language to be deleted (2) new language
CHAPTER 166-S.F.No. 1555 An act relating to gambling; amending various provisions relating to lawful gambling; amending and providing definitions; making technical, clarifying, and conforming changes; providing for electronic bingo; regulating lottery service businesses; authorizing certain video games of chance and social skill games; amending Minnesota Statutes 2004, sections 349.12, subdivisions 5, 25, 33, by adding subdivisions; 349.15, subdivision 1; 349.151, subdivisions 4, 4b, by adding a subdivision; 349.152, subdivision 2; 349.153; 349.155, subdivision 3; 349.16, subdivisions 2, 8; 349.161, subdivision 5; 349.162, subdivisions 1, 4, 5; 349.163, subdivision 3; 349.1635, subdivision 4; 349.166, subdivisions 1, 2; 349.167, subdivision 1; 349.168, subdivision 8; 349.17, subdivisions 5, 7; 349.1711, subdivision 1; 349.173; 349.18, subdivision 1; 349.19, subdivisions 4, 5, 10; 349.211, subdivision 2c; 349.2125, subdivision 1; 349.213; 609.75, subdivisions 1, 8; 609.761, subdivision 3; proposing coding for new law in Minnesota Statutes, chapter 299L; repealing Minnesota Statutes 2004, sections 349.162, subdivision 3; 349.164; 349.17, subdivision 1. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: ARTICLE 1 LAWFUL GAMBLING Section 1. Minnesota Statutes 2004, section 349.12, is amended by adding a subdivision to read: Subd. 3c. [BAR BINGO.] "Bar bingo" is a bingo occasion conducted at a permitted premises in an area where intoxicating liquor or 3.2 percent malt beverages are sold and where the licensed organization conducts another form of lawful gambling. Sec. 2. Minnesota Statutes 2004, section 349.12, subdivision 5, is amended to read: Subd. 5. [BINGO OCCASION.] "Bingo occasion" means a single gathering or session at which a series of one or more successive bingo games is played. There is no limit on the number of games conducted during a bingo occasion but a bingo occasion must not last longer than eight consecutive hours. Sec. 3. Minnesota Statutes 2004, section 349.12, is amended by adding a subdivision to read: Subd. 7a. [CHARITABLE CONTRIBUTION.] "Charitable contribution" means one or more of the lawful purposes expenditures under section 349.12, subdivision 25, paragraph (a), clauses (1) to (7), (10), (11), (13) to (15), and (19). Sec. 4. Minnesota Statutes 2004, section 349.12, is amended by adding a subdivision to read: Subd. 12a. [ELECTRONIC BINGO DEVICE.] "Electronic bingo device" means an electronic device used by a bingo player to monitor bingo paper sheets purchased at the time and place of an organization's bingo occasion and which (1) provides a means for bingo players to input numbers announced by a bingo caller; (2) compares the numbers entered by the player to the bingo faces previously stored in the memory of the device; and (3) identifies a winning bingo pattern. Electronic bingo device does not mean any device into which coin, currency, or tokens are inserted to activate play. Sec. 5. Minnesota Statutes 2004, 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 or expenditure for goods and services for an individual or family suffering from poverty, homelessness, or
physical or mentaldisability, which is used to relieve the effects of that poverty, homelessness, or disabilitysuffering; (3) a contribution to an individual for treatment for delayed posttraumatic stress syndrome ora contribution to a program recognized by the Minnesota Department of Human Services for the education, prevention, or treatment of compulsiveproblem 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 ormilitary 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 diem 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 diem; or (iv) active military personnel and their immediate family members in need of support 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 whollyowned by the licensed organization paying the taxes, or wholly leased by a licensed veterans organization under a national charter recognized under section 501(c)(19) of the Internal Revenue Code , 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 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 and paid prior to June 30, 2006; (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;(13) a contribution to or expenditure on projects or activities approved by the commissioner of natural resources for: (i) wildlife management projects that benefit the public at large; (ii) grant-in-aid trail maintenance and grooming established under sections 84.83 and 84.927 and other trails open to public use, including purchase or lease of equipment for this purpose; and (iii) supplies and materials for safety training and educational programs coordinated by the Department of Natural Resources including the Enforcement Division; (15)(14) conducting nutritional programs, food shelves, and congregate dining programs primarily for persons who are age 62 or older or disabled; (16)(15) 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; (17)(16) an expenditure by a licensed veterans organization for payment of water, fuel for heating, electricity, and sewer costs for a building wholly owned or wholly leased by and used as the primary headquarters of the licensed veterans organization; (18)(17) expenditure by a licensed veterans organization of up to $5,000 in a calendar year in net costs to the organization for meals and other membership events, limited to members and spouses, held in recognition of military service. No more than $5,000 can be expended in total per calendar year under this clause by all licensed veterans organizations sharing the same veterans post home; or (19)(18) payment of fees authorized under this chapter imposed by the state of Minnesota to conduct lawful gambling in Minnesota; or (19) a contribution or expenditure to honor an individual's humanitarian service as demonstrated through philanthropy or volunteerism to the United States, this state, or local community. (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 disastercatastrophe, 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. [EFFECTIVE DATE.] The effective date for paragraph (a), clause (9), is January 1, 2006. All other changes in this section are effective the day following final enactment. Sec. 6. Minnesota Statutes 2004, section 349.12, subdivision 33, is amended to read: Subd. 33. [RAFFLE.] "Raffle" means a game in which a participant buys a ticket for a chance at a prize with the winner determined by a random drawing to take place at a location and date printed upon the ticketor other certificate of participation in an event where the prize determination is based on a method of random selection and all entries have an equal chance of selection. The ticket or certificate of participation must include the location, date, and time of the selection of the winning entries. [EFFECTIVE DATE.] This section is effective the day following final enactment. Sec. 7. Minnesota Statutes 2004, 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 70 percent of the gross profit less the tax imposed under section 297E.02, subdivision 1, from bingo, and no more than 5560 percent of the gross profit from other forms of lawful gambling, may be expended biennially during the term of the license for allowable expenses related to lawful gambling. For licenses issued after June 30, 2006, compliance with this subdivision will be measured on a biennial basis that is concurrent with the term of the license. Compliance with this subdivision is a condition for the renewal of any license beginning on July 1, 2008. [EFFECTIVE DATE.] This section is effective July 1, 2006. Sec. 8. Minnesota Statutes 2004, section 349.151, subdivision 4, is amended to read: Subd. 4. [POWERS AND DUTIES.] (a) The board has the following powers and duties: (1) to regulate lawful gambling to ensure it is conducted in the public interest; (2) to issue licenses to organizations, distributors, distributor salespersons, bingo halls,manufacturers, linked bingo game providers, and gambling managers; (3) to collect and deposit license, permit, and registration fees due under this chapter; (4) to receive reports required by this chapter and inspect all premises, records, books, and other documents of organizations, distributors, manufacturers, and linked bingo game providers , and bingo hallsto insure compliance with all applicable laws and rules; (5) to make rules authorized by this chapter; (6) to register gambling equipment and issue registration stamps; (7) to provide by rule for the mandatory posting by organizations conducting lawful gambling of rules of play and the odds and/or house percentage on each form of lawful gambling; (8) to report annually to the governor and legislature on its activities and on recommended changes in the laws governing gambling; (9) to report annually to the governor and legislature a financial summary for each licensed organization identifying the gross receipts, prizes paid, allowable expenses, lawful purpose expenditures including charitable contributions and all taxes and fees as per section 349.12, subdivision 25, paragraph (a), clauses (8) and (18), and the percentage of annual gross profit used for lawful purposes; (10) to impose civil penalties of not more than $500 per violation on organizations, distributors, distributor salespersons, manufacturers, bingo halls,linked bingo game providers, and gambling managers for failure to comply with any provision of this chapter or any rule or order of the board; (10)(11) to issue premises permits to organizations licensed to conduct lawful gambling; (11)(12) to delegate to the director the authority to issue or deny license and premises permit applications and renewals under criteria established by the board; (12)(13) to delegate to the director the authority to approve or deny fund loss requests, contribution of gambling funds to another licensed organization, and property expenditure requests under criteria established by the board; (14) to suspend or revoke licenses and premises permits of organizations, distributors, distributor salespersons, manufacturers, bingo halls,linked bingo game providers, or gambling managers as provided in this chapter; (15) to approve or deny requests from licensees for: (i) waivers from fee requirements as provided in section 349.16, subdivision 6; and (ii) variances from Gambling Control Board rules under section 14.055; and (13)(16) to register employees of organizations licensed to conduct lawful gambling; (14)(17) to require fingerprints from persons determined by board rule to be subject to fingerprinting; (15)(18) to delegate to a compliance review group of the board the authority to investigate alleged violations, issue consent orders, and initiate contested cases on behalf of the board; (16)(19) to order organizations, distributors, distributor salespersons, manufacturers, bingo halls,linked bingo game providers, and gambling managers to take corrective actions; and (17)(20) to take all necessary steps to ensure the integrity of and public confidence in lawful gambling. (b) The board, or director if authorized to act on behalf of the board, may by citation assess any organization, distributor, employee eligible to make sales on behalf of adistributor salesperson, manufacturer, bingo hall licensee,linked bingo game provider, or gambling manager a civil penalty of not more than $500 per violation for a failure to comply with any provision of this chapter or any rule adopted or order issued by the board. Any organization, distributor, bingo hall licenseedistributor salesperson, gambling manager, linked bingo game provider, or manufacturer assessed a civil penalty under this paragraph may request a hearing before the board. Appeals of citations imposing a civil penalty are not subject to the provisions of the Administrative Procedure Act. (c) All penalties received by the board must be deposited in the general fund. (d) All fees imposed by the board under sections 349.16 to 349.167 must be deposited in the state treasury and credited to a lawful gambling regulation account in the special revenue fund. Receipts in this account are available for the operations of the board up to the amount authorized in biennial appropriations from the legislature. Sec. 9. Minnesota Statutes 2004, section 349.151, subdivision 4b, is amended to read: Subd. 4b. [PULL-TAB SALES FROM DISPENSING DEVICES.] (a) The board may by rule authorize but not require the use of pull-tab dispensing devices. (b) Rules adopted under paragraph (a): (1) must limit the number of pull-tab dispensing devices on any permitted premises to three; and (2) must limit the use of pull-tab dispensing devices to a permitted premises which is (i) a licensed premises for on-sales of intoxicating liquor or 3.2 percent malt beverages; or (ii) a licensed bingo hall that allows gambling only bypremises where bingo is conducted and admission is restricted to persons 18 years or older. (c) Notwithstanding rules adopted under paragraph (b), pull-tab dispensing devices may be used in establishments licensed for the off-sale of intoxicating liquor, other than drugstores and general food stores licensed under section 340A.405, subdivision 1. Sec. 10. Minnesota Statutes 2004, section 349.151, is amended by adding a subdivision to read: Subd. 4c. [ELECTRONIC BINGO.] (a) The board may by rule authorize but not require the use of electronic bingo devices. (b) Rules adopted under paragraph (a): (1) must limit the number of bingo faces that can be played using an electronic bingo device to 36; (2) must require that an electronic bingo device be used with corresponding bingo paper sheets; (3) must require that the electronic bingo device site system have dial-up capability to permit the board to remotely monitor the operation of the device and the internal accounting systems; and (4) must prohibit the price of a face played on an electronic bingo device from being less than the price of a face on a bingo paper sheet sold at the same occasion. Sec. 11. Minnesota Statutes 2004, section 349.152, subdivision 2, is amended to read: Subd. 2. [DUTIES OF DIRECTOR.] The director has the following duties: (1) to carry out gambling policy established by the board; (2) to employ and supervise personnel of the board; (3) to advise and make recommendations to the board on rules, policy, and legislative initiatives; (4) to approve or deny operational requests from licensees as delegated by the board; (5) to issue licenses and premises permits as authorized by the board; (5)(6) to issue cease and desist orders; (6)(7) to make recommendations to the board on license issuance, denial, censure, suspension and revocation, civil penalties, and corrective action the board imposes; (7)(8) to ensure that board rules, policy, and decisions are adequately and accurately conveyed to the board's licensees; (8)(9) to conduct investigations, inspections, compliance reviews, and audits under this chapter; and (9)(10) to issue subpoenas to compel the attendance of witnesses and the production of documents, books, records, and other evidence relating to an investigation, compliance review, or audit the director is authorized to conduct. Sec. 12. Minnesota Statutes 2004, section 349.153, is amended to read: 349.153 [CONFLICT OF INTEREST.] (a) A person may not serve on the board, be the director, or be an employee of the board who has an interest in any corporation, association, limited liability company, or partnership that is licensed by the board as a distributor, manufacturer, or linked bingo game provider , or bingo hallunder section 349.164. (b) A member of the board, the director, or an employee of the board may not accept employment with, receive compensation directly or indirectly from, or enter into a contractual relationship with an organization that conducts lawful gambling, a distributor, a linked bingo game provider, a bingo hall,or a manufacturer while employed with or a member of the board or within one year after terminating employment with or leaving the board. (c) A distributor, bingo hall,manufacturer, linked bingo game provider, or organization licensed to conduct lawful gambling may not hire a former employee, director, or member of the Gambling Control Board for one year after the employee, director, or member has terminated employment with or left the Gambling Control Board. Sec. 13. Minnesota Statutes 2004, section 349.155, subdivision 3, is amended to read: Subd. 3. [MANDATORY DISQUALIFICATIONS.] (a) In the case of licenses for manufacturers, distributors, distributor salespersons, bingo halls,linked bingo game providers, and gambling managers, the board may not issue or renew a license under this chapter, and shall revoke a license under this chapter, if the applicant or licensee, or a director, officer, partner, governor, or person in a supervisory or management position of the applicant or licensee: (1) has ever been convicted of a felony or a crime involving gambling; (2) has ever been convicted of (i) assault, (ii) a criminal violation involving the use of a firearm, or (iii) making terroristic threats; (3) is or has ever been connected with or engaged in an illegal business; (4) owes $500 or more in delinquent taxes as defined in section 270.72; (5) had a sales and use tax permit revoked by the commissioner of revenue within the past two years; or (6) after demand, has not filed tax returns required by the commissioner of revenue. The board may deny or refuse to renew a license under this chapter, and may revoke a license under this chapter, if any of the conditions in this paragraph are applicable to an affiliate or direct or indirect holder of more than a five percent financial interest in the applicant or licensee. (b) In the case of licenses for organizations, the board may not issue or renew a license under this chapter, and shall revoke a license under this chapter, if the organization, or an officer or member of the governing body of the organization: (1) has been convicted of a felony or gross misdemeanor within the five years before the issuance or renewal of the licenseinvolving theft or fraud; (2) has ever been convicted of a crime involving gambling; or (3) has had a license issued by the board or director permanently revoked for violation of law or board rule. Sec. 14. Minnesota Statutes 2004, section 349.16, subdivision 2, is amended to read: Subd. 2. [ISSUANCE OF GAMBLING LICENSES.] (a) Licenses authorizing organizations to conduct lawful gambling may be issued by the board to organizations meeting the qualifications in paragraphs (b) to (h) if the board determines that the license is consistent with the purpose of sections 349.11 to 349.22. (b) The organization must have been in existence for the most recent three years preceding the license application as a registered Minnesota nonprofit corporation or as an organization designated as exempt from the payment of income taxes by the Internal Revenue Code. (c) The organization at the time of licensing must have at least 15 active members. (d) The organization must not be in existence solely for the purpose of conducting gambling. (e) The organization has identified in its license application the lawful purposes on which it proposes to expend net profits from lawful gambling and has identified an annual goal for charitable contributions, expressed as a percentage of gross profits. (f) The organization has identified on its license application a gambling manager and certifies that the manager is qualified under this chapter. (g) The organization must not, in the opinion of the board after consultation with the commissioner of revenue, be seeking licensing primarily for the purpose of evading or reducing the tax imposed by section 297E.02, subdivision 6. (h) The organization has not exceeded the expenditure restrictions imposed under section 349.15, subdivision 1, or if the organization has exceeded the expenditure restrictions under section 349.15, subdivision 1, the organization has reimbursed any excess expenses from nongambling funds. Sec. 15. Minnesota Statutes 2004, section 349.16, subdivision 8, is amended to read: Subd. 8. [LOCAL INVESTIGATION FEE.] A statutory or home rule charter city or county notified under section 349.213, subdivision 2, may assess an investigation fee on organizations or bingo hallsapplying for or renewing a premises permit or a bingo hall license. An investigation fee may not exceed the following limits: (1) for cities of the first class, $500; (2) for cities of the second class, $250; (3) for all other cities, $100; and (4) for counties, $375. Sec. 16. Minnesota Statutes 2004, section 349.161, subdivision 5, is amended to read: Subd. 5. [PROHIBITION.] (a) No distributor, distributor salesperson, or other employee of a distributor, may also be a wholesale distributor of alcoholic beverages or an employee of a wholesale distributor of alcoholic beverages. (b) No distributor, distributor salesperson, or any representative, agent, affiliate, or other employee of a distributor, may: (1) be involved in the conduct of lawful gambling by an organization; (2) keep or assist in the keeping of an organization's financial records, accounts, and inventories; or (3) prepare or assist in the preparation of tax forms and other reporting forms required to be submitted to the state by an organization. (c) No distributor, distributor salesperson, or any representative, agent, affiliate, or other employee of a distributor may provide a lessor of gambling premises any compensation, gift, gratuity, premium, or other thing of value. (d) No distributor, distributor salesperson, or any representative, agent, affiliate, or other employee of a distributor may provide an employee or agent of the organization any compensation, gift, gratuity, premium, or other thing of value greater than $25 per organization in a calendar year. (e) No distributor, distributor salesperson, or any representative, agent, affiliate, or other employee of a distributor may participate in any gambling activity at any gambling site or premises where gambling equipment purchased from that distributor or distributor salesperson is being used in the conduct of lawful gambling. (e)(f) No distributor, distributor salesperson, or any representative, agent, affiliate, or other employee of a distributor may alter or modify any gambling equipment, except to add a "last ticket sold" prize sticker. (f)(g) No distributor, distributor salesperson, or any representative, agent, affiliate, or other employee of a distributor may: (1) recruit a person to become a gambling manager of an organization or identify to an organization a person as a candidate to become gambling manager for the organization; or (2) identify for an organization a potential gambling location. (g)(h) No distributor or distributor salesperson may purchase gambling equipment for resale to a person for use within the state from any person not licensed as a manufacturer under section 349.163, except for gambling equipment returned from an organization licensed under section 349.16, or exempt or excluded from licensing under section 349.166. (h)(i) No distributor or distributor salesperson may sell gambling equipment to any person for use in Minnesota other than (i) a licensed organization or organization excluded or exempt from licensing, or (ii) the governing body of an Indian tribe. (i)(j) No distributor or distributor salesperson may sell or otherwise provide a pull-tab or tipboard deal with the symbol required by section 349.163, subdivision 5, paragraph (h)(d), visible on the flare to any person other than in Minnesota to a