Office of the Revisor of Statutes
Minnesota Session Laws - 1998, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 322-S.F.No. 2911
An act relating to lawful gambling; allowing
expenditures as lawful purposes of compliance with the
Americans with Disabilities Act; authorizing
organizations to make certain expenditures and
contributions through electronic fund transfers;
allowing an employee to participate in lawful gambling
under certain circumstances; allowing locally
administered funds receiving contributions from
gambling profits to be spent for certain public safety
purposes; amending Minnesota Statutes 1996, sections
349.168, subdivision 6; 349.19, subdivision 3; and
349.213, subdivision 1; Minnesota Statutes 1997
Supplement, sections 349.12, subdivision 25; 349.154,
subdivision 2; and 349.18, subdivision 1.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1997 Supplement, section
349.12, subdivision 25, is amended to read:
Subd. 25. [LAWFUL PURPOSE.] (a) "Lawful purpose" means one
or more of the following:
(1) any expenditure by or contribution to a 501(c)(3) or
festival organization, as defined in subdivision 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
program recognized by the Minnesota department of human services
for the education, prevention, or treatment of compulsive
gambling;
(4) a contribution to or expenditure on a public or private
nonprofit educational institution registered with or accredited
by this state or any other state;
(5) a contribution to 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 color guard 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) for premises used for bingo, the amount that an
organization may expend under board rules on rent for bingo; and
(ii) $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;
(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 85.019, or (2) other trails open to public use,
including purchase or lease of equipment for this purpose; or
(15) conducting nutritional programs, food shelves, and
congregate dining programs primarily for persons who are age 62
or older or disabled.
(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; or (v) with
respect to an expenditure to bring an existing building into
compliance with the Americans with Disabilities Act under item
(ii), an organization has the option to apply the amount of the
board-approved expenditure to the erection or acquisition of a
replacement building that is in compliance with the Americans
with Disabilities Act;
(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. 2. Minnesota Statutes 1997 Supplement, section
349.154, subdivision 2, is amended to read:
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 or electronic
transfer confirmation number of the expenditure or contribution;
(4) a brief description of how the expenditure or
contribution meets one or more of the purposes in section
349.12, subdivision 25; and
(5) in the case of expenditures authorized under section
349.12, subdivision 25, paragraph (a), clause (7), whether the
expenditure is for a facility or activity that primarily
benefits male or female participants.
(b) The board shall make available to the commissioners of
revenue and public safety copies of reports received under this
subdivision and requested by them.
(c) The report required under this subdivision must provide
for a separate accounting for all expenditures made from the
reporting organization's tax refund or credit authorized under
section 297E.02, subdivision 4, paragraph (d).
Sec. 3. Minnesota Statutes 1996, section 349.168,
subdivision 6, is amended to read:
Subd. 6. [COMPENSATION PAID BY CHECK OR ELECTRONIC
TRANSFER.] Compensation paid by an organization in connection
with lawful gambling must either be: (1) in the form of a check
drawn on the organization's gambling account, as specified in
section 349.19, and paid directly to the person being
compensated; (2) transferred electronically from the
organization's gambling account, as specified in section 349.19,
subdivision 3, directly to the employee's bank account; or (3)
transferred electronically to and from the account of a payroll
processing firm for payment to the employee's account and for
the payment of local, state, and federal withholding taxes,
provided that the payroll processing firm is (i) currently
registered with and meets the criteria of the department of
revenue as a third-party bulk filer under section 290.92,
subdivision 30, (ii) is able to provide proof of a third-party
audit and an annual report and statement of financial condition,
(iii) is able to provide evidence of a fidelity bond, and (iv)
can provide proof of having been in business as a third-party
bulk filer for the most recent three years.
Sec. 4. Minnesota Statutes 1997 Supplement, section
349.18, subdivision 1, is amended to read:
Subdivision 1. [LEASE OR OWNERSHIP REQUIRED.] (a) An
organization may conduct lawful gambling only on premises it
owns or leases. Leases must be on a form prescribed by the
board. Except for leases entered into before August 1, 1994,
the term of the lease may not begin before the effective date of
the premises permit and must expire on the same day that the
premises permit expires. Copies of all leases must be made
available to employees of the board and the division of alcohol
and 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 provided
that no rule of the board may prescribe a limit of less than
$1,000 per month on rent paid for premises used for lawful
gambling other than bingo. 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.
(b) No person, distributor, manufacturer, lessor, or
organization other than the licensed organization leasing the
space may conduct any activity other than the sale or serving of
food and beverages on the leased premises during times when
lawful gambling is being conducted on the premises.
(c) At a site where the leased premises consists of an area
on or behind a bar at which alcoholic beverages are sold and
employees of the lessor are employed by the organization as
pull-tab sellers at the site, pull-tabs and tipboard tickets may
be sold and redeemed by those employees at any place on or
behind the bar, but the tipboards and receptacles for pull-tabs
and cash drawers for lawful gambling receipts must be maintained
only within the leased premises.
(d) Employees of a lessor may participate in lawful
gambling on the premises provided (1) if pull-tabs or tipboards
are sold, the organization voluntarily posts, or is required to
post, the major prizes as specified in section 349.172; and (2)
any employee of the lessor participating in lawful gambling is
not a gambling employee for the organization conducting lawful
gambling on the premises.
(e) A gambling employee may purchase pull-tabs at the site
of the employee's place of employment provided:
(1) the organization voluntarily posts, or is required to
post, the major prizes for pull-tab or tipboard games as
specified in section 349.172; and
(2) the employee is not involved in the sale of pull-tabs
at that site.
Sec. 5. Minnesota Statutes 1996, section 349.19,
subdivision 3, is amended to read:
Subd. 3. [EXPENDITURES.] (a) 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 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. Expenditures of gross profits from lawful gambling
for local, state, and federal taxes as identified in section
349.12, subdivision 25, paragraph (a), clause (8), may be: (1)
transferred electronically from the organization's gambling
account directly to bank accounts identified by local, state, or
federal agencies if the organization's gambling account monthly
bank statement specifically identifies the payee by name, the
amount transferred, the account number of the account into which
the funds were transferred, and the date of the transaction; or
(2) transferred electronically to and from the account of a
payroll processing firm that meets the criteria for such a firm
established under section 349.168, subdivision 6. Expenditures
of gross profits from lawful gambling as authorized by section
349.15, subdivision 1, for utility payments may be transferred
electronically from the organization's gambling account directly
to bank accounts identified by the utility vendor if the
organization's gambling account monthly bank statement
specifically identifies the payee by name, the amount
transferred, the account number of the account into which the
funds were transferred, and the date of the transaction.
Electronic payments of local, state, and federal taxes and
utility payments are permitted only if they have been authorized
by the membership, the organization maintains supporting
documentation, and the expenditures can be verified.
(b) Expenditures authorized by the board according to
section 349.12, subdivision 25, paragraph (b), clause (3), must
be 51 percent completed within two years of the date of board
approval. "Fifty-one percent completed" means that the work
completed must represent at least 51 percent of the value of the
project as documented by the contractor or vendor. An
organization that fails to comply with this paragraph shall
reapply to the board for approval of the project.
Sec. 6. Minnesota Statutes 1996, section 349.213,
subdivision 1, is amended to read:
Subdivision 1. [LOCAL REGULATION.] (a) A statutory or home
rule city or county has the authority to adopt more stringent
regulation of lawful gambling within its jurisdiction, including
the prohibition of lawful gambling, and may require a permit for
the conduct of gambling exempt from licensing under section
349.166. 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 gross profits
less amounts expended for allowable expenses and paid in taxes
assessed on lawful gambling. 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 8, or 297E.02; provided, however, that an ordinance
requirement that such organizations must contribute ten percent
of their net profits derived from lawful gambling conducted at
premises within the city's or county's jurisdiction 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 (i)
lawful purposes, or (ii) police, fire, and other emergency or
public safety-related services, equipment, and training,
excluding pension obligations, is not considered an expenditure
to the city or county nor a tax under section 297E.02, and is
valid and lawful. A city or county making expenditures
authorized under this paragraph must by March 15 of each year
file a report with the board, on a form the board prescribes,
that lists all such revenues collected and expenditures for the
previous calendar year.
(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 be limited to lawful purpose expenditures of
gross profits derived from lawful gambling conducted at premises
within the city's or county's jurisdiction, 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, except a
political subdivision may prohibit the use of paddlewheels.
Sec. 7. [EFFECTIVE DATE.]
This act is effective the day following final enactment.
Presented to the governor March 20, 1998
Signed by the governor March 23, 1998, 10:55 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes