Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1995, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 261-H.F.No. 265
An act relating to gambling; making technical
amendments to eliminate references to teleracing
facilities; regulating testing facilities for the
testing of gambling devices; regulating bingo and
lawful purpose expenditures, and credit and sales to
delinquent organizations; providing for contributions
to certain compulsive gambling programs; amending
Minnesota Statutes 1994, sections 240.01, subdivisions
18 and 23; 240.10; 240.19; 240.23; 240.27,
subdivisions 2, 3, 4, and 5; 299L.01, subdivision 1;
299L.03, subdivision 1; 299L.05; 299L.07, subdivisions
1, 2, 4, 5, 6, and by adding a subdivision; 349.12,
subdivision 25, and by adding a subdivision; 349.162,
subdivision 1; 349.17, subdivision 1; 349.191,
subdivision 1a; and 349.211, subdivision 1; proposing
coding for new law in Minnesota Statutes, chapter
299L; repealing Minnesota Statutes 1994, section
240.01, subdivisions 17 and 21.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1994, section 240.01,
subdivision 18, is amended to read:
Subd. 18. [ON-TRACK PARI-MUTUEL BETTING.] "On-track
pari-mutuel betting" means wagering conducted at a licensed
racetrack, or at a class E licensed facility whose wagering
system is electronically linked to a licensed racetrack.
Sec. 2. Minnesota Statutes 1994, section 240.01,
subdivision 23, is amended to read:
Subd. 23. [FULL RACING CARD.] "Full racing card" means
three or more races that are: (1) part of a horse racing
program being conducted at a racetrack; and (2) being simulcast
or telerace simulcast at a licensed racetrack or teleracing
facility.
Sec. 3. Minnesota Statutes 1994, section 240.10, is
amended to read:
240.10 [LICENSE FEES.]
The fee for a class A license is $10,000 per year. The fee
for a class B license is $100 for each assigned racing day on
which racing is actually conducted, and $50 for each day on
which simulcasting is authorized and actually takes place. The
fee for a class D license is $50 for each assigned racing day on
which racing is actually conducted. The fee for a class E
license is $1,000 per year. Fees imposed on class B and class D
licenses must be paid to the commission at a time and in a
manner as provided by rule of the commission.
The commission shall by rule establish an annual license
fee for each occupation it licenses under section 240.08 but no
annual fee for a class C license may exceed $100.
License fee payments received must be paid by the
commission to the state treasurer for deposit in the general
fund.
Sec. 4. Minnesota Statutes 1994, section 240.19, is
amended to read:
240.19 [CONTRACTS.]
The commission shall by rule require that all contracts
entered into by a class A, class B, or class D, or class E
licensee for the provision of goods or services, including
concessions contracts, be subject to commission approval. The
rules must require that the contract include an affirmative
action plan establishing goals and timetables consistent with
the Minnesota Human Rights Act, chapter 363. The rules may also
establish goals to provide economic opportunity for
disadvantaged and emerging small businesses, racial minorities,
women, and disabled individuals. The commission may require a
contract holder to submit to it documents and records the
commission deems necessary to evaluate the contract.
Sec. 5. Minnesota Statutes 1994, section 240.23, is
amended to read:
240.23 [RULEMAKING AUTHORITY.]
The commission has the authority, in addition to all other
rulemaking authority granted elsewhere in this chapter to
promulgate rules governing:
(a) the conduct of horse races held at licensed racetracks
in Minnesota, including but not limited to the rules of racing,
standards of entry, operation of claiming races, filing and
handling of objections, carrying of weights, and declaration of
official results;
(b) wire communications between the premises of a licensed
racetrack and any place outside the premises;
(c) information on horse races which is sold on the
premises of a licensed racetrack;
(d) liability insurance which it may require of all class
A, class B, and class D, and class E licensees;
(e) the auditing of the books and records of a licensee by
an auditor employed or appointed by the commission;
(f) emergency action plans maintained by licensed
racetracks and their periodic review;
(g) safety, security, and sanitation of stabling facilities
at licensed racetracks;
(h) entry fees and other funds received by a licensee in
the course of conducting racing which the commission determines
must be placed in escrow accounts;
(i) affirmative action in employment and contracting by
class A, class B, and class D licensees; and
(j) the operation of teleracing facilities; and
(k) any other aspect of horse racing or pari-mutuel betting
which in its opinion affects the integrity of racing or the
public health, welfare, or safety.
Rules of the commission are subject to chapter 14, the
Administrative Procedure Act.
Sec. 6. Minnesota Statutes 1994, section 240.27,
subdivision 2, is amended to read:
Subd. 2. [HEARING; APPEAL.] An order to exclude a person
from any or all licensed racetracks or licensed teleracing
facilities in the state must be made by the commission at a
public hearing of which the person to be excluded must have at
least five days' notice. If present at the hearing, the person
must be permitted to show cause why the exclusion should not be
ordered. An appeal of the order may be made in the same manner
as other appeals under section 240.20.
Sec. 7. Minnesota Statutes 1994, section 240.27,
subdivision 3, is amended to read:
Subd. 3. [NOTICE TO RACETRACKS.] Upon issuing an order
excluding a person from any or all licensed racetracks or
licensed teleracing facilities, the commission shall send a copy
of the order to the excluded person and to all racetracks or
teleracing facilities named in it, along with other information
as it deems necessary to permit compliance with the order.
Sec. 8. Minnesota Statutes 1994, section 240.27,
subdivision 4, is amended to read:
Subd. 4. [PROHIBITIONS.] It is a gross misdemeanor for a
person named in an exclusion order to enter, attempt to enter,
or be on the premises of a racetrack or a teleracing facility
named in the order while it is in effect, and for a person
licensed to conduct racing or operate a racetrack or a
teleracing facility knowingly to permit an excluded person to
enter or be on the premises.
Sec. 9. Minnesota Statutes 1994, section 240.27,
subdivision 5, is amended to read:
Subd. 5. [EXCLUSIONS BY RACETRACK.] The holder of a
license to conduct racing or operate a teleracing facility may
eject and exclude from its premises any licensee or any other
person who is in violation of any state law or commission rule
or order or who is a threat to racing integrity or the public
safety. A person so excluded from racetrack premises or
teleracing facility may appeal the exclusion to the commission
and must be given a public hearing on the appeal upon request.
At the hearing the person must be given the opportunity to show
cause why the exclusion should not have been ordered. If the
commission after the hearing finds that the integrity of racing
and the public safety do not justify the exclusion, it shall
order the racetrack or teleracing facility making the exclusion
to reinstate or readmit the person. An appeal of a commission
order upholding the exclusion is governed by section 240.20.
Sec. 10. Minnesota Statutes 1994, section 299L.01,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] (a) For the purposes of this
chapter, the terms defined in this subdivision have the meanings
given them.
(b) "Division" means the division of gambling enforcement.
(c) "Commissioner" means the commissioner of public safety.
(d) "Director" means the director of gambling enforcement.
(e) "Manufacturer" means a person who assembles from raw
materials or subparts a gambling device for sale or use in
Minnesota.
(f) "Distributor" means a person who sells, offers to sell,
or otherwise provides a gambling device to a person in Minnesota.
(g) "Used gambling device" means a gambling device five or
more years old from the date of manufacture.
(h) "Test" means the process of examining a gambling device
to determine its characteristics or compliance with the
established requirements of any jurisdiction.
(i) "Testing facility" means a person in Minnesota who is
engaged in the testing of gambling devices for use in any
jurisdiction.
Sec. 11. Minnesota Statutes 1994, section 299L.03,
subdivision 1, is amended to read:
Subdivision 1. [INSPECTIONS; ACCESS.] In conducting any
inspection authorized under this chapter or chapter 240, 349, or
349A, the employees of the division of gambling enforcement have
free and open access to all parts of the regulated business
premises, and may conduct the inspection at any reasonable time
without notice and without a search warrant. For purposes of
this subdivision, "regulated business premises" means premises
where:
(1) lawful gambling is conducted by an organization
licensed under chapter 349 or by an organization exempt from
licensing under section 349.166;
(2) gambling equipment is manufactured, sold, distributed,
or serviced by a manufacturer or distributor licensed under
chapter 349;
(3) records required to be maintained under chapter 240,
297E, 349, or 349A are prepared or retained;
(4) lottery tickets are sold by a lottery retailer under
chapter 340A;
(5) races are conducted by a person licensed under chapter
240; or
(6) gambling devices are manufactured or, distributed, or
tested, including places of storage under section 299L.07.