licensed organization or organization exempt from licensing. Sec. 17. Minnesota Statutes 2004, section 349.162, subdivision 1, is amended to read: Subdivision 1. [ STAMPREGISTRATION REQUIRED.] (a)A distributor may not sell, transfer, furnish, or otherwise provide to a person, and no person may purchase, borrow, accept, or acquire from a distributor gambling equipment for use within the state unless the equipment has been registered with the board and has a registration stamp affixed, except for gambling equipment not stamped by the manufacturer pursuant to section 349.163, subdivision 5 or 8. Each stamp must bear a registration number assigned by the board. (b) A manufacturer must return all unused registration stamps in its possession to the board by February 1, 1995. No manufacturer may possess unaffixed registration stamps after February 1, 1995. (c) After February 1, 1996, no person may possess any unplayed pull-tab or tipboard deals with a registration stamp affixed to the flare or any unplayed paddleticket cards with a registration stamp affixed to the master flare. This paragraph does not apply to unplayed pull-tab or tipboard deals with a registration stamp affixed to the flare, or to unplayed paddleticket cards with a registration stamp affixed to the master flare, if the deals or cards are identified on a list of existing inventory submitted by a licensed organization or a licensed distributor, in a format prescribed by the commissioner of revenue, to the commissioner of revenue on or before February 1, 1996or the Department of Revenue in a manner prescribed by the board or the Department of Revenue. Gambling equipment kept in violation of this paragraphsubdivision is contraband under section 349.2125. Sec. 18. Minnesota Statutes 2004, section 349.162, subdivision 4, is amended to read: Subd. 4. [PROHIBITION.] (a) No person other than a licensed distributor or licensed manufacturermay possess unaffixed registration stamps issued by the board for the purpose of registering gambling equipment. (b) Unless otherwise provided in this chapter, no person may possess gambling equipment that has not been stamped andregistered. (c) On and after January 1, 1991, no distributor may: (1) sell a bingo hard card or paper sheet that does not bear an individual number; or (2) sell a package of bingo paper sheets that does not contain bingo paper sheets in numerical order. Sec. 19. Minnesota Statutes 2004, section 349.162, subdivision 5, is amended to read: Subd. 5. [SALES FROM FACILITIES.] (a) All gambling equipment purchased or possessed by a licensed distributor for resale to any person for use in Minnesota must, prior to the equipment's resale, be unloaded into a storage facility located in Minnesota which the distributor owns or leases; and which has been registered, in advance and in writing, with the Division of Alcohol and Gambling Enforcement as a storage facility of the distributor. All unregistered gambling equipment and all unaffixed registration stamps owned by, or in the possession of, a licensed distributor in the state of Minnesota shall be stored at a storage facility which has been registered with the Division of Alcohol and Gambling Enforcement. No gambling equipment may be moved from the facility unless the gambling equipment has been first registered with the board , except for gambling equipment not stamped by the manufacturer pursuant to section 349.163, subdivision 5 or 8or the Department of Revenue. (b) Notwithstanding section 349.163, subdivisions 5, 6, and 8, a licensed manufacturer may ship into Minnesota approved or unapproved gambling equipment if the licensed manufacturer ships the gambling equipment to a Minnesota storage facility that is: (1) owned or leased by the licensed manufacturer; and (2) registered, in advance and in writing, with the Division of Alcohol and Gambling Enforcement as a manufacturer's storage facility. No gambling equipment may be shipped into Minnesota to the manufacturer's registered storage facility unless the shipment of the gambling equipment is reported to the Department of Revenue in a manner prescribed by the department. No gambling equipment may be moved from the storage facility unless the gambling equipment is sold to a licensed distributor and is otherwise in conformity with this chapter, is shipped to an out-of-state site and the shipment is reported to the Department of Revenue in a manner prescribed by the department, or is otherwise sold and shipped as permitted by board rule. (c) All storage facilities owned, leased, used, or operated by a licensed distributor or manufacturer may be entered upon and inspected by the employees of the Division of Alcohol and Gambling Enforcement, the Division of Alcohol and Gambling Enforcement director's authorized representatives, employees of the Gambling Control Board or its authorized representatives, employees of the Department of Revenue, or authorized representatives of the director of the Division of Special Taxes of the Department of Revenue during reasonable and regular business hours. Obstruction of, or failure to permit, entry and inspection is cause for revocation or suspension of a manufacturer's or distributor's licenses and permits issued under this chapter. (d) Unregistered gambling equipment and unaffixed registration stamps found at any location in Minnesota other than the manufacturing plant of a licensed manufacturer or a registered storage facility are contraband under section 349.2125. This paragraph does not apply: (1) to unregistered gambling equipment being transported in interstate commerce between locations outside this state, if the interstate shipment is verified by a bill of lading or other valid shipping document; and (2) to gambling equipment not stamped by the manufacturer pursuant to section 349.163, subdivision 5 or 8registered with the Department of Revenue for distribution to the tribal casinos. Sec. 20. Minnesota Statutes 2004, section 349.163, subdivision 3, is amended to read: Subd. 3. [PROHIBITED SALES.] (a) A manufacturer may not: (1) sell gambling equipment for use or resale within the state to any person not licensed as a distributor, except that gambling equipment used exclusively in a linked bingo game may be sold to a licensed linked bingo provider; or (2) sell gambling equipment to a distributor in this state that has the same serial number as another item of gambling equipment of the same type that is sold by that manufacturer for use or resale in this state. (b) A manufacturer, affiliate of a manufacturer, or person acting as a representative or agent of a manufacturer may not provide a lessor of gambling premises or an appointed official any compensation, gift, gratuity, premium, contribution, or other thing of value. (c) A manufacturer may not sell or otherwise provide a pull-tab or tipboard deal with the symbol required by subdivision 5, paragraph (h)(d), imprinted on the flare to any person other than a licensed distributor unless the manufacturer first renders the symbol permanently invisible. Sec. 21. Minnesota Statutes 2004, section 349.1635, subdivision 4, is amended to read: Subd. 4. [PROHIBITION.] (a) Except for services associated exclusively with a linked bingo game, a linked bingo game provider may not participate or assist in the conduct of lawful gambling by an organization. No linked bingo game provider may: (1) also be licensed as a bingo hall orhold any financial or managerial interest in a premises leased for the conduct of bingo hall; (2) also be licensed as a distributor or hold any financial or managerial interest in a distributor; (3) sell or lease linked bingo game equipment to any person not licensed as an organization; (4) purchase gambling equipment to be used exclusively in a linked bingo game from any person not licensed as a manufacturer under section 349.163; and (5) provide an organization, a lessor of gambling premises, or an appointed official any compensation, gift, gratuity, premium, or contribution. (b) Employees of the board and the Division of Alcohol and Gambling Enforcement may inspect the books, records, inventory, and business premises of a licensed linked bingo game provider without notice during the normal business hours of the linked bingo game provider. The board may charge a linked bingo game provider for the actual cost of conducting scheduled or unscheduled inspections of the licensee's facilities. Sec. 22. Minnesota Statutes 2004, section 349.166, subdivision 1, is amended to read: Subdivision 1. [EXCLUSIONS.] (a) Bingo, with the exception of linked bingo games, may be conducted without a license and without complying with sections 349.168, subdivisions 1 and 2; 349.17, subdivisions 1, 4, and 5; 349.18, subdivision 1; and 349.19, if it is conducted: (1) by an organization in connection with a county fair, the state fair, or a civic celebration and is not conducted for more than 12 consecutive days and is limited to no more than four separate applications for activities applied for and approved in a calendar year; or (2) by an organization that conducts four or fewer bingo occasions in a calendar year. An organization that holds a license to conduct lawful gambling under this chapter may not conduct bingo under this subdivision. (b) Bingo may be conducted within a nursing home or a senior citizen housing project or by a senior citizen organization if the prizes for a single bingo game do not exceed $10, total prizes awarded at a single bingo occasion do not exceed $200, no more than two bingo occasions are held by the organization or at the facility each week, only members of the organization or residents of the nursing home or housing project are allowed to play in a bingo game, no compensation is paid for any persons who conduct the bingo, and a manager is appointed to supervise the bingo. Bingo conducted under this paragraph is exempt from sections 349.11 to 349.23, and the board may not require an organization that conducts bingo under this paragraph, or the manager who supervises the bingo, to register or file a report with the board. The gross receipts from bingo conducted under the limitations of this subdivision are exempt from taxation under chapter 297A. (c) Raffles may be conducted by an organization without a license and without complying with sections 349.154 to 349.165 and 349.167 to 349.213registering with the board if the value of all raffle prizes awarded by the organization in a calendar year does not exceed $1,500. (d) Except as provided in paragraph (b), the organization must maintain all required records of excluded gambling activity for 3-1/2 years. Sec. 23. Minnesota Statutes 2004, section 349.166, subdivision 2, is amended to read: Subd. 2. [EXEMPTIONS.] (a) Lawful gambling, with the exception of linked bingo games, may be conducted by an organization without a license and without complying with sections 349.168, subdivisions 1 and 2; 349.17, subdivisions 4 and 5; 349.18, subdivision 1; and 349.19 if: (1) the organization conducts lawful gambling on five or fewer days in a calendar year; (2) the organization does not award more than $50,000 in prizes for lawful gambling in a calendar year; (3) the organization pays a fee of $50 to the board, notifies the board in writing not less than 30 days before each lawful gambling occasion of the date and location of the occasion, or 60 days for an occasion held in the case of a city of the first class, the types of lawful gambling to be conducted, the prizes to be awarded, and receives an exemption identification number; (4) the organization notifies the local government unit 30 days before the lawful gambling occasion, or 60 days for an occasion held in a city of the first class; (5) the organization purchases all gambling equipment and supplies from a licensed distributor; and (6) the organization reports to the board, on a single-page form prescribed by the board, within 30 days of each gambling occasion, the gross receipts, prizes, expenses, expenditures of net profits from the occasion, and the identification of the licensed distributor from whom all gambling equipment was purchased. (b) If the organization fails to file a timely report as required by paragraph (a), clause (3) or (6), the board shall not issue any authorization, license, or permit to the organization to conduct lawful gambling on an exempt, excluded, or licensed basis until the report has been filed and the organization may be subject to penalty as determined by the board. (c) Merchandise prizes must be valued at their fair market value. (d) Organizations that qualify to conduct exempt raffles under paragraph (a), are exempt from section 349.173, paragraph (b), clause (2), if the raffle tickets are sold only in combination with an organization's membership or a ticket for an organization's membership dinner and are not included with any other raffle conducted under the exempt permit. (e) Unused pull-tab and tipboard deals must be returned to the distributor within seven working days after the end of the lawful gambling occasion. The distributor must accept and pay a refund for all returns of unopened and undamaged deals returned under this paragraph. (e)(f) An organization that is exempt from taxation on purchases of pull-tabs and tipboards under section 297E.02, subdivision 4, paragraph (b), clause (4), must return to the distributor any tipboard or pull-tab deal no part of which is used at the lawful gambling occasion for which it was purchased by the organization. (f)(g) The organization must maintain all required records of exempt gambling activity for 3-1/2 years. Sec. 24. Minnesota Statutes 2004, section 349.167, subdivision 1, is amended to read: Subdivision 1. [GAMBLING MANAGER REQUIRED.] (a) All lawful gambling conducted by a licensed organization must be under the supervision of a gambling manager. A gambling manager designated by an organization to supervise lawful gambling is responsible for the gross receipts of the organization and for its conduct in compliance with all laws and rules. A person designated as a gambling manager shall maintain a fidelitydishonesty bond in the sum of $10,000 in favor of the organization conditioned on the faithful performance of the manager's duties. The terms of the bond must provide that notice be given to the board in writing not less than 30 days before its cancellation. (b) A person may not act as a gambling manager for more than one organization. (c) An organization may not conduct lawful gambling without having a gambling manager. (d) An organization may not have more than one gambling manager at any time. Sec. 25. Minnesota Statutes 2004, section 349.168, subdivision 8, is amended to read: Subd. 8. [PERCENTAGE OF GROSS PROFIT PAID.] (a) A licensed organization may pay a percentage of the gross profit from raffle ticket sales to a nonprofit organization that sells raffle tickets for the licensed organization. (b) A licensed organization may compensate an employee of the organization for the sale of gambling equipment at a bar operation if the frequency of the activity is one day or less per week and the games are limited to 32 chances or less per game. For purposes of this paragraph, an employee must not be a lessor, employee of the lessor, or an immediate family member of the lessor. Sec. 26. Minnesota Statutes 2004, section 349.17, subdivision 5, is amended to read: Subd. 5. [BINGO CARDS AND SHEETS.] (a) The board shall by rule require that all licensed organizations: (1) conduct bingo only using liquid daubers on bingo paper sheets that bear an individual number recorded by the distributor or linked bingo game provider; and (2) use each bingo paper sheet for no more than one bingo occasion. In lieu of the requirements of clause (2), a licensed organization may electronically record the sale of each bingo hard card or paper sheet at each bingo occasion using an electronic recording system approved by the board. (b) The requirements of paragraph (a) shall only apply to a licensed organization that received gross receipts from bingo in excess of $150,000 in the organization's last fiscal year. Sec. 27. Minnesota Statutes 2004, section 349.17, subdivision 7, is amended to read: Subd. 7. [ NOON HOURBAR BINGO.] Notwithstanding subdivisions 1 and 3,An organization may conduct bar 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)(2) the bingo is conducted using only bingo paper sheets purchased from a licensed distributor; (5) if the premises are leased, the(3) no rent may not exceed $25 per day for each day bingo is conductedbe paid for a bar bingo occasion; and (6)(4) linked bingo games may not be conducted at a noon hourbar bingo occasion. Sec. 28. Minnesota Statutes 2004, section 349.1711, subdivision 1, is amended to read: Subdivision 1. [SALE OF TICKETS.] Tipboard games must be played using only tipboard tickets that are either (1) attached to a placard and arranged in columns or rows, or (2) separate from the placard and contained in a receptacle while the game is in play. The placard serves as the game flare. The placard must contain a seal that conceals the winning number or symbol. When a tipboard ticket is purchased and opened from a game containing more than 32 tickets, each player having a tipboard ticket with one or more predesignated numbers or symbols must sign the placard at the line indicated by the number or symbol on the tipboard ticket. Sec. 29. Minnesota Statutes 2004, section 349.173, is amended to read: 349.173 [CONDUCT OF RAFFLES.] (a) Raffle tickets or certificates of participation at a minimum must list the three most expensive prizes to be awarded. If additional prizes will be awarded that are not contained on the raffle ticket, the raffle ticket must contain the statement "A complete list of additional prizes is available upon request.", a complete list of additional prizes must be publicly posted at the event and copies of the complete prize list made available upon request. Notwithstanding section 349.12, subdivision 33, raffles conducted under the exemptions in section 349.166 may use tickets that contain only the sequential number of the raffle ticket and no other information if the organization makes a list of prizes and a statement of other relevant information required by rule available to persons purchasing tickets and if tickets are only sold at the event and on the date when the tickets are drawn. (b) Raffles must be conducted in a manner that ensures: (1) all entries in the raffle have an equal chance of selection; (2) entry in the raffle is not conditioned upon any other purchase; (3) the method of selection is conducted in a public forum; (4) the method of selection cannot be manipulated or based on the outcome of an event not under the control of the organization; (5) physical presence at the raffle is not a requirement to win; and (6) all sold and unsold tickets or certificates of participation are accounted for. (c) Methods of selecting winning entries from a raffle other than prescribed in rule may be used with the prior written approval of the board. [EFFECTIVE DATE.] This section is effective the day following final enactment. Sec. 30. Minnesota Statutes 2004, section 349.18, subdivision 1, is amended to read: Subdivision 1. [LEASE OR OWNERSHIP REQUIRED; RENT LIMITATIONS.] (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. Leases approved by the board must specify that the board may authorize an organization to withhold rent from a lessor for a period of up to 90 days if the board determines that illegal gambling occurred on the premises and that the lessor or its employees participated in the illegal gambling or knew of the gambling and did not take prompt action to stop the gambling. The lease must authorize the continued tenancy of the organization without the payment of rent during the time period determined by the board under this paragraph. Copies of all leases must be made available to employees of the board and the Division of Alcohol and Gambling Enforcement on request. The board may prescribe by rule limits on the amount of rent which an organization may pay to a lessor for premises leased for 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) Rent paid by an organization for leased premises for the conduct of pull-tabs, tipboards, and paddlewheels is subject to the following limits: (1) for booth operations, including booth operations where a pull-tab dispensing device is located, booth operations where a bar operation is also conducted, and booth operations where both a pull-tab dispensing device is located and a bar operation is also conducted, the maximum rent is: (i) in any month where the organization's gross profit at those premises does not exceed $4,000, up to $400; and (ii) in any month where the organization's gross profit at those premises exceeds $4,000, up to $400 plus not more than ten percent of the gross profit for that month in excess of $4,000; (2) for bar operations, including bar operations where a pull-tab dispensing device is located but not including bar operations subject to clause (1), and for locations where only a pull-tab dispensing device is located: (i) in any month where the organization's gross profit at those premises does not exceed $1,000, up to $200; and (ii) in any month where the organization's gross profit at those premises exceeds $1,000, up to $200 plus not more than 20 percent of the gross profit for that month in excess of $1,000; (3) a lease not governed by clauses (1) and (2) must be approved by the board before becoming effective; (4) total rent paid to a lessor from all organizations from leases governed by clause (1) may not exceed $1,750 per month. Total rent paid to a lessor from all organizations from leases governed by clause (2) may not exceed $2,500 per month. (c) Rent paid by an organization for leased premises for the conduct of bingo is subject to either of the following limits at the option of the parties to the lease: (1) not more than ten percent of the monthly gross profit from all lawful gambling activities held during bingo occasions excluding bar bingo or at a rate based on a cost per square foot not to exceed 110 percent of a comparable cost per square foot for leased space as approved by the director; and (2) no rent may be paid for bar bingo. (d) Amounts paid as rent under leases are all-inclusive. No other services or expenses provided or contracted by the lessor may be paid by the organization, including, but not limited to, trash removal, janitorial and cleaning services, snow removal, lawn services, electricity, heat, security, security monitoring, storage, other utilities or services, and, in the case of bar operations, cash shortages, unless approved by the director. Any other expenditure made by an organization that is related to a leased premises must be approved by the director. An organization may not provide any compensation or thing of value to a lessor or the lessor's employees from any fund source other than its gambling account. Rent payments may not be made to an individual. (d)(e) Notwithstanding paragraph (b), an organization may pay a lessor for food or beverages or meeting room rental if the charge made is comparable to similar charges made to other individuals or groups. (e)(f) No person, distributor, manufacturer, lessor, linked bingo game provider, 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. (f)(g) 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. (g)(h) Employees of a lessor or employees of an organization 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 lessorparticipating in lawful gambling is not a gambling employee for the organization conducting lawful gambling on the premises. (h)(i) A gambling employee may purchase pull-tabs or tipboards 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 or tipboards at that site. (i)(j) 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. (j)(k) A member of the lessor's immediate family may not be a compensated employee of an organization leasing space at the premises. For purposes of this paragraph, a "member of the immediate family" is a spouse, parent, child, or sibling. Sec. 31. Minnesota Statutes 2004, section 349.19, subdivision 4, is amended to read: Subd. 4. [DISCREPANCIES.] If at a bingo occasion a discrepancy of more than $20$50 is found between the gross receipts as reported by the checkers and the gross receipts determined by adding the cash receipts, the discrepancy must be reported to the board within five days of the bingo occasion. Sec. 32. Minnesota Statutes 2004, section 349.19, subdivision 5, is amended to read: Subd. 5. [REPORTS.] A licensed organization must report to the Department of Revenue and to its membership monthly, or quarterly in the case of a licensed organization which does not report more than $1,000 in gross receipts from lawful gambling in any calendar quarter, on its gross receipts, expenses, profits, and expenditure of profits from lawful gambling. The report must include a reconciliation of the organization's profit carryover with its cash balance on hand. If the organization conducts both bingo and other forms of lawful gambling, the figures for both must be reported separately. The organization must report annually to its membership and annually file with the board a financial summary report in a format prescribed by the board that identifies the organization's receipts and use of lawful gambling proceeds, including: (1) gross receipts; (2) prizes paid; (3) allowable expenses; (4) lawful purpose expenditures, including annual totals for types of charitable contributions and all taxes and fees as per section 349.12, subdivision 25, paragraph (a), clauses (8) and (18); (5) the percentage of annual gross profits used for charitable contributions; and (6) the percentage of annual gross profits used for all taxes and fees as per section 349.12, subdivision 25, paragraph (a), clauses (8) and (18). Sec. 33. Minnesota Statutes 2004, section 349.19, subdivision 10, is amended to read: Subd. 10. [PULL-TAB RECORDS.] (a) The board shall by rule require a licensed organization to require each winner of a pull-tab prize of $50 or more to present identification in the form of a driver's license, Minnesota identification card, or other identification the board deems sufficient to allow the identification and tracing of the winner. The rule must require the organization to retain winning pull-tabs of $50 or more, and the identification of the winner of the pull-tab, for 3-1/2 years. (b) An organization must maintain separate cash banks for each deal of pull-tabs unless (1) two or more deals are commingled in a single receptaclepull-tab dispensing device, or (2) the organization uses a cash register, of a type approved by the board, which records all sales of pull-tabs by separate deals. (c) The board shall: (1) by rule adopt minimum technical standards for cash registers that may be used by organizations, and shall approve for use by organizations any cash register that meets the standards ,; and (2) before allowing an organization to use a cash register that commingles receipts from several different pull-tab games in play, adopt rules that define how cash registers may be used and that establish a procedure for organizations to reconcile all pull-tab games in play at the end of each month. Sec. 34. Minnesota Statutes 2004, section 349.211, subdivision 2c, is amended to read: Subd. 2c. [TIPBOARD PRIZES.] The maximum prize which may be awarded for a tipboard ticket is $500$599, not including any cumulative or carryover prizes. Cumulative or carryover prizes in tipboard games shall not exceed $2,500. Sec. 35. Minnesota Statutes 2004, section 349.2125, subdivision 1, is amended to read: Subdivision 1. [CONTRABAND DEFINED.] The following are contraband: (1) all pull-tab or tipboard deals or paddleticket cards not stamped orbar coded in accordance with this chapter or chapter 297E; (2) all pull-tab or tipboard deals in the possession of any unlicensed person, firm, or organization , whether stamped or unstamped; (3) any container used for the storage and display of any contraband pull-tab or tipboard deals as defined in clauses (1) and (2); (4) all currency, checks, and other things of value used for pull-tab or tipboard transactions not expressly permitted under this chapter, and any cash drawer, cash register, or any other container used for illegal pull-tab or tipboard transactions including its contents; (5) any device including, but not limited to, motor vehicles, trailers, snowmobiles, airplanes, and boats used, with the knowledge of the owner or of a person operating with the consent of the owner, for the storage or transportation of more than five pull-tab or tipboard deals that are contraband under this subdivision. When pull-tabs and tipboards are being transported in the course of interstate commerce between locations outside this state, the pull-tab and tipboard deals are not contraband, notwithstanding the provisions of clauses (1) and (12); (6) any unaffixed registration stamps except as provided in section 349.162, subdivision 4; (7) any prize used or offered in a game utilizing contraband as defined in this subdivision; (8) any altered, modified, or counterfeit pull-tab or tipboard ticket; (9) any unregistered gambling equipment except as permitted by this chapter; (10) any gambling equipment kept in violation of section 349.18; (11) any gambling equipment not in conformity with law or board rule; (12) any pull-tab or tipboard deal in the possession of a person other than a licensed distributor or licensed manufacturer for which the person, upon demand of a licensed peace officer or authorized agent of the commissioner of revenue or director of alcohol and gambling enforcement, does not immediately produce for inspection the invoice or a true and correct copy of the invoice for the acquisition of the deal from a licensed distributor; (13) any pull-tab or tipboard deals or portions of deals on which the tax imposed under chapter 297E has not been paid; and (14) any device prohibited by section 609.76, subdivisions 4 to 6. Sec. 36. Minnesota Statutes 2004, 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 or linked bingo game providers 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 hallis located or, if the premises or hallis located outside a city, the county board of the county and the town board of the town where the premises or hallis located. The board may require organizations or bingo hallsto 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 licenseunless 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 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. All documents pertaining to site inspections, fines, penalties, or other corrective action involving local lawful gambling regulation must be shared with the board within 30 days of filing at the city or county of jurisdiction. 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. 37. Minnesota Statutes 2004, section 609.75, subdivision 1, is amended to read: Subdivision 1. [LOTTERY.] (a) A lottery is a plan which provides for the distribution of money, property or other reward or benefit to persons selected by chance from among participants some or all of whom have given a consideration for the chance of being selected. A participant's payment for use of a 900 telephone number or another means of communication that results in payment to the sponsor of the plan constitutes consideration under this paragraph. (b) An in-package chance promotion is not a lottery if all of the following are met: (1) participation is available, free and without purchase of the package, from the retailer or by mail or toll-free telephone request to the sponsor for entry or for a game piece; (2) the label of the promotional package and any related advertising clearly states any method of participation and the scheduled termination date of the promotion; (3) the sponsor on request provides a retailer with a supply of entry forms or game pieces adequate to permit free participation in the promotion by the retailer's customers; (4) the sponsor does not misrepresent a participant's chances of winning any prize; (5) the sponsor randomly distributes all game pieces and maintains records of random distribution for at least one year after the termination date of the promotion; (6) all prizes are randomly awarded if game pieces are not used in the promotion; and (7) the sponsor provides on request of a state agency a record of the names and addresses of all winners of prizes valued at $100 or more, if the request is made within one year after the termination date of the promotion. (c) Except as provided by section 349.40, acts in this state in furtherance of a lottery conducted outside of this state are included notwithstanding its validity where conducted. (d) The distribution of property, or other reward or benefit by an employer to persons selected by chance from among participants who, all of whom: (1) have made a contribution through a payroll or pension deduction campaign to a registered combined charitable organization, within the meaning of section 309.501; or (2) have paid other consideration to the employer entirely for the benefit of such a registered combined charitable organization, as a precondition to the chance of being selected, is not a lottery if: (1)(i) all of the persons eligible to be selected are employed by or retirees of the employer; and (2)(ii) the cost of the property or other reward or benefit distributed and all costs associated with the distribution are borne by the employer. Sec. 38. [REPEALER.] Minnesota Statutes 2004, sections 349.162, subdivision 3; 349.164; and 349.17, subdivision 1, are repealed. ARTICLE 2 LOTTERY SERVICE BUSINESS Section 1. [299L.09] [LOTTERY SERVICE BUSINESS.] Subdivision 1. [DEFINITION.] For purposes of this section: (a) A "lottery service business" is a commercial enterprise that for a fee or commission purchases lottery tickets on behalf of customers or subscribers. (b) "Division" means the Division of Alcohol and Gambling Enforcement in the Department of Public Safety. (c) "Commissioner" means the commissioner of public safety acting through the division. (d) "Disqualifying offense" means any felony, gross misdemeanor, and any criminal offense involving fraud, misrepresentation, or deceit. Subd. 2. [REQUIRED STATEMENTS.] (a) All print advertising in any medium published by or on behalf of a lottery service business, and all print communications intended to solicit members, including Internet solicitations, for each lottery pool or subscription service offered, must contain a clear and prominent statement that discloses to the subscriber, either in print or in electronic format, a statement that describes how much of each subscriber's fees are used to buy tickets. (b) All advertising and solicitation described in paragraph (a) must contain the following statement in clear and readable type: "This business is not affiliated with and is not an agent of the Minnesota State Lottery." Subd. 3. [PROHIBITIONS.] (a) A lottery service business may not accept as a customer or subscriber any person under age 18, or make a payment of lottery winnings to a person under age 18. (b) Except as necessary for the lottery service business to fill a pool, a lottery service business and any officer, director, or employee of the business may not have any stake or own any shares in any lottery pool it creates for customers or subscribers. Subd. 4. [LOTTERY PRIZE ACCOUNT.] A lottery service business must deposit all money received as winnings from lottery tickets bought for or on behalf of customers or subscribers into a lottery prize account that it maintains separately from all other accounts of the business. The business may expend money from the account, including interest thereon, only to pay winnings to customers or subscribers and to make payments required under subdivision 5. Subd. 5. [UNCLAIMED PRIZES.] (a) A lottery service business must make all good-faith efforts to distribute money in its lottery prize account to customers and subscribers entitled thereto. (b) Any prizewinning money deposited in the lottery prize account that has not been distributed to customers or subscribers as winnings within one year after the date of the drawing becomes an unclaimed prize. On July 1 of each year, a lottery service business must transmit all unclaimed prizes, including all interest earned thereon while the prize was in the lottery prize account, to the commissioner. The commissioner shall deposit all payments under this subdivision in the general fund. This subdivision does not apply if the amount of prizewinning money in the account is less than $25. Subd. 6. [BOOKS AND RECORDS.] A lottery service business must keep a complete accounting and all records necessary to show fully the lottery service business's lottery transactions, including incoming revenue, tickets purchased, and winnings distributed. [EFFECTIVE DATE.] This section is effective August 1, 2005. ARTICLE 3 VIDEO GAME OF CHANCE Section 1. Minnesota Statutes 2004, section 609.75, subdivision 8, is amended to read: Subd. 8. [VIDEO GAME OF CHANCE.] A video game of chance is a game or device that simulates one or more games commonly referred to as poker, blackjack, craps, hi-lo, roulette, or other common gambling forms, though not offering any type of pecuniary award or gain to players. The term also includes any video game having one or more of the following characteristics: (1) it is primarily a game of chance, and has no substantial elements of skill involved; (2) it awards game credits or replays and contains a meter or device that records unplayed credits or replays. A video game that simulates horse racing that does not involve a prize payout is not a video game of chance. [EFFECTIVE DATE.] This section is effective the day following final enactment. ARTICLE 4 SOCIAL SKILL GAME Section 1. Minnesota Statutes 2004, section 609.761, subdivision 3, is amended to read: Subd. 3. [SOCIAL SKILL GAME.] Sections 609.755 and 609.76 do not prohibit tournaments or contests that satisfy all of the following requirements: (1) the tournament or contest consists of the card games of chance commonly known as cribbage, skat, sheephead, bridge, euchre, pinochle, gin, 500, smear, Texas hold'em, or whist; (2) the tournament or contest does not provide any direct financial benefit to the promoter or organizer; and(3) the sumvalue of all prizes awarded for each tournament or contest does not exceed $200; and (4) for a tournament or contest involving Texas hold'em: (i) no person under 18 years of age may participate; (ii) the payment of an entry fee or other consideration for participating is prohibited; (iii) the value of all prizes awarded to an individual winner of a tournament or contest at a single location may not exceed $200 each day; and (iv) the organizer or promoter must ensure that reasonable accommodations are made for players with disabilities. Accommodations to the table and the cards shall include the announcement of the cards visible to the entire table and the use of Braille cards for players who are blind. [EFFECTIVE DATE.] This section is effective the day following final enactment and applies to acts committed on or after that date. Presented to the governor May 31, 2005 Signed by the governor June 3, 2005, 10:40 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes