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Office of the Revisor of Statutes

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

  

                         Laws of Minnesota 1990 

                        CHAPTER 590-S.F.No. 2018 
           An act relating to lawful gambling; defining lawful 
          purposes for expenditures of gambling profits; 
          establishing licensing qualifications for 
          organizations, distributors, and manufacturers; 
          requiring organizations to report monthly on 
          expenditures and contributions of gambling profits; 
          authorizing the gambling control board to require 
          recipients of contributions of gambling profits to 
          register with the board; authorizing summary 
          suspension of gambling licenses; requiring pull-tabs 
          to be manufactured in Minnesota; requiring inspection 
          and testing of gambling equipment; requiring permits 
          for gambling premises; requiring gambling managers to 
          be licensed; requiring that employees of organizations 
          conducting lawful gambling be registered with the 
          board; prescribing specifications for video games of 
          chance and terminating all licenses for video games of 
          chance on January 1, 1992; regulating incentive 
          payments to lottery employees; prescribing 
          qualifications for lottery retailers; increasing 
          penalties for violations of lawful gambling statutes; 
          providing for the disposal of seized gambling 
          equipment; amending Minnesota Statutes 1988, sections 
          349.12, by adding subdivisions; 349.16; 349.17; 
          349.18; 349.19; 349.2123; 349.2125, subdivision 4; 
          349.2127, subdivisions 1, 3, and by adding 
          subdivisions; 349.22, by adding a subdivision; 349.30, 
          subdivision 2; 349.31; 349.32; 349.34; 349.35, 
          subdivision 1; 349.36; 349.38; 349.39; 349.50, 
          subdivision 8; 349.52, by adding a subdivision; 
          349.55; 349.59, subdivision 1; 609.75, subdivision 4; 
          349.59, subdivision 1; Minnesota Statutes 1989 
          Supplement, sections 299L.03, by adding subdivisions; 
          349.12, subdivisions 11 and 12; 349.15; 349.151, 
          subdivision 4, and by adding a subdivision; 349.152, 
          subdivision 2, and by adding subdivisions; 349.161; 
          349.162; 349.163; 349.164; 349.212, subdivision 2; 
          349.2122; 349.2125, subdivisions 1 and 3; 349.2127, 
          subdivisions 2, 4, and 5; 349.213; 349.22, subdivision 
          1; 349.501, subdivision 1; 349.502, subdivision 1; 
          349A.02, subdivision 5; 349A.06, subdivisions 2 and 4; 
          609.76, subdivision 1; proposing coding for new law in 
          Minnesota Statutes, chapters 299L; 349; repealing 
          Minnesota Statutes 1988, sections 349.14; 349.214, 
          subdivision 1, 1a, 3, and 4; Minnesota Statutes 1989 
          Supplement, sections 349.151, subdivision 4a; 349.20; 
          349.21; 349.22, subdivision 3; 349.502, subdivision 2; 
          Minnesota Statutes Second 1989 Supplement, section 
          349.214, subdivision 2; Laws 1989 First Special 
          Session, chapter 1, article 13, section 27. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1

                          REGULATORY PROVISIONS
    Section 1.  Minnesota Statutes 1989 Supplement, section 
299L.03, is amended by adding a subdivision to read: 
    Subd. 9.  [VIDEO GAMES OF CHANCE.] The commissioner shall 
exercise all powers and duties assigned to the commissioner 
relating to video games of chance under sections 349.50 to 
349.60 through the division and director. 
    Sec. 2.  Minnesota Statutes 1989 Supplement, section 
299L.03, is amended by adding a subdivision to read: 
    Subd. 10.  [FINGERPRINTING.] The director may require that 
any:  (1) licensee under sections 349.11 to 349.23, (2) employee 
of such a licensee, or (3) shareholder or officer of such a 
licensee be fingerprinted by the director, or otherwise submit 
to fingerprinting in a form and manner acceptable to the 
director. 
    Sec. 3.  [299L.06] [JURISDICTION.] 
    In any investigation or other enforcement activity where 
there is probable cause to believe that a criminal violation 
relating to gambling has occurred, except a violation relating 
only to taxation, the division rather than any other state 
department, agency, or office shall be the primary investigation 
entity where enforcement rests. 
    Sec. 4.  Minnesota Statutes Second 1989 Supplement, section 
349.12, subdivision 11, is amended to read: 
    Subd. 11.  (a) "Lawful purpose" means one or more of the 
following:  
    (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; 
    (2) initiating, performing, or fostering worthy public 
works or enabling or furthering the erection or maintenance of 
public structures; 
    (3) lessening the burdens borne by government or 
voluntarily supporting, augmenting or supplementing services 
which government would normally render to the people; 
    (4) payment of local taxes authorized under this chapter, 
and taxes imposed by the United States on receipts from lawful 
gambling; 
    (5) 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; 
    (6) payment of reasonable costs incurred in complying with 
the performing of annual audits required under section 349.19, 
subdivision 9; 
    (7) payment of real estate taxes and assessments on 
licensed gambling premises wholly owned by the licensed 
organization; or 
    (8) if approved by the board, construction, improvement, 
expansion, maintenance, and repair of athletic fields and 
outdoor ice rinks and their appurtenances, owned by the 
organization or a public agency. 
    (b) "Lawful purpose" does not include the erection, 
acquisition, improvement, expansion, repair, or maintenance of 
any real property or capital assets owned or leased by an 
organization, other than a hospital or nursing home exempt from 
taxation under section 501(c)(3) of the Internal Revenue Code, 
unless the board has first specifically authorized the 
expenditures after finding:  (1) that the property or capital 
assets will be used exclusively for one or more of the purposes 
specified in paragraph (a), clauses (1) to (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 shall 
by rule adopt procedures and standards to administer this 
subdivision. 
    (1) any expenditure by or contribution to a 501(c)(3) 
organization, provided that the organization and expenditure or 
contribution are in conformity with standards prescribed by the 
board under section 16; 
    (2) a contribution to an individual or family suffering 
from poverty, homelessness, or physical or mental disability, 
which is used to relieve the effects of that poverty, 
homelessness, or disability; 
    (3) a contribution to an individual for treatment for 
delayed posttraumatic stress syndrome, or a contribution to a 
recognized program for the treatment of compulsive gambling on 
behalf of an individual who is a compulsive gambler; 
    (4) a contribution to or expenditure on a public or private 
nonprofit educational institution registered with or accredited 
by this state or any other state; 
    (5) a contribution to a scholarship fund for defraying the 
cost of education to individuals, where the funds are awarded 
through an open and fair selection process; 
    (6) activities by an organization or a government entity 
which recognize humanitarian or military service to the United 
States, the state of Minnesota, or a community, subject to rules 
of the board; 
    (7) recreational, community, and athletic facilities and 
activities intended primarily for persons under age 21, provided 
that such facilities and activities do not discriminate on the 
basis of gender, as evidenced by (i) provision of equipment and 
supplies, (ii) scheduling of activities, including games and 
practice times, (iii) supply and assignment of coaches or other 
adult supervisors, (iv) provision and availability of support 
facilities, and (v) whether the opportunity to participate 
reflects each gender's demonstrated interest in the activity, 
provided that nothing in this clause prohibits a contribution to 
or expenditure on an educational institution or other entity 
that is excepted from the prohibition against discrimination 
based on sex contained in the Higher Education Act Amendments of 
1976, United States Code, title 20, section 1681; 
    (8) payment of local taxes authorized under this chapter, 
taxes imposed by the United States on receipts from lawful 
gambling, the tax imposed by section 349.212, subdivisions 1 and 
4, and the tax imposed on unrelated business income by section 
290.05, subdivision 3; 
    (9) payment of real estate taxes and assessments on 
licensed gambling premises wholly owned by the licensed 
organization paying the taxes, not to exceed the amount which an 
organization may expend under board rule on rent for premises 
used for lawful gambling; 
    (10) a contribution to the United States, this state or any 
of its political subdivisions, or any agency or instrumentality 
thereof other than a direct contribution to a law enforcement or 
prosecutorial agency; or 
    (11) a contribution to or expenditure by a nonprofit 
organization, church, or body of communicants, gathered in 
common membership for mutual support and edification in piety, 
worship, or religious observances. 
    (b) Notwithstanding paragraph (a), "lawful purpose" does 
not include: 
    (1) any expenditure made or incurred for the purpose of 
influencing the nomination or election of a candidate for public 
office or for the purpose of promoting or defeating a ballot 
question; 
    (2) any activity intended to influence an election or a 
governmental decision-making process; 
    (3) the erection, acquisition, improvement, expansion, 
repair, or maintenance of real property or capital assets owned 
or leased by an organization, except as provided in clause (6), 
unless the board has first specifically authorized the 
expenditures after finding that (i) the real property or capital 
assets will be used exclusively for one or more of the purposes 
in paragraph (a); (ii) with respect to expenditures for repair 
or maintenance only, that the property is or will be used 
extensively as a meeting place or event location by other 
nonprofit organizations or community or service groups and that 
no rental fee is charged for the use; (iii) with respect to 
expenditures, including a mortgage payment or other debt service 
payment, for erection or acquisition only, that the erection or 
acquisition is necessary to replace with a comparable building, 
a building owned by the organization and destroyed or made 
uninhabitable by fire or natural disaster, provided that the 
expenditure may be only for that part of the replacement cost 
not reimbursed by insurance; or (iv) with respect to 
expenditures, including a mortgage payment or other debt service 
payment, for erection or acquisition only, that the erection or 
acquisition is necessary to replace with a comparable building a 
building owned by the organization that was acquired from the 
organization by eminent domain or sold by the organization to a 
purchaser that the organization reasonably believed would 
otherwise have acquired the building by eminent domain, provided 
that the expenditure may be only for that part of the 
replacement cost that exceeds the compensation received by the 
organization for the building being replaced; 
    (4) an expenditure by an organization which is a 
contribution to a parent organization, foundation, or affiliate 
of the contributing organization, if the parent organization, 
foundation, or affiliate has provided to the contributing 
organization within one year of the contribution any money, 
grants, property, or other thing of value; 
    (5) a contribution by a licensed organization to another 
licensed organization unless the board has specifically 
authorized the contribution.  The board must authorize such a 
contribution when requested to do so by the contributing 
organization unless it makes an affirmative finding that the 
contribution will not be used by the recipient organization for 
one or more of the purposes in paragraph (a); or 
    (6) the erection, acquisition, improvement, or expansion of 
real property or capital assets which will be used for one or 
more of the purposes in paragraph (a), clause (7), unless the 
organization making the expenditures notifies the board at least 
15 days before making the expenditure. 
    Sec. 5.  Minnesota Statutes 1989 Supplement, section 
349.12, subdivision 12, is amended to read: 
    Subd. 12.  [ORGANIZATION.] "Organization" means any 
fraternal, religious, veterans, or other nonprofit organization 
which 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. 6.  Minnesota Statutes 1988, section 349.12, is 
amended by adding a subdivision to read: 
    Subd. 30.  [501(c)(3) ORGANIZATION.] "501(c)(3) 
organization" is an organization exempt from the payment of 
federal income taxes under section 501(c)(3) of the Internal 
Revenue Code. 
    Sec. 7.  Minnesota Statutes 1988, section 349.12, is 
amended by adding a subdivision to read: 
    Subd. 31.  [AFFILIATE.] "Affiliate" is any person or entity 
directly or indirectly controlling, controlled by, or under 
common control or ownership with a licensee of the board or any 
officer or director of a licensee of the board. 
