Office of the Revisor of Statutes
Minnesota Session Laws - 2000, Regular Session
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