Sec. 12. Minnesota Statutes 1994, section 299L.05, is
amended to read:
299L.05 [GAMBLING VIOLATIONS; RESTRICTIONS ON FURTHER
ACTIVITY.]
An owner of an establishment is prohibited from having
lawful gambling under chapter 349 conducted on the premises, or
selling any lottery tickets under chapter 349A, or having a
video game of chance as defined under section 349.50 located on
the premises, if a person was convicted of violating section
609.76, subdivision 1, clause (7), or 609.76, subdivision (2),
for an activity occurring on the owner's premises.
Sec. 13. Minnesota Statutes 1994, section 299L.07,
subdivision 1, is amended to read:
Subdivision 1. [LICENSE REQUIRED.] Except as provided in
subdivision 2, a person may not (1) manufacture, sell, offer to
sell, lease, rent, or otherwise provide, in whole or in part, a
gambling device as defined in sections 349.30, subdivision 2,
and 609.75, subdivision 4, or (2) operate a testing facility,
without first obtaining a license under this section.
Sec. 14. Minnesota Statutes 1994, section 299L.07,
subdivision 2, is amended to read:
Subd. 2. [EXCLUSIONS.] Notwithstanding subdivision 1, a
gambling device:
(1) may be manufactured without a license as provided in
section 349.40; and
(2) may be sold by a person who is not licensed under this
section, if the person (i) is not engaged in the trade or
business of selling gambling devices, and (ii) does not sell
more than one gambling device in any calendar year;
(2) may be possessed by a person not licensed under this
section if the person holds a permit issued under section
299L.08; and
(3) may be possessed by a state agency, with the written
authorization of the director, for display or evaluation
purposes only and not for the conduct of gambling.
Sec. 15. Minnesota Statutes 1994, section 299L.07, is
amended by adding a subdivision to read:
Subd. 2b. [TESTING FACILITIES.] (a) A person holding a
license to operate a testing facility may possess a gambling
device only for the purpose of performing tests on the gambling
device.
(b) No person may hold a license to operate a testing
facility under this section who is licensed as a manufacturer or
distributor of gambling devices under this section or as a
manufacturer or distributor of gambling equipment under chapter
349.
Sec. 16. Minnesota Statutes 1994, section 299L.07,
subdivision 4, is amended to read:
Subd. 4. [APPLICATION.] An application for a
manufacturer's or distributor's license under this section must
be on a form prescribed by the commissioner and must, at a
minimum, contain:
(1) the name and address of the applicant and, if it is a
corporation, the names of all officers, directors, and
shareholders with a financial interest of five percent or more;
(2) the names and addresses of any holding corporation,
subsidiary, or affiliate of the applicant, without regard to
whether the holding corporation, subsidiary, or affiliate does
business in Minnesota; and
(3) if the applicant does not maintain a Minnesota office,
an irrevocable consent statement signed by the applicant,
stating that suits and actions relating to the subject matter of
the application or acts of omissions arising from it may be
commenced against the applicant in a court of competent
jurisdiction in this state by service on the secretary of state
of any summons, process, or pleadings authorized by the laws of
this state. If any summons, process, or pleading is served upon
the secretary of state, it must be by duplicate copies. One
copy must be retained in the office of the secretary of state
and the other copy must be forwarded immediately by certified
mail to the address of the applicant, as shown on the
application.
Sec. 17. Minnesota Statutes 1994, section 299L.07,
subdivision 5, is amended to read:
Subd. 5. [INVESTIGATION.] Before a manufacturer's or
distributor's license under this section is granted, the
director may conduct a background and financial investigation of
the applicant, including the applicant's sources of financing.
The director may, or shall when required by law, require that
fingerprints be taken and the director may forward the
fingerprints to the Federal Bureau of Investigation for a
national criminal history check. The director may charge an
investigation fee to cover the cost of the investigation.
Sec. 18. Minnesota Statutes 1994, section 299L.07,
subdivision 6, is amended to read:
Subd. 6. [LICENSE FEES.] (a) A license issued under this
section is valid for one year.
(b) For a person who distributes 100 or fewer used gambling
devices per year, the fee is $1,500. For a person who
distributes more than 100 used gambling devices per year, the
fee is $2,000.
(c) For a person who manufactures or distributes 100 or
fewer new, or new and used gambling devices in a year, the fee
is $5,000. For a person who manufactures or distributes more
than 100 new, or new and used gambling devices in a year, the
fee is $7,500.
(d) For a testing facility the fee is $5,000.
Sec. 19. [299L.08] [TEMPORARY POSSESSION; PERMIT.]
Subdivision 1. [PERMIT AUTHORIZED.] The director may issue
a temporary permit for a person to possess a gambling device for
the purpose of displaying the gambling device at a trade show,
convention, or other event where gambling devices are displayed.
Subd. 2. [APPLICATION; FEE.] An application for a
temporary permit under this section must contain:
(1) the applicant's name, address, and telephone number;
(2) the name, date, and location of the event where the
gambling device will be displayed;
(3) the method or methods by which the gambling device will
be transported to the event, including the name of all carriers
performing the transportation and the date of expected shipment;
(4) the individual or individuals who will be responsible
for the gambling device while it is in Minnesota;
(5) the type, make, model, and serial number of the device;
(6) the location where the device will be stored in
Minnesota while not at the event location;
(7) the date on which the device will be transported
outside Minnesota;
(8) evidence satisfactory to the director that the
applicant is registered and in compliance with United States
Code, title 15, sections 1171 to 1178; and
(9) other information the director deems necessary.
The fee for a permit under this section is $100.
Subd. 3. [TERMS.] A permit under this section authorizes
possession of a gambling device only during the period and for
the event named in the permit. The permit authorizes the
possession of a gambling device for display, educational, and
information purposes only, and does not authorize the conduct of
any gambling. The permit may not extend for more than 72 hours
beyond the end of the event named in the permit.
Subd. 4. [INSPECTION.] The director may conduct
inspections of events where gambling devices are displayed to
ensure compliance with this section and other laws relating to
gambling.
Sec. 20. Minnesota Statutes 1994, section 349.12, is
amended by adding a subdivision to read:
Subd. 15a. [FESTIVAL ORGANIZATION.] "Festival
organization" is an organization conducting a community festival
that is exempt from the payment of federal income taxes under
section 501(c)(4) of the Internal Revenue Code.
Sec. 21. Minnesota Statutes 1994, section 349.12,
subdivision 25, is amended to read:
Subd. 25. [LAWFUL PURPOSE.] (a) "Lawful purpose" means one
or more of the following:
(1) any expenditure by or contribution to a 501(c)(3) or
festival organization, as defined in subdivision 15a, provided
that the organization and expenditure or contribution are in
conformity with standards prescribed by the board under section
349.154, which standards must apply to both types of
organizations in the same manner and to the same extent;
(2) a contribution to 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 recognized by the Minnesota department of
human services for the education, prevention, or 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, provided that the rules must not include mileage
reimbursements in the computation of the per occasion
reimbursement limit and must impose no aggregate annual limit on
the amount of reasonable and necessary expenditures made to
support:
(i) members of a military marching or colorguard unit for
activities conducted within the state; or
(ii) members of an organization solely for services
performed by the members at funeral services;
(7) recreational, community, and athletic facilities and
activities intended primarily for persons under age 21, provided
that such facilities and activities do not discriminate on the
basis of gender and the organization complies with section
349.154;
(8) payment of local taxes authorized under this chapter,
taxes imposed by the United States on receipts from lawful
gambling, the taxes imposed by section 297E.02, subdivisions 1,
4, 5, and 6, and the tax imposed on unrelated business income by
section 290.05, subdivision 3;
(9) payment of real estate taxes and assessments on
permitted gambling premises wholly owned by the licensed
organization paying the taxes, not to exceed:
(i) the amount which an organization may expend under board
rule on rent for premises used for bingo, the amount that an
organization may expend under board rules on rent for bingo; or
and
(ii) $15,000 $35,000 per year for premises used for other
forms of 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;
(11) a contribution to or expenditure by a nonprofit
organization which is a church or body of communicants gathered
in common membership for mutual support and edification in
piety, worship, or religious observances;
(12) payment of one-half of the reasonable costs of an
audit required in section 297E.06, subdivision 4;
(13) a contribution to or expenditure on a wildlife
management project that benefits the public at-large, provided
that the state agency with authority over that wildlife
management project approves the project before the contribution
or expenditure is made; or
(14) expenditures, approved by the commissioner of natural
resources, by an organization for grooming and maintaining
snowmobile trails that are (1) grant-in-aid trails established
under section 116J.406, or (2) other trails open to public use,
including purchase or lease of equipment for this purpose.
