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1994 Minnesota Session Laws

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                            CHAPTER 633-S.F.No. 103 
                  An act relating to gambling; repealing references in 
                  law to off-track betting on horse racing; authorizing 
                  revocation of racetrack license for failure to conduct 
                  live racing; recodifying gambling tax laws and 
                  applying them to gambling other than lawful gambling; 
                  setting out licensing qualifications for the division 
                  of gambling enforcement; prohibiting unauthorized 
                  possession of a gambling device; redefining lawful 
                  purposes; allowing pull-tab dispensing devices under 
                  certain circumstances; setting out licensing 
                  procedures for the gambling control board; repealing 
                  requirements for gambling stamps and substituting 
                  requirements for bar coding of gambling equipment; 
                  specifying who may negotiate tribal-state compacts on 
                  behalf of the state; establishing revolving funds and 
                  appropriating money; prescribing penalties; providing 
                  for a report on state gambling policy; providing 
                  appointments; amending Minnesota Statutes 1992, 
                  sections 3.9221, subdivisions 2 and 5; 240.05, 
                  subdivision 1; 240.06, subdivision 7; 240.09, by 
                  adding a subdivision; 240.13, subdivisions 1, 2, 3, 5, 
                  6, and 8; 240.15, subdivision 6; 240.16, subdivision 
                  1a; 240.25, subdivision 2, and by adding a 
                  subdivision; 240.26, subdivision 3; 240.27, 
                  subdivision 1; 240.28, subdivision 1; 270.101, 
                  subdivision 1; 299L.01, subdivision 1, and by adding a 
                  subdivision; 299L.02, subdivisions 2, 5, and by adding 
                  subdivisions; 299L.03, subdivisions 1, 2, 6, and by 
                  adding a subdivision; 299L.07; 349.12, subdivisions 1, 
                  3a, 4, 8, 11, 16, 18, 19, 21, 23, 30, 32, 34, and by 
                  adding subdivisions; 349.13; 349.15; 349.151, 
                  subdivision 4, and by adding subdivisions; 349.152, 
                  subdivisions 2 and 3; 349.153; 349.154; 349.16, 
                  subdivisions 2, 3, 6, 8, and by adding a subdivision; 
                  349.161, subdivisions 1 and 5; 349.162, subdivisions 
                  1, 2, 4, and 5; 349.163, subdivisions 1, 3, 5, 6, and 
                  by adding a subdivision; 349.164, subdivisions 1, 6, 
                  and by adding a subdivision; 349.1641; 349.166, 
                  subdivisions 1, 2, and 3; 349.167, subdivisions 1, 2, 
                  4, and by adding a subdivision; 349.168, subdivisions 
                  3, 6, and by adding a subdivision; 349.169, 
                  subdivision 1; 349.17, subdivisions 2, 4, 5, and by 
                  adding a subdivision; 349.174; 349.18, subdivisions 1, 
                  1a, and 2; 349.19, subdivisions 2, 5, 8, 9, and 10; 
                  349.191, subdivisions 1, 4, and by adding 
                  subdivisions; 349.211, subdivisions 1, 2, and 2a; 
                  349.2123; 349.2125, subdivisions 1 and 3; 349.2127, 
                  subdivisions 2, 3, 4, and by adding subdivisions; 
                  349.213, subdivision 1; 349.22, subdivision 1; 
                  349A.06, by adding a subdivision; 349A.10, by adding a 
                  subdivision; 349A.12, subdivisions 1, 2, 5, and 6; 
                  541.21; and 609.755; Minnesota Statutes 1993 
                  Supplement, section 349.12, subdivision 25; proposing 
                  coding for new law in Minnesota Statutes, chapters 4; 
                  325E; and 349; proposing coding for new law as 
                  Minnesota Statutes, chapter 297E; repealing Minnesota 
                  Statutes 1992, sections 240.091; 299L.04; 299L.07, 
                  subdivision 7; 349.16, subdivisions 4 and 5; 349.161, 
                  subdivisions 3, 6, and 7; 349.163, subdivisions 1a and 
                  2a; 349.164, subdivisions 3, 5, and 8; 349.166, 
                  subdivision 4; 349.167, subdivisions 3 and 5; 349.212, 
                  subdivisions 1, 2, 5, 6, and 7; 349.2121; 349.2122; 
                  349.215; 349.2151; 349.2152; 349.216; 349.217, 
                  subdivisions 3, 4, 5, 6, 7, 8, and 9; 349.2171; and 
                  349.219; Minnesota Statutes 1993 Supplement, sections 
                  349.2115; 349.212, subdivision 4; and 349.217, 
                  subdivisions 1, 2, and 5a. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1
                               PARI-MUTUEL RACING
           Section 1.  Minnesota Statutes 1992, section 240.05, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CLASSES.] The commission may issue five 
        four classes of licenses:  
           (a) class A licenses, for the ownership and operation of a 
        racetrack with horse racing on which pari-mutuel betting is 
        conducted; 
           (b) class B licenses, for the sponsorship and management of 
        horse racing on which pari-mutuel betting is conducted; 
           (c) class C licenses, for the privilege of engaging in 
        certain occupations related to horse racing; and 
           (d) class D licenses, for the conduct of pari-mutuel horse 
        racing by county agricultural societies or associations; and 
           (e) class E licenses, for the management of a teleracing 
        facility.  
           No person may engage in any of the above activities without 
        first having obtained the appropriate license from the 
        commission.  
           Sec. 2.  Minnesota Statutes 1992, section 240.06, 
        subdivision 7, is amended to read: 
           Subd. 7.  [LICENSE SUSPENSION AND REVOCATION.] The 
        commission: 
           (1) may revoke a class A license for (i) a violation of 
        law, order, or rule which in the commission's opinion adversely 
        affects the integrity of horse racing in Minnesota, or for an 
        intentional false statement made in a license application, 
        or for (ii) a willful failure to pay any money required to be 
        paid by Laws 1983, chapter 214, and 
           (2) may revoke a class A license for failure to perform 
        material covenants or representations made in a license 
        application; and 
           (3) shall revoke a class A license if live racing has not 
        been conducted on at least 50 racing days assigned by the 
        commission during any period of 12 consecutive months, unless 
        the commission authorizes a shorter period because of 
        circumstances beyond the licensee's control. 
           The commission may suspend a class A license for up to one 
        year for a violation of law, order, or rule which in the 
        commission's opinion adversely affects the integrity of horse 
        racing in Minnesota, and may suspend a class A license 
        indefinitely if it determines that the licensee has as an 
        officer, director, shareholder, or other person with a direct, 
        indirect, or beneficial interest a person who is in the 
        commission's opinion inimical to the integrity of horse racing 
        in Minnesota or who cannot be certified under subdivision 1, 
        clause (d).  
           A license revocation or suspension under this subdivision 
        is a contested case under sections 14.57 to 14.69 of the 
        Administrative Procedure Act, and is in addition to criminal 
        penalties imposed for a violation of law or rule.  
           Sec. 3.  Minnesota Statutes 1992, section 240.09, is 
        amended by adding a subdivision to read: 
           Subd. 3a.  [INVESTIGATION.] Before granting a class D 
        license the director shall conduct, or request the division of 
        gambling enforcement to conduct, a comprehensive background and 
        financial investigation of the applicant and the sources of 
        financing.  The director may charge an applicant an 
        investigation fee to cover the cost of the investigation, and 
        shall from this fee reimburse the division of gambling 
        enforcement for its share of the cost of the investigation.  The 
        director has access to all criminal history data compiled by the 
        division of gambling enforcement on class A licensees and 
        applicants.  
           Sec. 4.  Minnesota Statutes 1992, section 240.13, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORIZED.] (a) Class B and class D 
        licenses give the licensees authority to conduct pari-mutuel 
        betting on the results of races run at the licensed racetrack, 
        and on other races as authorized by the commission under this 
        section. 
           (b) A class B or class E D license gives the licensee the 
        authority to transmit and receive telecasts and conduct 
        pari-mutuel betting on the results of horse races run at its 
        class A facility, and of other horse races run at other 
        locations outside of the state, as authorized by the 
        commission.  A class E licensee must present, for pari-mutuel 
        wagering purposes, all live horse races conducted at its class A 
        facility.  The class B or class E D licensee may present racing 
        programs separately or concurrently.  
           (c) Subject to the approval of the commission, for 
        simulcasts and telerace simulcasts the types of betting, 
        takeout, and distribution of winnings on pari-mutuel pools of on 
        simulcast races at a class B or class E D facility are those in 
        effect at the sending racetrack. Pari-mutuel pools accumulated 
        at a class E facility must be commingled with the pools at the 
        class A facility for comparable pools on those races that are 
        being simultaneously presented at both facilities.  Pari-mutuel 
        pools may be commingled with pools at the sending racetrack, for 
        the purposes of determining odds and payout prices, via the 
        totalizator computer at the class A facility. 
           (d) The commission may not authorize a class B or class E 
        licensee to conduct simulcasting or telerace simulcasting unless 
        125 days of live racing, consisting of not less than eight live 
        races on each racing day, have been conducted at the class A 
        facility within the preceding 12 months.  The number of live 
        racing days required may be adjusted by agreement between the 
        licensee and the horsepersons' organization representing the 
        majority of horsepersons racing the breed racing the majority of 
        races at the licensee's class A facility during the preceding 12 
        months.  The number of live racing days required must be reduced 
        by one day for each assigned racing day that the licensee is 
        unable to conduct live racing due to natural occurrences or 
        catastrophes beyond its control. 
           (e) The commission may authorize no more than five class D 
        licensees to conduct simulcasting in any year.  Simulcasting may 
        be conducted at each class D licensee's facility:  
           (1) only on races conducted at another class D facility 
        during a county fair day at that facility; and 
           (2) only on standardbred races. 
           A class D licensee may not conduct simulcasting for 
        wagering purposes unless the licensee has a written contract, 
        permitting the simulcasting, with a horseperson's organization 
        representing the standardbred industry the breed being simulcast 
        under authority of the class D license.  
           Sec. 5.  Minnesota Statutes 1992, section 240.13, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REQUIREMENTS.] (a) A licensee conducting 
        pari-mutuel betting must provide at the licensed track or at the 
        teleracing facility: 
           (1) the necessary equipment for issuing pari-mutuel 
        tickets; and 
           (2) mechanical or electronic equipment for displaying 
        information the commission requires.  All mechanical or 
        electronic devises must be approved by the commission before 
        being used. 
           (b) A licensee conducting pari-mutuel betting must post 
        prominently at each point of sale of pari-mutuel tickets, in a 
        manner approved by the commissioner of human services, the 
        toll-free telephone number established by the commissioner of 
        human services in connection with the compulsive gambling 
        program established under section 245.98. 
           Sec. 6.  Minnesota Statutes 1992, section 240.13, 
        subdivision 3, is amended to read: 
           Subd. 3.  [TYPES OF BETTING.] The commission shall by rule 
        designate those types of pari-mutuel pools which are permitted 
        at licensed racetracks and teleracing facilities, and no 
        licensee may conduct any type of pari-mutuel pool which has not 
        been so designated.  Pari-mutuel pools permitted at licensed 
        racetracks and pari-mutuel pools designated by the commission 
        are permitted at teleracing facilities. 
           Sec. 7.  Minnesota Statutes 1992, section 240.13, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PURSES.] (a) From the amounts deducted from all 
        pari-mutuel pools by a licensee, an amount equal to not less 
        than the following percentages of all money in all pools must be 
        set aside by the licensee and used for purses for races 
        conducted by the licensee, provided that a licensee may agree by 
        contract with an organization representing a majority of the 
        horsepersons racing the breed involved to set aside amounts in 
        addition to the following percentages: 
           (1) for live races conducted at a class A facility, and for 
        races that are part of full racing card simulcasting or full 
        racing card telerace simulcasting that takes place within the 
        time period of the live races, 8.4 percent; 
           (2) for simulcasts and telerace simulcasts conducted during 
        the racing season other than as provided for in clause (1), 50 
        percent of the takeout remaining after deduction for taxes on 
        pari-mutuel pools, payment to the breeders fund, and payment to 
        the sending out-of-state racetrack for receipt of the signal; 
        and 
           (3) for simulcasts and telerace simulcasts conducted 
        outside of the racing season, 25 percent of the takeout 
        remaining after deduction for the state pari-mutuel tax, payment 
        to the breeders fund, payment to the sending out-of-state 
        racetrack for receipt of the signal and, before January 1, 2005, 
        a further deduction of eight percent of all money in all pools; 
        provided, however, that.  In the event that wagering on 
        simulcasts and telerace simulcasts outside of the racing season 
        exceeds $125 million in any calendar year, the amount set aside 
        for purses by this formula is increased to 30 percent on amounts 
        between $125,000,000 and $150,000,000 wagered; 40 percent on 
        amounts between $150,000,000 and $175,000,000 wagered; and 50 
        percent on amounts in excess of $175,000,000 wagered.  In lieu 
        of the eight percent deduction, a deduction as agreed to between 
        the licensee and the horsepersons' organization representing the 
        majority of horsepersons racing at the licensee's class A 
        facility during the preceding 12 months, is allowed after 
        December 31, 2004.  
           The commission may by rule provide for the administration 
        and enforcement of this subdivision.  The deductions for payment 
        to the sending out-of-state racetrack must be actual, except 
        that when there exists any overlap of ownership, control, or 
        interest between the sending out-of-state racetrack and the 
        receiving licensee, the deduction must not be greater than three 
        percent unless agreed to between the licensee and the 
        horsepersons' organization representing the majority of 
        horsepersons racing the breed racing the majority of races 
        during the existing racing meeting or, if outside of the racing 
        season, during the most recent racing meeting.  
           In lieu of the amount the licensee must pay to the 
        commission for deposit in the Minnesota breeders fund under 
        section 240.15, subdivision 1, the licensee shall pay 5-1/2 
        percent of the takeout from all pari-mutuel pools generated by 
        wagering at the licensee's facility on full racing card 
        simulcasts and full racing card telerace simulcasts of races not 
        conducted in this state. 
           (b) From the money set aside for purses, the licensee shall 
        pay to the horseperson's organization representing the majority 
        of the horsepersons racing the breed involved and contracting 
        with the licensee with respect to purses and the conduct of the 
        racing meetings and providing representation, benevolent 
        programs, benefits, and services for horsepersons and their 
        on-track employees, an amount, sufficient to perform these 
        services, as may be determined by agreement by the licensee and 
        the horseperson's organization.  The amount paid may be deducted 
        only from the money set aside for purses to be paid in races for 
        the breed represented by the horseperson's organization.  With 
        respect to racing meetings where more than one breed is racing, 
        the licensee may contract independently with the horseperson's 
        organization representing each breed racing. 
           (c) Notwithstanding sections 325D.49 to 325D.66, a 
        horseperson's organization representing the majority of the 
        horsepersons racing a breed at a meeting, and the members 
        thereof, may agree to withhold horses during a meeting. 
           (d) Money set aside for purses from wagering, during the 
        racing season, on simulcasts and telerace simulcasts must be 
        used for purses for live races conducted at the licensee's class 
        A facility during the same racing season, over and above the 8.4 
        percent purse requirement or any higher requirement to which the 
        parties agree, for races conducted in this state.  Money set 
        aside for purses from wagering, outside of the racing season, on 
        simulcasts and telerace simulcasts must be for purses for live 
        races conducted at the licensee's class A facility during the 
        next racing season, over and above the 8.4 percent purse 
        requirement or any higher requirement to which the parties 
        agree, for races conducted in this state. 
           (e) Money set aside for purses from wagering on simulcasts 
        and telerace simulcasts must be used for purses for live races 
        involving the same breed involved in the simulcast or telerace 
        simulcast except that money set aside for purses and payments to 
        the breeders fund from wagering on full racing card simulcasts 
        and full racing card telerace simulcasts of races not conducted 
        in this state, occurring during a live mixed meet, must be 
        allotted to the purses and breeders fund for each breed 
        participating in the mixed meet in the same proportion that the 
        number of live races run by each breed bears to the total number 
        of live races conducted during the period of the mixed meet. 
           (f) The allocation of money set aside for purses to 
        particular racing meets may be adjusted, relative to 
        overpayments and underpayments, by contract between the licensee 
        and the horsepersons' organization representing the majority of 
        horsepersons racing the breed involved at the licensee's 
        facility.  
           (g) Subject to the provisions of this chapter, money set 
        aside from pari-mutuel pools for purses must be for the breed 
        involved in the race that generated the pool, except that if the 
        breed involved in the race generating the pari-mutuel pool is 
        not racing in the current racing meeting, or has not raced 
        within the preceding 12 months at the licensee's class A 
        facility, money set aside for purses may be distributed 
        proportionately to those breeds that have run during the 
        preceding 12 months or paid to the commission and used for 
        purses or to promote racing for the breed involved in the race 
        generating the pari-mutuel pool, or both, in a manner prescribed 
        by the commission. 
           (h) This subdivision does not apply to a class D licensee. 
