Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 2001, Regular Session
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.
Official Publication of the State of Minnesota
Revisor of Statutes