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

                            CHAPTER 300-S.F.No. 2903 
                  An act relating to gambling; changing paddlewheel 
                  location and prize requirements; allowing lawful 
                  gambling organizations to pay for premises; expanding 
                  the definition of lawful purpose; requiring 
                  manufacturers to sell gambling supplies in certain 
                  cases; amending Minnesota Statutes 1998, sections 
                  349.12, subdivisions 19 and 25; 349.15, by adding a 
                  subdivision; 349.163, by adding a subdivision; 349.18, 
                  subdivisions 1 and 2; 349.211, subdivision 4; and 
                  349.213, subdivision 1. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1998, section 349.12, 
        subdivision 19, is amended to read: 
           Subd. 19.  [GAMBLING MANAGER.] "Gambling manager" means a 
        person who has been designated by the organization to supervise 
        the lawful gambling conducted by it and who: 
           (1) has been an active member of the organization for at 
        least two years and has been designated by the organization to 
        supervise lawful gambling conducted by it; or 
           (2) meets other qualifications as prescribed by the board 
        by rule. 
           Sec. 2.  Minnesota Statutes 1998, 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; or 
           (iii) members of military marching, color guard, or honor 
        guard units may be reimbursed for participating in color guard, 
        honor guard, or marching unit events within the state at a per 
        participant rate of up to $35 per occasion; 
           (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; (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. 3.  Minnesota Statutes 1998, section 349.15, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [ALTERNATIVE PREMISES PAYMENT.] An organization 
        eligible to expend gross profits on real estate taxes and 
        assessments under section 349.12, subdivision 25, paragraph (a), 
        clause (9), may in the alternative, elect on a calendar year 
        basis to pay itself up to $1,000 per month for the use of its 
        premises for lawful gambling.  Any payments made under this 
        subdivision shall be considered an allowable expense. 
           Sec. 4.  Minnesota Statutes 1998, section 349.163, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [SALES REQUIRED.] No licensed manufacturer may 
        refuse to sell pull-tab games to a licensed distributor unless: 
           (1) a specific game sold on an exclusive basis is at issue; 
           (2) the manufacturer does not sell the pull-tab games to 
        any distributor in Minnesota; 
           (3) a Minnesota statute or rule prohibits the sale; or 
           (4) the distributor is delinquent on any payment owed to 
        the manufacturer. 
           Sec. 5.  Minnesota Statutes 1998, 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. 
           (f) At a leased site where an organization uses a 
        paddlewheel consisting of 30 numbers or less or a tipboard 
        consisting of 30 tickets or less, tickets may be sold throughout 
        the permitted premises, but winning tickets must be redeemed, 
        the paddlewheel must be located, and the tipboard seal must be 
        opened within the leased premises. 
           Sec. 6.  Minnesota Statutes 1998, section 349.18, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXCEPTIONS.] (a) An organization may conduct 
        raffles on a premise it does not own or lease.  
           (b) An organization may, with the permission of the board, 
        conduct bingo on premises it does not own or lease for up to 12 
        consecutive days in a calendar year, in connection with a county 
        fair, the state fair, or a civic celebration.  
           (c) A licensed organization may, after compliance with 
        section 349.213, conduct lawful gambling on premises other than 
        the organization's permitted premises for one day per calendar 
        year for not more than 12 hours that day or up to 12 consecutive 
        days in a calendar year in connection with a county fair, the 
        state fair, a church festival, or a civic celebration.  A lease 
        for that time period for the exempted premises must accompany 
        the request to the board. 
           Sec. 7.  Minnesota Statutes 1998, section 349.211, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PRIZE VALUE.] (a) Merchandise prizes must be 
        valued at their fair market value.  For purposes of sections 
        349.11 to 349.22 "prizes" do not include free plays awarded. 
           (b) Merchandise prizes for a paddlewheel consisting of 30 
        numbers or less or a tipboard consisting of 30 tickets or less 
        may be paid for by the organization up to 30 days after the 
        prize is received by the organization.  
           Sec. 8.  Minnesota Statutes 1998, 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 and township 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. 9.  [EFFECTIVE DATE.] 
           Sections 1 to 8 are effective the day following final 
        enactment. 
           Presented to the governor March 28, 2000 
           Signed by the governor March 31, 2000, 2:40 p.m.

Official Publication of the State of Minnesota
Revisor of Statutes