    Sec. 8.  Minnesota Statutes 1988, section 349.12, is 
amended by adding a subdivision to read: 
    Subd. 32.  [PERSON.] "Person" is an individual, firm, 
association, partnership, corporation, trustee, or legal 
representative. 
    Sec. 9.  Minnesota Statutes 1988, section 349.12, is 
amended by adding a subdivision to read: 
    Subd. 34.  [FLARE.] "Flare" is the posted display, with 
registration stamp affixed, that sets forth the rules of a 
particular game of pull-tabs or tipboards, and that is 
associated with a specific deal of pull-tabs or grouping of 
tipboards. 
    Sec. 10.  Minnesota Statutes Second 1989 Supplement, 
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 60 percent of the gross profit less the tax 
imposed under section 349.212, subdivision 1, from bingo, and no 
more than 50 percent of the gross profit less the taxes tax 
imposed by section 349.212, subdivisions 1, 4, and subdivision 
6, from other forms of lawful gambling, may be expended for 
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.  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 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. 
    (d) 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. 11.  Minnesota Statutes 1989 Supplement, section 
349.151, is amended by adding a subdivision to read: 
    Subd. 3a.  [COMPENSATION.] The compensation of board 
members is as provided in section 15.0575, subdivision 3. 
    Sec. 12.  Minnesota Statutes 1989 Supplement, section 
349.151, subdivision 4, is amended to read: 
    Subd. 4.  [POWERS AND DUTIES.] (a) The board has the 
following powers and duties:  
    (1) to regulate lawful gambling to ensure it is conducted 
in the public interest; 
    (2) to issue, revoke, and suspend licenses to 
organizations, distributors, bingo halls, and manufacturers 
under sections 349.16, 349.161, 349.163, and 349.164, and 
gambling managers; 
    (2) (3) to collect and deposit license, permit, and 
registration fees due under this chapter; 
    (3) (4) to receive reports required by this chapter and 
inspect the all premises, records, books, and other documents of 
organizations and suppliers, distributors, manufacturers, and 
bingo halls to insure compliance with all applicable laws and 
rules; 
    (4) (5) to make rules required authorized by this chapter; 
    (5) (6) to register gambling equipment and issue 
registration stamps under section 349.162; 
    (6) (7) 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) (8) to report annually to the governor and legislature 
on its activities and on recommended changes in the laws 
governing gambling; 
    (8) (9) to impose civil penalties of not more than $500 per 
violation on organizations, distributors, and manufacturers, 
bingo halls, and gambling managers for failure to comply with 
any provision of sections 349.12 to 349.23 this chapter 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) to issue premises permits to organizations licensed to 
conduct lawful gambling; 
    (11) to delegate to the director the authority to issue 
licenses and premises permits under criteria established by the 
board.; 
    (12) to suspend or revoke licenses and premises permits of 
organizations, distributors, manufacturers, bingo halls, or 
gambling managers as provided in this chapter; 
    (13) to register recipients of net profits from lawful 
gambling and to revoke or suspend the registrations; 
    (14) to register employees of organizations licensed to 
conduct lawful gambling; 
    (15) to require fingerprints from persons determined by 
board rule to be subject to fingerprinting; and 
    (16) to take all necessary steps to ensure the integrity of 
and public confidence in lawful gambling.  
    (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.  
    Sec. 13.  Minnesota Statutes 1989 Supplement, section 
349.152, subdivision 2, is amended to read: 
    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 and premises permits 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. 14.  Minnesota Statutes 1989 Supplement, section 
349.152, is amended by adding a subdivision to read: 
    Subd. 3.  [CEASE AND DESIST ORDERS.] Whenever it appears to 
the 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 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 
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. 
    Sec. 15.  Minnesota Statutes 1989 Supplement, section 
349.152, is amended by adding a subdivision to read: 
    Subd. 4.  [EXECUTIVE ASSISTANT.] The director may appoint 
an executive assistant to the director, who is in the 
unclassified service. 
    Sec. 16.  [349.154] [EXPENDITURE OF NET PROFITS FROM LAWFUL 
GAMBLING.] 
    Subdivision 1.  [STANDARDS FOR CERTAIN ORGANIZATIONS.] The 
board shall by rule prescribe standards that must be met by any 
licensed organization that is a 501(c)(3) organization.  The 
standards must provide: 
    (1) operating standards for the organization, including a 
maximum percentage or percentages of the organization's total 
expenditures that may be expended for the organization's 
administration and operation; and 
    (2) standards for any expenditure by the organization of 
net profits from lawful gambling, including a requirement that 
the expenditure be related to the primary purpose of the 
organization. 
    Subd. 2.  [NET PROFIT REPORTS.] (a) Each licensed 
organization must report monthly to the board on a form 
prescribed by the board each expenditure and contribution of net 
profits from lawful gambling.  The reports must provide for each 
expenditure or contribution: 
    (1) the name, address, and telephone number of the 
recipient of the expenditure or contribution; 
    (2) the date the contribution was approved by the 
organization; 
    (3) the date, amount, and check number of the expenditure 
or contribution; and 
    (4) a brief description of how the expenditure or 
contribution meets one or more of the purposes in section 
349.12, subdivision 11, paragraph (a). 
    (b) Each report required under paragraph (a) must be 
accompanied by an acknowledgment, on a form the board 
prescribes, of each contribution of net profits from lawful 
gambling included in the report.  The acknowledgment must be 
signed by the recipient of the contribution, or, if the 
recipient is not an individual, or other authorized 
representative of the recipient, by an officer.  The 
acknowledgment must include the name and address of the 
contributing organization and each item in paragraph (a), 
clauses (1) to (3).  
    (c) The board shall provide the commissioners of revenue 
and public safety copies of each report received under this 
subdivision. 
    Subd. 3.  [REGISTRATION OF LAWFUL GAMBLING NET PROFIT 
RECIPIENTS.] The board may by rule require that any individual, 
organization, or other entity must be registered with the board 
to receive a contribution of net profits from lawful gambling.  
The rules may designate and define specific categories of 
recipients that are subject to registration.  The board may 
suspend or revoke the registration of any recipient the board 
determines has made an unlawful expenditure of net profits from 
lawful gambling. 
    Sec. 17.  Minnesota Statutes 1988, section 349.16, as 
amended by Laws 1989, chapter 334, article 2, sections 20 and 
21, and Laws 1989, First Special Session chapter 1, article 13, 
section 8, is amended to read: 
    349.16 [ORGANIZATION LICENSES.] 
    Subdivision 1.  [LICENSE REQUIRED.] An organization may 
conduct lawful gambling if it has a license to conduct lawful 
gambling and complies with this chapter. 
    Subd. 2.  [ISSUANCE OF GAMBLING LICENSES.] (a) Licenses 
authorizing organizations to conduct lawful gambling may be 
issued by the board to organizations meeting the 
qualifications of section 349.14, in paragraphs (b) to (h) if 
the board determines that the license is consistent with the 
purpose of sections 349.11 to 349.22.  
    (b) The organization must have been in existence for the 
most recent three years preceding the license application as a 
registered Minnesota nonprofit corporation or as an organization 
designated as exempt from the payment of income taxes by the 
Internal Revenue Code. 
    (c) The organization at the time of licensing must have at 
least 15 active members. 
    (d) The organization must not be in existence solely for 
the purpose of conducting gambling. 
    (e) The organization must not have as an officer or member 
of the governing body any person who, within the five years 
before the issuance of the license, has been convicted in a 
federal or state court of a felony or gross misdemeanor or who 
has ever been convicted of a crime involving gambling or who has 
had a license issued by the board or director revoked for a 
violation of law or board rule. 
    (f) The organization has identified in its license 
application the lawful purposes on which it proposes to expend 
net profits from lawful gambling. 
    (g) The organization has identified on its license 
application a gambling manager and certifies that the manager is 
qualified under this chapter. 
    (h) The organization must not, in the opinion of the board 
after consultation with the commissioner of revenue, be seeking 
licensing primarily for the purpose of evading or reducing the 
tax imposed by section 349.212, subdivision 6. 
    Subd. 3.  [TERM OF LICENSE:  SUSPENSION AND REVOCATION.] 
Licenses issued under this section are valid for one year and 
may be suspended by the board for a violation of law or board 
rule or revoked for what the board determines to be a pattern of 
willful violations violation 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. 1a.  [RESTRICTIONS ON LICENSE ISSUANCE.] On and after 
October 1, 1989, the board shall not issue an initial license to 
any organization if the board, in consultation with the 
department of revenue, determines that the organization is 
seeking licensing for the primary purpose of evading or reducing 
the tax imposed by section 349.212, subdivision 6. 
    Subd. 2 4.  [APPLICATION.] All applications for a license 
under this section must be on a form prescribed by the board. 
The board may require the applying organization to submit a copy 
of its articles of incorporation and other documents it deems 
necessary.  
    Subd. 5.  [RENEWALS.] The board shall not renew a license 
issued under this section unless it determines that the 
organization is in compliance with all laws and rules governing 
lawful gambling and is not delinquent in filing tax returns or 
paying taxes required under this chapter.  The board may 
delegate to the director the authority to make determinations 
required under this subdivision. 
    Subd. 3 6.  [FEES.] The board may issue four classes of 
organization licenses:  a class A license authorizing all forms 
of lawful gambling; a class B license authorizing all forms of 
lawful gambling except bingo; a class C license authorizing 
bingo only; and 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 board shall not charge a fee 
for an organization license. 
    Subd. 7.  [PURCHASE OF GAMBLING EQUIPMENT.] An organization 
may purchase gambling equipment only from a person licensed as a 
distributor. 
    Subd. 4 8.  [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; 
    (3) for all other cities, $100; and 
    (4) for counties, $375. 
    Sec. 18.  Minnesota Statutes 1989 Supplement, section 
349.161, as amended by Laws 1989, First Special Session chapter 
1, article 13, section 9, 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 or excluded from licensing under section 
349.214, except to an organization licensed for lawful gambling; 
    (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; 
    (3) sell, offer for sale, or furnish gambling equipment for 
use within the state that is not purchased or obtained from a 
manufacturer or distributor licensed under this chapter; or 
    (4) sell, offer for sale, or furnish gambling equipment for 
use within the state that has the same serial number as another 
item of gambling equipment of the same type sold or offered for 
sale or furnished for use in the state by that distributor.  
    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 ever been convicted of a felony within the past 
five years; 
    (2) has ever been convicted of a felony involving fraud or 
misrepresentation or a crime involving gambling; 
    (3) has ever been convicted of (i) assault, (ii) a criminal 
violation involving the use of a firearm, or (iii) making 
terroristic threats; 
    (4) is or has ever been engaged in an illegal business; 
    (4) (5) owes $500 or more in delinquent taxes as defined in 
section 270.72; 
    (5) (6) has had a sales and use tax permit revoked by the 
commissioner of revenue within the last two years; or 
    (6) (7) after demand, has not filed tax returns required by 
the commissioner of revenue. 
    Subd. 4.  [FEES.] The annual fee for a distributor's 
license is $2,500.  
    Subd. 5.  [PROHIBITION.] (a) No distributor, or employee of 
a distributor, may also be a wholesale distributor of alcoholic 
beverages or an employee of a wholesale distributor of alcoholic 
beverages. 
    (b) No distributor, distributor's or any representative, 
agent, affiliate, or employee of a distributor, may be (1) 
involved directly in the operation conduct of lawful gambling 
conducted by an organization; (2) keep or assist in the keeping 
of an organization's financial records, accounts, and 
inventories; or (3) prepare or assist in the preparation of tax 
forms and other reporting forms required to be submitted to the 
state by an organization. 
    (c) No manufacturer or distributor or person acting as a 
any representative, agent, affiliate, 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 or any representative, 
agent, affiliate, 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 or any representative, 
agent, affiliate, or employee of a distributor may alter or 
modify any gambling equipment, except to add a "last ticket 
sold" prize sticker. 
    (f) No distributor or any representative, agent, affiliate, 
or employee of a distributor may:  (1) recruit a person to 
become a gambling manager of an organization or identify to an 
organization a person as a candidate to become gambling manager 
for the organization; or (2) identify for an organization a 
potential gambling location. 
    (g) No distributor may purchase gambling equipment from any 
person not licensed as a manufacturer under section 349.163. 
    (h) No distributor may sell gambling equipment to any 
person in Minnesota other than (i) a licensed organization or 
organization exempt from licensing, or (ii) the governing body 
of an Indian tribe. 
    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.  A license under this section may be revoked for 
failure to meet the qualifications in subdivision 3 at any time 
or revoked for what the board determines to be a pattern of a 
willful violations violation 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 division of gambling enforcement in 
investigating the background of an applicant for a distributor's 
license and may reimburse the division of gambling enforcement 
for the costs thereof.  The board has access to all criminal 
history data compiled by the 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 home addresses of all employees.  Each distributor, and 
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.  
No person other than an employee of a licensed distributor shall 
make any sales on behalf of a licensed distributor. 
    Sec. 19.  Minnesota Statutes 1989 Supplement, section 
349.162, is amended to read: 
    349.162 [EQUIPMENT REGISTERED.] 
    Subdivision 1.  [STAMP REQUIRED.] (a) A distributor may not 
sell, 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. 
    (b) From January 1, 1991, to June 30, 1992, no distributor, 
organization, or other person may sell a pull-tab which is not 
clearly marked "For Sale in Minnesota Only." 
    (c) On and after July 1, 1992, no distributor, 
organization, or other person may sell a pull-tab which is not 
clearly marked "Manufactured in Minnesota For Sale in Minnesota 
Only." 
     (d) Paragraphs (b) and (c) do not apply to pull-tabs sold 
by a distributor to the governing body of an Indian tribe. 
    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 distributor purchased the equipment; 
    (2) the registration number of the equipment; 
    (3) the name and, address, and license or exempt permit 
number of the organization to which the sale was made; 
    (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.; 
    (7) the type of equipment; 
    (8) the serial number of the equipment; 
    (9) the name, form number, or other identifying information 
for each game; and 
    (10) in the case of bingo cards sold on and after January 
1, 1991, the individual number of each card. 
    The invoice for each sale must be retained for at least two 
3-1/2 years after the sale is completed and a copy of 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 division and the division of 
gambling enforcement may inspect the business premises, books, 
records, and other documents of a distributor at any reasonable 
time without notice and without a search warrant.  
     The board may require that a distributor submit the monthly 
report and invoices required in this subdivision via magnetic 
media or electronic data transfer. 
    Subd. 3.  [EXEMPTION.] For purposes of this section, bingo 
cards or sheets need not be stamped.  
    Subd. 4.  [PROHIBITION.] (a) No person other than 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 stamped and 
registered with the board.  
    (c) On and after January 1, 1991, no distributor may: 
     (1) sell a bingo card that does not bear an individual 
number; or 
     (2) sell a package of bingo cards that does not contain 
bingo cards in numerical order. 
    Subd. 5.  [SALES FROM FACILITIES.] (a) All gambling 
equipment purchased or possessed by a licensed distributor for 
resale in Minnesota must, prior to 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.  This paragraph does not apply to unregistered 
gambling equipment being transported in interstate commerce 
between locations outside this state, if the interstate shipment 
is verified by a bill of lading or other valid shipping document.
    Subd. 6.  [REMOVAL OF EQUIPMENT FROM INVENTORY.] Authorized 
employees of the board, the division of gambling enforcement of 
the department of public safety, and the commissioner of revenue 
may remove gambling equipment from the inventories of 
distributors and organizations and test that equipment to 
determine its compliance with all applicable laws and rules.  A 
distributor or organization may return to the manufacturer 
thereof any gambling equipment which is determined to be in 
violation of law or rule.  The cost to an organization of 
gambling equipment removed from inventory under this paragraph 
and found to be in compliance with all applicable law and rules 
is an allowable expense under section 349.15. 
    Sec. 20.  Minnesota Statutes 1989 Supplement, section 
349.163, as amended by Laws 1989, First Special Session chapter 
1, article 13, section 10, is amended to read: 
    349.163 [LICENSING OF MANUFACTURERS.] 
    Subdivision 1.  [LICENSE REQUIRED.] No manufacturer of 
gambling equipment may sell any gambling equipment to any person 
unless the manufacturer has been issued a current and valid 
license by the board under objective this section and other 
criteria prescribed by the board by rule. 
    A manufacturer licensed under this section may not also be 
directly or indirectly licensed as a distributor under section 
349.161, unless the manufacturer (1) does not manufacture any 
gambling equipment other than paddlewheels, and (2) was licensed 
as both a manufacturer and distributor on May 1, 1990. 
    Subd. 1a.  [QUALIFICATIONS.] A license may not be issued 
under this section to a person, or to a corporation, firm, or 
partnership that 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 ever been convicted of a felony; 
    (2) has ever been convicted of a crime involving gambling; 
    (3) has ever been convicted of (i) assault, (ii) a criminal 
violation involving the use of a firearm, or (iii) making 
terroristic threats; 
    (4) is or has ever been engaged in an illegal business; 
    (5) owes $500 or more in delinquent taxes as defined in 
section 270.72; 
    (6) has had a sales and use tax permit revoked by the 
commissioner of revenue within the last two years; or 
    (7) after demand, has not filed tax returns required by the 
commissioner of revenue. 
     Subd. 1b.  [APPLICATIONS; INFORMATION.] An applicant for a 
manufacturer's license must list on the license application the 
names and addresses of all subsidiaries, affiliates, and 
branches in which the applicant has any form of ownership or 
control, in whole or in part, without regard to whether the 
subsidiary, affiliate, or branch does business in Minnesota. 
    Subd. 2.  [LICENSE; FEE.] A license under this section is 
valid for one year.  The annual fee for the license is $2,500. 
    Subd. 2a.  [LICENSES; SUSPENSION, REVOCATION.] The board 
may suspend a license under this section for a violation of law 
or board rule.  The board may revoke a license under this 
section for (1) a willful violation of law or board rule, or (2) 
a conviction in another jurisdiction for a criminal violation 
that is related to gambling, or that would be a felony or gross 
misdemeanor if committed in Minnesota. 
    Subd. 3.  [PROHIBITED SALES.] (a) A manufacturer may not: 
    (1) sell gambling equipment to any person not licensed as a 
distributor unless the manufacturer is also a licensed 
distributor; or 
    (2) sell gambling equipment to a distributor in this state 
that has the same serial number as another item of gambling 
equipment of the same type that is sold by that manufacturer for 
use in this state.; 
    (3) from January 1, 1991, to June 30, 1992, sell to any 
person in Minnesota, other than the governing body of an Indian 
tribe, a pull-tab on which the manufacturer has not clearly 
printed the words "For Sale in Minnesota Only"; 
    (4) on and after July 1, 1992, sell to any person in 
Minnesota, other than the governing body of an Indian tribe, a 
pull-tab on which the manufacturer has not clearly printed the 
words "Manufactured in Minnesota For Sale In Minnesota Only"; or 
    (5) sell a pull-tab marked as required in paragraphs (3) 
and (4) to any person inside or outside the state, including the 
governing body of an Indian tribe, who is not a licensed 
distributor. 
    (b) On and after July 1, 1992, all pull-tabs sold by a 
licensed manufacturer to a person in Minnesota must be 
manufactured in Minnesota. 
    (c) A manufacturer, affiliate of a manufacturer, or person 
acting as a representative or agent of a manufacturer, may not 
provide a lessor of gambling premises or an appointed official 
any compensation, gift, gratuity, premium, contribution, or 
other thing of value. 
    Subd. 4.  [INSPECTION OF MANUFACTURERS.] Employees of the 
division and the division of gambling enforcement may inspect 
the books, records, inventory, and manufacturing operations 
business premises of a licensed manufacturer without notice 
during the normal business hours of the manufacturer.  
    Subd. 5.  [PULL-TAB AND TIPBOARD FLARES.] (a) A 
manufacturer may not ship or cause to be shipped into this state 
any deal of pull-tabs or tipboards that does not have its own 
individual flare as required for that deal by rule of the 
board.  A person other than a manufacturer may not manufacture, 
alter, modify, or otherwise change a flare for a deal of 
pull-tabs or tipboards except as allowed by this chapter or 
board rules. 
     (b) The flare of each deal of pull-tabs and tipboards sold 
by a manufacturer in Minnesota must have the Minnesota gambling 
stamp affixed.  The flare, with the stamp affixed, must be 
placed inside the wrapping of the deal which the flare describes.
    (c) Each pull-tab and tipboard flare must bear the 
following statement printed in letters large enough to be 
clearly legible: 
    "Pull-tab (or tipboard) purchasers -- This pull-tab (or 
tipboard) game is not legal in Minnesota unless: 
    -- a Minnesota gambling stamp is affixed to this sheet, and 
    -- the serial number handwritten on the gambling stamp is 
the same as the serial number printed on this sheet and on the 
pull-tab (or tipboard) ticket you have purchased." 
    (d) The flare of each pull-tab and tipboard game must bear 
the serial number of the game, printed in numbers at least 
one-half inch high. 
    (e) The flare of each pull-tab and tipboard game must be 
imprinted at the bottom with a bar code that provides: 
    (1) the name of the game; 
    (2) the serial number of the game; 
    (3) the name of the manufacturer; 
    (4) the number of tickets in the deal; 
    (5) the odds of winning each prize in the deal; and 
    (6) other information the board by rule requires. 
The serial number included in the bar code must be the same as 
the serial number of the tickets included in the deal.  A 
manufacturer who manufactures a deal of pull-tabs must affix to 
the outside of the box containing that game the same bar code 
that is imprinted at the bottom of a flare for that deal. 
    (f) No person may alter the bar code that appears on the 
outside of a box containing a deal of pull-tabs and tipboards.  
Possession of a box containing a deal of pull-tabs and tipboards 
that has a bar code different from the bar code of the deal 
inside the box is prima facie evidence that the possessor has 
altered the bar code on the box. 
    Subd. 6.  [SAMPLES OF GAMBLING EQUIPMENT.] The board shall 
require each licensed manufacturer to submit to the board one or 
more samples of each item of gambling equipment the manufacturer 
manufactures for sale in this state.  The board shall inspect 
and test all the equipment it deems necessary to determine the 
equipment's compliance with law and board rules.  Samples 
required under this subdivision must be approved by the board 
before the equipment being sampled is sold in this state.  The 
board may request the assistance of the commissioner of public 
safety and the director of the state lottery division in 
performing the tests.  
     Subd. 7.  [RECYCLED PAPER.] The board may, after January 1, 
1991, by rule require that all pull-tabs sold in Minnesota be 
manufactured using recycled paper. 
