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Minnesota Legislature

Office of the Revisor of Statutes

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

                             CHAPTER 96-S.F.No. 986 
                  An act relating to gambling; making changes to card 
                  club provisions; defining terms; adjusting gross 
                  receipt amounts for purposes of audits; modifying 
                  provisions relating to expenditure of profits from 
                  lawful gambling; amending requirements for illegal 
                  gambling enforcement; authorizing noon hour bingo; 
                  permitting checks for raffle purchases; making 
                  clarifying changes; amending Minnesota Statutes 2000, 
                  sections 240.01, subdivision 26, by adding a 
                  subdivision; 240.30, subdivision 8, by adding a 
                  subdivision; 297E.06, subdivision 4; 349.12, 
                  subdivision 25; 349.15, subdivision 1, by adding a 
                  subdivision; 349.155, subdivision 4a; 349.168, 
                  subdivision 1; 349.17, by adding a subdivision; 
                  349.2127, subdivision 7; 349.213. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2000, section 240.01, 
        subdivision 26, is amended to read: 
           Subd. 26.  [UNBANKED.] "Unbanked" means a wagering system 
        or game where the individual participants compete against each 
        other and not against the sponsor or house.  In an unbanked 
        system or game, the sponsor or house may deduct a percentage 
        from the accumulated wagers and impose other charges for hosting 
        the activity but does not have an interest in the outcome of a 
        game.  The sponsor or house may add additional prizes, awards, 
        or money to any game for promotional purposes.  Unbanked games 
        include those games that involve a player pool. 
           Sec. 2.  Minnesota Statutes 2000, section 240.01, is 
        amended by adding a subdivision to read: 
           Subd. 27.  [PLAYER POOL.] "Player pool" means a wagering 
        system or game where wagers lost in a number of card games may 
        be accumulated into a pool for purposes of enhancing the total 
        amount paid back to players in any other card game.  In such 
        instances, the sponsor or house may only serve as custodian of 
        the player pool and may not have an active interest in any card 
        game. 
           Sec. 3.  Minnesota Statutes 2000, section 240.30, 
        subdivision 8, is amended to read: 
           Subd. 8.  [LIMITATIONS.] The commission may not approve any 
        plan of operation under subdivision 6 that exceeds any of the 
        following limitations: 
           (1) the maximum number of tables used for card playing at 
        the card club at any one time, other than tables used for 
        instruction, demonstrations, or tournament play, may not exceed 
        50.  The table limit exception for tournament play is allowed 
        for only one tournament per year that lasts for no longer than 
        14 days; 
           (2) the opening wager by any player in any card game may 
        not exceed $15; and 
           (3) except as provided in clause (3), no single wager that 
        increases the total amount staked in any card game may exceed 
        $30 $60; 
           (3) for games in which each player is allowed to make only 
        one wager or has a limited opportunity to change that wager, no 
        wager may exceed $300. 
           Sec. 4.  Minnesota Statutes 2000, section 240.30, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [REPORTING.] The class B licensee shall report 
        all income generated by the card club in an annual report to the 
        racing commission.  The report shall also account for all costs 
        of operation, taxes paid, amounts paid to the breeder's fund, 
        and net profits to the class B licensee. 
           Sec. 5.  Minnesota Statutes 2000, section 297E.06, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ANNUAL AUDIT.] (a) An organization licensed 
        under chapter 349 with gross receipts from lawful gambling of 
        more than $250,000 $300,000 in any year must have an annual 
        financial audit of its lawful gambling activities and funds for 
        that year.  An organization licensed under chapter 349 with 
        gross receipts from lawful gambling of more 
        than $50,000 $150,000 but not more than $250,000 $300,000 in any 
        year must have an annual financial review of its lawful gambling 
        activities and funds for that year. Audits and financial reviews 
        under this subdivision must be performed by an independent 
        accountant licensed by the state of Minnesota. 
           (b) The commissioner of revenue shall prescribe standards 
        for audits and financial review required under this 
        subdivision.  The standards may vary based on the gross receipts 
        of the organization.  The standards must incorporate and be 
        consistent with standards prescribed by the American institute 
        of certified public accountants.  A complete, true, and correct 
        copy of the audit report must be filed as prescribed by the 
        commissioner. 
           Sec. 6.  Minnesota Statutes 2000, 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; 
           (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 or states 
        contiguous to Minnesota 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, provided the 
        annual audit is filed in a timely manner with the department of 
        revenue; 
           (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 and all-terrain vehicle 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; or 
           (16) a contribution to a community arts organization, or an 
        expenditure to sponsor arts programs in the community, including 
        but not limited to visual, literary, performing, or musical arts.
           (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. 7.  Minnesota Statutes 2000, section 349.15, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EXPENDITURE RESTRICTIONS.] Gross profits 
        from lawful gambling may be expended only for lawful purposes or 
        allowable expenses as authorized by the membership of the 
        conducting organization at a monthly meeting of the 
        organization's membership.  Provided that no more than 65 70 
        percent of the gross profit less the tax imposed under section 
        297E.02, subdivision 1, from bingo, and no more than 55 percent 
        of the gross profit from other forms of lawful gambling, may be 
        expended for allowable expenses related to lawful gambling.  
           Sec. 8.  Minnesota Statutes 2000, section 349.15, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [NATURAL DISASTER RELIEF.] An organization may 
        expend net profits from lawful gambling to relieve the effects 
        of a natural disaster without the prior approval of its 
        membership if: 
           (1) the contribution is a lawful purpose under section 
        349.12, subdivision 25; 
           (2) the contribution is authorized by the organization's 
        chief executive officer and gambling manager; and 
           (3) the contribution is approved by the membership of the 
        organization at its next regularly scheduled monthly meeting. 
        If the contribution is not approved by the membership of the 
        organization at its next regularly scheduled monthly meeting, 
        the organization shall reimburse its gambling account in the 
        amount of the contribution. 
           Sec. 9.  Minnesota Statutes 2000, section 349.155, 
        subdivision 4a, is amended to read: 
           Subd. 4a.  [ILLEGAL GAMBLING.] (a) The board may not deny, 
        suspend, revoke, or refuse to renew an organization's premises 
        permit because illegal gambling occurred at the site for which 
        the premises permit was issued, unless the board determines that:
        (1) the organization knowingly participated in the illegal 
        gambling; or (2) the organization or any of its agents knew or 
        reasonably should have known of the illegal gambling and the 
        organization did not notify the lessor of the premises, in 
        writing and with specificity, that illegal gambling was being 
        conducted on the premises and requesting that the lessor take 
        appropriate action.  For purposes of this paragraph, "agent" 
        means any person, compensated or otherwise, who participates in 
        the conduct of the organization's lawful gambling. 
           (b) The board may not deny, suspend, revoke, or refuse to 
        renew an organization's license because illegal gambling 
        occurred at a site for which a premises permit was issued to the 
        organization unless the board determines that the organization's 
        chief executive officer, gambling manager, or one or more of its 
        assistant gambling managers participated in or authorized the 
        illegal gambling.  
           Sec. 10.  Minnesota Statutes 2000, section 349.168, 
        subdivision 1, is amended to read: 
           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, date of birth, and 
        social security number; (2) a current photograph; (3) the name, 
        address, and license number of the employing organization; 
        and (4) (3) 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. 
           Sec. 11.  Minnesota Statutes 2000, section 349.17, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [NOON HOUR BINGO.] Notwithstanding subdivisions 1 
        and 3, an organization may conduct bingo subject to the 
        following restrictions: 
           (1) the bingo is conducted only between the hours of 11:00 
        a.m. and 2:00 p.m.; 
           (2) the bingo is conducted at a site the organization owns 
        or leases and which has a license for the sale of intoxicating 
        beverages on the premises under chapter 340A; 
           (3) the bingo is limited to one progressive bingo game per 
        site as defined by section 349.211, subdivision 2; 
           (4) the bingo is conducted using only bingo paper sheets; 
        and 
           (5) if the premise is leased, the rent may not exceed $25 
        per day for each day bingo is conducted. 
           Sec. 12.  Minnesota Statutes 2000, section 349.2127, 
        subdivision 7, is amended 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 except a raffle.  If an organization accepts 
        a check, the payment of which is subsequently dishonored, the 
        organization shall reimburse its gambling account for the amount 
        of the dishonored check within 30 days of receiving notice of 
        the dishonor.  This subdivision does not apply to gaming 
        activities conducted pursuant to the Indian Gaming Regulatory 
        Act, United States Code, title 25, section 2701 et seq. 
           Sec. 13.  Minnesota Statutes 2000, 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 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 per year 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 per year 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. 
           Subd. 2.  [LOCAL APPROVAL.] Before issuing or renewing 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.  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 
        90 days of the date of application for the new or renewed permit 
        or license. 
           Subd. 3.  [LOCAL GAMBLING TAX.] A statutory or home rule 
        charter city that has one or more licensed organizations 
        operating lawful gambling, and a county that has one or more 
        licensed organizations outside incorporated areas operating 
        lawful gambling, may impose a local gambling tax on each 
        licensed organization within the city's or county's 
        jurisdiction.  The tax may be imposed only if the amount to be 
        received by the city or county is necessary to cover the costs 
        incurred by the city or county to regulate lawful gambling.  The 
        tax imposed by this subdivision may not exceed three percent per 
        year of the gross receipts of a licensed organization from all 
        lawful gambling less prizes actually paid out by the 
        organization.  A city or county may not use money collected 
        under this subdivision for any purpose other than to regulate 
        lawful gambling.  A tax imposed under this subdivision is in 
        lieu of all other local taxes and local investigation fees on 
        lawful gambling.  A city or county that imposes a tax under this 
        subdivision shall annually, by March 15, file a report with the 
        board in a form prescribed by the board showing (1) the amount 
        of revenue produced by the tax during the preceding calendar 
        year, and (2) the use of the proceeds of the tax.  
           Sec. 14.  [EFFECTIVE DATE.] 
           Sections 5 to 13 are effective the day following final 
        enactment. 
           Presented to the governor May 10, 2001 
           Signed by the governor May 14, 2001, 3:01 p.m.