(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, 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) a contribution to a statutory or home rule charter
city, county, or town by a licensed organization with the
knowledge that the governmental unit intends to use the
contribution for a pension or retirement fund.
Sec. 22. Minnesota Statutes 1994, section 349.162,
subdivision 1, is amended to read:
Subdivision 1. [STAMP REQUIRED.] (a) A distributor may not
sell, transfer, furnish, or otherwise provide to a person, and
no person may purchase, borrow, accept, or acquire from a
distributor gambling equipment for use within the state unless
the equipment has been registered with the board and has a
registration stamp affixed, except for gambling equipment not
stamped by the manufacturer pursuant to section 349.163,
subdivision 5 or 8. 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 or manufacturer is
entitled to a refund for unused registration stamps and
replacement for registration stamps which are defective or
canceled by the distributor or manufacturer.
(b) A manufacturer must return all unused registration
stamps in its possession to the board by February 1, 1995. No
manufacturer may possess unaffixed registration stamps after
February 1, 1995.
(c) After February 1, 1996, no person may possess any
unplayed pull-tab or tipboard deals with a registration stamp
affixed to the flare or any unplayed paddleticket cards with a
registration stamp affixed to the master flare. This paragraph
does not apply to unplayed pull-tab or tipboard deals with a
registration stamp affixed to the flare, or to unplayed
paddleticket cards with a registration stamp affixed to the
master flare, if the deals or cards are identified on a list of
existing inventory submitted by a licensed organization or a
licensed distributor, in a format prescribed by the commissioner
of revenue, to the commissioner of revenue on or before February
1, 1996. Gambling equipment kept in violation of this paragraph
is contraband under section 349.2125.
Sec. 23. Minnesota Statutes 1994, section 349.17,
subdivision 1, is amended to read:
Subdivision 1. [BINGO OCCASIONS.] Not more than seven ten
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.
Sec. 24. Minnesota Statutes 1994, section 349.191,
subdivision 1a, is amended to read:
Subd. 1a. [CREDIT AND SALES TO DELINQUENT ORGANIZATIONS.]
(a) If a distributor does not receive payment in full from an
organization within 30 35 days of the delivery of gambling
equipment, the distributor must notify the board in writing of
the delinquency.
(b) If a distributor who has notified the board under
paragraph (a) has not received payment in full from the
organization within 60 days of the notification under paragraph
(a), the distributor must notify the board of the continuing
delinquency.
(c) On receipt of a notice under paragraph (a), the board
shall order all distributors that until further notice from the
board, they may sell gambling equipment to the delinquent
organizations only on a cash basis with no credit extended. On
receipt of a notice under paragraph (b), the board shall order
all distributors not to sell any gambling equipment to the
delinquent organization.
(d) No distributor may extend credit or sell gambling
equipment to an organization in violation of an order under
paragraph (c) until the board has authorized such credit or sale.
Sec. 25. Minnesota Statutes 1994, section 349.211,
subdivision 1, is amended to read:
Subdivision 1. [BINGO.] Except as provided in subdivision
2, prizes for a single bingo game may not exceed $100 except
prizes for a cover-all game, which may exceed $100 if the
aggregate value of all cover-all prizes in a bingo occasion does
not exceed $1,000. Total prizes awarded at a bingo occasion may
not exceed $2,500, unless a cover-all game is played in which
case the limit is $3,500. A prize may be determined based on
the value of the bingo packet sold to the player. For purposes
of this subdivision, a cover-all game is one in which a player
must cover all spaces except a single free space to win.
Sec. 26. [REPEALER.]
Minnesota Statutes 1994, section 240.01, subdivisions 17,
20, and 21, are repealed.
Sec. 27. [EFFECTIVE DATE.]
Sections 1 to 26 are effective the day following final
enactment.
Presented to the governor May 30, 1995
Signed by the governor June 1, 1995, 11:16 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes