the duties specified in subdivision 2.  The 
employees are in the unclassified service. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective July 1, 1989. 

                                ARTICLE 5 

                          GAMBLING ENFORCEMENT 
    Section 1.  [299L.01] [DIVISION OF GAMBLING ENFORCEMENT.] 
    Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
chapter, the terms defined in this subdivision have the meanings 
given them. 
    (b) "Division" means the division of gambling enforcement.  
    (c) "Commissioner" means the commissioner of public safety. 
    (d) "Director" means the director of gambling enforcement.  
    Subd. 2.  [ESTABLISHED.] The division of gambling 
enforcement is a division in the department of public safety 
under the control and supervision of a director, appointed by 
the commissioner and serving at the commissioner's pleasure in 
the unclassified service.  The director must be a person who is 
licensed or eligible to be licensed as a peace officer under 
sections 626.84 to 626.863. 
    Subd. 3.  [EMPLOYEES.] The director shall employ in the 
division of gambling enforcement personnel, in the classified 
service, necessary to carry out the duties under this chapter.  
The director shall request the bureau of criminal apprehension 
to perform background checks on persons who are finalists for 
employment with the division, but may employ personnel pending 
completion of the background check. 
    Sec. 2.  [299L.02] [DUTIES OF DIVISION OF GAMBLING 
ENFORCEMENT.] 
    Subdivision 1.  [LOTTERY.] (a) The director shall when 
required under chapter 349A or when requested by the director of 
the lottery conduct background checks on employees of the state 
lottery, lottery retailers, and bidders of lottery procurement 
contracts.  
    (b) The director shall, when so requested by the director 
of the state lottery or when the director believes it to be 
reasonable and necessary, conduct investigations of lottery 
retailers, applicants for lottery retailer contracts, suppliers 
of goods or services to the state lottery, and persons bidding 
on contracts for goods or services with the state lottery.  
    (c) The director shall conduct an annual security audit of 
the state lottery, or arrange for such an audit by an outside 
agency or person, firm, or corporation.  The director shall 
report to the state lottery board and the director of the 
lottery on the results of the audit. 
    Subd. 2.  [GAMBLING.] The director shall:  
    (1) conduct background investigations of applicants for 
licensing as a manufacturer or distributor of gambling equipment 
or as a bingo hall under chapter 349; and 
    (2) when requested by the director of gambling control, or 
when the director believes it to be reasonable and necessary, 
inspect the premises of a licensee under chapter 349 to 
determine compliance with law and with the rules of the board, 
or to conduct an audit of the accounts, books, records, or other 
documents required to be kept by the licensee. 
    Subd. 3.  [HORSE RACING INVESTIGATIONS.] (a) The director 
shall conduct background investigations as provided by law on 
all applicants for licenses issued by the Minnesota racing 
commission.  
    (b) The director shall, upon request of the director of 
pari-mutuel racing, or when the director believes it to be 
reasonable and necessary, investigate the activities of a 
licensee of the Minnesota racing commission to determine the 
licensee's compliance with law and with rules of the commission. 
    Subd. 4.  [OTHER GAMBLING.] The director of gambling 
enforcement shall cooperate with all state and local agencies in 
the detection and apprehension of unlawful gambling. 
    Subd. 5.  [BACKGROUND CHECKS.] In any background check 
required to be conducted by the division of gambling enforcement 
under chapter 240, 349, or 349A, the director may, or shall when 
required by law, require that fingerprints be taken and the 
director may forward the fingerprints to the Federal Bureau of 
Investigation for the conducting of a national criminal history 
check.  
    Sec. 3.  [299L.03] [POWERS OF DIRECTOR.] 
    Subdivision 1.  [INSPECTIONS; ACCESS.] In conducting any 
inspection authorized under chapter 240, 349, or 349A, the 
employees of the division of gambling enforcement have free and 
open access to all parts of the regulated business premises, and 
may conduct the inspection at any reasonable time without notice 
and without a search warrant.  For purposes of this subdivision, 
"regulated business premises" means premises where: 
    (1) lawful gambling is conducted by an organization 
licensed under chapter 349 or by an organization exempt from 
licensing under section 349.214; 
    (2) gambling equipment is manufactured, sold, distributed, 
or serviced by a manufacturer or distributor licensed under 
chapter 349; 
    (3) records required to be maintained under chapter 240, 
349, or 349A are prepared or retained; 
    (4) lottery tickets are sold by a lottery retailer under 
chapter 340A; or 
    (5) races are conducted by a person licensed under chapter 
240. 
    Subd. 2.  [ITEMS REQUIRED TO BE PRODUCED.] In conducting an 
audit or inspection authorized under chapter 240, 349 or 349A 
the director may inspect any book, record, or other document the 
licensee, retailer, or vendor is required to keep. 
    Subd. 3.  [SUBPOENA POWER.] The director may issue 
subpoenas to compel the attendance of witnesses and the 
production of documents, books, records, and other evidence 
relating to any investigation or audit the director is 
authorized to conduct. 
    Subd. 4.  [ACCESS TO CRIMINAL HISTORY.] The director has 
access to all criminal history data compiled by the bureau of 
criminal apprehension on any person licensed or under contract 
with the state lottery, racing commission, or the gambling 
control board, or any applicant for licensing or a person who 
has submitted a bid on a lottery contractor or any employee and 
finalist for employment with the division of state lottery. 
    Subd. 5.  [ARREST POWERS.] The director may designate 
certain employees within the division of gambling enforcement 
who are authorized to arrest or investigate any person who is 
suspected of violating any provision of chapter 240, 349, or 
349A, or is suspected of committing any crime involving 
gambling, and to conduct searches and seizures to enforce any of 
those laws.  Any employee authorized by this subdivision to make 
an arrest must be licensed under sections 626.84 to 626.863.  
    Subd. 6.  [UNLICENSED SELLERS.] (a) If anyone not licensed 
under chapter 349 sells gambling equipment at a business 
establishment, the director may, in addition to any other 
provisions of chapter 349: 
    (1) assess a civil penalty of not more than $300 against 
each person participating in the sales and assess a civil 
penalty of not more than $1,000 against the owner or owners of 
the business establishment; or 
    (2) if the subject violation is the second or subsequent 
violation of this subdivision at the same business establishment 
within any 24-month period, assess a civil penalty of not more 
than $300 against each person participating in such sales, and 
assess a civil penalty of not more than $5,000 against the owner 
or owners of the business establishment.  
    (b) The assessment of a civil penalty under this section 
does not preclude a recommendation by the director at any time 
deemed appropriate to a licensing authority for revocation, 
suspension, or denial of a license controlled by the licensing 
authority. 
    (c) Within ten days of an assessment under this 
subdivision, the person assessed the penalty must pay the 
assessment or request that a hearing be held under chapter 14.  
If a hearing is requested, the hearing must be scheduled within 
20 days of the request, and the recommendations of the 
administrative law judge must be issued within five working days 
of the close of the hearing.  The director's final determination 
must be issued within five working days of the issuance of the 
recommendations of the administrative law judge. 
    Subd. 7.  [OTHER POWERS.] Nothing in this chapter limits 
the authority of the division of gambling enforcement to 
exercise any other power specified under chapter 240, 349, or 
349A.  
    Subd. 8.  [RULEMAKING.] The commissioner may adopt rules, 
including emergency rules, under chapter 14 to carry out the 
commissioner's duties under this chapter.  
    Sec. 4.  [299L.04] [CONFLICT OF INTEREST.] 
    Subdivision 1.  [INTEREST.] The director and any person 
employed by the division may not have a direct or indirect 
financial interest in:  
    (1) a class A or B licensee of the racing commission; 
    (2) a lottery retailer under contract with the state 
lottery; 
    (3) a person who is under a lottery procurement contract 
with the state lottery; or 
    (4) a bingo hall, manufacturer, or distributor licensed 
under chapter 349.  
    Subd. 2.  [GAMBLING.] The director or an employee of the 
division of gambling enforcement may not participate in the 
conducting of lawful gambling under chapter 349.  
    Sec. 5.  [299L.05] [GAMBLING VIOLATIONS; RESTRICTIONS ON 
FURTHER ACTIVITY.] 
    An owner of an establishment is prohibited from having 
lawful gambling under chapter 349 conducted on the premises, 
selling any lottery tickets under chapter 349A, or having a 
video game of chance as defined under section 349.50 located on 
the premises, if a person was convicted of violating section 
609.76, subdivision 1, clause (7), or 609.76, subdivision (2), 
for an activity occurring on the owner's premises. 
    Sec. 6.  [EFFECTIVE DATE.] 
    Sections 1 to 5 are effective July 1, 1989. 

                               ARTICLE 6

                             MISCELLANEOUS
    Section 1.  Minnesota Statutes 1988, section 10A.01, 
subdivision 18, is amended to read: 
    Subd. 18.  "Public official" means any: 
     (a) member of the legislature; 
    (b) constitutional officer in the executive branch and the 
officer's chief administrative deputy; 
     (c) member, chief administrative officer or deputy chief 
administrative officer of a state board or commission which has 
at least one of the following powers:  (i) the power to adopt, 
amend or repeal rules, or (ii) the power to adjudicate contested 
cases or appeals; 
     (d) commissioner, deputy commissioner or assistant 
commissioner of any state department as designated pursuant to 
section 15.01; 
     (e) individual employed in the executive branch who is 
authorized to adopt, amend or repeal rules or adjudicate 
contested cases; 
      (f) executive director of the state board of investment; 
      (g) executive director of the Indian affairs intertribal 
board; 
      (h) commissioner of the iron range resources and 
rehabilitation board; 
    (i) director of mediation services; 
    (j) deputy of any official listed in clauses (e) to (i); 
    (k) judge of the workers' compensation court of appeals; 
    (l) administrative law judge or compensation judge in the 
state office of administrative hearings or hearing examiner in 
the department of jobs and training; 
    (m) solicitor general or deputy, assistant or special 
assistant attorney general; 
    (n) individual employed by the legislature as secretary of 
the senate, legislative auditor, chief clerk of the house, 
revisor of statutes, or researcher or attorney in the office of 
senate research, senate counsel, or house research; or 
    (o) member or chief administrative officer of the 
metropolitan council, regional transit board, metropolitan 
transit commission, metropolitan waste control commission, 
metropolitan parks and open spaces commission, metropolitan 
airports commission or metropolitan sports facilities 
commission; 
    (p) the commissioner of gaming and director of each 
division in the department of gaming and the deputy director of 
the division of state lottery; or 
    (q) director of the division of gambling enforcement in the 
department of public safety.  
    Sec. 2.  Minnesota Statutes 1988, section 10A.09, 
subdivision 1, is amended to read: 
    Subdivision 1.  [TIME FOR FILING.] Except for a candidate 
for elective office in the judicial branch, an individual shall 
file a statement of economic interest with the board: 
    (a) Within 60 days of accepting employment as a public 
official; 
    (b) Within 14 days after filing an affidavit of candidacy 
or petition to appear on the ballot for an elective public 
office; 
    (c) In the case of a public official requiring the advice 
and consent of the senate, within 14 days after undertaking the 
duties of office; or 
    (d) In the case of members of the Minnesota racing 
commission, and its executive secretary, the director of the 
division of pari-mutuel racing, chief of security, medical 
officer, inspector of pari-mutuels and stewards employed or 
approved by the commission or persons who fulfill those duties 
under contract, within 60 days of accepting or assuming duties.  
    Sec. 3.  Minnesota Statutes 1988, section 15A.081, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SALARY RANGES.] The governor shall set the 
salary rate within the ranges listed below for positions 
specified in this subdivision, upon approval of the legislative 
commission on employee relations and the legislature as provided 
by section 43A.18, subdivisions 2 and 5: 

                              Salary Range 

                               Effective 

                              July 1, 1987 
$57,500-$78,500 
    Commissioner of finance; 
    Commissioner of education; 
    Commissioner of transportation; 
    Commissioner of human services; 
    Commissioner of revenue; 
    Commissioner of public safety; 
    Executive director, state board of 
    investment; 
    Commissioner of gaming; 
    Director of the state lottery; 
$50,000-$67,500 
    Commissioner of administration; 
    Commissioner of agriculture; 
    Commissioner of commerce; 
    Commissioner of corrections; 
    Commissioner of jobs and training; 
    Commissioner of employee relations; 
    Commissioner of health; 
     Commissioner of labor and industry; 
     Commissioner of natural resources; 
    Commissioner of public safety; 
     Commissioner of trade and economic development; 
     Chair, waste management board; 
     Chief administrative law judge; office of 
     administrative hearings; 
    Commissioner, pollution control agency; 
    Commissioner, state planning agency; 
     Executive director, housing finance 
     agency; 
     Executive director, public employees 
     retirement association; 
     Executive director, teacher's 
     retirement association; 
     Executive director, state retirement 
     system; 
     Chair, metropolitan council; 
     Chair, regional transit board; 
$42,500-$60,000 
     Commissioner of human rights; 
    Commissioner, department of public service; 
    Commissioner of veterans' affairs; 
    Commissioner, bureau of mediation services; 
    Commissioner, public utilities commission; 
    Member, transportation regulation board; 
    Ombudsman for corrections; 
    Ombudsman for mental health and retardation. 
     Sec. 4.  Minnesota Statutes 1988, section 16B.54, 
subdivision 2, is amended to read: 
    Subd. 2.  [VEHICLES.] (a) [ACQUISITION FROM AGENCY; 
APPROPRIATION.] The commissioner may direct an agency to make a 
transfer of a passenger motor vehicle or truck presently 
assigned to it.  The transfer must be made to the commissioner 
for use in the central motor pool.  The commissioner shall 
reimburse an agency whose motor vehicles have been paid for with 
funds dedicated by the constitution for a special purpose and 
which are assigned to the central motor pool.  The amount of 
reimbursement for a motor vehicle is its average wholesale price 
as determined from the midwest edition of the national 
automobile dealers association official used car guide. 
      (b) [PURCHASE.] To the extent that funds are available for 
the purpose, the commissioner may purchase or otherwise acquire 
additional passenger motor vehicles and trucks necessary for the 
central motor pool.  The title to all motor vehicles assigned to 
or purchased or acquired for the central motor pool is in the 
name of the department of administration.  
      (c) [TRANSFER AT AGENCY REQUEST.] On the request of an 
agency, the commissioner may transfer to the central motor pool 
any passenger motor vehicle or truck for the purpose of 
disposing of it.  The department or agency transferring the 
vehicle or truck shall be paid for it from the motor pool 
revolving account established by this section in an amount equal 
to two-thirds of the average wholesale price of the vehicle or 
truck as determined from the midwest edition of the National 
Automobile Dealers Association official used car guide. 
    (d) [VEHICLES; MARKING.] The commissioner shall provide for 
the uniform marking of all motor vehicles.  Motor vehicle colors 
must be selected from the regular color chart provided by the 
manufacturer each year.  The commissioner may further provide by 
rule for the use of motor vehicles without uniform coloring or 
marking by the governor, the lieutenant governor, the division 
of criminal apprehension, division of gambling enforcement, 
arson investigators of the division of fire marshal in the 
department of public safety, financial institutions division of 
the department of commerce, division of state lottery in the 
department of gaming, and the office of the attorney general.  
    Sec. 5.  Minnesota Statutes 1988, section 340A.410, 
subdivision 5, is amended to read: 
    Subd. 5.  [GAMBLING PROHIBITED.] (a) No retail 
establishment licensed to sell alcoholic beverages may keep, 
possess, or operate, or permit the keeping, possession, or 
operation on the licensed premises of dice or any gambling 
device as defined in section 349.30, or permit gambling therein 
except as provided in this subdivision.  
    (b) Gambling equipment may be kept or operated and raffles 
conducted on licensed premises and adjoining rooms when the use 
of the gambling equipment is authorized under chapter 349. 
    (c) Lottery tickets may be purchased and sold within the 
licensed premises as authorized by the director of the lottery 
under chapter 349A.  
    Sec. 6.  Minnesota Statutes 1988, section 541.20, is 
amended to read: 
    541.20 [RECOVERY OF MONEY LOST.] 
    Every person who, by playing at cards, dice, or other game, 
or by betting on the hands or sides of such as are gambling, 
shall lose to any person so playing or betting any sum of money 
or any goods, and pays or delivers the same, or any part 
thereof, to the winner, may sue for and recover such money by a 
civil action, before any court of competent jurisdiction.  For 
purposes of this section, gambling shall not include pari-mutuel 
wagering conducted under a license issued pursuant to chapter 
240, purchase or sale of tickets in the state lottery, or 
gambling authorized under chapter chapters 349 and 349A. 
    Sec. 7.  Minnesota Statutes 1988, section 541.21, is 
amended to read: 
    541.21 [COMMITMENTS FOR GAMBLING DEBT VOID.] 
    Every note, bill, bond, mortgage, or other security or 
conveyance in which the whole or any part of the consideration 
shall be for any money or goods won by gambling or playing at 
cards, dice, or any other game whatever, or by betting on the 
sides or hands of any person gambling, or for reimbursing or 
repaying any money knowingly lent or advanced at the time and 
place of such gambling or betting, or lent and advanced for any 
gambling or betting to any persons so gambling or betting, shall 
be void and of no effect as between the parties to the same, and 
as to all persons except such as hold or claim under them in 
good faith, without notice of the illegality of the 
consideration of such contract or conveyance.  The provisions of 
this section shall not apply to pari-mutuel wagering conducted 
under a license issued pursuant to chapter chapters 240 and 349 
or purchase of tickets in the state lottery under chapter 349A. 
    Sec. 8.  Minnesota Statutes 1988, section 609.75, 
subdivision 3, is amended to read: 
    Subd. 3.  [WHAT ARE NOT BETS.] The following are not bets: 
    (1) A contract to insure, indemnify, guarantee or otherwise 
compensate another for a harm or loss sustained, even though the 
loss depends upon chance. 
    (2) A contract for the purchase or sale at a future date of 
securities or other commodities. 
    (3) Offers of purses, prizes or premiums to the actual 
contestants in any bona fide contest for the determination of 
skill, speed, strength, endurance, or quality or to the bona 
fide owners of animals or other property entered in such a 
contest. 
    (4) The game of bingo when conducted in compliance with 
sections 349.11 to 349.23. 
    (5) A private social bet not part of or incidental to 
organized, commercialized, or systematic gambling. 
    (6) The operation of equipment or the conduct of a raffle 
under sections 349.11 to 349.22, by an organization licensed by 
the charitable gambling control board or an organization exempt 
from licensing under section 349.214.  
    (7) Pari-mutuel betting on horse racing when the betting is 
conducted under chapter 240.  
    (8) The purchase and sale of state lottery tickets under 
chapter 349A.  
    Sec. 9.  Minnesota Statutes 1988, section 609.76, 
subdivision 1, is amended to read: 
    Subdivision 1.  [GROSS MISDEMEANORS.] Whoever does any of 
the following may be sentenced to imprisonment for not more than 
one year or to payment of a fine of not more than $3,000, or 
both: 
    (1) maintains or operates a gambling place or operates a 
bucket shop; 
    (2) intentionally participates in the income of a gambling 
place or bucket shop; 
    (3) conducts a lottery, or, with intent to conduct a 
lottery, possesses facilities for doing so; 
    (4) sets up for use for the purpose of gambling, or 
collects the proceeds of, any gambling device or bucket shop; 
    (5) with intent that it shall be so used, manufactures, 
sells or offers for sale, in whole or any part thereof, any 
gambling device including those defined in section 349.30, 
subdivision 2, and any facility for conducting a lottery, except 
as provided by section 349.40; or 
    (6) receives, records, or forwards bets or offers to bet 
or, with intent to receive, record, or forward bets or offers to 
bet, possesses facilities to do so; or 
    (7) pays any compensation for game credits earned on or 
otherwise rewards players of video games of chance as defined 
under section 349.50, subdivision 8. 