           Sec. 8.  Minnesota Statutes 1992, section 240.13, 
        subdivision 6, is amended to read: 
           Subd. 6.  [SIMULCASTING.] (a) The commission may permit an 
        authorized licensee to conduct simulcasting or telerace 
        simulcasting at the licensee's facility on any day authorized by 
        the commission.  All simulcasts and telerace simulcasts must 
        comply with the Interstate Horse Racing Act of 1978, United 
        States Code, title 15, sections 3001 to 3007.  In addition to 
        teleracing programs featuring live racing conducted at the 
        licensee's class A facility, the class E licensee may conduct 
        not more than seven teleracing programs per week during the 
        racing season, unless additional telerace simulcasting is 
        authorized by the director and approved by the horsepersons' 
        organization representing the majority of horsepersons racing 
        the breed racing the majority of races at the licensee's class A 
        facility during the preceding 12 months. 
           (b) The commission may not authorize any day for 
        simulcasting at a class A facility during the racing season, and 
        a licensee may not be allowed to transmit out-of-state telecasts 
        of races the licensee conducts, unless the licensee has obtained 
        the approval of the horsepersons' organization representing the 
        majority of the horsepersons racing the breed involved at the 
        licensed racetrack during the preceding 12 months.  
           (c) The licensee may pay fees and costs to an entity 
        transmitting a telecast of a race to the licensee for purposes 
        of conducting pari-mutuel wagering on the race.  The licensee 
        may deduct fees and costs related to the receipt of televised 
        transmissions from a pari-mutuel pool on the televised race, 
        provided that one-half of any amount recouped in this manner 
        must be added to the amounts required to be set aside for purses.
           (e) With the approval of the commission and subject to the 
        provisions of this subdivision, a licensee may transmit 
        telecasts of races it conducts, for wagering purposes, to 
        locations outside the state, and the commission may allow this 
        to be done on a commingled pool basis.  
           (f) Except as otherwise provided in this section, 
        simulcasting and telerace simulcasting may be conducted on a 
        separate pool basis or, with the approval of the commission, on 
        a commingled pool basis.  All provisions of law governing 
        pari-mutuel betting apply to simulcasting and telerace 
        simulcasting except as otherwise provided in this subdivision or 
        in the commission's rules.  If pools are commingled, wagering at 
        the licensed facility must be on equipment electronically linked 
        with the equipment at the licensee's class A facility or with 
        the sending racetrack via the totalizator computer at the 
        licensee's class A facility.  Subject to the approval of the 
        commission, the types of betting, takeout, and distribution of 
        winnings on commingled pari-mutuel pools are those in effect at 
        the sending racetrack.  Breakage for pari-mutuel pools on a 
        televised race must be calculated in accordance with the law or 
        rules governing the sending racetrack for these pools, and must 
        be distributed in a manner agreed to between the licensee and 
        the sending racetrack.  Notwithstanding subdivision 7 and 
        section 240.15, subdivision 5, the commission may approve 
        procedures governing the definition and disposition of unclaimed 
        tickets that are consistent with the law and rules governing 
        unclaimed tickets at the sending racetrack.  For the purposes of 
        this section, "sending racetrack" is either the racetrack 
        outside of this state where the horse race is conducted or, with 
        the consent of the racetrack, an alternative facility that 
        serves as the racetrack for the purpose of commingling pools.  
           (g) If there is more than one class B licensee conducting 
        racing within the seven-county metropolitan area, simulcasting 
        and telerace simulcasting may be conducted only on races run by 
        a breed that ran at the licensee's class A facility within the 
        12 months preceding the event.  
           Contractual agreements between licensees and horsepersons' 
        organizations entered into before June 5, 1991, regarding money 
        to be set aside for purses from pools generated by simulcasts at 
        a class A facility, are controlling regarding purse requirements 
        through the end of the 1992 racing season. 
           Sec. 9.  Minnesota Statutes 1992, section 240.13, 
        subdivision 8, is amended to read: 
           Subd. 8.  [PROHIBITED ACTS.] (a) A licensee may not accept 
        a bet or a pari-mutuel ticket for payment from any person under 
        the age of 18 years; and a licensee may not accept a bet of less 
        than $1.  It is an affirmative defense to a charge under this 
        paragraph for the licensee to prove by a preponderance of the 
        evidence that the licensee, reasonably and in good faith, relied 
        upon representation of proof of age described in section 
        340A.503, subdivision 6, in accepting the bet or pari-mutuel 
        ticket for payment. 
           Sec. 10.  Minnesota Statutes 1992, section 240.15, 
        subdivision 6, is amended to read: 
           Subd. 6.  [DISPOSITION OF PROCEEDS.] The commission shall 
        distribute all money received under this section, and all money 
        received from license fees and fines it collects, as follows: 
        all money designated for deposit in the Minnesota breeders fund 
        must be paid into that fund for distribution under section 
        240.18 except that all money generated by full racing card 
        simulcasts, or full racing card telerace simulcasts of races not 
        conducted in this state, must be distributed as provided in 
        section 240.18, subdivisions 2, paragraph (d), clauses (1), (2), 
        and (3); and 3.  Revenue from an admissions tax imposed under 
        subdivision 1 must be paid to the local unit of government at 
        whose request it was imposed, at times and in a manner the 
        commission determines. All other revenues received under this 
        section by the commission, and all license fees, fines, and 
        other revenue it receives, must be paid to the state treasurer 
        for deposit in the general fund. 
           Sec. 11.  Minnesota Statutes 1992, section 240.16, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [SIMULCAST.] All simulcasts and telerace 
        simulcasts are subject to the regulation of the commission.  The 
        commission may assign an official to preside over these 
        activities and, if so assigned, the official has the powers and 
        duties provided by rule. 
           Sec. 12.  Minnesota Statutes 1992, section 240.25, 
        subdivision 2, is amended to read: 
           Subd. 2.  [OFF-TRACK BETS.] (a) No person shall: 
           (1) for a fee, directly or indirectly, accept anything of 
        value from another to be transmitted or delivered for wager in 
        any licensed pari-mutuel system of wagering on horse races, or 
        for a fee deliver anything of value which has been received 
        outside of the enclosure of a licensed racetrack holding a race 
        meet licensed under this chapter or a teleracing facility, to be 
        placed as wagers in the pari-mutuel system of wagering on horse 
        racing within the enclosure or facility; or 
           (2) give anything of value to be transmitted or delivered 
        for wager in any licensed pari-mutuel system of wagering on 
        horse races to another who charges a fee, directly or 
        indirectly, for the transmission or delivery. 
           (b) Nothing in this subdivision prohibits the conducting of 
        pari-mutuel wagering at a licensed teleracing facility.  
           Sec. 13.  Minnesota Statutes 1992, section 240.25, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [AGE UNDER 18.] A person under the age of 18 may 
        not place a bet or present a pari-mutuel ticket for payment with 
        an approved pari-mutuel system. 
           Sec. 14.  Minnesota Statutes 1992, section 240.26, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MISDEMEANORS.] A violation of any other 
        provision of Laws 1983, this chapter 214 or of a rule or order 
        of the commission for which another penalty is not provided is a 
        misdemeanor. 
           Sec. 15.  Minnesota Statutes 1992, section 240.27, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PERSONS EXCLUDED.] The commission may 
        exclude from any and all licensed racetracks or licensed 
        teleracing facilities in the state a person who:  
           (a) has been convicted of a felony under the laws of any 
        state or the United States; 
           (b) has had a license suspended, revoked, or denied by the 
        commission or by the racing authority of any other jurisdiction; 
        or 
           (c) is determined by the commission, on the basis of 
        evidence presented to it, to be a threat to the integrity of 
        racing in Minnesota.  
           Sec. 16.  Minnesota Statutes 1992, section 240.28, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [FINANCIAL INTEREST.] No person may serve 
        on or be employed by the commission who has an interest in any 
        corporation, association, or partnership which holds a license 
        from the commission or which holds a contract to supply goods or 
        services to a licensee or at a licensed racetrack or a licensed 
        teleracing facility, including concessions contracts.  No member 
        or employee of the commission may own, wholly or in part, or 
        have an interest in a horse which races at a licensed racetrack 
        in Minnesota.  No member or employee of the commission may have 
        a financial interest in or be employed in a profession or 
        business which conflicts with the performance of duties as a 
        member or employee. 
           Sec. 17.  [REPEALER.] 
           Minnesota Statutes 1992, section 240.091, is repealed. 
           Sec. 18.  [EFFECTIVE DATE.] 
           Sections 1, 3 to 8, 10 to 12, and 14 to 17 are effective 
        the day following final enactment.  Sections 9 and 13 are 
        effective August 1, 1994.  Section 2 is effective April 1, 1995. 
                                   ARTICLE 2
                          GAMBLING TAX RECODIFICATION
           Section 1.  [297E.01] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] Unless otherwise defined in this 
        chapter, or unless the context clearly indicates otherwise, the 
        terms used in this chapter have the meaning given them in 
        chapter 349.  The definitions in this section are for tax 
        administration purposes and apply to this chapter. 
           Subd. 2.  [BINGO.] For purposes of this chapter "bingo" 
        means the game of bingo as defined in section 349.12, 
        subdivision 4, and as conducted under chapter 349, and any other 
        game that is substantially the same as or similar to that game, 
        including but not limited to a game where: 
           (1) players pay compensation for a game sheet, card, or 
        paper that has spaces arranged on it in columns and rows 
        containing printed numbers or figures, or that has spaces in 
        which players are allowed to place their own numbers or figures, 
        or for an electronic, mechanical, or other facsimile of such 
        sheets, cards or paper; 
           (2) numbers or figures are randomly selected for comparison 
        with the numbers or figures on each game sheet, card, paper, or 
        facsimile; 
           (3) game winners are those who have a game sheet, card, 
        paper, or facsimile with some or all of the randomly selected 
        numbers or figures displayed thereon, in the same pattern or 
        arrangement that has been previously designated or understood to 
        be a winning pattern or arrangement for the game; and 
           (4) game winner receive or are eligible to receive a prize 
        such as money, property, or other reward or benefit. 
           Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of revenue or a person to whom the commissioner has 
        delegated functions. 
           Subd. 4.  [CONTRABAND.] For purposes of this chapter, 
        "contraband" means all of the items listed in section 349.2125, 
        and all pull-tab or tipboard deals or portions of deals on which 
        the tax imposed under section 297E.02 has not been paid.  
           Subd. 5.  [DISTRIBUTOR.] "Distributor" means a distributor 
        as defined in section 349.12, subdivision 11, or a person who 
        markets, sells, or provides gambling product to a person or 
        entity for resale or use at the retail level.  
           Subd. 6.  [FISCAL YEAR.] "Fiscal year" means the period 
        from July 1 to June 30. 
           Subd. 7.  [GAMBLING PRODUCT.] "Gambling product" means 
        bingo cards, paper, or sheets; pull-tabs; tipboards; 
        paddletickets and paddleticket cards; raffle tickets; or any 
        other ticket, card, board, placard, device, or token that 
        represents a chance, for which consideration is paid, to win a 
        prize.  
           Subd. 8.  [GROSS RECEIPTS.] "Gross receipts"  means all 
        receipts derived from lawful gambling activity including, but 
        not limited to, the following items: 
           (1) gross sales of bingo hard cards and paper sheets before 
        reduction for prizes, expenses, shortages, free plays, or any 
        other charges or offsets; 
           (2) the ideal gross of pull-tab and tipboard deals or games 
        less the value of unsold and defective tickets and before 
        reduction for prizes, expenses, shortages, free plays, or any 
        other charges or offsets; 
           (3) gross sales of raffle tickets and paddle tickets before 
        reduction for prizes, expenses, shortages, free plays, or any 
        other charges or offsets; 
           (4) admission, commission, cover, or other charges imposed 
        on participants in lawful gambling activity as a condition for 
        or cost of participation; and 
           (5) interest, dividends, annuities, profit from 
        transactions, or other income derived from the accumulation or 
        use of gambling proceeds. 
           Gross receipts does not include proceeds from rental under 
        section 349.164 or 349.18, subdivision 3. 
           Subd. 9.  [IDEAL GROSS.] "Ideal gross" means the total 
        amount of receipts that would be received if every individual 
        ticket in the pull-tab or tipboard deal was sold at its face 
        value.  In the calculation of ideal gross and prizes, a free 
        play ticket shall be valued at face value. 
           Subd. 10.  [MANUFACTURER.] "Manufacturer" means a 
        manufacturer as defined in section 349.12, subdivision 26, or a 
        person or entity who:  (1) assembles from raw materials, or from 
        subparts or other components, a completed item of gambling 
        product for resale, use, or receipt in Minnesota; or (2) sells, 
        furnishes, ships, or imports completed gambling product from 
        outside Minnesota for resale, use, receipt, or storage in 
        Minnesota; or (3) being within the state, assembles, produces, 
        or otherwise creates gambling products. 
           Subd. 11.  [PRIZE.] "Prize" means a thing of value, other 
        than a free play, offered or awarded to the winner of a gambling 
        game.  
           Subd. 12.  [PULL-TAB.] "Pull-tab" is a pull-tab as defined 
        in section 349.12, subdivision 32, or any other gambling ticket 
        or device that is substantially the same as or similar to such a 
        pull-tab, including but not limited to, a ticket or card that: 
           (1) has one or more concealed numbers, figures, or symbols, 
        or combination thereof, printed on it; 
           (2) may be used in games where the player knows in advance, 
        or can determine in advance, what the pre-designated winning 
        numbers, figures, symbols, or combinations are; and 
           (3) may be played by revealing the concealed ticket 
        information and comparing that information with the 
        pre-designated winning numbers, figures, symbols, or 
        combinations in order to determine a winner. 
           Subd. 13.  [RAFFLE.] "Raffle" means a raffle as defined in 
        section 349.12, subdivision 33, and any other game that is 
        played in a manner substantially similar to the play of such a 
        raffle, including but not limited to raffles in which 
        compensation is paid for the chance to win a thing of value, the 
        chance is evidenced by a ticket, card, token, or equivalent 
        item, and the winner is selected by random drawing. 
           Subd. 14.  [RETAIL LEVEL.] "Retail level" means an activity 
        where gambling product is sold to players or participants in 
        gambling games and where the players or participants give 
        consideration for a chance to win a prize.  
           Subd. 15.  [TAXPAYER.] "Taxpayer" means a person subject to 
        or liable for a tax imposed by this chapter, a person required 
        to file reports or returns with the commissioner under this 
        chapter, a person required to keep or retain records under this 
        chapter, or a person required by this chapter to obtain or hold 
        a permit.  
           Subd. 16.  [TICKET.] "Ticket" means a valid token, card, or 
        other tangible voucher, other than bingo cards, sheets, or 
        paper, that grants the holder a chance or chances to participate 
        in a game of gambling.  
           Subd. 17.  [TIPBOARD.] "Tipboard" means a tipboard as 
        defined in section 349.12, subdivision 34, and any game that is 
        substantially the same as or similar to the game of tipboards 
        authorized under chapter 349, including but not limited to any 
        of the following games: 
           (1) a game that consists of one or more boards, placards, 
        or other devices in which (i) the board, placard, or other 
        device has been marked off into a grid or columns in which each 
        section represents a chance to win a prize, (ii) participants 
        pay a consideration to select a section or sections, (iii) all 
        or some of the winning numbers, figures, symbols, or other 
        winning criteria for the game are concealed or otherwise not 
        known by the player at the time the player obtains a chance in 
        the game, and (iv) the numbers, figures, symbols, or other 
        criteria for winning the game are later revealed for comparison 
        with the information on the board, placard, or other device in 
        order to determine a winner; 
           (2) a game that consists of one or more boards, placards, 
        or other devices that (i) have tickets attached to or otherwise 
        associated with them, and that have one or more concealed 
        numbers, figures, or combination thereof on the tickets; (ii) 
        participants pay a consideration to obtain the tickets, (iii) 
        all or some of the winning numbers, figures, symbols, or other 
        winning criteria for the game are concealed or otherwise not 
        known by the player at the time the player obtains a chance in 
        the game, and (iv) the numbers, figures, symbols, or other 
        criteria for winning the game are later revealed for comparison 
        with the information on the game tickets in order to determine a 
        winner; or 
           (3) a game that consists of a deal or set of tickets that 
        (i) have one or more concealed numbers, figures, or symbols, or 
        combination thereof, on the tickets, (ii) participants pay a 
        consideration to obtain the tickets, (iii) all or some of the 
        winning numbers, figures, symbols, or combination thereof, are 
        concealed or otherwise not known to the player at the time the 
        player obtains the ticket, and (iv) the tickets are used in 
        games where the numbers, figures, symbols, or other winning 
        criteria are later revealed for comparison with the information 
        on the game tickets in order to determine a winner. 
           "Tipboards" includes any game otherwise described in this 
        subdivision in which the winning chances are determined in whole 
        or in part by the outcome of one or more sporting events.  
        "Tipboard" does not include boards, placards, tickets, or other 
        devices lawfully used in connection with the operation of the 
        state lottery under chapter 349A or the lawful conduct of 
        pari-mutuel betting on horse racing under chapter 240. 
           Subd. 18.  [OTHER WORDS.] Unless specifically defined in 
        this chapter, or unless the context clearly indicates otherwise, 
        the words used in this chapter have the meanings given them in 
        chapter 349. 
           Sec. 2.  [297E.02] [TAX IMPOSED.] 
           Subdivision 1.  [IMPOSITION.] A tax is imposed on all 
        lawful gambling other than (1) pull-tabs purchased and placed 
        into inventory after January 1, 1987, and (2) tipboards 
        purchased and placed into inventory after June 30, 1988, at the 
        rate of ten percent on the gross receipts as defined in section 
        349.12, subdivision 21, less prizes actually paid.  The tax 
        imposed by this subdivision is in lieu of the tax imposed by 
        section 297A.02 and all local taxes and license fees except a 
        fee authorized under section 349.16, subdivision 8, or a tax 
        authorized under subdivision 5.  
           The tax imposed under this subdivision is payable by the 
        organization or party conducting, directly or indirectly, the 
        gambling.  
           Subd. 2.  [TAX-EXEMPT GAMBLING.] An organization's receipts 
        from lawful gambling that are excluded or exempt from licensing 
        under section 349.166, are not subject to the tax imposed by 
        this section or section 297A.02.  This exclusion from tax is 
        only valid if at the time of the event giving rise to the tax 
        the organization either has an exclusion under section 349.166, 
        subdivision 1, or has applied for and received a valid exemption 
        from the lawful gambling control board.  
           Subd. 3.  [COLLECTION; DISPOSITION.] Taxes imposed by this 
        section are due and payable to the commissioner when the 
        gambling tax return is required to be filed.  Returns covering 
        the taxes imposed under this section must be filed with the 
        commissioner on or before the 20th day of the month following 
        the close of the previous calendar month.  The commissioner may 
        require that the returns be filed via magnetic media or 
        electronic data transfer.  The proceeds, along with the revenue 
        received from all license fees and other fees under sections 
        349.11 to 349.191, 349.211, and 349.213, must be paid to the 
        state treasurer for deposit in the general fund. 
           Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
        on the sale of each deal of pull-tabs and tipboards sold by a 
        distributor.  The rate of the tax is two percent of the ideal 
        gross of the pull-tab or tipboard deal.  The sales tax imposed 
        by chapter 297A on the sale of the pull-tabs and tipboards by 
        the distributor is imposed on the retail sales price less the 
        tax imposed by this subdivision.  The retail sale of pull-tabs 
        or tipboards by the organization is exempt from taxes imposed by 
        chapter 297A and is exempt from all local taxes and license fees 
        except a fee authorized under section 349.16, subdivision 8.  
           (b) The liability for the tax imposed by this section is 
        incurred when the pull-tabs and tipboards are delivered by the 
        distributor to the customer or to a common or contract carrier 
        for delivery to the customer, or when received by the customer's 
        authorized representative at the distributor's place of 
        business, regardless of the distributor's method of accounting 
        or the terms of the sale.  
           The tax imposed by this subdivision is imposed on all sales 
        of pull-tabs and tipboards, except the following:  
           (1) sales to the governing body of an Indian tribal 
        organization for use on an Indian reservation; 
           (2) sales to distributors licensed under the laws of 
        another state or of a province of Canada, as long as all 
        statutory and regulatory requirements are met in the other state 
        or province; 
           (3) sales of promotional tickets as defined in section 
        349.12; and 
           (4) pull-tabs and tipboards sold to an organization that 
        sells pull-tabs and tipboards under the exemption from licensing 
        in section 349.166, subdivision 2.  A distributor shall require 
        an organization conducting exempt gambling to show proof of its 
        exempt status before making a tax-exempt sale of pull-tabs or 
        tipboards to the organization.  A distributor shall identify, on 
        all reports submitted to the commissioner, all sales of 
        pull-tabs and tipboards that are exempt from tax under this 
        subdivision.  
           (c) A distributor having a liability of $120,000 or more 
        during a fiscal year ending June 30 must remit all liabilities 
        in the subsequent calendar year by a funds transfer as defined 
        in section 336.4A-104, paragraph (a).  The funds transfer 
        payment date, as defined in section 336.4A-401, must be on or 
        before the date the tax is due.  If the date the tax is due is 
        not a funds transfer business day, as defined in section 
        336.4A-105, paragraph (a), clause (4), the payment date must be 
        on or before the funds transfer business day next following the 
        date the tax is due. 
           Subd. 5.  [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 of 
        the gross receipts of a licensed organization from all lawful 
        gambling less prizes actually paid out by the organization.  A 
        city or county may not use money collected under this 
        subdivision for any purpose other than to regulate lawful 
        gambling.  A tax imposed under this subdivision is in lieu of 
        all other local taxes and local investigation fees on lawful 
        gambling.  A city or county that imposes a tax under this 
        subdivision shall annually, by March 15, file a report with the 
        board in a form prescribed by the board showing (1) the amount 
        of revenue produced by the tax during the preceding calendar 
        year, and (2) the use of the proceeds of the tax.  
           Subd. 6.  [COMBINED RECEIPTS TAX.] In addition to the taxes 
        imposed under subdivisions 1 and 4, a tax is imposed on the 
        combined receipts of the organization.  As used in this section, 
        "combined receipts" is the sum of the organization's gross 
        receipts from lawful gambling less gross receipts directly 
        derived from the conduct of bingo, raffles, and paddlewheels, as 
        defined in section 349.12, subdivision 21, for the fiscal year.  
        The combined receipts of an organization are subject to a tax 
        computed according to the following schedule: 
           If the combined receipts for the          The tax is:
           fiscal year are:
           Not over $500,000                   zero
           Over $500,000, but not over
           $700,000                            two percent of the amount
                                               over $500,000, but not
                                               over $700,000
           Over $700,000, but not over
           $900,000                            $4,000 plus four percent
                                               of the amount over
                                               $700,000, but not over
                                               $900,000
           Over $900,000                       $12,000 plus six percent
                                               of the amount over
                                               $900,000
           Subd. 7.  [UNTAXED GAMBLING PRODUCT.] (a) In addition to 
        penalties or criminal sanctions imposed by this chapter, a 
        person, organization, or business entity possessing or selling a 
        pull-tab or tipboard upon which the tax imposed by subdivision 4 
        has not been paid is liable for a tax of six percent of the 
        ideal gross of each pull-tab or tipboard.  The tax on a partial 
        deal must be assessed as if it were a full deal.  
           (b) In addition to penalties and criminal sanctions imposed 
        by this chapter, a person not licensed by the board who conducts 
        bingo, raffles, or paddlewheel games is liable for a tax of six 
        percent of the gross receipts from that activity.  
           (c) The tax must be assessed by the commissioner.  An 
        assessment must be considered a jeopardy assessment or jeopardy 
        collection as provided in section 270.70.  The commissioner 
        shall assess the tax based on personal knowledge or information 
        available to the commissioner.  The commissioner shall mail to 
        the taxpayer at the taxpayer's last known address, or serve in 
        person, a written notice of the amount of tax, demand its 
        immediate payment, and, if payment is not immediately made, 
        collect the tax by any method described in chapter 270, except 
        that the commissioner need not await the expiration of the times 
        specified in chapter 270.  The tax assessed by the commissioner 
        is presumed to be valid and correctly determined and assessed.  
        The burden is upon the taxpayer to show its incorrectness or 
        invalidity.  The tax imposed under this subdivision does not 
        apply to gambling that is exempt from taxation under subdivision 
        2.  
           Subd. 8.  [PERSONAL DEBT.] The tax imposed by this section, 
        and interest and penalties imposed with respect to it, are a 
        personal debt of the person required to file a return from the 
        time the liability for it arises, irrespective of when the time 
        for payment of the liability occurs.  The debt must, in the case 
        of the executor or administrator of the estate of a decedent and 
        in the case of a fiduciary, be that of the person in the 
        person's official or fiduciary capacity only unless the person 
        has voluntarily distributed the assets held in that capacity 
        without reserving sufficient assets to pay the tax, interest, 
        and penalties, in which event the person is personally liable 
        for any deficiency.  
           Subd. 9.  [PUBLIC INFORMATION.] All records concerning the 
        administration of the taxes under this chapter are classified as 
        public information.  
           Subd. 10.  [REFUNDS; APPROPRIATION.] A person who has, 
        under this chapter, paid to the commissioner an amount of tax 
        for a period in excess of the amount legally due for that 
        period, may file with the commissioner a claim for a refund of 
        the excess.  The amount necessary to pay the refunds is 
        appropriated from the general fund to the commissioner.  
           Subd. 11.  [UNPLAYED OR DEFECTIVE PULL-TABS OR 
        TIPBOARDS.] If a deal of pull-tabs or tipboards registered with 
        the board or bar coded in accordance with chapter 349 and upon 
        which the tax imposed by subdivision 4 has been paid is returned 
        unplayed to the distributor, the commissioner shall allow a 
        refund of the tax paid.  
           If a defective deal registered with the board or bar coded 
        in accordance with chapter 349 and upon which the taxes have 
        been paid is returned to the manufacturer, the distributor shall 
        submit to the commissioner of revenue certification from the 
        manufacturer that the deal was returned and in what respect it 
        was defective.  The certification must be on a form prescribed 
        by the commissioner and must contain additional information the 
        commissioner requires.  
           The commissioner may require that no refund under this 
        subdivision be made unless the returned pull-tabs or tipboards 
        have been set aside for inspection by the commissioner's 
        employee.  
           Reductions in previously paid taxes authorized by this 
        subdivision must be made when and in the manner prescribed by 
        the commissioner.  
           Sec. 3.  [297E.03] [SPORTS BOOKMAKING TAX.] 
           Subdivision 1.  [IMPOSITION OF TAX.] An excise tax of six 
        percent is imposed on the value of all bets received by, 
        recorded by, accepted by, forwarded by, or placed with a person 
        engaged in sports bookmaking. 
           Subd. 2.  [BET DEFINED.] For purposes of this section, the 
        term "bet" has the meaning given it in section 609.75, 
        subdivision 2. 
           Subd. 3.  [SPORTS BOOKMAKING DEFINED.] For purposes of this 
        section, the term "sports bookmaking" has the meaning given it 
        in section 609.75, subdivision 7. 
           Subd. 4.  [AMOUNT OF BET.] In determining the value or 
        amount of any bet for purposes of this section, all charges 
        incident to the placing of the bet must be included. 
           Subd. 5.  [TAX RETURNS.] A person engaged in sports 
        bookmaking shall file monthly tax returns with the commissioner 
        of revenue, in the form required by the commissioner, of all 
        bookmaking activity, and shall include information on all bets 
        recorded, accepted, forwarded, and placed.  The returns must be 
        filed on or before the 20th day of the month following the month 
        in which the bets reported were recorded, accepted, forwarded, 
        or placed.  The tax imposed by this section is due and payable 
        at the time when the returns are filed. 
           Subd. 6.  [PERSONS LIABLE FOR TAX.] Each person who is 
        engaged in receiving, recording, forwarding, or accepting sports 
        bookmaking bets is liable for and shall pay the tax imposed 
        under this section. 
           Subd. 7.  [JEOPARDY ASSESSMENT; JEOPARDY COLLECTION.] The 
        tax may be assessed by the commissioner of revenue.  An 
        assessment made pursuant to this section shall be considered a 
        jeopardy assessment or jeopardy collection as provided in 
        section 270.70.  The commissioner shall assess the tax based on 
        personal knowledge or information available to the 
        commissioner.  The commissioner shall mail to the taxpayer at 
        the taxpayer's last known address, or serve in person, a written 
        notice of the amount of tax, demand its immediate payment, and, 
        if payment is not immediately made, collect the tax by any 
        method described in chapter 270, except that the commissioner 
        need not await the expiration of the times specified in chapter 
        270.  The tax assessed by the commissioner is presumed to be 
        valid and correctly determined and assessed. 
           Subd. 8.  [DISCLOSURE PROHIBITED.] (a) Notwithstanding any 
        law to the contrary, neither the commissioner nor a public 
        employee may reveal facts contained in a sports bookmaking tax 
        return filed with the commissioner of revenue as required by 
        this section, nor can any information contained in the report or 
        return be used against the tax obligor in any criminal 
        proceeding, unless independently obtained, except in connection 
        with a proceeding involving taxes due under this section, or as 
        provided in section 270.064. 
           (b) Any person violating this section is guilty of a gross 
        misdemeanor. 
           (c) This section does not prohibit the commissioner from 
        publishing statistics that do not disclose the identity of tax 
        obligors or the contents of particular returns or reports. 
           Sec. 4.  [297E.031] [GAMBLING TAX PERMIT.] 
           Subdivision 1.  [APPLICATION AND ISSUANCE.] A distributor 
        who sells gambling products under this chapter must file with 
        the commissioner an application, on a form prescribed by the 
        commissioner, for a gambling tax permit and identification 
        number.  The commissioner, when satisfied that the applicant has 
        a valid license from the board, shall issue the applicant a 
        permit and number.  A permit is not assignable and is valid only 
        for the distributor in whose name it is issued. 
           Subd. 2.  [SUSPENSION; REVOCATION.] (a) If a distributor 
        fails to comply with this chapter or a rule of the commissioner, 
        or if a license issued under chapter 349 is revoked or 
        suspended, the commissioner, after giving notice, may for 
        reasonable cause revoke or suspend a permit held by a 
        distributor.  A notice must be sent to the distributor at least 
        15 days before the proposed suspension or revocation is to take 
        effect.  The notice must give the reason for the proposed 
        suspension or revocation and must require the distributor to 
        show cause why the proposed action should not be taken.  The 
        notice may be served personally or by mail.  
           (b) The notice must inform the distributor of the right to 
        a contested case hearing.  If a request in writing is made to 
        the commissioner within 14 days of the date of the notice, the 
        commissioner shall defer action on the suspension or revocation 
        and shall refer the case to the office of administrative 
        hearings for the scheduling of a contested case hearing.  The 
        distributor must be served with 20 days' notice in writing 
        specifying the time and place of the hearing and the allegations 
        against the distributor.  
           (c) The commissioner shall issue a final order following 
        receipt of the recommendation of the administrative law judge.  
           (d) Under section 271.06, subdivision 1, an appeal to the 
        tax court may be taken from the commissioner's order of 
        revocation or suspension.  The commissioner may not issue a new 
        permit after revocation except upon application accompanied by 
        reasonable evidence of the intention of the applicant to comply 
        with all applicable laws and rules.  
           Sec. 5.  [297E.04] [MANUFACTURER'S REPORTS AND RECORDS.] 
           Subdivision 1.  [REPORTS OF SALES.] A manufacturer who 
        sells gambling product for use or resale in this state, or for 
        receipt by a person or entity in this state, shall file with the 
        commissioner, on a form prescribed by the commissioner, a report 
        of gambling product sold to any person in the state, including 
        the established governing body of an Indian tribe recognized by 
        the United States Department of the Interior.  The report must 
        be filed monthly on or before the 20th day of the month 
        succeeding the month in which the sale was made.  The 
        commissioner may require that the report be submitted via 
        magnetic media or electronic data transfer.  The commissioner 
        may inspect the premises, books, records, and inventory of a 
        manufacturer without notice during the normal business hours of 
        the manufacturer.  A person violating this section is guilty of 
        a misdemeanor.  
           Subd. 2.  [BAR CODES.] The flare of each pull-tab and 
        tipboard game must be imprinted by the manufacturer with a bar 
        code that provides all information prescribed by the 
        commissioner.  The commissioner must require that the bar code 
        include the serial number of the game.  A manufacturer must also 
        affix to the outside of the box containing these games a bar 
        code providing all information prescribed by the commissioner.  
        The commissioner may also prescribe additional bar coding 
        requirements.  
           No person may alter the bar code that appears on the 
        outside of a box containing a deal of pull-tabs and tipboards.  
        Possession of a box containing a deal of pull-tabs and tipboards 
        that has a bar code different from the bar code of the deal 
        inside the box is prima facie evidence that the possessor has 
        altered the bar code on the box.  
           Subd. 3.  [PADDLETICKET CARD MASTER FLARES.] Each sealed 
        grouping of 100 paddleticket cards must have its own individual 
        master flare.  The manufacturer of the paddleticket cards must 
        affix to or imprint at the bottom of each master flare a bar 
        code that provides: 
           (1) the name of the manufacturer; 
           (2) the first paddleticket card number in the group; 
           (3) the number of paddletickets attached to each 
        paddleticket card in the group; and 
           (4) all other information required by the commissioner.  
        This subdivision applies to paddleticket cards (i) sold by a 
        manufacturer after June 30, 1995, for use or resale in Minnesota 
        or (ii) shipped into or caused to be shipped into Minnesota by a 
        manufacturer after June 30, 1995.  Paddleticket cards that are 
        subject to this subdivision may not have a registration stamp 
        affixed to the master flare. 
           Sec. 6.  [297E.05] [DISTRIBUTOR REPORTS AND RECORDS.] 
           Subdivision 1.  [BUSINESS RECORDS.] A distributor shall 
        keep at each place of business complete and accurate records for 
        that place of business, including itemized invoices of gambling 
        product held, purchased, manufactured, or brought in or caused 
        to be brought in from without this state, and of all sales of 
        gambling product.  The records must show the names and addresses 
        of purchasers, the inventory at the close of each period for 
        which a return is required of all gambling product on hand, and 
        other pertinent papers and documents relating to the purchase, 
        sale, or disposition of gambling product.  Books, records, 
        itemized invoices, and other papers and documents required by 
        this section must be kept for a period of at least 3-1/2 years 
        after the date of the documents, or the date of the entries 
        appearing in the records, unless the commissioner of revenue 
        authorizes in writing their destruction or disposal at an 
        earlier date.  
           Subd. 2.  [SALES RECORDS.] A distributor must maintain a 
        record of all gambling product that it sells.  The record must 
        include:  
           (1) the identity of the person from whom the distributor 
        purchased the product; 
           (2) the registration number of the product; 
           (3) the name, address, and license or exempt permit number 
        of the organization or person to which the sale was made; 
           (4) the date of the sale; 
           (5) the name of the person who ordered the product; 
           (6) the name of the person who received the product; 
           (7) the type of product; 
           (8) the serial number of the product; 
           (9) the name, form number, or other identifying information 
        for each game; and 
           (10) in the case of bingo hard cards or sheets sold on and 
        after January 1, 1991, the individual number of each card or 
        sheet. 
           Subd. 3.  [INVOICES.] A distributor shall give with each 
        sale of gambling product an itemized invoice showing the 
        distributor's name and address, the purchaser's name and 
        address, the date of the sale, description of the deals, 
        including the ideal gross from every deal of pull-tabs and every 
        deal of tipboards.  
           Subd. 4.  [REPORTS.] A distributor shall report monthly to 
        the commissioner, on a form the commissioner prescribes, its 
        sales of each type of gambling product.  This report must be 
        filed monthly on or before the 20th day of the month succeeding 
        the month in which the sale was made.  The commissioner may 
        require that a distributor submit the monthly report and 
        invoices required in this subdivision via magnetic media or 
        electronic data transfer.  
           Subd. 5.  [CERTIFIED PHYSICAL INVENTORY.] The commissioner 
        may, upon request, require a distributor to furnish a certified 
        physical inventory of all gambling product in stock.  The 
        inventory must contain the information required by the 
        commissioner.  
           Sec. 7.  [297E.06] [ORGANIZATION REPORTS AND RECORDS.] 
           Subdivision 1.  [REPORTS.] An organization must file with 
        the commissioner, on a form prescribed by the commissioner, a 
        report showing all gambling activity conducted by that 
        organization for each month.  Gambling activity includes all 
        gross receipts, prizes, all gambling taxes owed or paid to the 
        commissioner, all gambling expenses, and all lawful purpose and 
        board-approved expenditures.  The report must be filed with the 
        commissioner on or before the 20th day of the month following 
        the month in which the gambling activity takes place.  The 
        commissioner may require that the reports be filed via magnetic 
        media or electronic data transfer.  
           Subd. 2.  [BUSINESS RECORDS.] An organization shall 
        maintain records supporting the gambling activity reported to 
        the commissioner.  Records include, but are not limited to, the 
        following items:  
           (1) all winning and unsold tickets, cards, or stubs for 
        pull-tab, tipboard, paddlewheel, and raffle games; 
           (2) all reports and statements, including checker's 
        records, for each bingo occasion; 
           (3) all cash journals and ledgers, deposit slips, register 
        tapes, and bank statements supporting gambling activity 
        receipts; 
           (4) all invoices that represent purchases of gambling 
        product; 
           (5) all canceled checks, check recorders, journals and 
        ledgers, vouchers, invoices, bank statements, and other 
        documents supporting gambling activity expenditures; and 
           (6) all organizational meeting minutes.  
           All records required to be kept by this section must be 
        preserved by the organization for at least 3-1/2 years and may 
        be inspected by the commissioner of revenue at any reasonable 
        time without notice or a search warrant.  
           Subd. 3.  [ACCOUNTS.] All gambling activity transactions 
        must be segregated from all other revenues and expenditures made 
        by the conducting organization. 
           Subd. 4.  [ANNUAL AUDIT.] (a) An organization licensed 
        under chapter 349 with gross receipts from lawful gambling of 
        more than $250,000 in any year must have an annual financial 
        audit of its lawful gambling activities and funds for that 
        year.  An organization licensed under chapter 349 with gross 
        receipts from lawful gambling of more than $50,000 but not more 
        than $250,000 in any year must have an annual financial review 
        of its lawful gambling activities and funds for that year.  
        Audits and financial reviews under this subdivision must be 
        performed by an independent accountant licensed by the state of 
        Minnesota. 
           (b) The commissioner of revenue shall prescribe standards 
        for audits and financial review required under this 
        subdivision.  The standards may vary based on the gross receipts 
        of the organization.  The standards must incorporate and be 
        consistent with standards prescribed by the American institute 
        of certified public accountants.  A complete, true, and correct 
        copy of the audit report must be filed as prescribed by the 
        commissioner. 
           Sec. 8.  [297E.07] [INSPECTION RIGHTS.] 
           At any reasonable time, without notice and without a search 
        warrant, the commissioner may enter a place of business of a 
        manufacturer, distributor, or organization; any site from which 
        pull-tabs or tipboards or other gambling equipment or gambling 
        product are being manufactured, stored, or sold; or any site at 
        which lawful gambling is being conducted, and inspect the 
        premises, books, records, and other documents required to be 
        kept under this chapter to determine whether or not this chapter 
        is being fully complied with.  If the commissioner is denied 
        free access to or is hindered or interfered with in making an 
        inspection of the place of business, books, or records, the 
        permit of the distributor may be revoked by the commissioner, 
        and the license of the manufacturer, the distributor, or the 
        organization may be revoked by the board. 
           Sec. 9.  [297E.08] [EXAMINATIONS.] 
           Subdivision 1.  [EXAMINATION OF TAXPAYER.] To determine the 
        accuracy of a return or report, or in fixing liability under 
        this chapter, the commissioner may make reasonable examinations 
        or investigations of a taxpayer's place of business, tangible 
        personal property, equipment, computer systems and facilities, 
        pertinent books, records, papers, vouchers, computer printouts, 
        accounts, and documents.  
           Subd. 2.  [ACCESS TO RECORDS OF OTHER PERSONS IN CONNECTION 
        WITH EXAMINATION OF TAXPAYER.] When conducting an investigation 
        or an audit of a taxpayer, the commissioner may examine, except 
        where privileged by law, the relevant records and files of a 
        person, business, institution, financial institution, state 
        agency, agency of the United States government, or agency of 
        another state where permitted by statute, agreement, or 
        reciprocity.  The commissioner may compel production of these 
        records by subpoena.  A subpoena may be served directly by the 
        commissioner. 
           Subd. 3.  [POWER TO COMPEL TESTIMONY.] In the 
        administration of this chapter, the commissioner may:  
           (1) administer oaths or affirmations and compel by subpoena 
        the attendance of witnesses, testimony, and the production of a 
        person's pertinent books, records, papers, or other data; 
           (2) examine under oath or affirmation any person regarding 
        the business of a taxpayer concerning a matter relevant to the 
        administration of this chapter.  The fees of witnesses required 
        by the commissioner to attend a hearing are equal to those 
        allowed to witnesses appearing before courts of this state.  The 
        fees must be paid in the manner provided for the payment of 
        other expenses incident to the administration of state tax law; 
        and 
           (3) in addition to other remedies available, bring an 
        action in equity by the state against a taxpayer for an 
        injunction ordering the taxpayer to file a complete and proper 
        return or amended return.  The district courts of this state 
        have jurisdiction over the action, and disobedience of an 
        injunction issued under this clause must be punished as for 
        contempt.  
           Subd. 4.  [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 
        IS KNOWN.] An investigation may extend to any person that the 
        commissioner determines has access to information that may be 
        relevant to the examination or investigation.  If a subpoena 
        requiring the production of records under subdivision 2 is 
        served on a third-party record keeper, written notice of the 
        subpoena must be mailed to the taxpayer and to any other person 
        who is identified in the subpoena.  The notices must be given 
        within three days of the day on which the subpoena is served.  
        Notice to the taxpayer required by this section is sufficient if 
        it is mailed to the last address on record with the commissioner 
        of revenue. 
           The provisions of this subdivision relating to notice to 
        the taxpayer or other parties identified in the subpoena do not 
        apply if there is reasonable cause to believe that the giving of 
        notice may lead to attempts to conceal, destroy, or alter 
        records relevant to the examination, to prevent the 
        communication of information from other persons through 
        intimidation, bribery, or collusion, or to flee to avoid 
        prosecution, testifying, or production of records. 
           Subd. 5.  [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 
        IS NOT KNOWN.] A subpoena that does not identify the person or 
        persons whose tax liability is being investigated may be served 
        only if:  
           (1) the subpoena relates to the investigation of a 
        particular person or ascertainable group or class of persons; 
           (2) there is a reasonable basis for believing that the 
        person or group or class of persons may fail or may have failed 
        to comply with tax laws administered by the commissioner of 
        revenue; 
           (3) the subpoena is clear and specific concerning 
        information sought to be obtained; and 
           (4) the information sought to be obtained is limited solely 
        to the scope of the investigation. 
           A party served with a subpoena that does not identify the 
        person or persons with respect to whose tax liability the 
        subpoena is issued may, within three days after service of the 
        subpoena, petition the district court in the judicial district 
        in which that party is located for a determination whether the 
        commissioner of revenue has complied with all the requirements 
        in clauses (1) to (4), and whether the subpoena is enforceable.  
        If no petition is made by the party served within the time 
        prescribed, the subpoena has the effect of a court order.  
           Subd. 6.  [REQUEST BY TAXPAYER FOR SUBPOENA.] If the 
        commissioner has the power to issue a subpoena for investigative 
        or auditing purposes, the commissioner shall honor a reasonable 
        request by the taxpayer to issue a subpoena on the taxpayer's 
        behalf in connection with the investigation or audit.  
           Subd. 7.  [APPLICATION TO COURT FOR ENFORCEMENT OF 
        SUBPOENA.] The commissioner or the taxpayer may apply to the 
        district court of the county of the taxpayer's residence, place 
        of business, or county where the subpoena can be served as with 
        any other case at law, for an order compelling the appearance of 
        the subpoenaed witness or the production of the subpoenaed 
        records.  Failure to comply with the order of the court for the 
        appearance of a witness or the production of records may be 
        punished by the court as for contempt.  
           Subd. 8.  [COST OF PRODUCTION OF RECORDS.] The cost of 
        producing records of a third party required by a subpoena must 
        be paid by the taxpayer if the taxpayer requests the subpoena to 
        be issued or if the taxpayer has the records available but has 
        refused to provide them to the commissioner.  In other cases 
        where the taxpayer cannot produce records and the commissioner 
        then issues a subpoena for third-party records, the commissioner 
        shall pay the reasonable cost of producing the records.  The 
        commissioner may later assess the reasonable costs against the 
        taxpayer if the records contribute to the determination of an 
        assessment of tax against the taxpayer.  
           Sec. 10.  [297E.09] [ASSESSMENTS.] 
           Subdivision 1.  [GENERALLY.] The commissioner shall make 
        determinations, corrections, and assessments with respect to 
        taxes, including interest, additions to taxes, and assessable 
        penalties, imposed under this chapter.  
           Subd. 2.  [COMMISSIONER FILED RETURNS.] If a taxpayer fails 
        to file a return required by this chapter, the commissioner may 
        make a return for the taxpayer from information in the 
        commissioner's possession or obtainable by the commissioner.  
        The return is prima facie correct and valid.  
           Subd. 3.  [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 
        TAXPAYER.] (a) If a return has been filed and the commissioner 
        determines that the tax disclosed by the return is different 
        from the tax determined by the examination, the commissioner 
        shall send an order of assessment to the taxpayer.  The order 
        must explain the basis for the assessment and must explain the 
        taxpayer's appeal rights.  An assessment by the commissioner 
        must be made by recording the liability of the taxpayer in the 
        office of the commissioner, which may be done by keeping a copy 
        of the order of assessment sent to the taxpayer.  An order of 
        assessment is final when made but may be reconsidered by the 
        commissioner under section 349.219.  
           (b) The amount of unpaid tax shown on the order must be 
        paid to the commissioner:  
           (1) within 60 days after notice of the amount and demand 
        for its payment have been mailed to the taxpayer by the 
        commissioner; or 
           (2) if an administrative appeal is filed under section 
        349.219 within 60 days following the determination or compromise 
        of the appeal.  
           Subd. 4.  [ERRONEOUS REFUNDS.] An erroneous refund is 
        considered an underpayment of tax on the date made.  An 
        assessment of a deficiency arising out of an erroneous refund 
        may be made at any time within two years from the making of the 
        refund.  If part of the refund was induced by fraud or 
        misrepresentation of a material fact, the assessment may be made 
        at any time.  
           Subd. 5.  [ASSESSMENT PRESUMED VALID.] A return or 
        assessment made by the commissioner is prima facie correct and 
        valid.  The taxpayer has the burden of establishing the 
        incorrectness or invalidity of the return or assessment in any 
        action or proceeding in respect to it.  
           Subd. 6.  [AGGREGATE REFUND OR ASSESSMENT.] On examining 
        returns of a taxpayer for more than one year or period, the 
        commissioner may issue one order covering the period under 
        examination that reflects the aggregate refund or additional tax 
        due.  
           Subd. 7.  [SUFFICIENCY OF NOTICE.] An order of assessment 
        sent by United States mail, postage prepaid to the taxpayer at 
        the taxpayer's last known address, is sufficient even if the 
        taxpayer is deceased or is under a legal disability, or, in the 
        case of a corporation, has terminated its existence, unless the 
        department has been provided with a new address by a party 
        authorized to receive notices of assessment. 
           Sec. 11.  [297E.10] [EXTENSIONS FOR FILING RETURNS AND 
        PAYING TAXES.] 
           If, in the commissioner's judgment, good cause exists, the 
        commissioner may extend the time for filing tax returns, paying 
        taxes, or both, for not more than six months. 
           Sec. 12.  [297E.11] [LIMITATIONS ON TIME FOR ASSESSMENT OF 
        TAX.] 
           Subdivision 1.  [GENERAL RULE.] Except as otherwise 
        provided in this chapter, the amount of taxes assessable must be 
        assessed within 3-1/2 years after the return is filed, whether 
        or not the return is filed on or after the date prescribed.  A 
        return must not be treated as filed until it is in processible 
        form.  A return is in processible form if it is filed on a 
        permitted form and contains sufficient data to identify the 
        taxpayer and permit the mathematical verification of the tax 
        liability shown on the return.  
           Subd. 2.  [FALSE OR FRAUDULENT RETURN.] Notwithstanding 
        subdivision 1, the tax may be assessed at any time if a false or 
        fraudulent return is filed or if a taxpayer fails to file a 
        return.  
           Subd. 3.  [OMISSION IN EXCESS OF 25 PERCENT.] Additional 
        taxes may be assessed within 6-1/2 years after the due date of 
        the return or the date the return was filed, whichever is later, 
        if the taxpayer omits from a tax return taxes in excess of 25 
        percent of the taxes reported in the return.  
           Subd. 4.  [TIME LIMIT FOR REFUNDS.] Unless otherwise 
        provided in this chapter, a claim for a refund of an overpayment 
        of tax must be filed within 3-1/2 years from the date prescribed 
        for filing the return, plus any extension of time granted for 
        filing the return, but only if filed within the extended time, 
        or two years from the time the tax is paid, whichever period 
        expires later.  Interest on refunds must be computed at the rate 
        specified in section 270.76 from the date of payment to the date 
        the refund is paid or credited.  For purposes of this 
        subdivision, the date of payment is the later of the date the 
        tax was finally due or was paid.  
           Subd. 5.  [BANKRUPTCY; SUSPENSION OF TIME.] The time during 
        which a tax must be assessed or collection proceedings begun is 
        suspended during the period from the date of a filing of a 
        petition in bankruptcy until 30 days after either:  
           (1) notice to the commissioner that the bankruptcy 
        proceedings have been closed or dismissed; or 
           (2) the automatic stay has been ended or has expired, 
        whichever occurs first.  
           The suspension of the statute of limitations under this 
        subdivision applies to the person the petition in bankruptcy is 
        filed against, and all other persons who may also be wholly or 
        partially liable for the tax.  
           Subd. 6.  [EXTENSION AGREEMENT.] If before the expiration 
        of time prescribed in subdivisions 1 and 4 for the assessment of 
        tax or the filing of a claim for refund, both the commissioner 
        and the taxpayer have consented in writing to the assessment or 
        filing of a claim for refund after that time, the tax may be 
        assessed or the claim for refund filed at any time before the 
        expiration of the agreed upon period.  The period may be 
        extended by later agreements in writing before the expiration of 
        the period previously agreed upon. 
           Sec. 13.  [297E.13] [CIVIL PENALTIES.] 
           Subdivision 1.  [PENALTY FOR FAILURE TO PAY TAX.] If a tax 
        is not paid within the time specified for payment, a penalty is 
        added to the amount required to be shown as tax.  The penalty is 
        five percent of the unpaid tax if the failure is for not more 
        than 30 days, with an additional penalty of five percent of the 
        amount of tax remaining unpaid during each additional 30 days or 
        fraction of 30 days during which the failure continues, not 
        exceeding 15 percent in the aggregate. 
           If the taxpayer has not filed a return, for purposes of 
        this subdivision the time specified for payment is the final 
        date a return should have been filed. 
           Subd. 2.  [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 
        a taxpayer fails to make and file a return within the time 
        prescribed or an extension, a penalty is added to the tax.  The 
        penalty is five percent of the amount of tax not paid on or 
        before the date prescribed for payment of the tax. 
           If a taxpayer fails to file a return within 60 days of the 
        date prescribed for filing of the return (determined with regard 
        to any extension of time for filing), the addition to tax under 
        this subdivision must be at least the lesser of:  (1) $200; or 
        (2) the greater of (i) 25 percent of the amount required to be 
        shown as tax on the return without reduction for any payments 
        made or refundable credits allowable against the tax, or (ii) 
        $50. 
           Subd. 3.  [COMBINED PENALTIES.] When penalties are imposed 
        under subdivisions 1 and 2, except for the minimum penalty under 
        subdivision 2, the penalties imposed under both subdivisions 
        combined must not exceed 38 percent. 
           Subd. 4.  [PENALTY FOR INTENTIONAL DISREGARD OF LAW OR 
        RULES.] If part of an additional assessment is due to negligence 
        or intentional disregard of the provisions of this chapter or 
        rules of the commissioner of revenue (but without intent to 
        defraud), there is added to the tax an amount equal to ten 
        percent of the additional assessment.  
           Subd. 5.  [PENALTY FOR FALSE OR FRAUDULENT RETURN; 
        EVASION.] If a person files a false or fraudulent return, or 
        attempts in any manner to evade or defeat a tax or payment of 
        tax, there is imposed on the person a penalty equal to 50 
        percent of the tax found due for the period to which the return 
        related, less amounts paid by the person on the basis of the 
        false or fraudulent return. 
           Subd. 6.  [PENALTY FOR REPEATED FAILURES TO FILE RETURNS OR 
        PAY TAXES.] If there is a pattern by a person of repeated 
        failures to timely file returns or timely pay taxes, and written 
        notice is given that a penalty will be imposed if such failures 
        continue, a penalty of 25 percent of the amount of tax not 
        timely paid as a result of each such subsequent failure is added 
        to the tax.  The penalty can be abated under the abatement 
        authority in section 270.07, subdivisions 1, paragraph (e), and 
        6.  
           Subd. 7.  [PENALTY FOR SALES AFTER REVOCATION, SUSPENSION, 
        OR EXPIRATION.] A distributor who engages in, or whose 
        representative engages in, the offering for sale, sale, 
        transport, delivery, or furnishing of gambling equipment to a 
        person, firm, or organization, after the distributor's license 
        or permit has been revoked or suspended, or has expired, and 
        until such license or permit has been reinstated or renewed, is 
        liable for a penalty of $1,000 for each day the distributor 
        continues to engage in the activity.  This subdivision does not 
        apply to the transport of gambling equipment for the purpose of 
        returning the equipment to a licensed manufacturer. 
           Subd. 8.  [PAYMENT OF PENALTIES.] The penalties imposed by 
        this section must be collected and paid in the same manner as 
        taxes.  
           Subd. 9.  [PENALTIES ARE ADDITIONAL.] The civil penalties 
        imposed by this section are in addition to the criminal 
        penalties imposed by this chapter. 
           Subd. 10.  [ORDER PAYMENTS CREDITED.] All payments received 
        may be credited first to the oldest liability not secured by a 
        judgment or lien in the discretion of the commissioner of 
        revenue, but in all cases must be credited first to penalties, 
        next to interest, and then to the tax due. 
           Sec. 14.  [297E.135] [TAX-RELATED CRIMINAL PENALTIES.] 
           Subdivision 1.  [PENALTY FOR FAILURE TO FILE OR PAY.] (a) A 
        person required to file a return, report, or other document with 
        the commissioner, who knowingly fails to file it when required, 
        is guilty of a gross misdemeanor.  A person required to file a 
        return, report, or other document who willfully attempts to 
        evade or defeat a tax by failing to file it when required is 
        guilty of a felony.  
           (b) A person required to pay or to collect and remit a tax, 
        who knowingly fails to do so when required, is guilty of a gross 
        misdemeanor.  A person required to pay or to collect and remit a 
        tax, who willfully attempts to evade or defeat a tax law by 
        failing to do so when required is guilty of a felony.  
           Subd. 2.  [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 
        person required to file a return, report, or other document with 
        the commissioner, who delivers to the commissioner a return, 
        report, or other document known by the person to be fraudulent 
        or false concerning a material matter is guilty of a felony.  
           (b) A person who knowingly aids or assists in, or advises 
        in the preparation or presentation of a return, report, or other 
        document that is fraudulent or false concerning a material 
        matter, whether or not the falsity or fraud committed is with 
        the knowledge or consent of the person authorized or required to 
        present the return, report, or other document, is guilty of a 
        felony.  
           Subd. 3.  [FALSE INFORMATION.] A person is guilty of a 
        felony if the person:  
           (1) is required by section 297E.05 to keep records or to 
        make returns, and falsifies or fails to keep the records or 
        falsifies or fails to make the returns; or 
           (2) knowingly submits materially false information in any 
        report, document, or other communication submitted to the 
        commissioner in connection with lawful gambling or with this 
        chapter.  
           Subd. 4.  [SALES WITHOUT PERMIT; VIOLATIONS.] (a) A person 
        who engages in the business of selling gambling product in 
        Minnesota without the licenses or permits required under this 
        chapter or chapter 349, or an officer of a corporation who so 
        engages in the sales, is guilty of a gross misdemeanor.  
           (b) A person selling gambling product in Minnesota after 
        revocation of a license or permit under this chapter or chapter 
        349, when the commissioner or the board has not issued a new 
        license or permit, is guilty of a felony.  
           Subd. 5.  [UNTAXED GAMBLING EQUIPMENT.] It is a gross 
        misdemeanor for a person to possess gambling equipment for 
        resale in this state that has not been stamped or bar-coded in 
        accordance with chapter 349 and upon which the taxes imposed by 
        chapter 297A or section 297E.02, subdivision 4, have not been 
        paid.  The director of gambling enforcement or the commissioner 
        or the designated inspectors and employees of the director or 
        commissioner may seize in the name of the state of Minnesota any 
        unregistered or untaxed gambling equipment.  
           Subd. 6.  [CRIMINAL PENALTIES.] (a) Criminal penalties 
        imposed by this section are in addition to civil penalties 
        imposed by this chapter.  
           (b) A person who violates a provision of this chapter for 
        which another penalty is not provided is guilty of a misdemeanor.
           (c) A person who violates a provision of this chapter for 
        which another penalty is not provided is guilty of a gross 
        misdemeanor if the violation occurs within five years after a 
        previous conviction under a provision of this chapter.  
           (d) A person who in any manner violates a provision of this 
        chapter to evade a tax imposed by this chapter, or who aids and 
        abets the evasion of a tax, or hinders or interferes with a 
        seizing authority when a seizure is made as provided by section 
        297E.16 is guilty of a gross misdemeanor.  
           (e) This section does not preclude civil or criminal action 
        under other applicable law or preclude any agency of government 
        from investigating or prosecuting violations of this chapter or 
        chapter 349.  County attorneys have primary responsibility for 
        prosecuting violations of this chapter, but the attorney general 
        may prosecute a violation of this chapter.  
           Subd. 7.  [STATUTE OF LIMITATIONS.] Notwithstanding section 
        628.26, or other provision of the criminal laws of this state, 
        an indictment may be found and filed, or a complaint filed, upon 
        a criminal offense named in this section, in the proper court 
        within six years after the offense is committed. 
           Sec. 15.  [297E.14] [INTEREST.] 
           Subdivision 1.  [INTEREST RATE.] If an interest assessment 
        is required under this section, interest is computed at the rate 
        specified in section 270.75. 
           Subd. 2.  [LATE PAYMENT.] If a tax is not paid within the 
        time specified by law for payment, the unpaid tax bears interest 
        from the date the tax should have been paid until the date the 
        tax is paid.  
           Subd. 3.  [EXTENSIONS.] If an extension of time for payment 
        has been granted, interest must be paid from the date the 
        payment should have been made if no extension had been granted, 
        until the date the tax is paid.  
           Subd. 4.  [ADDITIONAL ASSESSMENTS.] If a taxpayer is liable 
        for additional taxes because of a redetermination by the 
        commissioner, or for any other reason, the additional taxes bear 
        interest from the time the tax should have been paid, without 
        regard to any extension allowed, until the date the tax is paid. 
           Subd. 5.  [ERRONEOUS REFUNDS.] In the case of an erroneous 
        refund, interest accrues from the date the refund was paid 
        unless the erroneous refund results from a mistake of the 
        department, then no interest or penalty is imposed unless the 
        deficiency assessment is not satisfied within 60 days of the 
        order.  
           Subd. 6.  [INTEREST ON JUDGMENTS.] Notwithstanding section 
        549.09, if judgment is entered in favor of the commissioner with 
        regard to any tax, the judgment bears interest at the rate 
        specified in section 270.75 from the date the judgment is 
        entered until the date of payment.  
           Subd. 7.  [INTEREST ON PENALTIES.] (a) A penalty imposed 
        under section 297E.12, subdivision 1, 2, 3, 4, or 5, bears 
        interest from the date the return or payment was required to be 
        filed or paid, including any extensions, to the date of payment 
        of the penalty.  
           (b) A penalty not included in paragraph (a) bears interest 
        only if it is not paid within ten days from the date of notice.  
        In that case interest is imposed from the date of notice to the 
        date of payment. 
           Sec. 16.  [297E.15] [ADMINISTRATIVE REVIEW.] 
           Subdivision 1.  [TAXPAYER RIGHT TO RECONSIDERATION.] A 
        taxpayer may obtain reconsideration by the commissioner of an 
        order assessing tax, a denial of a request for abatement of 
        penalty, or a denial of a claim for refund of money paid to the 
        commissioner under provisions, assessments, or orders under this 
        chapter by filing an administrative appeal as provided in 
        subdivision 4.  A taxpayer cannot obtain reconsideration if the 
        action taken by the commissioner of revenue is the outcome of an 
        administrative appeal.  
           Subd. 2.  [APPEAL BY TAXPAYER.] A taxpayer who wishes to 
        seek administrative review shall follow the procedure in 
        subdivision 4.  
           Subd. 3.  [NOTICE DATE.] For purposes of this section, 
        "notice date" means the date of the order adjusting the tax or 
        order denying a request for abatement or, in the case of a 
        denied refund, the date of the notice of denial.  
           Subd. 4.  [TIME AND CONTENT FOR ADMINISTRATIVE 
        APPEAL.] Within 60 days after the notice date, the taxpayer must 
        file a written appeal with the commissioner of revenue.  The 
        appeal need not be in any particular form, but must contain the 
        following information:  
           (1) name and address of the taxpayer; 
           (2) if a corporation, the state of incorporation of the 
        taxpayer, and the principal place of business of the 
        corporation; 
           (3) the Minnesota identification number or social security 
        number of the taxpayer; 
           (4) the type of tax involved; 
           (5) the date; 
           (6) the tax years or periods involved and the amount of tax 
        involved for each year or period; 
           (7) the findings in the notice that the taxpayer disputes; 
           (8) a summary statement that the taxpayer relies on for 
        each exception; and 
           (9) the taxpayer's signature or signature of the taxpayer's 
        duly authorized agent.  
           Subd. 5.  [EXTENSIONS.] If requested in writing and within 
        the time allowed for filing an administrative appeal, the 
        commissioner may extend the time for filing an appeal for a 
        period of not more than 30 days from the expiration of the 60 
        days from the notice date.  
           Subd. 6.  [AUTOMATIC EXTENSION OF STATUTE OF 
        LIMITATIONS.] Notwithstanding any statute of limitations to the 
        contrary, if the commissioner has made a determination and the 
        taxpayer has authority to file an administrative appeal, the 
        period during which the commissioner can make further 
        assessments or other determinations does not expire before:  
           (1) 90 days after the notice date if no protest is filed 
        under subdivision 4; or 
           (2) 90 days after the commissioner notifies the taxpayer of 
        the determination on the appeal.  
           Subd. 7.  [DETERMINATION OF APPEAL.] On the basis of 
        applicable law and available information, the commissioner shall 
        determine the validity, if any, in whole or part of the appeal 
        and notify the taxpayer of the decision.  This notice must be in 
        writing and contain the basis for the determination. 
           Subd. 8.  [AGREEMENT DETERMINING TAX LIABILITY.] If it 
        appears to be in the best interests of the state, the 
        commissioner may settle taxes, penalties, or interest that the 
        commissioner has under consideration by virtue of an appeal 
        filed under this section.  An agreement must be in writing and 
        signed by the commissioner and the taxpayer or the taxpayer's 
        representative authorized by the taxpayer to enter into an 
        agreement.  An agreement must be filed in the office of the 
        commissioner.  
           Subd. 9.  [APPEAL OF AN ADMINISTRATIVE APPEAL.] Following 
        the determination or settlement of an appeal, the commissioner 
        must issue an order reflecting that disposition.  Except in the 
        case of an agreement determining tax under this section, the 
        order is appealable to the Minnesota tax court under section 
        271.06.  
           Subd. 10.  [APPEAL WHERE NO DETERMINATION.] If the 
        commissioner does not make a determination within six months of 
        the filing of an administrative appeal, the taxpayer may elect 
        to appeal to tax court.  
           Subd. 11.  [EXEMPTION FROM ADMINISTRATIVE PROCEDURE 
        ACT.] This section is not subject to chapter 14. 
           Sec. 17.  [297E.16] [CONTRABAND.] 
           Subdivision 1.  [SEIZURE.] Contraband may be seized by the 
        commissioner or by any sheriff or other police officer, 
        hereinafter referred to as the "seizing authority," with or 
        without process, and is subject to forfeiture as provided in 
        subdivisions 2 and 3.  
           Subd. 2.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
        DISPOSITION OF SEIZED PROPERTY.] Within ten days after the 
        seizure of alleged contraband, the person making the seizure 
        shall make available an inventory of the property seized to the 
        person from whom the property was seized, if known, and file a 
        copy with the commissioner or the director of gambling 
        enforcement.  Within ten days after the date of service of the 
        inventory, the person from whom the property was seized or any 
        person claiming an interest in the property may file with the 
        seizing authority a demand for judicial determination of whether 
        the property was lawfully subject to seizure and forfeiture.  
        Within 60 days after the date of filing of the demand, the 
        seizing authority must bring an action in the district court of 
        the county where seizure was made to determine the issue of 
        forfeiture.  The action must be brought in the name of the state 
        and be prosecuted by the county attorney or by the attorney 
        general.  The court shall hear the action without a jury and 
        determine the issues of fact and law involved.  If a judgment of 
        forfeiture is entered, the seizing authority may, unless the 
        judgment is stayed pending an appeal, either (1) cause the 
        forfeited property to be destroyed; or (2) cause it to be sold 
        at a public auction as provided by law.  
           If demand for judicial determination is made and no action 
        is commenced by the seizing authority as provided in this 
        subdivision, the property must be released by the seizing 
        authority and delivered to the person entitled to it.  If no 
        demand is made, the property seized is considered forfeited to 
        the seizing authority by operation of law and may be disposed of 
        by the seizing authority as provided where there has been a 
        judgment of forfeiture.  When the seizing authority is satisfied 
        that a person from whom property is seized was acting in good 
        faith and without intent to evade the tax imposed by section 
        297E.02, the seizing authority shall release the property seized 
        without further legal proceedings.  
           Subd. 3.  [DISPOSAL.] (a) The property described in section 
        349.2125, subdivision 1, clauses (4) and (5), must be 
        confiscated after conviction of the person from whom it was 
        seized, upon compliance with the following procedure:  the 
        seizing authority shall file with the court a separate complaint 
        against the property, describing it and charging its use in the 
        specific violation, and specifying substantially the time and 
        place of the unlawful use.  A copy of the complaint must be 
        served upon the defendant or person in charge of the property at 
        the time of seizure, if any.  If the person arrested is 
        acquitted, the court shall dismiss the complaint against the 
        property and order it returned to the persons legally entitled 
        to it.  Upon conviction of the person arrested, the court shall 
        issue an order directed to any person known or believed to have 
        any right, title or interest in, or lien upon, any of the 
        property, and to persons unknown claiming any right, title, 
        interest, or lien in it, describing the property and (1) stating 
        that it was seized and that a complaint against it, charging the 
        specified violation, has been filed with the court, (2) 
        requiring the persons to file with the court administrator their 
        answer to the complaint, setting forth any claim they may have 
        to any right or title to, interest in, or lien upon the 
        property, within 30 days after the service of the order, and (3) 
        notifying them in substance that if they fail to file their 
        answer within the time, the property will be ordered sold by the 
        seizing authority.  The court shall cause the order to be served 
        upon any person known or believed to have any right, title, 
        interest, or lien as in the case of a summons in a civil action, 
        and upon unknown persons by publication, as provided for service 
        of summons in a civil action.  If no answer is filed within the 
        time prescribed, the court shall, upon affidavit by the court 
        administrator, setting forth the fact, order the property sold 
        by the seizing authority.  Seventy percent of the proceeds of 
        the sale of forfeited property, after payment of seizure, 
        storage, forfeiture, and sale expenses, must be forwarded to the 
        seizing authority for deposit as a supplement to its operating 
        fund or similar fund for official use, and 20 percent must be 
        forwarded to the county attorney or other prosecuting agency 
        that handled the forfeiture for deposit as a supplement to its 
        operating fund or similar fund for prosecutorial purposes.  The 
        remaining ten percent of the proceeds must be forwarded within 
        60 days after resolution of the forfeiture to the department of 
        human services to fund programs for the treatment of compulsive 
        gamblers.  If an answer is filed within the time provided, the 
        court shall fix a time for a hearing, which must not be less 
        than ten nor more than 30 days after the time for filing an 
        answer expires.  At the time fixed for hearing, unless continued 
        for cause, the matter must be heard and determined by the court, 
        without a jury, as in other civil actions.  
           (b) If the court finds that the property, or any part of 
        it, was used in the violation specified in the complaint, it 
        shall order the unlawfully used property sold as provided by 
        law, unless the owner shows to the satisfaction of the court 
        that the owner had no notice or knowledge or reason to believe 
        that the property was used or intended to be used in the 
        violation.  The officer making a sale, after deducting the 
        expense of keeping the property, the fee for seizure, and the 
        costs of the sale, shall pay all liens according to their 
        priority, which are established at the hearing as being bona 
        fide and as existing without the lienor having any notice or 
        knowledge that the property was being used or was intended to be 
        used for or in connection with the violation specified in the 
        order of the court, and shall pay the balance of the proceeds to 
        the seizing authority for official use and sharing in the manner 
        provided in paragraph (a).  A sale under this section frees the 
        property sold from all liens on it.  Appeal from the order of 
        the district court is available as in other civil cases.  At any 
        time after seizure of the articles specified in this 
        subdivision, and before the hearing provided for, the property 
        must be returned to the owner or person having a legal right to 
        its possession, upon execution of a good and valid bond to the 
        state, with corporate surety, in the sum of at least $100 and 
        not more than double the value of the property seized, to be 
        approved by the court in which the case is triable, or a judge 
        of it, conditioned to abide any order and the judgment of the 
        court, and to pay the full value of the property at the time of 
        the seizure.  The seizing authority may dismiss the proceedings 
        outlined in this subdivision when the seizing authority 
        considers it to be in the public interest to do so.  
           Sec. 18.  [297E.17] [DISTRIBUTOR'S BOND.] 
           On finding it necessary to ensure compliance with this 
        chapter, the commissioner may require that a distributor deposit 
        with the commissioner security in the form and amount determined 
        by the commissioner, but not more than the lesser of (1) twice 
        the estimated average monthly tax liability for the previous 12 
        months, or (2) $10,000.  
           In lieu of security, the commissioner may require a 
        distributor to file a bond issued by a surety company authorized 
        to transact business in this state and approved by the 
        commissioner of commerce as to solvency and responsibility.  
           The commissioner may make claim against this security or 
        bond for all taxes, penalties, and interest owed by the 
        distributor.  
           Sec. 19.  [INSTRUCTIONS TO REVISOR.] 
           (a) If a provision of a section of Minnesota Statutes 
        repealed or amended by this article is amended or referred to by 
        an act enacted in 1994, the revisor shall codify the amendment 
        or reference consistent with the recodification of the affected 
        section by this act, notwithstanding any law to the contrary. 
           (b) In the next edition of Minnesota Statutes, in the 
        sections referred to in column A, the revisor of statutes shall 
        delete the reference in column B and insert the reference in 
        column C.  The revisor may change the references in column C to 
        the sections of Minnesota Statutes in which the bill sections 
        are compiled. 
                Column A              Column B            Column C
           270.101, subd. 1        349.212             297E.02
           349.12, subd. 25        349.19, subd. 9     297E.06, subd. 4
           349.12, subd. 25        349.212, subd. 1    297E.02, subd. 1
                                   and 4               and 4
           349.15                  349.212, subd. 1    297E.02, subd. 1
           349.16, subd. 2         349.212, subd. 6    297E.02, subd. 6
           349.166, subd. 2,       349.212             297E.02
           paragraph (a)
           349.166, subd. 2,       349.212, subd. 4,   297E.02, subd. 4,
           paragraph (e)           paragraph (c)       paragraph (b),
                                                       clause (4)
           349.2125, subd. 3       349.2121, subd. 4   297E.02
           349.213, subd. 1        349.212             297E.02
           349.22, subd. 2         349.219             349.213, and
                                                       chapter 297E
           (c) In the next edition of Minnesota Statutes, the revisor 
        shall change the reference to taxes under or by "this chapter" 
        to taxes under or by "chapter 297E" in sections 349.16, 
        subdivision 5; 349.1641; and 349.2127, subdivision 1. 
           Sec. 20.  [PURPOSE.] 
           It is the intent of the legislature to simplify Minnesota's 
        lawful gambling tax laws by consolidating and recodifying tax 
        administration and compliance provisions now contained 
        throughout Minnesota Statutes, chapter 349.  Due to the 
        complexity of the recodification, prior provisions are repealed 
        on the effective date of the new provisions.  The repealed 
        provisions, however, continue to remain in effect until 
        superseded by the analogous provision in the new law.  
           Sec. 21.  [REPEALER.] 
           Minnesota Statutes 1992, sections 349.166, subdivision 4; 
        349.212, subdivisions 1, 2, 5, 6, and 7; 349.2121; 349.2122; 
        349.215; 349.2151; 349.2152; 349.216; 349.217, subdivisions 3, 
        4, 5, 6, 7, 8, and 9; 349.2171; and 349.219; and Minnesota 
        Statutes 1993 Supplement, sections 349.2115; 349.212, 
        subdivision 4; and 349.217, subdivisions 1, 2, and 5a, are 
        repealed. 
           Sec. 22.  [EFFECTIVE DATE.] 
           Sections 1, 8 to 16, and 18 to 20 are effective the day 
        following final enactment. 
           Sections 2, 3, 4, 5, 6, 7, and 21 are effective for 
        returns, reports, records, assessments, taxes, or other payments 
        first becoming due on or after August 1, 1994. 
           Section 4 is effective for sales or shipments of gambling 
        product inventory made on or after August 1, 1994. 
                                   ARTICLE 3
                            GAMBLING TAX AMENDMENTS
           Section 1.  Minnesota Statutes 1992, section 270.101, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LIABILITY IMPOSED.] A person who, either 
        singly or jointly with others, has the control of, supervision 
        of, or responsibility for filing returns or reports, paying 
        taxes, or collecting or withholding and remitting taxes and who 
        fails to do so, or a person who is liable under any other law, 
        is liable for the payment of taxes, penalties, and interest 
        arising under chapters 296, 297, 297A, and 297C, or sections 
        290.92, 349.212, and 349.2121 297E.02. 
           Sec. 2.  Minnesota Statutes 1992, section 349.2123, is 
        amended to read: 
           349.2123 [CERTIFIED PHYSICAL INVENTORY.] 
           The board or commissioner of revenue may, upon request, 
        require a distributor to furnish a certified physical inventory 
        of all gambling equipment in stock.  The inventory must contain 
        the information required by the board or the commissioner. 
           Sec. 3.  Minnesota Statutes 1992, section 349.22, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PENALTY.] (a) A person who violates any 
        provision of sections 349.11 to 349.23 for which another penalty 
        is not provided is guilty of a misdemeanor. 
           (b) A person who violates any provision of sections 349.11 
        to 349.23 for which another penalty is not provided is guilty of 
        a gross misdemeanor if the violation occurs within five years 
        after a previous conviction under any provision of sections 
        349.11 to 349.23. 
           (c) A person who in any manner violates sections 349.11 to 
        349.23 to evade a tax imposed by a provision of this chapter, or 
        who aids and abets the evasion of a tax, or hinders or 
        interferes with a seizing authority when a seizure is made as 
        provided by section 349.2125, is guilty of a gross misdemeanor.  
           Sec. 4.  [EFFECTIVE DATE.] 
           Section 1 is effective for taxes, returns, or reports first 
        becoming due on or after August 1, 1994. 
           Sections 2 and 3 are effective August 1, 1994. 
                                   ARTICLE 4
                              GAMBLING ENFORCEMENT
           Section 1.  Minnesota Statutes 1992, section 299L.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
        chapter, the terms defined in this subdivision have the meanings 
        given them. 
           (b) "Division" means the division of gambling enforcement.  
           (c) "Commissioner" means the commissioner of public safety. 
           (d) "Director" means the director of gambling enforcement.  
           (e) "Manufacturer" means a person who assembles from raw 
        materials or subparts a gambling device for sale or use in 
        Minnesota. 
           (f) "Distributor" means a person who sells, offers to sell, 
        or otherwise provides a gambling device to a person in Minnesota.
           (g) "Used gambling device" means a gambling device five or 
        more years old from the date of manufacture. 
           Sec. 2.  Minnesota Statutes 1992, section 299L.01, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [CONFLICT OF INTEREST.] (a) The director and any 
        person employed by the division may not have a direct or 
        indirect financial interest in: 
           (1) a class A or B licensee of the racing commission; 
           (2) a lottery retailer under contract with the state 
        lottery; 
           (3) a person who is under a lottery procurement contract 
        with the state lottery; 
           (4) a bingo hall, manufacturer, or distributor licensed 
        under chapter 349; or 
           (5) a manufacturer or distributor licensed under this 
        chapter. 
           (b) The director or an employee of the division of gambling 
        enforcement may not participate in the conducting of lawful 
        gambling under chapter 349. 
           Sec. 3.  Minnesota Statutes 1992, section 299L.02, 
        subdivision 2, is amended to read: 
           Subd. 2.  [GAMBLING.] The director shall:  
           (1) conduct background investigations of applicants for 
        licensing as a manufacturer or distributor of gambling equipment 
        or as a bingo hall under chapter 349; and 
           (2) when requested by the director of gambling control, or 
        when the director believes it to be reasonable and necessary, 
        inspect the premises of a licensee under chapter 349 to 
        determine compliance with law and with the rules of the board, 
        or to conduct an audit of the accounts, books, records, or other 
        documents required to be kept by the licensee. 
           The director may charge applicants under clause (1) a 
        reasonable fee to cover the costs of the investigation. 
           Sec. 4.  Minnesota Statutes 1992, section 299L.02, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [RESPONSE TO REQUESTS.] An applicant, licensee, 
        or the person subject to the jurisdiction of the commissioner or 
        director under this chapter, must: 
           (1) comply with a request from the commissioner or director 
        for information, documents, or other material within 30 days of 
        the mailing of the request by the commissioner or director 
        unless the notice specifies a different time; and 
           (2) appear before the commissioner or director when 
        requested to do so, and must bring documents or materials that 
        the commissioner or director has requested. 
           Sec. 5.  Minnesota Statutes 1992, section 299L.03, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [INSPECTIONS; ACCESS.] In conducting any 
        inspection authorized under this chapter or chapter 240, 349, or 
        349A, the employees of the division of gambling enforcement have 
        free and open access to all parts of the regulated business 
        premises, and may conduct the inspection at any reasonable time 
        without notice and without a search warrant.  For purposes of 
        this subdivision, "regulated business premises" means premises 
        where: 
           (1) lawful gambling is conducted by an organization 
        licensed under chapter 349 or by an organization exempt from 
        licensing under section 349.166; 
           (2) gambling equipment is manufactured, sold, distributed, 
        or serviced by a manufacturer or distributor licensed under 
        chapter 349; 
           (3) records required to be maintained under chapter 
        240, 297E, 349, or 349A are prepared or retained; 
           (4) lottery tickets are sold by a lottery retailer under 
        chapter 340A; or 
           (5) races are conducted by a person licensed under chapter 
        240; or 
           (6) gambling devices are manufactured or distributed, 
        including places of storage under section 299L.07. 
           Sec. 6.  Minnesota Statutes 1992, section 299L.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ITEMS REQUIRED TO BE PRODUCED.] In conducting an 
        audit or inspection authorized under this chapter or chapter 
        240, 349 or 349A the director may inspect any book, record, or 
        other document the licensee, retailer, or vendor is required to 
        keep. 
           Sec. 7.  Minnesota Statutes 1992, section 299L.03, 
        subdivision 6, is amended to read: 
           Subd. 6.  [UNLICENSED SELLERS.] (a) If anyone not licensed 
        under chapter 349 sells gambling equipment at a business 
        establishment, the director may, in addition to any other 
        provisions of chapter 349: 
           (1) assess a civil penalty of not more than $300 for each 
        violation against each person participating in the sales and 
        assess a civil penalty of not more than $1,000 for each 
        violation against the owner or owners of the business 
        establishment; or 
           (2) if the subject violation is the second or subsequent 
        violation of this subdivision at the same business establishment 
        within any 24-month period, assess a civil penalty of not more 
        than $300 for each violation against each person participating 
        in such sales, and assess a civil penalty of not more than 
        $5,000 for each violation against the owner or owners of the 
        business establishment.  
           (b) The assessment of a civil penalty under this section 
        does not preclude a recommendation by the director at any time 
        deemed appropriate to a licensing authority for revocation, 
        suspension, or denial of a license controlled by the licensing 
        authority. 
           (c) Within ten days of an assessment under this 
        subdivision, the person assessed the penalty must pay the 
        assessment or request that a hearing be held under chapter 14.  
        If a hearing is requested, the hearing must be scheduled within 
        20 days of the request, and the recommendations of the 
        administrative law judge must be issued within five working days 
        of the close of the hearing.  The director's final determination 
        must be issued within five working days of the issuance of the 
        recommendations of the administrative law judge. 
           Sec. 8.  Minnesota Statutes 1992, section 299L.03, is 
        amended by adding a subdivision to read: 
           Subd. 12.  [CEASE AND DESIST ORDERS.] (a) When it appears 
        to the director that any person has engaged in or is about to 
        engage in any act or practice constituting a violation of this 
        chapter, or any rule or order issued under this chapter, the 
        director may issue and cause to be served on the person an order 
        requiring the person to cease and desist from violations of this 
        chapter, or any rule or order issued under this chapter.  The 
        order must give reasonable notice of the rights of the person to 
        request a hearing and must state the reason for the entry of the 
        order.  Unless otherwise agreed between the parties, a hearing 
        must be held not later than seven days after receiving the 
        request for a hearing.  Within 20 days of receiving the 
        administrative law judge's report and subsequent exceptions and 
        argument, the director shall issue an order vacating the cease 
        and desist order, modifying the order, or making it permanent, 
        as the facts require.  If no hearing is requested within 30 days 
        of service of the order, the order becomes final and remains in 
        effect until modified or vacated by the commissioner.  All 
        hearings under this subdivision must be conducted in accordance 
        with sections 14.57 to 14.69 of the administrative procedure 
        act.  If the person to whom a cease and desist order has been 
        issued under this subdivision fails to appear at a hearing after 
        being notified of the hearing, the person is deemed in default 
        and the proceeding may be determined against the person on 
        consideration of the cease and desist order, the allegations of 
        which are deemed to be true. 
           (b) When it appears to the director that any person has 
        engaged in or is about the engage in any act or practice 
        constituting a violation of this chapter, or any rule adopted or 
        subpoena or order issued under this chapter, the director may 
        bring an action in the district court in the appropriate county 
        to enjoin the acts or practices and to enforce compliance with 
        this chapter or any rule, subpoena, or order issued or adopted 
        under this chapter, and may refer the matter to the attorney 
        general.  On a proper showing, the court shall grant a permanent 
        or temporary injunction, restraining order, or writ of 
        mandamus.  The court may not require the director to post a bond.
           Sec. 9.  Minnesota Statutes 1992, section 299L.07, is 
        amended to read: 
           299L.07 [GAMBLING DEVICES.] 
           Subdivision 1.  [RESTRICTION LICENSE REQUIRED.] Except as 
        provided in subdivision 2, a person may not manufacture, sell, 
        offer to sell, lease, rent, or otherwise provide, in whole or in 
        part, a gambling device as defined in sections 349.30, 
        subdivision 2, and 609.75, subdivision 4, except that a gambling 
        device may be: 
           (1) manufactured as provided in section 349.40; 
           (2) sold, offered for sale, or otherwise provided to a 
        distributor licensed under subdivision 3; 
           (3) sold, offered for sale, or otherwise provided to the 
        governing body of a federally recognized Indian tribe that is 
        authorized to operate the gambling device under a tribal-state 
        compact under the Indian Gaming Regulatory Act, United States 
        Code, title 25, sections 2701 to 2721; 
           (4) sold, offered for sale, or otherwise provided to a 
        person for use in the person's dwelling for display or amusement 
        purposes in a manner that does not afford players an opportunity 
        to obtain anything of value; or 
           (5) sold by a person who is not licensed under this section 
        and who is not engaged in the trade or business of selling 
        gambling devices, if the person does not sell more than one 
        gambling device in any calendar year without first obtaining a 
        license under this section.  
           Subd. 2.  [LICENSE REQUIRED EXCLUSIONS.] A person may not 
        manufacture or distribute gambling devices without having 
        obtained a license under this section. Notwithstanding 
        subdivision 1, a gambling device: 
           (1) may be manufactured without a license as provided in 
        section 349.40; and 
           (2) may be sold by a person who is not licensed under this 
        section, if the person (i) is not engaged in the trade or 
        business of selling gambling devices, and (ii) does not sell 
        more than one gambling device in any calendar year.  
           Subd. 2a.  [RESTRICTIONS.] (a) A manufacturer licensed 
        under this section may sell, offer to sell, lease, or rent, in 
        whole or in part, a gambling device only to a distributor 
        licensed under this section. 
           (b) A distributor licensed under this section may sell, 
        offer to sell, market, rent, lease, or other provide, in whole 
        or in part, a gambling device only to: 
           (1) the governing body of a federally recognized Indian 
        tribe that is authorized to operate the gambling device under a 
        tribal state compact under the Indian Gaming Regulatory Act, 
        Public Law Number 100-497, and future amendments to it; 
           (2) a person for use in the person's dwelling for display 
        or amusement purposes in a manner that does not afford players 
        an opportunity to obtain anything of value. 
           Subd. 3.  [LICENSE ISSUANCE.] The commissioner may issue a 
        license under this section if the commissioner determines that 
        the applicant will conduct the business in a manner that will 
        not adversely affect the public health, welfare, and safety or 
        be detrimental to the effective regulation and control of 
        gambling.  A license may not be issued under this section to a 
        person, or a corporation, firm, or partnership that has an 
        officer, director, or other person with a direct or indirect 
        financial or management interest of five percent or more, who 
        has ever: 
           (1) been convicted of a felony; 
           (2) been convicted of a crime involving gambling; 
           (3) been connected with or engaged in an illegal business; 
        or 
           (4) had a license revoked or denied by another jurisdiction 
        for a violation of law or rule related to gambling. 
           Subd. 4.  [APPLICATION.] An application for a 
        manufacturer's or distributor's license must be on a form 
        prescribed by the commissioner and must, at a minimum, contain: 
           (1) the name and address of the applicant and, if it is a 
        corporation, the names of all officers, directors, and 
        shareholders with a financial interest of five percent or more; 
           (2) the names and addresses of any holding corporation, 
        subsidiary, or affiliate of the applicant, without regard to 
        whether the holding corporation, subsidiary, or affiliate does 
        business in Minnesota; and 
           (3) if the applicant does not maintain a Minnesota office, 
        an irrevocable consent statement signed by the applicant, 
        stating that suits and actions relating to the subject matter of 
        the application or acts of omissions arising from it may be 
        commenced against the applicant in a court of competent 
        jurisdiction in this state by service on the secretary of state 
        of any summons, process, or pleadings authorized by the laws of 
        this state.  If any summons, process, or pleading is served upon 
        the secretary of state, it must be by duplicate copies.  One 
        copy must be retained in the office of the secretary of state 
        and the other copy must be forwarded immediately by certified 
        mail to the address of the applicant, as shown on the 
        application.  
           Subd. 5.  [INVESTIGATION.] Before a manufacturer's or 
        distributor's license is granted, the director may conduct a 
        background and financial investigation of the applicant, 
        including the applicant's sources of financing.  The director 
        may, or shall when required by law, require that fingerprints be 
        taken and the director may forward the fingerprints to the 
        Federal Bureau of Investigation for a national criminal history 
        check.  The director may charge an investigation fee to cover 
        the cost of the investigation. 
           Subd. 6.  [LICENSE FEES.] (a) A license issued under this 
        section is valid for one year. 
           (b) For a person who distributes 100 or fewer used gambling 
        devices per year, the fee is $1,500.  For a person who 
        distributes more than 100 used gambling devices per year, the 
        fee is $2,000.  For purposes of this subdivision, a used 
        gambling device is a gambling device five or more years old. 
           (c) For a person who manufactures or distributes 100 or 
        fewer new, or new and used gambling devices in a year, the fee 
        is $5,000.  For a person who manufactures or distributes more 
        than 100 new, or new and used gambling devices in a year, the 
        fee is $7,500. 
           Subd. 7.  [RENEWAL.] Upon making the same determination as 
        in subdivision 3, the commissioner may renew a license issued 
        under this section. 
           Subd. 8.  [LICENSE SUSPENSION AND , REVOCATION, DENIAL 
        ACTIONS.] (a) The commissioner may suspend a license under this 
        section for a violation of law or rule.  The commissioner may 
        revoke a license: 
           (1) for a violation of law or rule which, in the 
        commissioner's opinion, adversely affects the integrity of 
        gambling in Minnesota; 
           (2) for an intentional false statement in a license 
        application; or 
           (3) if the licensee is the subject of a disciplinary 
        proceeding in another jurisdiction which results in the 
        revocation of a license. 
           A revocation or suspension is a contested case under 
        sections 14.57 to 14.69. 
           (b) The commissioner may summarily suspend a license prior 
        to a contested case hearing if the commissioner determines that 
        a summary suspension is necessary to ensure the integrity of 
        gambling.  A contested case hearing must be held within 20 days 
        of the summary suspension and the administrative law judge must 
        issue a report within 20 days of the close of the hearing 
        record.  The commissioner shall issue a final decision within 30 
        days from receipt of the report of the administrative law judge 
        and subsequent exceptions and argument under section 14.61. (a) 
        The commissioner 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, person in a supervisory or management position of the 
        applicant or licensee, an employee eligible to make sales on 
        behalf of the applicant or licensee, or direct or indirect 
        holder of more than a five percent financial interest in the 
        applicant or licensee: 
           (1) has ever been convicted of a felony, or of 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 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; 
           (6) after demand, has not filed tax returns required by the 
        commissioner of revenue; or 
           (7) had a license or permit revoked or denied by another 
        jurisdiction for a violation of law or rule relating to gambling.
           The commissioner 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 subdivision is applicable to an 
        affiliate of or a direct or indirect holder of more than a five 
        percent financial interest in the applicant or licensee. 
           (b) The commissioner may by order deny, suspend, revoke, 
        refuse to renew a license or premises permit, or censure a 
        licensee or applicant, if the commissioner finds that the order 
        is in the public interest and that the applicant or licensee, or 
        a director, officer, partner, person in a supervisory or 
        management position of the applicant of licensee, or an employee 
        eligible to make sales on behalf of the applicant or licensee: 
           (1) has violated or failed to comply with any provision of 
        chapter 297E, 299L, or 349, or any rule adopted or order issued 
        thereunder; 
           (2) has filed an application for a license that is 
        incomplete in any material respect, or contains a statement 
        that, in light of the circumstances under which it was made, is 
        false, misleading, fraudulent, or a misrepresentation; 
           (3) has made a false statement in a document or report 
        required to be submitted to the director, the commissioner, or 
        the commissioner of revenue, or has made a false statement in a 
        statement made to the director or commissioner; 
           (4) has been convicted of a crime in another jurisdiction 
        that would be a felony if committed in Minnesota; 
           (5) is permanently or temporarily enjoined by any gambling 
        regulatory agency from engaging in or continuing any conduct or 
        practice involving any aspect of gambling; 
           (6) has had a gambling-related license revoked or 
        suspended, or has paid or been required to pay a monetary 
        penalty of $2,500 or more, by a gambling regulator in another 
        state or jurisdiction, or has violated or failed to comply with 
        an order of such a regulator that imposed those actions; 
           (7) has been the subject of any of the following actions by 
        the director or commissioner:  (i) had a license under chapter 
        299L denied, suspended or revoked, (ii) been censured, 
        reprimanded, has paid or been required to pay a monetary penalty 
        or fine, or (iii) has been the subject of any other discipline 
        by the director; 
           (8) has engaged in conduct that is contrary to the public 
        health, welfare, or safety, or to the integrity of gambling; or 
           (9) based on the licensee's past activities or criminal 
        record, poses a threat to the public interest or to the 
        effective regulation and control of gambling, or creates or 
        enhances the danger of unsuitable, unfair, or illegal practices, 
        methods, and activities in the conduct of gambling or the 
        carrying on of the business and financial arrangements 
        incidental to the conduct of gambling. 
           Subd. 8a.  [CIVIL PENALTIES.] The commissioner may impose a 
        civil penalty not to exceed $500 per violation on a person who 
        has violated this chapter, or any rule adopted or order issued 
        under this chapter, unless a different penalty is specified. 
           Subd. 8b.  [SHOW CAUSE ORDERS.] (a) If the commissioner 
        determines that one of the conditions listed in subdivision 8 
        exists, or that a licensee is no longer conducting business in 
        the manner required by subdivision 2a, the commissioner may 
        issue an order requiring a person to show cause why any or all 
        of the following should not occur:  (1) the license be revoked 
        or suspended, (2) the licensee be censured, (3) a civil penalty 
        be imposed or (4) corrective action be taken. 
           (b) The order must give reasonable notice of the time and 
        place for hearing on the matter, and must state the reasons for 
        the entry of the order.  The commissioner may by order summarily 
        suspend a license pending final determination of any order to 
        show cause.  If a license is suspended pending final 
        determination of an order to show cause, a hearing on the merits 
        must be held within 30 days of the issuance of the order of 
        suspension.  All hearings must be conducted in accordance with 
        sections 14.57 to 14.69 of the administrative procedure act. 
           (c) After the hearing the commissioner must enter an order 
        disposing of the matter as the facts require.  If the licensee 
        fails to appear at a hearing after being notified of the 
        hearing, the person is deemed in default and the proceeding may 
        be determined against the person on consideration of the order 
        to show cause, the allegations of which are deemed to be true. 
           Subd. 8c.  [APPLICATIONS; RENEWALS.] (a) When it appears to 
        the commissioner that a license application or renewal should be 
        denied under subdivision 8, the commissioner must promptly give 
        to the applicant a written notice of the denial.  The notice 
        must state the grounds for the denial and give reasonable notice 
        of the rights of the applicant to request a hearing.  A hearing 
        must be held not later than 30 days after the request for the 
        hearing is received by the commissioner, unless the applicant 
        and the commissioner agree that the hearing may be held at a 
        later date.  If no hearing is requested within 30 days of the 
        service of the notice, the denial becomes final.  All hearings 
        under this subdivision must be conducted in accordance with 
        sections 14.57 to 14.69 of the administrative procedure act. 
           (b) After the hearing, the commissioner shall enter an 
        order making such disposition as the facts require.  If the 
        applicant fails to appear at a hearing after being notified of 
        the hearing, the applicant is deemed in default and the 
        proceeding may be determined against the applicant on 
        consideration of the notice denying application or renewal, the 
        allegations of which are deemed to be true.  All fees 
        accompanying the initial or renewal application are considered 
        earned and are not refundable. 
           Subd. 8d.  [ACTIONS AGAINST LAPSED LICENSE.] If a license 
        lapses, is surrendered, withdrawn, terminated, or otherwise 
        becomes ineffective, the commissioner may institute a proceeding 
        under this subdivision within two years after the license was 
        last effective and enter a revocation or suspension order as of 
        the last day on which the license was in effect, or impose a 
        civil penalty as provided in subdivision 8a. 
           Subd. 8e.  [NOTIFICATION OF ACTIONS TAKEN BY OTHER 
        STATE.] A licensee under this section must notify the 
        commissioner within 30 days of the action whenever any of the 
        actions listed in subdivision 8, paragraph (b), clause (6) have 
        been taken against the licensee in another state or jurisdiction.
           Subd. 9.  [REQUIRED INFORMATION.] A person to whom a 
        license is issued under this section shall provide, in a manner 
        prescribed by the commissioner, information required by the 
        commissioner relating to the shipment and sale of gambling 
        devices. 
           Subd. 10.  [TRANSPORTATION OF GAMBLING DEVICES.] In 
        addition to the requirements of this section, the transportation 
        of gambling devices into Minnesota must be in compliance with 
        United States Code, title 15, sections 1171 to 1177, as amended. 
           Subd. 11.  [INSPECTION.] The commissioner, director, and 
        employees of the division may inspect the business premises of a 
        licensee under this section. 
           Sec. 10.  Minnesota Statutes 1992, section 609.755, is 
        amended to read: 
           609.755 [ACTS OF OR RELATING TO GAMBLING.] 
           Whoever does any of the following is guilty of a 
        misdemeanor: 
           (1) makes a bet; 
           (2) sells or transfers a chance to participate in a 
        lottery; 
           (3) disseminates information about a lottery, except a 
        lottery conducted by an adjoining state, with intent to 
        encourage participation therein; 
           (4) permits a structure or location owned or occupied by 
        the actor or under the actor's control to be used as a gambling 
        place; or 
           (5) operates except where authorized by statute, possesses 
        a gambling device.  
           Clause (5) does not prohibit operation possession of a 
        gambling device in a person's dwelling for amusement purposes in 
        a manner that does not afford players an opportunity to obtain 
        anything of value. 
           Sec. 11.  [REPEALER.] 
           Minnesota Statutes 1992, sections 299L.04 and 299L.07, 
        subdivision 7, are repealed. 
           Sec. 12.  [EFFECTIVE DATE.] 
           Section 10 is effective August 1, 1994, and applies to 
        crimes committed on and after that date. 
                                   ARTICLE 5
                           LAWFUL GAMBLING REGULATION
           Section 1.  Minnesota Statutes 1992, section 349.12, 
        subdivision 1, is amended to read: 
           Subdivision 1.  As used in sections 349.11 to 349.22 349.23 
        the following terms in this section have the meanings given them.
           Sec. 2.  Minnesota Statutes 1992, section 349.12, 
        subdivision 3a, is amended to read: 
           Subd. 3a.  [ALLOWABLE EXPENSE.] "Allowable expense" 
        means an expense directly related to the conduct of lawful 
        gambling the percentage of the total cost incurred by the 
        organization in the purchase of any good, service, or other item 
        which corresponds to the proportion of the total actual use of 
        the good, service, or other item that is directly related to 
        conduct of lawful gambling.  Allowable expense includes the 
        advertising of the conduct of lawful gambling, provided that the 
        amount expended does not exceed five percent of the annual gross 
        profits of the organization or $5,000 per year per organization, 
        whichever is less.  The board may adopt rules to regulate the 
        content of the advertising to ensure that the content is 
        consistent with the public welfare. 
           Sec. 3.  Minnesota Statutes 1992, section 349.12, 
        subdivision 4, is amended to read: 
           Subd. 4.  [BINGO.] "Bingo" means a game where each player 
        has a bingo hard card or board bingo paper sheet, for which a 
        consideration has been paid, and played in accordance with this 
        chapter and with rules of the board for the conduct of 
        bingo.  containing five horizontal rows of spaces, with each row 
        except the central one containing five figures.  The central row 
        has four figures with the word "free" marked in the center space 
        thereof.  Bingo also includes games which are as described in 
        this subdivision except for the use of cards where the figures 
        are not preprinted but are filled in by the players.  A player 
        wins a game of bingo by completing a preannounced combination of 
        spaces or, in the absence of a preannouncement of a combination 
        of spaces, any combination of five spaces in a row, either 
        vertical, horizontal or diagonal.  
           Sec. 4.  Minnesota Statutes 1992, section 349.12, 
        subdivision 8, is amended to read: 
           Subd. 8.  [CHECKER.] "Checker" means a person who records 
        the number of bingo hard cards purchased and played during each 
        game and records the prizes awarded to the recorded hard cards, 
        but does not collect the payment for the hard cards. 
           Sec. 5.  Minnesota Statutes 1992, section 349.12, 
        subdivision 11, is amended to read: 
           Subd. 11.  [DISTRIBUTOR.] "Distributor" is a person who 
        sells gambling equipment for use within the state to licensed 
        organizations, or to organizations conducting excluded or exempt 
        activities under section 349.166, or to other distributors. 
           Sec. 6.  Minnesota Statutes 1992, section 349.12, 
        subdivision 16, is amended to read: 
           Subd. 16.  [FLARE.] "Flare" is the posted display, with 
        registration stamp affixed or bar code imprinted or affixed, 
        that sets forth the rules of a particular game of pull-tabs or 
        tipboards and that is associated with a specific deal of 
        pull-tabs or grouping of tipboards. 
           Sec. 7.  Minnesota Statutes 1992, section 349.12, 
        subdivision 18, is amended to read: 
           Subd. 18.  [GAMBLING EQUIPMENT.] "Gambling equipment" 
        means:  bingo hard cards or paper sheets, devices for selecting 
        bingo numbers, pull-tabs, jar tickets, paddlewheels, and 
        paddlewheel tables, paddletickets, paddleticket cards, tipboards 
        , tipboard tickets, and pull-tab dispensing devices.  
           Sec. 8.  Minnesota Statutes 1992, section 349.12, 
        subdivision 19, is amended to read: 
           Subd. 19.  [GAMBLING MANAGER.] "Gambling manager" means a 
        person who has paid all dues to an organization and has been 
        a an active member of the organization for at least two years 
        and has been designated by the organization to supervise lawful 
        gambling conducted by it. 
           Sec. 9.  Minnesota Statutes 1992, section 349.12, 
        subdivision 21, is amended to read: 
           Subd. 21.  [GROSS RECEIPTS.] "Gross receipts" means all 
        receipts derived from lawful gambling activity including, but 
        not limited to, the following items: 
           (1) gross sales of bingo hard cards and paper sheets before 
        reduction for prizes, expenses, shortages, free plays, or any 
        other charges or offsets; 
           (2) the ideal gross of pull-tab and tipboard deals or games 
        less the value of unsold and defective tickets and before 
        reduction for prizes, expenses, shortages, free plays, or any 
        other charges or offsets; 
           (3) gross sales of raffle tickets and paddletickets before 
        reduction for prizes, expenses, shortages, free plays, or any 
        other charges or offsets; 
           (4) admission, commission, cover, or other charges imposed 
        on participants in lawful gambling activity as a condition for 
        or cost of participation; and 
           (5) interest, dividends, annuities, profit from 
        transactions, or other income derived from the accumulation or 
        use of gambling proceeds. 
           Gross receipts does not include proceeds from rental under 
        section 349.164 or 349.18, subdivision 3, for duly licensed 
        bingo hall lessors. 
           Sec. 10.  Minnesota Statutes 1992, section 349.12, 
        subdivision 23, is amended to read: 
           Subd. 23.  [IDEAL NET.] "Ideal net" means the pull-tab or 
        tipboard deal's ideal gross, as defined under subdivision 19 22, 
        less the total predetermined prize amounts available to be paid 
        out.  When the prize is not entirely a monetary one, the ideal 
        net is 50 percent of the ideal gross. 