    Sec. 21.  Minnesota Statutes 1989 Supplement, 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 individual, corporation, partnership, 
or organization to conduct bingo without having obtained a 
current and valid bingo hall license under this section, unless 
the 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 organization, 
corporation, firm, or partnership that is not the legal owner of 
the facility, or to a person, organization, corporation, firm, 
or partnership which has as an officer, director, or other 
person in a supervisory or management position a person, who:  
    (1) has ever been convicted of a felony within the past 
five years; 
    (2) has ever been convicted of a felony involving fraud or 
misrepresentation or a crime involving gambling; or 
    (3) has ever been convicted of (i) assault, (ii) a criminal 
violation involving the use of a firearm, or (iii) making 
terroristic threats; 
    (4) owes delinquent taxes in excess of $500 as defined in 
section 270.72; or 
    (5) after demand, has not filed tax returns required by the 
commissioner of revenue. 
    Subd. 4.  [FEES.] The annual fee for a bingo hall license 
is $2,500. 
    Subd. 5.  [CRIMINAL HISTORY.] The board may request the 
assistance of the division of gambling enforcement in 
investigating the background of an applicant for a bingo hall 
license and may reimburse the 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 PROHIBITED ACTS.] No bingo hall 
licensee, person holding a financial or managerial interest in a 
bingo hall, or affiliate thereof may also: 
     (1) be a licensed distributor or 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) (2) provide any staff to conduct or assist in the 
conduct of bingo or any other form of lawful gambling during the 
bingo occasion on the premises; 
    (2) (3) acquire, provide storage or inventory control, or 
report the use of any gambling equipment used by an organization 
that conducts bingo lawful gambling on the premises; 
    (3) (4) provide accounting services to an organization 
conducting bingo lawful gambling on the premises; 
    (4) (5) solicit, suggest, encourage, or make any 
expenditures of gross receipts of an organization from lawful 
gambling; or 
    (5) (6) charge any fee to a person at a bingo occasion, 
without which the person could not play a bingo game or 
participate in another form of lawful gambling on the premises; 
    (7) provide assistance or participate in the conduct of 
lawful gambling on the premises; or 
    (8) permit more than 21 bingo occasions to be conducted on 
the premises in any week.  
    Subd. 8 7.  [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 
licensee based on the number of participants attending the bingo 
occasion or participating in lawful gambling on the premises, or 
based on the gross receipts or profit received by the 
organization.  All provisions of section 349.18 apply to lawful 
gambling conducted in bingo halls. 
    Subd. 9 8.  [REVOCATION AND SUSPENSION.] A license under 
this section may be suspended by the board for a violation of 
law or board rule or revoked for (1) failure to meet the 
qualifications in subdivision 3 at any time; or revoked for what 
the board determines to be (2) a pattern of willful violations 
violation 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. 22.  [349.1641] [LICENSES; SUMMARY SUSPENSION.] 
    The board may (1) summarily suspend the license of an 
organization that is more than three months late in filing a tax 
return required under this chapter, and may keep the suspension 
in effect until all required returns are filed; and (2) 
summarily suspend for not more than 90 days any license issued 
by the board or director for what the board determines are 
actions detrimental to the integrity of lawful gambling in 
Minnesota.  The board must notify the licensee at least 14 days 
before suspending the license under this paragraph.  A contested 
case hearing must be held within 20 days of the summary 
suspension and the administrative law judge's report must be 
issued within 20 days after the close of the hearing record.  In 
all cases involving summary suspension, the board must issue its 
final decision within 30 days after receipt of the report of the 
administrative law judge and subsequent exceptions and argument 
under section 14.61.  When an organization's license is 
suspended or revoked under this subdivision, the board shall 
within three days notify all municipalities in which the 
organization's gambling premises are located, and all licensed 
distributors in the state. 
    Sec. 23.  [349.165] [PREMISES PERMITS.] 
    Subdivision 1.  [PREMISES PERMIT REQUIRED; APPLICATION.] A 
licensed organization may not conduct lawful gambling at any 
site unless it has first obtained from the board a premises 
permit for the site.  The board shall prescribe a form for 
permit applications, and each application for a permit must be 
submitted on a separate form.  The board may by rule limit the 
number of premises permits that may be issued to an organization.
    Subd. 2.  [CONTENTS OF APPLICATION.] An application for a 
premises permit must contain: 
    (1) the name and address of the applying organization and 
of the organization's gambling manager; 
    (2) a description of the site for which the permit is 
sought, including its address and, where applicable, its 
placement within another premises or establishment; 
    (3) if the site is leased, the name and address of the 
lessor and information about the lease the board requires, 
including all rents and other charges for the use of the site; 
and 
    (4) other information the board deems necessary to carry 
out its purposes. 
    An organization holding a premises permit must notify the 
board in writing within ten days whenever any material change is 
made in the above information. 
    Subd. 3.  [FEES.] The board may issue four classes of 
premises permits, corresponding to the classes of licenses 
authorized under section 349.16, subdivision 6.  The annual fee 
for each class of permit is: 
    (1) $200 for a class A permit; 
    (2) $125 for a class B permit; 
    (3) $100 for a class C permit; and 
    (4) $75 for a class D permit. 
    Subd. 4.  [IDENTIFICATION OF PREMISES.] No organization may 
seek or accept assistance from a manufacturer or distributor, or 
a representative, agent, affiliate, or employee of a 
manufacturer or distributor, in identifying potential locations 
for gambling conducted by the organization. 
    Sec. 24.  [349.166] [EXCLUSIONS; EXEMPTIONS.] 
    Subdivision 1.  [EXCLUSIONS.] (a) Bingo may be conducted 
without a license and without complying with sections 349.17, 
subdivision 1, and 349.18, if it is conducted:  
    (1) in connection with a county fair, the state fair, or a 
civic celebration if it is not conducted for more than 12 
consecutive days in a calendar year; or 
   (2) by an organization that conducts four or fewer bingo 
occasions in a calendar year.  
    An organization that holds a license to conduct lawful 
gambling under this chapter may not conduct bingo under this 
subdivision.  
    (b) Bingo may be conducted within a nursing home or a 
senior citizen housing project or by a senior citizen 
organization without compliance with sections 349.11 to 349.213 
if the prizes for a single bingo game do not exceed $10, total 
prizes awarded at a single bingo occasion do not exceed $200, no 
more than two bingo occasions are held by the organization or at 
the facility each week, only members of the organization or 
residents of the nursing home or housing project are allowed to 
play in a bingo game, no compensation is paid for any persons 
who conduct the bingo, a manager is appointed to supervise the 
bingo, and the manager registers with the board.  The gross 
receipts from bingo conducted under the limitations of this 
subdivision are exempt from taxation under chapter 297A.  
    (c) Raffles may be conducted by an organization 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.  
    Subd. 2.  [EXEMPTIONS.] (a) Lawful gambling may be 
conducted by an organization as defined in section 349.12, 
subdivision 12, without complying with sections 349.151 to 
349.16; 349.167; 349.168; 349.18; 349.19; 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.  
    (b) If the organization fails to file a timely report as 
required by paragraph (a), 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 later filed and the penalty paid. 
    (c) Merchandise prizes must be valued at their fair market 
value. 
    (d) 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. 
    (e) An organization that is exempt from taxation on 
purchases of pull-tabs and tipboards under section 349.212, 
subdivision 4, paragraph (c), must return to the distributor any 
tipboard or pull-tab deal no part of which is used at the lawful 
gambling occasion for which it was purchased by the organization.
    Subd. 3.  [RAFFLES; CERTAIN ORGANIZATIONS.] Sections 349.21 
and 349.211, subdivision 3, and the membership requirements of 
sections 349.14 and 349.20 do not apply to raffles conducted by 
an organization that directly or under contract to the state or 
a political subdivision delivers health or social services and 
that is a 501(c)(3) organization if the prizes awarded in the 
raffles are real or personal property donated by an individual, 
firm, or other organization.  The person who accounts for the 
gross receipts, expenses, and profits of the raffles may be the 
same person who accounts for other funds of the organization.  
    Subd. 4.  [TAXATION.] An organization's receipts from 
lawful gambling that is exempt from licensing under this section 
are not subject to the tax imposed by section 297A.02 or 349.212.
    Sec. 25.  [349.167] [GAMBLING MANAGERS.] 
    Subdivision 1.  [GAMBLING MANAGER REQUIRED.] (a) All lawful 
gambling conducted by a licensed organization must be under the 
supervision of a gambling manager.  A gambling manager 
designated by an organization to supervise lawful gambling is 
responsible for the gross receipts of the organization and for 
its conduct in compliance with all laws and rules.  The 
organization must maintain, or require the person designated as 
a gambling manager to maintain, a fidelity bond in the sum or 
$25,000 in favor of the organization and the state, conditioned 
on (1) the faithful performance of the manager's duties; and (2) 
the payment of all taxes due under this chapter on lawful 
expenditures of gross profits from lawful gambling.  The terms 
of the bond must provide that notice be given to the board in 
writing not less than 30 days before its cancellation.  In the 
case of conflicting claims against a bond a claim by the state 
has preference over a claim by the organization. 
    (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. 
    (d) An organization may not have more than one gambling 
manager at any time. 
    Subd. 2.  [GAMBLING MANAGERS; LICENSES.] A person may not 
serve as a gambling manager for an organization unless the 
person possesses a valid gambling manager's license issued by 
the board.  The board may issue a gambling manager's license to 
a person applying for the license who: 
    (1) has received training as required in subdivision 5; 
    (2) has never been convicted of a felony; 
    (3) within the five years before the date of the license 
application, has not committed a violation of law or board rule 
that resulted in the revocation of a license issued by the 
board; 
    (4) has never been convicted of a criminal violation 
involving fraud, theft, tax evasion, misrepresentation, or 
gambling; 
    (5) has never been convicted of (i) assault, (ii) a 
criminal violation involving the use of a firearm, or (iii) 
making terroristic threats; and 
    (6) has not engaged in conduct the board determines is 
contrary to the public health, welfare, or safety or the 
integrity of lawful gambling. 
    A gambling manager's license is valid for one year unless 
suspended or revoked.  The annual fee for a gambling manager's 
license is $100. 
    Subd. 4.  [SUSPENSION; REVOCATION.] The board may suspend 
or revoke, as provided in board rules, a gambling manager's 
license for a violation of law or board rule.  A suspension or 
revocation is a contested case under sections 14.57 to 14.69 of 
the administrative procedure act. 
     Subd. 5.  [TRAINING OF GAMBLING MANAGERS.] (a) The board 
shall by rule require all persons licensed as gambling managers 
to receive periodic training in laws and rules governing lawful 
gambling.  The rules must contain the following requirements: 
    (1) each gambling manager must have received such training 
before being issued a new license; 
    (2) each gambling manager applying for a renewal of a 
license must have received training within the three years prior 
to the date of application for the renewal; and 
    (3) the training required by this subdivision may be 
provided by a person, firm, association, or organization 
authorized by the board to provide the training.  Before 
authorizing a person, firm, association, or organization to 
provide training, the board must determine that: 
    (i) the provider and all of the provider's personnel 
conducting the training are qualified to do so; 
    (ii) the curriculum to be used fully and accurately covers 
all elements of lawful gambling law and rules that the board 
determines are necessary for a gambling manager to know and 
understand; 
    (iii) the fee to be charged for participants in the 
training sessions is fair and reasonable; and 
    (iv) the training provider has an adequate system for 
documenting completion of training. 
    The rules may provide for differing training requirements 
for gambling managers based on the class of license held by the 
gambling manager's organization. 
    The board or the director may provide the training required 
by this subdivision using employees of the division. 
    Subd. 6.  [CRIMINAL HISTORY.] The board may request the 
assistance of the division of gambling enforcement in 
investigating the background of an applicant for a gambling 
manager's license and may reimburse the division of gambling 
enforcement for the costs thereof.  The board has access to all 
criminal history data compiled by the division of gambling 
enforcement on licensees and applicants. 
    Subd. 7.  [RECRUITMENT OF GAMBLING MANAGERS.] No 
organization may seek or accept assistance from a manufacturer 
or distributor, or a representative, agent, affiliate, or 
employee of a manufacturer or distributor, in identifying or 
recruiting candidates to become a gambling manager for the 
organization. 
    Sec. 26.  [349.168] [GAMBLING EMPLOYEES.] 
    Subdivision 1.  [REGISTRATION OF EMPLOYEES.] A person may 
not receive compensation for participating in the conduct of 
lawful gambling as an employee of a licensed organization unless 
the person has first registered with the board on a form the 
board prescribes.  The form must require each registrant to 
provide:  (1) the person's name, address, and social security 
number; (2) a current photograph; (3) the name, address, and 
license number of the employing organization; and (4) a listing 
of all employment in the conduct of lawful gambling within the 
previous three years, including the name and address of each 
employing organization and the circumstances under which the 
employment was terminated. 
    Subd. 2.  [IDENTIFICATION OF EMPLOYEES.] The board shall 
issue to each person registering under subdivision 1 a 
registration number and identification card, which must include 
the employee's photograph.  Each person receiving compensation 
for the conduct of lawful gambling must wear the identification 
card provided by the board at all times while conducting the 
lawful gambling. 
    Subd. 3.  [COMPENSATION.] 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 the following persons may receive 
compensation without being active members:  (1) sellers of 
pull-tabs, tipboards, raffle tickets, paddlewheel tickets, and 
bingo paper; (2) accountants performing auditing or bookkeeping 
services for the organization; and (3) attorneys providing legal 
services to the organization.  The board may by rule allow other 
persons not active members of the organization to receive 
compensation. 
    Subd. 4.  [AMOUNTS PAID.] The amounts of compensation that 
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. 5.  [COMPENSATION RECORDS.] An organization paying 
compensation to persons who participate in 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 itemize each payment made 
to each recipient of compensation and must include the amount 
and the full name, address, and membership status of each 
recipient. 
    Subd. 6.  [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, and paid directly to 
the employee.  
    Subd. 7.  [PENALTY.] (a) An organization that makes payment 
of compensation, or causes compensation to be made, that 
violates subdivision 4 must 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 must 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 must 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. 8.  [PERCENTAGE OF GROSS PROFIT PAID.] A licensed 
organization may pay a percentage of the gross profit from 
raffle ticket sales to a nonprofit organization that sells 
raffle tickets for the licensed organization. 
    Sec. 27.  [349.169] [FILING OF PRICES.] 
    Subdivision 1.  [FILING REQUIRED.] All manufacturers and 
distributors must file with the director, not later than the 
first day of each month, the prices at which the manufacturer or 
distributor will sell all gambling equipment in that month.  The 
filing must be on a form the director prescribes.  Prices filed 
must include all charges the manufacturer or distributor makes 
for each item of gambling equipment sold, including all volume 
discounts, exclusive of transportation costs.  All filings are 
effective on the first day of the month for which they are 
filed, except that a manufacturer or distributor may amend a 
filed price within five days of filing it. 
    Subd. 2.  [COPIES.] The director shall provide copies of 
price filings to any person requesting them and may charge a 
reasonable fee for the copies.  Any person may examine price 
filings in the division office at no cost, and the director 
shall make the filings available for that purpose. 
    Subd. 3.  [SALES AT FILED PRICES.] No manufacturer may sell 
to a distributor, and no distributor may sell to an 
organization, any gambling equipment for any price other than a 
price the manufacturer or distributor has filed with the 
director under subdivision 1, exclusive of transportation costs. 
    Sec. 28.  Minnesota Statutes 1988, section 349.17, as 
amended by Laws 1989, chapter 334, article 2, section 26, is 
amended to read: 
    349.17 [CONDUCT OF BINGO.] 
    Subdivision 1.  [BINGO OCCASIONS.] Not more than six seven 
bingo occasions each week may be conducted by an organization.  
At least 15 bingo games must be held at each occasion and a 
bingo occasion must continue for at least 1-1/2 hours but not 
more than four consecutive hours. 
    Subd. 2.  [BINGO ON LEASED PREMISES.] (a) A person or 
corporation, other than an organization, which leases any 
premises that it owns to two or more organizations for purposes 
including the conduct of bingo occasions, may not allow more 
than 18 bingo occasions to be conducted on the premises in any 
week.  
    (b) If an organization conducts bingo on premises it does 
not own, the organization must provide the board with the name 
of the owner and lessor of the premises, copies of all 
agreements between the organization and the owner or lessor, and 
the names of employees of the owner or lessor who will be 
responsible for the premises during the bingo occasion held by 
the organization. 
    (c) During any bingo occasion held conducted by an 
organization on premises it does not own, the organization shall 
be is directly responsible for the:  
    (1) staffing of the bingo occasion; 
    (2) conducting of lawful gambling during the bingo 
occasion; 
    (3) acquiring, storage, inventory control, and reporting of 
all gambling equipment used by the organization; and 
    (4) receipt, accounting, and all expenditures of gross 
receipts from lawful gambling; and 
    (5) preparation of the bingo packets. 
    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.  
    Subd. 3.  Each bingo winner must be determined and every 
prize shall be awarded and delivered the same day on which the 
bingo occasion is conducted. 
    Subd. 4.  [CHECKERS.] One or more checkers must be engaged 
for each bingo occasion.  The checker or checkers must record, 
on a form the board provides, the number of cards played in each 
game and the prizes awarded to recorded cards.  The form must 
provide for the inclusion of the registration number of each 
card and must include a checker's certification that the figures 
recorded are correct to the best of the checker's knowledge.  
    Subd. 5.  [BINGO CARD NUMBERING.] (a) The board shall by 
rule require that all licensed organizations:  (1) conduct bingo 
only using liquid daubers on cards that bear an individual 
number recorded by the distributor; (2) sell all bingo cards 
only in the order of the numbers appearing on the cards; and (3) 
use each bingo card for no more than one bingo occasion.  In 
lieu of the requirements of clauses (2) and (3), a licensed 
organization may electronically record the sale of each bingo 
card at each bingo occasion using an electronic recording system 
approved by the board. 
    (b) The requirements of paragraph (a) do not apply to a 
licensed organization that (1) has never received gross receipts 
from bingo in excess of $150,000 in any year, and (2) does not 
pay compensation to any person for participating in the conduct 
of lawful gambling. 
    Sec. 29.  [349.172] [PULL-TABS; INFORMATION REQUIRED TO BE 
POSTED.] 
    An organization selling pull-tabs must post for each deal 
of pull-tabs all major prizes that have been awarded for 
pull-tabs purchased from that deal.  The information must be 
posted prominently at the point of sale of the deal.  An easily 
legible pull-tab flare that lists prizes in that deal, and on 
which prizes are marked or crossed off as they are awarded, 
satisfies the requirement of this section that major prizes be 
posted, provided that a separate flare is posted for each deal 
of pull-tabs.  An organization must post or mark off each major 
prize immediately upon awarding the prize.  A "major prize" in a 
deal of pull-tabs is any prize that is at least 50 times the 
face value of any pull-tab in the deal. 
    Sec. 30.  [349.174] [PULL-TABS; DEADLINE FOR USE.] 
    A deal of pull-tabs and tipboards received by an 
organization before September 1, 1989, must be put into play by 
that organization before September 1, 1990, unless the deal 
bears a serial number that allows it to be traced back to its 
manufacturer and to the distributor who sold it to the 
organization.  An organization in possession on and after 
September 1, 1990, of a deal of pull-tabs and tipboards the 
organization received before September 1, 1989, may not put such 
a deal in play but must remove it from the organization's 
inventory and return it to the manufacturer. 
    Sec. 31.  Minnesota Statutes 1988, section 349.18, as 
amended by Laws 1989, chapter 334, article 2, sections 27 and 
28, is amended to read: 
    349.18 [PREMISES USED FOR GAMBLING.] 
    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 one year and 
must be in writing on a form prescribed by the board.  Copies of 
all leases must be made available to employees of the division 
and the division of gambling enforcement on request.  A lease 
may not provide for payments 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 on the leased space premises 
during times when lawful gambling is being conducted in the 
space on the premises. 
    Subd. 1a.  [STORAGE OF GAMBLING EQUIPMENT.] (a) Gambling 
equipment owned by or in the possession of a licensed an 
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.  
Gambling equipment owned by an organization may not be kept at a 
distributor's office, warehouse, storage unit, or other place of 
the distributor's business.  
    (b) Gambling equipment, other than devices for selecting 
bingo numbers, owned by a licensed an organization must be 
secured and 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 An organization may transport gambling 
equipment it owns or possesses between approved gambling 
equipment storage sites and to and from licensed distributors. 
    Subd. 2.  [EXCEPTIONS.] (a) A licensed An organization may 
conduct raffles on a premise it does not own or lease.  
    (b) A licensed An organization may with the permission of 
the board, conduct bingo on premises it does not own or lease 
for up to six 12 consecutive days in a calendar year, in 
connection with a county fair, the state fair, or civil a civic 
celebration.  
    (c) A licensed organization may, after compliance with 
section 349.213, conduct lawful gambling on premises other than 
the organization's licensed premise for one day per year for not 
more than 12 hours that day.  A lease for that time period for 
the exempted premises must accompany the request to the board. 
    Subd. 3.  [PROCEEDS FROM RENTAL.] Rental proceeds from 
premises owned by a licensed an organization and leased or 
subleased to one or more other licensed organizations for the 
purposes of conducting lawful gambling shall not be reported as 
gambling proceeds under this chapter.  
    Subd. 4.  [PROHIBITION.] (a) An organization may not pay 
rent to itself or to any of its affiliates for use of space for 
conducting lawful gambling. 
    (b) An organization may not pay rent for space for 
conducting lawful gambling from any account or fund other than 
the organization's separate gambling account. 
    Subd. 5.  [CERTAIN AGREEMENTS PROHIBITED.] An organization 
may not enter into or be a party to a lending agreement under 
which any of the organization's receipts from lawful gambling 
are pledged as collateral for a loan.  
    Sec. 32.  Minnesota Statutes 1988, section 349.19, as 
amended by Laws 1989, chapter 334, article 2, sections 29, 30, 
32, and 33, and Laws 1989, First Special Session chapter 1, 
article 13, section 11, is amended to read: 
    349.19 [RECORDS AND REPORTS.] 
    Subdivision 1.  [REQUIRED RECORD OF RECEIPTS.] A licensed 
organization must keep a record of each occasion on which it 
conducts gambling, including each bingo occasion and each day on 
which other forms of lawful gambling are conducted.  The record 
must include gross receipts, quantities of free plays if any, 
expenses, prizes, and profits gross profit.  The board may by 
rule provide for the methods by which expenses are documented.  
Gross receipts for bingo include any amount received by the 
organization which has been paid by a person at the bingo 
occasion to play the game, without which the player could not 
play the game.  In the case of bingo, gross receipts must be 
compared to the checkers' records for the occasion by a person 
who did not sell cards for the occasion.  Separate records must 
be kept for bingo and all other forms of lawful gambling.  
    Subd. 2.  [ACCOUNTS.] Gross receipts from lawful gambling 
by each organization at each licensed permitted premises must be 
segregated from all other revenues of the conducting 
organization and placed in a separate account.  All expenditures 
for expenses, taxes, and lawful purposes must be made from the 
separate account except in the case of expenditures previously 
approved by the organization's membership for emergencies as 
defined by board rule.  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 three 
days 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. 
    Subd. 3.  [EXPENDITURES.] All expenditures of gross profits 
from lawful gambling must be itemized as to payee, purpose, 
amount, and date of payment, and must be in compliance with 
section 349.154.  Authorization of the expenditures must be 
recorded in the regular monthly meeting minutes of the licensed 
organization.  Checks for expenditures of gross profits must be 
signed by at least two persons authorized by board rules to sign 
the checks.  
    Subd. 4.  [DISCREPANCIES.] If at a bingo occasion a 
discrepancy of more than $20 is found between the gross receipts 
as reported by the checkers and the gross receipts determined by 
adding the cash receipts, the discrepancy must be reported to 
the board within five days of the bingo occasion.  
    Subd. 5.  [REPORTS.] A licensed organization must report to 
the board and to its membership monthly, or quarterly in the 
case of a licensed organization which does not report more than 
$1,000 in gross receipts from lawful gambling in any calendar 
quarter, on its gross receipts, expenses, profits, and 
expenditure of profits from lawful gambling.  If the 
organization conducts both bingo and other forms of lawful 
gambling, the figures for both must be reported separately.  In 
addition, a licensed organization must report to the board 
monthly on its purchases of gambling equipment and must include 
the type, quantity, and dollar amount from each supplier 
separately.  The reports must be on a form the board prescribes. 
Submission of the report required by section 16 satisfies the 
requirement for reporting monthly to the board on expenditure of 
net profits. 
    Subd. 6.  [PRESERVATION OF RECORDS.] Records required to be 
kept by this section must be preserved by a licensed 
organization for at least 3-1/2 years and may be inspected by 
the commissioner of revenue, the commissioner of gaming, or the 
commissioner of public safety at any reasonable time without 
notice or a search warrant. 
    Subd. 7.  [TAX RECORDS.] The board may by rule require each 
licensed organization to provide copies of forms it files with 
the United States department of the treasury which are required 
for organizations exempt from income tax.  
    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. 
    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.  The board shall by rule prescribe 
standards for the audit, which must provide for the 
reconciliation of the organization's gambling account or 
accounts with the organization's reports filed under subdivision 
5 and section 16.  A complete, true, and correct copy of the 
audit report must be filed with the board upon completion of the 
audit. 
    Subd. 10.  [PULL-TAB RECORDS.] The board shall by rule 
require a licensed organization to require each winner of a 
pull-tab prize of $50 or more to present identification in the 
form of a drivers license, Minnesota identification card, or 
other identification the board deems sufficient to allow the 
identification and tracing of the winner.  The rule must require 
the organization to retain winning pull-tabs of $50 or more, and 
the identification of the winner of the pull-tab, for 3-1/2 
years. 
    Subd. 11.  [INFORMATION MADE PART OF ORGANIZATION MINUTES.] 
A licensed organization which receives a copy of a written audit 
under subdivision 9, or an audit or compliance report prepared 
by an agency of the state, must place the audit report or 
compliance report in the minutes of the next meeting of the 
organization following receipt of the report.  Copies of such 
minutes must be made available to all members of the 
organization upon request. 
    Sec. 33.  [349.191] [SALES ON CREDIT.] 
    Subdivision 1.  [CREDIT RESTRICTION.] A manufacturer may 
not offer or extend to a distributor, and a distributor may not 
extend to an organization, credit for a period of more than 30 
days for the sale of any gambling equipment.  No right of action 
exists for the collection of any claim based on credit 
prohibited by this subdivision.  The 30-day period allowed by 
this subdivision begins with the day immediately following the 
day of invoice and includes all successive days, including 
Sundays and holidays, to and including the 30th successive day. 
    Subd. 2.  [INVOICES.] All invoices prepared by a 
manufacturer or distributor and presented as part of a credit 
transaction for the purchase of gambling equipment must clearly 
bear the words "Notice:  State Law Prohibits the Extension of 
Credit For This Sale For More Than 30 Days." 
    Subd. 3.  [RULES.] Any rule of the board which requires a 
manufacturer to report to the board any distributor who is 
delinquent in payment for gambling equipment must provide that a 
distributor is subject to the rule if the distributor is more 
than 30 days delinquent in payment to a manufacturer. 
    Subd. 4.  [CREDIT; POSTDATED CHECKS.] For purposes of this 
subdivision, "credit" includes acceptance by a manufacturer or 
distributor of a postdated check in payment for gambling 
equipment. 
    Sec. 34.  Minnesota Statutes Second 1989 Supplement, 
section 349.212, subdivision 2, is amended to read: 
    Subd. 2.  [COLLECTION; DISPOSITION.] The taxes imposed by 
this section are due and payable to the commissioner of revenue 
at the time when the gambling tax return is required to be 
filed.  Returns covering the taxes imposed under this section 
must be filed with the commissioner of revenue on or before the 
20th day of the month following the close of the previous 
calendar month.  The commissioner may require that the returns 
be filed via magnetic media or electronic data transfer.  The 
proceeds, along with the revenue received from all license fees 
and other fees under sections 349.11 to 349.21 and 349.211, 
349.212, and 349.213, must be paid to the state treasurer for 
deposit in the general fund. 
    Sec. 35.  Minnesota Statutes 1989 Supplement, section 
349.2122, is amended to read: 
    349.2122 [MANUFACTURERS; REPORTS TO THE COMMISSIONER OF 
REVENUE; PENALTY.] 
    A manufacturer licensed with by the board who sells 
pull-tabs and tipboards to a licensed 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 any person in the state, 
including the established governing body of Indian tribes 
recognized by the United States Department of the Interior.  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 may require that the report be submitted via 
magnetic media or electronic data transfer.  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. 36.  Minnesota Statutes 1988, section 349.2123, is 
amended to read: 
    349.2123 [CERTIFIED PHYSICAL INVENTORY.] 
    The board or commissioner of revenue may, upon request, 
require a licensed distributor to furnish a certified physical 
inventory of the pull-tabs and tipboards all gambling equipment 
in stock.  The inventory must contain the information required 
by the board or the commissioner. 
    Sec. 37.  Minnesota Statutes 1989 Supplement, section 
349.213, is amended to read: 
    349.213 [LOCAL AUTHORITY.] 
    Subdivision 1.  [LOCAL REGULATION.] (a) 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 349.212; provided, however, that an ordinance requirement 
that such organizations must contribute ten percent of their net 
profits derived from lawful gambling to a fund administered and 
regulated by the responsible local unit of government without 
cost to such fund, for disbursement by the responsible local 
unit of government of the receipts for lawful purposes, is not 
considered an expenditure to the city or county nor a tax under 
section 349.212, and is valid and lawful.  
    (b) 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.  A trade area defined by a 
city under this subdivision must include each city contiguous to 
the defining city. 
    (c) A more stringent regulation or prohibition of lawful 
gambling adopted by a political subdivision under this 
subdivision must apply equally to all forms of lawful gambling 
within the jurisdiction of the political subdivision. 
    Subd. 2.  [LOCAL APPROVAL.] Before issuing or renewing an 
organization license a premises permit or bingo hall license, 
the board must notify the city council of the statutory or home 
rule city in which the organization's premises or the bingo hall 
is located or, if the premises or hall is located outside a 
city, the county board of the county and the town board of the 
town where the premises or hall is located.  The board may 
require organizations or bingo halls 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 application, the 
license may not be issued or renewed.  The board may not issue 
or renew a premises permit or bingo hall license unless the 
organization submits a resolution from the city council or 
county board approving the premises permit or bingo hall 
license.  The resolution must have been adopted within 60 days 
of the date of application for the new or renewed permit or 
license. 
    Sec. 38.  Minnesota Statutes 1988, section 349.30, 
subdivision 2, is amended to read: 
    Subd. 2.  "Gambling devices" means slot machines, roulette 
wheels, punchboards, and pin ball machines which return coins or 
slugs, chips, or tokens of any kind, which are redeemable in 
merchandise or cash device" has the meaning given it in section 
609.75, subdivision 4. 
    Sec. 39.  Minnesota Statutes 1988, section 349.31, is 
amended to read: 
    349.31 [GAMBLING DEVICE; POSSESSION OF.] 
    Subdivision 1.  [INTENTIONAL POSSESSION; WILLFUL KEEPING.] 
The intentional possession or willful keeping of a gambling 
device on a licensed premises is cause for the suspension or 
revocation of any license under which the licensed business is 
carried on upon the premises where the gambling device is found, 
provided that possession of gambling equipment as defined in 
section 349.12, subdivision 17, which is used for lawful 
gambling authorized by this chapter, and the manufacture of 
gambling devices for use in jurisdictions where use of the 
gambling device is legal as provided for by section 349.40 shall 
not be cause for revocation of a license. 
    Subd. 2.  [SUSPENSION AND REVOCATION OF LICENSES.] All 
licenses under which any licensed business is permitted to be 
carried on upon the licensed premises shall be suspended or 
revoked if the intentional possession or willful keeping of any 
such gambling devices upon the licensed premises is established, 
notwithstanding that it may not be made to appear that such 
devices have actually been used or operated for the purpose of 
gambling.  
    Sec. 40.  Minnesota Statutes 1988, section 349.32, is 
amended to read: 
    349.32 [ISSUING AUTHORITY TO SUSPEND OR REVOKE.] 
    The proceedings for suspension or revocation shall be had 
are held before the issuing authority, which shall have has the 
power to suspend or revoke the license or licenses involved, as 
hereinafter provided.  
    Sec. 41.  Minnesota Statutes 1988, section 349.34, is 
amended to read: 
    349.34 [PROCEEDINGS BEFORE ISSUING AUTHORITY; ORDER TO SHOW 
CAUSE.] 
    Upon the receipt of such information from any of the peace 
officers referred to in section 349.33, if any If an issuing 
authority, on receipt of information from a peace officer 
described in section 349.33, is of the opinion that cause exists 
for the suspension or revocation of any such a license, then 
that the authority shall issue an order to show cause directed 
to the licensee of the premises, stating the ground upon which 
the proceeding is based and requiring the licensee to appear and 
show cause at a time and place, within the county in which the 
licensed premises are located, not less than ten days after the 
date of the order, why the license should not be suspended or 
revoked.  That order to show cause shall be served upon the 
licensee in the manner prescribed by law for the service of 
summons in a civil action, or by certified mail, not less than 
eight days before the date fixed for the hearing thereof.  A 
copy of the order shall forthwith be mailed to the owner of the 
premises, as shown by the records in the office of the county 
recorder, at the owner's last known post office address.  A copy 
of the order shall at the same time be mailed to any other 
issuing authority, of which the authority issuing the order to 
show cause has knowledge, by which other license to that 
licensee may have been issued, and any such other authority may 
participate in the suspension or revocation proceedings after 
notifying the licensee and the officer or authority holding the 
hearing of its intention so to do on or before the date of 
hearing, and after the hearing take such action as it could have 
taken had it instituted the suspension or revocation proceedings 
in the first instance. 
    Sec. 42.  Minnesota Statutes 1988, section 349.35, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SUSPENSION; REVOCATION; STAY; APPEAL.] If, 
upon the hearing of the order to show cause, it appears that the 
licensee intentionally possessed or willfully kept upon the 
licensed premises any gambling device, then the license or 
licenses under which the licensed business is operated on the 
licensed premises, shall be suspended or revoked.  The order of 
suspension or revocation shall not be enforced during the period 
allowed by section 349.39 for taking an appeal.  
    Sec. 43.  Minnesota Statutes 1988, section 349.36, is 
amended to read: 
    349.36 [DUTIES OF COUNTY ATTORNEY.] 
    The county attorney of the county in which the hearing is 
held, or the city attorney if the issuing authority is the city, 
shall attend the hearing, interrogate the witnesses, and advise 
the issuing authority.  The county attorney shall also, and 
appear for the issuing authority on any appeal taken pursuant to 
the provisions of section 349.39.  
    Sec. 44.  Minnesota Statutes 1988, section 349.38, is 
amended to read: 
    349.38 [PROPERTY OWNERS LIABILITY.] 
    When a license is suspended or revoked under the provisions 
of sections 349.30 to 349.39, the owner of the premises upon 
which any licensed business has been operated shall not be 
penalized by reason thereof unless it is established that the 
owner had knowledge of the existence of the gambling devices 
resulting in license suspension or revocation.  
    Sec. 45.  Minnesota Statutes 1988, section 349.39, is 
amended to read: 
    349.39 [APPEAL TO DISTRICT COURT; STAY; CONTINUANCE UNDER 
BOND; HEARING UPON ONE YEAR LIMITATION ON PREMISES.] 
    Any licensee, or any owner of licensed premises, aggrieved 
by an order of an issuing authority suspending or revoking any 
license may appeal from that order to the district court of the 
county in which the licensee resides by serving a notice of the 
appeal upon the issuing authority or the clerk thereof.  The 
notice of appeal shall state that the person appealing takes an 
appeal to that district court from the order suspending or 
revoking the license or licenses, describing them and 
identifying the order appealed from.  This notice shall be 
served within 15 days from the date of service of the order 
appealed from, and the same, with proof of service thereof, 
shall be filed with the court administrator of the district 
court of the proper county.  The appeal shall stand for trial at 
the next term of the district court following the filing of the 
notice of appeal, without the service of any notice of trial, 
and shall be tried in the district court de novo.  The trial 
shall be by jury if the appellant shall so demand.  The licensee 
may continue to operate the licensed business or businesses 
until the final disposition of such appeal.  If the district 
court upon the appeal shall determine that any license involved 
in the appeal should be suspended or revoked, it may, 
nevertheless, in its discretion permit the continuance of the 
licensed business under a bond in the amount and in the form and 
containing the conditions prescribed by the court.  The district 
court on the appeal, or in a separate proceeding, may permit the 
issuance of a new license to a different licensee before the 
expiration of the period of one year specified in section 
349.35, subdivision 2, upon such terms and conditions imposed by 
the court as will insure that no gambling device shall 
thereafter be maintained upon the licensed premises.  
    Sec. 46.  Minnesota Statutes 1988, section 349.50, 
subdivision 8, is amended to read: 
    Subd. 8.  [VIDEO GAME OF CHANCE.] "Video game of chance" 
means games or devices that simulate games commonly referred to 
as poker, blackjack, craps, hi-lo, roulette or other common 
gambling forms, though not offering any type of pecuniary award 
or gain to players.  The term also includes any video game 
having one or more of the following characteristics:  
    (1) it is primarily a game of chance, and has no 
substantial elements of skill involved; 
    (2) it awards game credits or replays and contains a meter 
or device which records unplayed credits or replays and contains 
a device that permits them to be canceled. 
    Sec. 47.  Minnesota Statutes 1988, section 349.55, is 
amended to read: 
    349.55 [GAME SPECIFICATIONS.] 
    No payment may be made directly from any game or in 
connection with the operation of any device.  Each game must 
contain a random character generator, and any internal meter 
must be nonresettable.  Any game canceling replays or credits 
must cancel them no more than one at a time.  A video game of 
chance may not contain or have attached to it any switch, lever, 
button, or other device capable of canceling replays or credits 
in any way other than by playing the game offered by the 
machine.  A video game of chance must be programmed and must 
operate in such a way that all credits accumulated on a game 
must automatically cancel within 60 seconds of the completion of 
a play.  No person may cancel replays or credits on a video game 
of chance in any way other than by playing the game offered by 
the machine.  A video game of chance may not be restarted after 
cancellation of all accumulated credits except on insertion of a 
coin. 
    Sec. 48.  [349.61] [REPEAL; TERMINATION OF LICENSES.] 
    Subdivision 1.  [REPEAL.] Section 1 and sections 349.50; 
349.501; 349.502; 349.51; 349.52; 349.53; 349.54; 349.55; 
349.56; 349.57; 349.58; 349.59; and 349.60 are repealed January 
1, 1992.  All licenses issued under sections 349.51 and 349.52 
in effect on that date expire on that date.  The commissioner of 
finance shall on that date transfer all money in the video 
gaming license account to the general fund.  
    Subd. 2.  [NOT TO AFFECT CERTAIN COMPACTS.] Nothing in 
subdivision 1 is intended to affect the validity of any compact 
entered into before or after the effective date of this section 
between the state and the governing body of an Indian tribe that 
governs the conduct of any form of gambling on Indian lands. 
    Sec. 49.  Minnesota Statutes 1989 Supplement, section 
349A.02, subdivision 5, is amended to read: 
    Subd. 5.  [COMPENSATION INCENTIVE PLAN.] The compensation 
of employees in the division is as provided in chapter 
43A.  Subject to the provisions of section 43A.18, subdivision 
1, the commissioner of employee relations director 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. 
    Sec. 50.  Minnesota Statutes 1989 Supplement, section 
349A.06, subdivision 2, is amended to read: 
    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; or 
    (7) is a currency exchange, as defined in section 53A.01. 
    A contract entered into before August 1, 1990, which 
violates clause (7) may continue in effect until its expiration 
but may not be renewed. 
    (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. 
    Sec. 51.  Minnesota Statutes 1989 Supplement, section 
349A.06, subdivision 4, is amended to read: 
    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.  The 
director has access to all criminal history data compiled by the 
director of gambling enforcement on any person (1) holding or 
applying for a retailer contract, (2) any person holding a 
lottery vendor contract or who has submitted a bid on such a 
contract, and (3) any person applying for employment with the 
lottery. 
    Sec. 52.  Minnesota Statutes 1988, section 609.75, 
subdivision 4, is amended to read: 
    Subd. 4.  [GAMBLING DEVICE.] A gambling device is a 
contrivance which for a consideration affords the player an 
opportunity to obtain something of value, other than free plays, 
automatically from the machine or otherwise, the award of which 
is determined principally by chance.  "Gambling device" includes 
any video game of chance, as defined in section 349.50, 
subdivision 8, that is not in compliance with sections 349.50 to 
349.60. 
    Sec. 53.  [TRANSPORTATION OF UNSTAMPED DEALS; 
APPLICABILITY.] 
    Until January 1, 1991, Minnesota Statutes, section 
349.2127, subdivision 4, does not prevent the otherwise lawful 
transfer of gambling equipment to a licensed facility in 
Minnesota from a facility in an adjoining state which is owned 
and operated by the licensed Minnesota distributor who makes the 
transfer. 
    Sec. 54.  [LEGISLATIVE FINDING.] 
    The legislature finds and determines that, because of (1) 
the difficulty of ensuring the security and integrity of 
pull-tabs when they are manufactured in another state, and (2) 
the enhanced inspection and regulation of the manufacture of 
pull-tabs, and the consequent enhancement of their security and 
integrity that would result from their manufacture in Minnesota, 
it is necessary and desirable that all pull-tabs sold in the 
state after June 30, 1992, be required to be manufactured in 
Minnesota. 
    Sec. 55.  [REPEALER.] 
    (a) Minnesota Statutes 1988, sections 349.14; and 349.214, 
subdivisions 1, 1a, 3, and 4; Minnesota Statutes 1989 
Supplement, section 349.151, subdivision 4a; and Minnesota 
Statutes Second 1989 Supplement, section 349.214, subdivision 2, 
are repealed.  
    (b) Minnesota Statutes 1989 Supplement, sections 349.20 and 
349.21, are repealed. 
    (c) Laws 1989, First Special Session chapter 1, article 13, 
section 27, is repealed. 
    Sec. 56.  [EFFECTIVE DATE.] 
    Section 55, paragraph (c), is effective the day following 
final enactment.  Sections 23; 25; 26; 28, subdivision 5; 47; 
and 55, paragraph (b), are effective January 1, 1991. 

                               ARTICLE 2

                           PENALTY PROVISIONS
    Section 1.  Minnesota Statutes 1989 Supplement, 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; 
    (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; and 
    (11) any gambling equipment not in conformity with law or 
board rule. 
    Sec. 2.  Minnesota Statutes 1989 Supplement, section 
349.2125, subdivision 3, is amended to read: 
    Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
DISPOSITION OF SEIZED PROPERTY.] Within two ten days after the 
seizure of any alleged contraband, the person making the seizure 
shall deliver make available 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 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 60 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 by the seizing authority 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 seizing authority 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. 3.  Minnesota Statutes 1988, section 349.2125, 
subdivision 4, is amended to read: 
    Subd. 4.  [DISPOSAL.] (a) The property described in 
subdivision 1, clauses (4) and (5), must be confiscated after 
conviction of the person from whom it was seized, upon 
compliance with the following procedure:  the seizing authority 
shall file with the court a separate complaint against the 
property, describing it and charging its use in the specific 
violation, and specifying substantially the time and place of 
the unlawful use.  A copy of the complaint must be served upon 
the defendant or person in charge of the property at the time of 
seizure, if any.  If the person arrested is acquitted, the court 
shall dismiss the complaint against the property and order it 
returned to the persons legally entitled to it.  Upon conviction 
of the person arrested, the court shall issue an order directed 
to any person known or believed to have any right, title or 
interest in, or lien upon, any of the property, and to persons 
unknown claiming any right, title, interest, or lien in it, 
describing the property and (1) stating that it was seized and 
that a complaint against it, charging the specified violation, 
has been filed with the court, (2) requiring the persons to file 
with the court administrator their answer to the complaint, 
setting forth any claim they may have to any right or title to, 
interest in, or lien upon the property, within 30 days after the 
service of the order, and (3) notifying them in substance that 
if they fail to file their answer within the time, the property 
will be ordered sold by the seizing authority.  The court shall 
cause the order to be served upon any person known or believed 
to have any right, title, interest, or lien as in the case of a 
summons in a civil action, and upon unknown persons by 
publication, as provided for service of summons in a civil 
action.  If no answer is filed within the time prescribed, the 
court shall, upon affidavit by the court administrator, setting 
forth the fact, order the property sold by the seizing 
authority.  Seventy percent of the proceeds of the sale, after 
deducting the expense of keeping the property and fees and costs 
of sale, must be paid into the state treasury and credited to 
the general fund of forfeited property, after payment of 
seizure, storage, forfeiture and sale expenses, must be 
forwarded to the seizing authority for deposit as a supplement 
to its operating fund or similar fund for official use, and 20 
percent must be forwarded to the county attorney or other 
prosecuting agency that handled the forfeiture for deposit as a 
supplement to its operating fund or similar fund for 
prosecutorial purposes.  The remaining ten percent of the 
proceeds must be forwarded within 60 days after resolution of 
the forfeiture to the department of human services to fund 
programs for the treatment of compulsive gamblers.  If answer is 
filed within the time provided, the court shall fix a time for a 
hearing, which shall be not less than ten nor more than 30 days 
after the time for filing answer expires.  At the time fixed for 
hearing, unless continued for cause, the matter shall be heard 
and determined by the court, without a jury, as in other civil 
actions.  
    (b) If the court finds that the property, or any part of 
it, was used in the violation specified in the complaint, it 
shall order the property unlawfully used, sold as provided by 
law, unless the owner shows to the satisfaction of the court 
that the owner had no notice or knowledge or reason to believe 
that the property was used or intended to be used in the 
violation.  The officer making a sale, after deducting the 
expense of keeping the property, the fee for seizure, and the 
costs of the sale, shall pay all liens according to their 
priority, which are established at the hearing as being bona 
fide and as existing without the lienor having any notice or 
knowledge that the property was being used or was intended to be 
used for or in connection with the violation specified in the 
order of the court, and shall pay the balance of the 
proceeds into the state treasury to be credited to the general 
fund to the seizing authority for official use and sharing in 
the manner provided in paragraph (a).  A sale under this section 
shall free the property sold from any and all liens on it.  
Appeal from the order of the district court will lie as in other 
civil cases.  At any time after seizure of the articles 
specified in this subdivision, and before the hearing provided 
for, the property must be returned to the owner or person having 
a legal right to its possession, upon execution of a good and 
valid bond to the state, with corporate surety, in the sum of 
not less than $100 and not more than double the value of the 
property seized, to be approved by the court in which the case 
is triable, or a judge of it, conditioned to abide any order and 
the judgment of the court, and to pay the full value of the 
property at the time of the seizure.  The seizing authority may 
dismiss the proceedings outlined in this subdivision when the 
seizing authority considers it to be in the best interests of 
the state public interest to do so.  
    Sec. 4.  Minnesota Statutes 1988, section 349.2127, 
subdivision 1, is amended to read: 
    Subdivision 1.  [COUNTERFEITING.] No A person shall is 
guilty of a felony who, with intent to defraud the state, make 
makes, alter alters, forge forges, or counterfeit 
counterfeits any license or stamp provided for in this chapter, 
or have has in possession any forged, spurious, or altered 
stamps, with the intent, or with the result of, depriving the 
state of the tax imposed by this chapter.  
    Sec. 5.  Minnesota Statutes 1988, section 349.2127, is 
amended by adding a subdivision to read: 
    Subd. 6.  [UNLAWFUL EXPENDITURES.] (a) A person who 
knowingly or with reason to know makes an unlawful expenditure 
of gross profits from lawful gambling is guilty of a crime and 
may be sentenced as provided in this subdivision. 
    (b) If the unlawful expenditure is of $200 or less, the 
penalty in section 349.22, subdivision 1, applies. 
    (c) If the unlawful expenditure is of more than $200 but 
not more than $2,500, the person is guilty of a gross 
misdemeanor. 
     (d) If the unlawful expenditure is of more than $2,500, the 
person is guilty of a felony.  
    (e) For purposes of this subdivision, expenditures made 
within a six-month period may be aggregated and the defendant 
charged accordingly. 
    Sec. 6.  Minnesota Statutes 1989 Supplement, section 
349.2127, subdivision 2, is amended to read: 
    Subd. 2.  [PROHIBITION AGAINST POSSESSION.] (a) No A 
person, other than a licensed distributor, shall sell, offer is 
guilty of a crime who sells, offers for sale, or have in 
possession with intent to sell or offer for sale, possesses a 
pull-tab or tipboard deal not stamped in accordance with the 
provisions of this chapter.  A violation of this paragraph is a 
gross misdemeanor if it involves ten or fewer pull-tab or 
tipboard deals.  A violation of this paragraph is a felony if it 
involves more than ten pull-tab or tipboard deals, or a 
combination of more than ten deals of pull-tabs and tipboards. 
    (b) No A person, other than a licensed distributor or 
licensed or exempt an organization under section 349.214 may 
possess with the intent to sell or offer licensed or exempt or 
excluded from licensing under this chapter, is guilty of a crime 
who sells, offers to sell, or possesses gambling equipment, 
except (1) equipment exempt from taxation, or (2) equipment put 
into play by a licensed or exempt organization.  A violation of 
this paragraph is a gross misdemeanor if it involves ten or 
fewer pull-tab or tipboard deals.  A violation of this paragraph 
is a felony if it involves more than ten pull-tab or tipboard 
deals, or a combination of more than ten deals of pull-tabs and 
tipboards. 
    (c) No A person, firm, or organization may possess is 
guilty of a crime who alters, modifies, or counterfeits 
pull-tabs, tipboards, or tipboard tickets, or possesses altered, 
modified, or counterfeit pull-tabs or, tipboards, or tipboard 
tickets with intent to sell, redeem, or exchange them.  A 
violation of this paragraph is a gross misdemeanor if the total 
face value for all such pull-tabs, tipboards, or tipboard 
tickets does not exceed $200.  A violation of this paragraph is 
a felony if the total face value exceeds $200.  For purposes of 
this paragraph, the face value of all pull-tabs, tipboards, and 
tipboard tickets altered, modified, or counterfeited within a 
six-month period may be aggregated and the defendant charged 
accordingly. 
    Sec. 7.  Minnesota Statutes 1988, section 349.2127, 
subdivision 3, is amended to read: 
    Subd. 3.  [FALSIFICATION OF RECORDS FALSE INFORMATION.] No 
(a) A person is guilty of a felony if the person is required by 
section 349.2121, subdivision 2, to keep records or to make 
returns shall falsify or fail and falsifies or fails to keep the 
records or falsify or fail falsifies or fails to make the 
returns.  
    (b) A person is guilty of a felony who: 
    (1) knowingly submits materially false information in any 
license application or other document or communication submitted 
to the board; or 
    (2) knowingly submits materially false information in any 
report, document, or other communication submitted to the 
commissioner of revenue in connection with lawful gambling or 
with any provision of this chapter. 
    Sec. 8.  Minnesota Statutes Second 1989 Supplement, section 
349.2127, subdivision 4, is amended to read: 
    Subd. 4.  [TRANSPORTING UNSTAMPED DEALS.] No A person shall 
transport is guilty of a gross misdemeanor who transports into, 
or receive receives, carry carries, or move moves from place 
to place in this state, any deals of pull-tabs or tipboards not 
stamped in accordance with this chapter except in the course of 
interstate commerce.  A person is guilty of a felony who 
violates this subdivision with respect to more than ten pull-tab 
or tipboard deals, or a combination of more than ten deals of 
pull-tabs and tipboards. 
    Sec. 9.  Minnesota Statutes Second 1989 Supplement, section 
349.2127, subdivision 5, is amended to read: 
    Subd. 5.  [PROVIDING INFORMATION.] No (a) An employee of an 
organization shall may not provide any information to a player 
that would provide an unfair advantage to the player related to 
the potential winnings of any lawful gambling activity.  For 
purposes of this subdivision, "employee" includes a volunteer. 
    (b) An employee may not provide, and a person may not 
receive, with expectation of pecuniary gain to either, any 
information that would provide an unfair advantage to the 
recipient of the information related to the potential winnings 
of any lawful gambling activity.  A person who violates this 
paragraph is guilty of a gross misdemeanor.  A person who 
violates this paragraph within five years after a previous 
conviction under this paragraph is guilty of a felony. 
    (c) For purposes of this subdivision, "employee" includes a 
volunteer. 
    Sec. 10.  Minnesota Statutes 1988, section 349.2127, is 
amended by adding a subdivision to read: 
    Subd. 7.  [CHECKS FOR GAMBLING PURCHASES.] An organization 
may not accept checks in payment for the purchase of any 
gambling equipment or for the chance to participate in any form 
of lawful gambling. 
    Sec. 11.  Minnesota Statutes 1989 Supplement, section 
349.22, subdivision 1, is amended to read: 
    Subdivision 1.  [GROSS MISDEMEANOR PENALTY.] (a) A person 
who violates any provision of sections 349.11 to 349.23 for 
which another penalty is not provided is guilty of a misdemeanor.
     (b) A person who violates any provision of sections 349.11 
to 349.23 for which another penalty is not provided is guilty of 
a gross misdemeanor if the violation occurs within five years 
after a previous conviction under any provision of sections 
349.11 to 349.23. 
    (c) A person who in any manner violates sections 349.11 to 
349.23 to evade a tax imposed by a provision of this chapter, or 
who aids and abets the evasion of 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. 12.  Minnesota Statutes 1988, section 349.22, is 
amended by adding a subdivision to read: 
    Subd. 3a.  [AGGREGATION.] When the value of prizes or 
pull-tabs received within a six-month period is aggregated under 
this section and two or more offenses were committed by the same 
person in two or more counties, the accused may be prosecuted in 
any county in which one of the offenses was committed for all of 
the offenses aggregated under this section. 
    Sec. 13.  Minnesota Statutes 1989 Supplement, section 
349.501, subdivision 1, is amended to read: 
    Subdivision 1.  [TO THE PUBLIC.] An operator must 
prominently post in the owner's business premises a brief 
description of the legal consequences of awarding or receiving 
cash instead of game credits or replays on video games of chance 
in violation of section sections 349.502 and 609.76, subdivision 
1. 
    The information is prominently posted if it can be readily 
seen by a player immediately before the player participates in 
the video game of chance. 
    Sec. 14.  Minnesota Statutes 1989 Supplement, section 
349.502, subdivision 1, is amended to read: 
    Subdivision 1.  [MISDEMEANOR.] A person who awards or 
receives cash instead of game credits or anything of value other 
than replays on a video game of chance is guilty of a 
misdemeanor.  An owner who directs an employee to violate this 
section is also considered to have violated this section.  For 
purposes of this subdivision "cash" includes checks. 
    Sec. 15.  Minnesota Statutes 1988, section 349.52, is 
amended by adding a subdivision to read: 
    Subd. 5.  [LOCAL REGULATION.] A statutory or home rule 
charter city or county has the authority to adopt more stringent 
regulations concerning video games of chance, including 
regulations prohibiting video games of chance within its 
jurisdiction. 
    Sec. 16.  Minnesota Statutes 1988, section 349.59, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PACKAGES DECLARED TO BE CONTRABAND.] The 
following are declared to be contraband:  
    (1) all video games of chance which do not have a licensing 
stamp affixed to them and all containers that contain contraband 
video games of chance; 
    (2) all video games of chance to which the commissioner or 
designated representatives have been denied access for the 
inspection of contents.  In lieu of seizure, the commissioner or 
designated representatives may seal the game to prevent its use 
until inspection of contents is permitted; 
    (3) all video games of chance at a location at which there 
is no location agreement in force; and 
    (4) all video games of chance illegally brought into the 
state; and 
    (5) all video games of chance that do not conform to the 
game specifications contained in section 349.55.  
    Sec. 17.  Minnesota Statutes 1989 Supplement, section 
609.76, subdivision 1, is amended to read: 
    Subdivision 1.  [GROSS MISDEMEANORS.] (a) 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; 
    (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, with anything of value other than free plays, 
players of video games of chance as defined under in section 
349.50, subdivision 8, or who directs an employee to pay any 
such compensation or reward. 
    (b) On conviction of a person for the crime established in 
paragraph (a), clause (7), the court shall impose a fine of not 
less than $700. 
    Sec. 18.  [REPEALER.] 
    Minnesota Statutes 1989 Supplement, sections 349.22, 
subdivision 3; and 349.502, subdivision 2, are repealed. 
    Sec. 19.  [EFFECTIVE DATE; APPLICATION.] 
    Sections 1 to 18 are effective August 1, 1990.  Sections 4 
to 12, 14, 17, and 18 apply to violations committed on or after 
that date. 
    Presented to the governor April 28, 1990 
    Signed by the governor May 4, 1990, 11:02 p.m.