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Office of the Revisor of Statutes

Key: (1) 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 mental disability, which is used to 
        relieve the effects of that poverty, homelessness, or disability 
        suffering; 
           (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 
        problem 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 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 wholly owned 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 
        disaster catastrophe, 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 ticket or 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 55 60 
        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 halls to 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 a 
        distributor 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 
        licensee distributor 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 by premises 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 hall under 
        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 
        license involving 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 halls applying 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.  [STAMP REGISTRATION 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, 1996 or the Department of Revenue in a manner prescribed by 
        the board or the Department of Revenue.  Gambling equipment kept 
        in violation of this paragraph subdivision 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 manufacturer may 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 and 
        registered.  
           (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 8 or 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 8 registered 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 or hold 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 349.213 registering 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 fidelity 
        dishonesty 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 HOUR BAR 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 conducted be paid for a 
        bar bingo occasion; and 
           (6) (4) linked bingo games may not be conducted at a noon 
        hour bar 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 lessor participating 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 receptacle pull-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 or bar 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 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 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 sum value 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.