Minnesota Session Laws - 1989, Regular Session

  

                         Laws of Minnesota 1989 

                        CHAPTER 203-S.F.No. 1039 
           An act relating to charitable gambling; permitting 
          organizations to treat legal expenses as an allowable 
          expense; defining lawful purpose; amending Minnesota 
          Statutes 1988, sections 349.12, subdivision 11; and 
          349.15.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1988, section 349.12, 
subdivision 11, is amended to read: 
    Subd. 11.  (a) "Lawful purpose" means one or more of the 
following:  (a) (1) 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) (2) initiating, performing, or fostering worthy public works 
or enabling or furthering the erection or maintenance of public 
structures; (c) (3) lessening the burdens borne by government or 
voluntarily supporting, augmenting or supplementing services 
which government would normally render to the people; or (d) (4) 
payment of taxes imposed under this chapter, and other taxes 
imposed by the state or the United States on receipts from 
lawful gambling. 
    (b) "Lawful purpose" does not include the erection, 
acquisition, improvement, expansion, repair, or maintenance of 
any real property owned or leased by the an organization, unless 
the board has first specifically authorizes authorized the 
expenditures after finding: (1) that the property will be used 
exclusively for one or more of the purposes specified 
in paragraph (a), clauses (a) (1) to (c) (3); or (2) with 
respect to expenditures for repair or maintenance only, that the 
property is or will be used extensively as a meeting place or 
event location by other nonprofit organizations or community or 
service groups and that no rental fee is charged for the use; or 
(3) with respect to expenditures for erection or acquisition 
only, that the erection or acquisition is necessary to replace 
with a comparable building a building owned by the organization 
and destroyed or made uninhabitable by fire or natural disaster, 
provided that the expenditure may be only for that part of the 
replacement cost not reimbursed by insurance.  The board may by 
rule adopt procedures and standards to administer this 
subdivision. 
    Sec. 2.  Minnesota Statutes 1988, section 349.15, is 
amended to read: 
    349.15 [USE OF PROFITS.] 
    (a) 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 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 which may be expended for certain 
expenses.  
    (c) Allowable expenses include reasonable legal fees and 
damages that relate to the conducting of lawful gambling, except 
for legal fees or damages incurred in defending the organization 
against the board, attorney general, United States attorney, 
commissioner of revenue, or a county or city attorney.  
    Sec. 3.  [EFFECTIVE DATE.] 
    Section 2 is effective retroactively to January 1, 1987, 
and applies to any legal expense incurred after that date. 
    Presented to the governor May 19, 1989 
    Signed by the governor May 19, 1989, 11:30 p.m.