    Sec. 10.  Minnesota Statutes 1988, section 609.761, is 
amended to read: 
    609.761 [OPERATIONS PERMITTED.] 
    Subdivision 1.  [LAWFUL GAMBLING.] Notwithstanding sections 
609.755 and 609.76, an organization may conduct lawful gambling 
as defined in section 349.12, if authorized under chapter 349, 
and a person may manufacture, sell, or offer for sale a gambling 
device to an organization authorized under chapter 349 to 
conduct lawful gambling, and pari-mutuel betting on horse racing 
may be conducted under chapter 240. 
    Subd. 2.  [STATE LOTTERY.] Sections 609.755 and 609.76 do 
not prohibit the operation of the state lottery or the sale, 
possession, or purchase of tickets for the state lottery under 
chapter 349A.  
    Sec. 11.  Minnesota Statutes 1988, section 626.05, 
subdivision 2, is amended to read: 
    Subd. 2.  The term "peace officer" as used in sections 
626.04 to 626.17 means a sheriff, deputy sheriff, police 
officer, constable, agent of the bureau of criminal 
apprehension, agent of the division of gambling enforcement, or 
University of Minnesota peace officer. 
    Sec. 12.  Minnesota Statutes 1988, section 626.13, is 
amended to read: 
    626.13 [SERVICE, PERSONS MAKING.] 
    A search warrant may in all cases be served by any of the 
officers mentioned in its directions, but by no other person, 
except in aid of the officer on the officer's requiring it, the 
officer being present and acting in its execution.  If the 
warrant is to be served by an agent of the bureau of criminal 
apprehension or an agent of the division of gambling 
enforcement, the agent shall notify the chief of police of an 
organized full-time police department of the municipality or, if 
there is no such local chief of police, the sheriff or a deputy 
sheriff of the county in which service is to be made prior to 
execution.  
    Sec. 13.  Minnesota Statutes 1988, section 626.84, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] For purposes of sections 
626.84 to 626.863, the following terms have the meanings given 
them: 
    (a) "Board" means the board of peace officer standards and 
training. 
    (b) "Director" means the executive director of the board. 
    (c) "Peace officer" means an employee or an elected or 
appointed official of a political subdivision or law enforcement 
agency who is licensed by the board, charged with the prevention 
and detection of crime and the enforcement of the general 
criminal laws of the state and who has the full power of arrest, 
and shall also include the Minnesota state patrol, agents of the 
division of gambling enforcement, and state conservation 
officers. 
    (d) "Constable" has the meaning assigned to it in section 
367.40. 
    (e) "Deputy constable" has the meaning assigned to it in 
section 367.40. 
    (f) "Part-time peace officer" means an individual licensed 
by the board whose services are utilized by law enforcement 
agencies no more than an average of 20 hours per week, not 
including time spent on call when no call to active duty is 
received, calculated on an annual basis, who has either full 
powers of arrest or authorization to carry a firearm while on 
active duty.  The term shall apply even though the individual 
receives no compensation for time spent on active duty, and 
shall apply irrespective of the title conferred upon the 
individual by any law enforcement agency.  The limitation on the 
average number of hours in which the services of a part-time 
peace officer may be utilized shall not apply to a part-time 
peace officer who has formally notified the board pursuant to 
rules adopted by the board of the part-time peace officer's 
intention to pursue the specialized training for part-time peace 
officers who desire to become peace officers pursuant to 
sections 626.843, subdivision 1, clause (g) and 626.845, 
subdivision 1, clause (g).  
    (g) "Reserve officer" means an individual whose services 
are utilized by a law enforcement agency to provide 
supplementary assistance at special events, traffic or crowd 
control, and administrative or clerical assistance.  A reserve 
officer's duties do not include enforcement of the general 
criminal laws of the state, and the officer does not have full 
powers of arrest or authorization to carry a firearm on duty.  
    (h) "Law enforcement agency" means a unit of state or local 
government that is authorized by law to grant full powers of 
arrest and to charge a person with the duties of preventing and 
detecting crime and enforcing the general criminal laws of the 
state. 
    Sec. 14.  [INDIAN COMPACTS.] 
    Section 9 may not be construed as prohibiting the state 
from entering into a tribal-state compact under the provisions 
of the Federal Gaming Regulatory Act, Public Law No. 100-497, as 
it relates to video poker or video blackjack games of chance 
currently operated by Indian tribes in this state. 
    Sec. 15.  [EFFECTIVE DATE.] 
    Sections 1 to 14 are effective July 1, 1989, except that 
the provisions of section 3 relating to the director of the 
division of state lottery are effective the day following final 
enactment. 

                               ARTICLE 7 
COMPULSIVE GAMBLING
    Section 1.  [245.98] [COMPULSIVE GAMBLING TREATMENT 
PROGRAM.] 
    Subdivision 1.  [DEFINITION.] For the purposes of this 
section, "compulsive gambler" means a person who is chronically 
and progressively preoccupied with gambling and with the urge to 
gamble to the extent that the gambling behavior compromises, 
disrupts, or damages personal, family, or vocational pursuits. 
    Subd. 2.  [PROGRAM.] The commissioner of human services 
shall establish a program for the treatment of compulsive 
gamblers.  The commissioner may contract with a nonprofit entity 
with expertise regarding the treatment of compulsive gambling to 
operate the program.  The program may include the establishment 
of a statewide toll-free number, resource library, public 
education programs; regional in-service training programs and 
conferences for health care professionals, educators, treatment 
providers, employee assistance programs, and criminal justice 
representatives; and the establishment of certification 
standards for programs and service providers.  The commissioner 
may enter into agreements with other governmental or nonprofit 
entities and may employ or contract with consultants to 
facilitate the provision of these services or the training of 
individuals to qualify them to provide these services.  The 
program may also include inpatient and outpatient treatment and 
rehabilitation services and research studies.  The research 
studies must include baseline and prevalence studies for 
adolescents and adults to identify those at the highest risk. 
The program must be approved by the commissioner before it is 
established.  
    Subd. 3.  [REPORT.] The commissioner must report annually 
to the legislature by January 15 of each year of the manner in 
which the program to treat and prevent compulsive gamblers is 
being implemented. 
    Sec. 2.  [APPROPRIATION.] 
    $300,000 in fiscal year 1990 and $300,000 in fiscal year 
1991 is appropriated from the general fund to the commissioner 
of human services to implement the compulsive gambling treatment 
program under this section. 
    The director of the division of state lottery must transfer 
$100,000 in fiscal year 1990 and $100,000 in fiscal year 1991 
from the amount that would otherwise be credited to the lottery 
operations account to the general fund for the costs incurred 
for the compulsive gambling program under section 1. 
    Sec. 3.  [EFFECTIVE DATE.] 
    Sections 1 and 2 are effective July 1, 1989. 

                               ARTICLE 8 

                             APPROPRIATIONS 
    Section 1.  [DEPARTMENT OF GAMING.] 
    (a) $370,000 is appropriated from the general fund to the 
commissioner of gaming for the purposes of carrying out article 
4.  Of this amount, $182,000 is from the general fund for the 
fiscal year ending June 30, 1990, and $188,000 is from the 
general fund for the fiscal year ending June 30, 1991.  The 
director of the state lottery shall by June 30, 1990, transfer 
from the lottery operations account to the general fund in 
addition to any other transfers required by law $125,000 to 
reimburse the general fund for the appropriation to the 
commissioner of gaming for fiscal year 1991.  If the 
appropriation in either year of the 1990-1991 biennium is 
insufficient the appropriation for the other year is available. 
    (b) The approved complement of the department, in addition 
to the complements established by law for each of its divisions, 
is three positions. 
    Sec. 2.  [LOTTERY DIVISION.] 
    $8,500,000 is appropriated from the general fund to the 
director of the division of state lottery for the purposes of 
article 3.  This appropriation must be repaid from the lottery 
fund, with interest at the average monthly rate on invested 
treasurer's cash, not later than June 30, 1990. 
    The governor or the governor's designee may expend any part 
of this appropriation prior to the effective date of the 
appointment of the first director of the division of state 
lottery for carrying out any of the duties assigned under 
article 3 to the director or the governor.  
    Sec. 3.  [GAMBLING CONTROL.] 
    (a) The 13 positions relating to the responsibility for 
processing license applications under Minnesota Statutes, 
chapter 349, are transferred from the commissioner of revenue to 
the division of gambling control under Minnesota Statutes, 
section 15.039. 
    (b) The commissioner of administration shall, under 
Minnesota Statutes, section 15.039, transfer to the director of 
gambling control, from the appropriations made by law to the 
commissioner of revenue for the 1990-1991 biennium for lawful 
gambling activities, amounts necessary for the division to carry 
out the responsibilities of Minnesota Statutes, sections 349.11 
to 349.23. 
    (c) Reorganization order No. 152 of the commissioner of 
administration is void. 
    Sec. 4.  [PARI-MUTUEL RACING.] 
    (a) The commissioner of administration shall transfer, 
under Minnesota Statutes, section 15.039, the amounts 
appropriated by law to the Minnesota racing commission for the 
fiscal years 1990 and 1991 to the director of pari-mutuel racing 
for the purposes of carrying out the duties assigned to the 
division of pari-mutuel racing in article 1. 
    (b) The commissioner of administration shall, under 
Minnesota Statutes, section 15.039, transfer the authorized 
complement of the Minnesota racing commission to the division of 
pari-mutuel racing. 
    Sec. 5.  [DEPARTMENT OF PUBLIC SAFETY.] 
    Subdivision 1.  [TRANSFER FROM REVENUE.] The two positions 
relating to the responsibility for auditing and investigation of 
gambling under Minnesota Statutes, chapter 349, except for the 
responsibility for auditing tax returns are transferred from the 
commissioner of revenue to the commissioner of public safety for 
the division of gambling enforcement under Minnesota Statutes, 
section 15.039.  
    Subd. 2.  [PUBLIC SAFETY.] $750,000 is appropriated from 
the general fund to the commissioner of public safety to 
implement articles 1, 2, 3, and 5.  $375,000 is for the fiscal 
year ending June 30, 1990, and $375,000 is for the fiscal year 
ending June 30, 1991.  The approved complement of the department 
of public safety is increased by ten positions.  At least six of 
the additional positions authorized by this subdivision must be 
used to employ persons that are licensed under Minnesota 
Statutes, sections 626.84 to 626.863. 
    Sec. 6.  [ATTORNEY GENERAL.] 
    (a) $136,000 is appropriated from the general fund to the 
attorney general to administer articles 1 to 3 and 5.  $68,000 
is for the fiscal year ending June 30, 1990, and $68,000 is for 
the fiscal year ending June 30, 1991.  If the appropriation in 
either year of the 1990-1991 biennium is insufficient, the 
appropriation for the other year is available.  The approved 
complement of the attorney general's office is increased by one 
and one-half positions.  
    (b) The director of the state lottery shall by June 30, 
1990, transfer from the lottery operations account to the 
general fund, in addition to any other transfers required by 
law, $46,000 to reimburse the general fund for the appropriation 
to the attorney general under this section.  
    Sec. 7.  [COMMISSIONER OF REVENUE.] 
    $388,000 is appropriated from the general fund to the 
commissioner of revenue to provide for computer modifications 
necessary to administer Minnesota Statutes, chapter 349.  
$194,000 is for the fiscal year ending June 30, 1990, and 
$194,000 is for the fiscal year ending June 30, 1991. 
    Sec. 8.  [EFFECTIVE DATE.] 
    Section 2 is effective the day following final enactment.  
Sections 1 and 3 to 7 are effective July 1, 1989. 
    Presented to the governor May 30, 1989 
    Signed by the governor June 2, 1989, 10:55 p.m.