           Sec. 11.  Minnesota Statutes 1993 Supplement, 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) 
        organization, provided that the organization and expenditure or 
        contribution are in conformity with standards prescribed by the 
        board under section 349.154; 
           (2) a contribution to an individual or family suffering 
        from poverty, homelessness, or physical or mental disability, 
        which is used to relieve the effects of that poverty, 
        homelessness, or disability; 
           (3) a contribution to an individual for treatment for 
        delayed posttraumatic stress syndrome or a contribution to a 
        recognized program for the treatment of compulsive gambling on 
        behalf of an individual who is a compulsive gambler; 
           (4) a contribution to or expenditure on a public or private 
        nonprofit educational institution registered with or accredited 
        by this state or any other state; 
           (5) a contribution to a scholarship fund for defraying the 
        cost of education to individuals where the funds are awarded 
        through an open and fair selection process; 
           (6) activities by an organization or a government entity 
        which recognize humanitarian or military service to the United 
        States, the state of Minnesota, or a community, subject to rules 
        of the board, provided that the rules must not include mileage 
        reimbursements in the computation of the per occasion 
        reimbursement limit and must impose no aggregate annual limit on 
        the amount of reasonable and necessary expenditures made to 
        support: 
           (i) members of a military marching or colorguard unit for 
        activities conducted within the state; or 
           (ii) members of an organization solely for services 
        performed by the members at funeral 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, as evidenced by (i) provision of equipment and 
        supplies, (ii) scheduling of activities, including games and 
        practice times, (iii) supply and assignment of coaches or other 
        adult supervisors, (iv) provision and availability of support 
        facilities, and (v) whether the opportunity to participate 
        reflects each gender's demonstrated interest in the activity, 
        provided that nothing in this clause prohibits a contribution to 
        or expenditure on an educational institution or other entity 
        that is excepted from the prohibition against discrimination 
        based on sex contained in the Higher Education Act Amendments of 
        1976, United States Code, title 20, section 1681 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, and the tax taxes imposed by section 349.212 
        297E.02, subdivisions 1 and, 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 
        licensed permitted gambling premises wholly owned by the 
        licensed organization paying the taxes, not to exceed: 
           (i) the amount which an organization may expend under board 
        rule on rent for premises used for bingo; or 
           (ii) $15,000 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; or 
           (12) payment of one-half of the reasonable costs of an 
        audit required in section 349.19, subdivision 9; 
           (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; or 
           (14) expenditures, approved by the commissioner of natural 
        resources, by an organization for grooming and maintaining 
        snowmobile trails that are (1) grant-in-aid trails established 
        under section 116J.406, or (2) other trails open to public use, 
        including purchase or lease of equipment for this purpose. 
           (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, except as provided in clause (6), 
        unless the board has first specifically authorized the 
        expenditures after finding that (i) the real property or capital 
        assets will be used exclusively for one or more of the purposes 
        in paragraph (a); (ii) with respect to expenditures for repair 
        or maintenance only, that the property is or will be used 
        extensively as a meeting place or event location by other 
        nonprofit organizations or community or service groups and that 
        no rental fee is charged for the use; (iii) with respect to 
        expenditures, including a mortgage payment or other debt service 
        payment, for erection or acquisition only, that the erection or 
        acquisition is necessary to replace with a comparable building, 
        a building owned by the organization and destroyed or made 
        uninhabitable by fire or natural disaster, provided that the 
        expenditure may be only for that part of the replacement cost 
        not reimbursed by insurance; or (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; 
           (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) the erection, acquisition, improvement, or expansion of 
        real property or capital assets which will be used for one or 
        more of the purposes in paragraph (a), clause (7), unless the 
        organization making the expenditures notifies the board at least 
        15 days before making the expenditure; or 
           (7) a contribution to a statutory or home rule charter 
        city, county, or town by a licensed organization with the 
        knowledge that the governmental unit intends to use the 
        contribution for a pension or retirement fund. 
           Sec. 12.  Minnesota Statutes 1992, section 349.12, is 
        amended by adding a subdivision to read: 
           Subd. 26a.  [MASTER FLARE.] "Master flare" is the posted 
        display, with registration stamp affixed or bar code imprinted 
        or affixed, that is used in conjunction with sealed groupings of 
        100 sequentially numbered paddleticket cards. 
           Sec. 13.  Minnesota Statutes 1992, section 349.12, is 
        amended by adding a subdivision to read: 
           Subd. 28a.  [PADDLETICKET.] "Paddleticket" means a 
        preprinted ticket that can be used to place wagers on the spin 
        of a paddlewheel. 
           Sec. 14.  Minnesota Statutes 1992, section 349.12, is 
        amended by adding a subdivision to read: 
           Subd. 28b.  [PADDLETICKET CARD.] "Paddleticket card" means 
        a card to which detachable paddletickets are attached. 
           Sec. 15.  Minnesota Statutes 1992, section 349.12, is 
        amended by adding a subdivision to read: 
           Subd. 28c.  [PADDLETICKET CARD NUMBER.] "Paddleticket card 
        number" means the unique serial number preprinted by the 
        manufacturer on the stub of a paddleticket card and the 
        paddletickets attached to the card. 
           Sec. 16.  Minnesota Statutes 1992, section 349.12, 
        subdivision 30, is amended to read: 
           Subd. 30.  [PERSON.] "Person" is an individual, 
        organization, firm, association, partnership, limited liability 
        company, corporation, trustee, or legal representative. 
           Sec. 17.  Minnesota Statutes 1992, section 349.12, 
        subdivision 32, is amended to read: 
           Subd. 32.  [PULL-TAB.] "Pull-tab" means a single folded or 
        banded ticket or a multi-ply card with a perforated break-open 
        tabs, the face of which is initially covered to conceal one or 
        more numbers or symbols, where one or more of each set of 
        tickets or cards has been designated in advance as a 
        winner.  "Pull-tab" also includes a ticket sold in a gambling 
        device known as a ticket jar.  
           Sec. 18.  Minnesota Statutes 1992, section 349.12, is 
        amended by adding a subdivision to read: 
           Subd. 32a.  [PULL-TAB DISPENSING DEVICE.] "Pull-tab 
        dispensing device" means a mechanical device that dispenses 
        paper pull-tabs and has no additional function as an amusement 
        or gambling device. 
           Sec. 19.  Minnesota Statutes 1992, section 349.12, 
        subdivision 34, is amended to read: 
           Subd. 34.  "Tipboard" means a board, placard or other 
        device marked off in a grid or columns, in which each section 
        contains a hidden number or numbers, or other symbol, which 
        determines the winning chances containing a seal that conceals 
        the winning number or symbol, and that serves as the game flare 
        for a tipboard game. 
           Sec. 20.  Minnesota Statutes 1992, section 349.12, is 
        amended by adding a subdivision to read: 
           Subd. 35.  [TIPBOARD TICKET.] "Tipboard ticket" is a single 
        folded or banded ticket, or multi-ply card, the face of which is 
        initially covered or otherwise hidden from view to conceal a 
        number, symbol, or set of symbols, some of which have been 
        designated in advance and at random as prize winners. 
           Sec. 21.  Minnesota Statutes 1992, section 349.13, is 
        amended to read: 
           349.13 [LAWFUL GAMBLING.] 
           Lawful gambling is not a lottery or gambling within the 
        meaning of sections 609.75 to 609.76 if it is conducted under 
        this chapter.  A pull-tab dispensing device permitted by board 
        rule is not a gambling device within the meaning of sections 
        609.75 to 609.76 and chapter 299L. 
           Sec. 22.  Minnesota Statutes 1992, section 349.15, is 
        amended to read: 
           349.15 [USE OF GROSS PROFITS.] 
           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 regular monthly meeting of 
        the conducting organization organization's membership.  Provided 
        that no more than 60 percent of the gross profit less the tax 
        imposed under section 349.212, subdivision 1, from bingo, and no 
        more than 50 percent of the gross profit from other forms of 
        lawful gambling, may be expended for allowable expenses related 
        to lawful gambling.  
           Subd. 2.  [CASH SHORTAGES.] In computing gross profit to 
        determine maximum amounts which may be expended for allowable 
        expenses under subdivision 1, an organization may not reduce its 
        gross receipts by any cash shortages.  An organization may 
        report cash shortages to the board only as an allowable 
        expense.  An organization may not report cash shortages in any 
        reporting period that in total exceed the following percentages 
        of the organization's gross receipts from lawful gambling for 
        that period:  until August 1, 1995, four-tenths of one percent; 
        and on and after August 1, 1995, three-tenths of one percent. 
           Sec. 23.  Minnesota Statutes 1992, 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, bingo 
        halls, manufacturers, 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 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 impose civil penalties of not more than $500 per 
        violation on organizations, distributors, manufacturers, bingo 
        halls, and gambling managers for failure to comply with any 
        provision of this chapter or any rule or order of the board; 
           (10) to issue premises permits to organizations licensed to 
        conduct lawful gambling; 
           (11) to delegate to the director the authority to issue or 
        deny licenses license and premises permits permit applications 
        and renewals under criteria established by the board; 
           (12) to suspend or revoke licenses and premises permits of 
        organizations, distributors, manufacturers, bingo halls, or 
        gambling managers as provided in this chapter; 
           (13) to register employees of organizations licensed to 
        conduct lawful gambling; 
           (14) to require fingerprints from persons determined by 
        board rule to be subject to fingerprinting; and 
           (15) 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) to order organizations, distributors, manufacturers, 
        bingo halls, and gambling managers to take corrective actions; 
        and 
           (15) (17) 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, manufacturer, bingo hall licensee, 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 operator licensee, gambling manager, or 
        manufacturer assessed a civil penalty under this paragraph may 
        request a hearing before the board.  Hearings conducted on 
        appeals of imposition of penalties Appeals of citations imposing 
        a civil penalty are not subject to the provisions of the 
        administrative procedure act.  
           (c) All fees and penalties received by the board must be 
        deposited in the general fund. 
           Sec. 24.  Minnesota Statutes 1992, section 349.151, is 
        amended by adding a subdivision 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; 
           (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 persons 18 
        years or older; and 
           (3) must prohibit the use of pull-tab dispensing devices at 
        any licensed premises where pull-tabs are sold other than 
        through a pull-tab dispensing device by an employee of the 
        organization who is also the lessor or an employee of the lessor.
           Sec. 25.  Minnesota Statutes 1992, section 349.151, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [ORDERS.] The board may order any person subject 
        to its jurisdiction who has violated this chapter or a board 
        rule or order to take appropriate action to correct the 
        violation. 
           Sec. 26.  Minnesota Statutes 1992, section 349.151, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [CRIMINAL HISTORY.] The board may request the 
        director of gambling enforcement to assist in investigating the 
        background of an applicant for a license under this chapter, and 
        the director of gambling enforcement may bill the license 
        applicant for the cost thereof.  The board has access to all 
        criminal history data compiled by the division of gambling 
        enforcement on licensees and applicants. 
           Sec. 27.  Minnesota Statutes 1992, section 349.151, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [RESPONSE TO REQUESTS.] An applicant, licensee, 
        or other person subject to the board's jurisdiction must: 
           (1) comply with requests for information or documents, or 
        other requests, from the board or director within the time 
        specified in the request or, if no time is specified, within 30 
        days of the date the board or director mails the request; and 
           (2) appear before the board or director when requested to 
        do so, and must bring documents or materials requested by the 
        board or director. 
           Sec. 28.  Minnesota Statutes 1992, section 349.151, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [PRODUCTION OF EVIDENCE.] For the purpose of any 
        investigation, inspection, compliance review, audit, or 
        proceeding under this chapter, the board or director may (1) 
        administer oaths and affirmations, (2) subpoena witnesses and 
        compel their attendance, (3) take evidence, and (4) require the 
        production of books, papers, correspondence, memoranda, 
        agreements, or other documents or records that the board or 
        director determines are relevant or material to the inquiry. 
           Sec. 29.  Minnesota Statutes 1992, section 349.151, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [COURT ORDERS.] In the event of a refusal to 
        appear by, or refusal to obey a subpoena issued to, any person 
        under this chapter, the district court may on application of the 
        board or director issue to the person an order directing the 
        person to appear before the board or director, and to produce 
        documentary evidence if so ordered or to give evidence relating 
        to the matter under investigation or in question.  Failure to 
        obey such an order may be punished by the court as contempt of 
        court. 
           Sec. 30.  Minnesota Statutes 1992, section 349.151, is 
        amended by adding a subdivision to read: 
           Subd. 12.  [ACCESS.] The board or director has free access 
        during normal business hours to the offices and places of 
        business of licensees or organizations conducting excluded or 
        exempt gambling, and to all books, accounts, papers, records, 
        files, safes, and vaults maintained in the places of business or 
        required to be maintained. 
           Sec. 31.  Minnesota Statutes 1992, section 349.151, is 
        amended by adding a subdivision to read: 
           Subd. 13.  [RULEMAKING.] In addition to any authority to 
        adopt rules specifically authorized under this chapter, the 
        board may adopt, amend, or repeal rules, including emergency 
        rules, under chapter 14, when necessary or proper in discharging 
        the board's powers and duties. 
           Sec. 32.  Minnesota Statutes 1992, section 349.152, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DUTIES OF THE 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; 
           (4) to issue licenses and premises permits as authorized by 
        the board; 
           (5) to issue cease and desist orders; 
           (6) to make recommendations to the board on license 
        issuance, denial, censure, suspension and revocation, and civil 
        penalties, and corrective action the board imposes; and 
           (7) to ensure that board rules, policy, and decisions are 
        adequately and accurately conveyed to the board's licensees; 
           (8) to conduct investigations, inspections, compliance 
        reviews, and audits under this chapter; and 
           (9) 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. 33.  Minnesota Statutes 1992, section 349.152, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CEASE AND DESIST ORDERS.] (a) Whenever it 
        appears to the director that any person has engaged or is about 
        to engage in any act or practice constituting a violation of 
        this chapter or any board rule or order: (a) the director has 
        the power to may issue and cause to be served upon the person an 
        order requiring the person to cease and desist from violations 
        of this chapter or board rule or order.  The order must give 
        reasonable notice of the rights of the person to request a 
        hearing and must state the reason for the entry of the 
        order.  Unless otherwise agreed between the parties, a hearing 
        shall be held not later than seven days after the request for 
        the hearing is received by the board after which and within 20 
        days of the date of the hearing after the receipt of the 
        administrative law judge's report and subsequent exceptions and 
        argument the board shall issue an order vacating the cease and 
        desist order, modifying it, or making it permanent as the facts 
        require.  If no hearing is requested within 30 days of the 
        service of the order, the order becomes final and remains in 
        effect until modified or vacated by the board or director.  All 
        hearings shall be conducted in accordance with the provisions of 
        chapter 14.  If the person to whom a cease and desist order is 
        issued fails to appear at the hearing after being duly notified, 
        the person shall be deemed in default, and the proceeding may be 
        determined against the person upon consideration of the cease 
        and desist order, the allegations of which may be deemed to be 
        true.  
           (b) Whenever it appears to the board that any person has 
        engaged or is about to engage in any act or practice that 
        violates this chapter or any board rule or order, the board may 
        bring an action in the district court in the appropriate county 
        to enjoin the acts or practices and to enforce compliance with 
        this chapter or any board rule or order and may refer the matter 
        to the attorney general.  Upon a proper showing, a permanent or 
        temporary injunction, restraining order, or writ of mandamus 
        shall be granted.  The court may not require the board to post a 
        bond. 
           Sec. 34.  Minnesota Statutes 1992, 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 a bingo hall under section 349.164.  
           (b) A member of the board, the director, or an employee of 
        the board may not participate in the conducting of lawful 
        gambling. 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 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, 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. 35.  Minnesota Statutes 1992, section 349.154, is 
        amended to read: 
           349.154 [EXPENDITURE OF NET PROFITS FROM LAWFUL GAMBLING.] 
           Subdivision 1.  [STANDARDS FOR CERTAIN ORGANIZATIONS.] The 
        board shall by rule prescribe standards that must be met by any 
        licensed organization that is a 501(c)(3) organization.  The 
        standards must provide: 
           (1) operating standards for the organization, including a 
        maximum percentage or percentages of the organization's total 
        expenditures that may be expended for the organization's 
        administration and operation; and 
           (2) standards for any expenditure by the organization of 
        net profits from lawful gambling, including a requirement that 
        the expenditure be related to the primary purpose of the 
        organization. 
           Subd. 2.  [NET PROFIT REPORTS.] (a) Each licensed 
        organization must report monthly to the board on a form 
        prescribed by the board each expenditure and contribution of net 
        profits from lawful gambling.  The reports must provide for each 
        expenditure or contribution: 
           (1) the name, address, and telephone number of the 
        recipient of the expenditure or contribution; 
           (2) the date the contribution was approved by the 
        organization; 
           (3) the date, amount, and check number of the expenditure 
        or contribution; and 
           (4) a brief description of how the expenditure or 
        contribution meets one or more of the purposes in section 
        349.12, subdivision 25, paragraph (a); and 
           (5) in the case of expenditures authorized under section 
        349.12, subdivision 25, paragraph (a), clause (7), whether the 
        expenditure is for a facility or activity that primarily 
        benefits male or female participants. 
           (b) The board shall provide make available to the 
        commissioners of revenue and public safety copies of each report 
        reports received under this subdivision and requested by them. 
           Subd. 3a.  [EXPENDITURES FOR RECREATIONAL, COMMUNITY, AND 
        ATHLETIC PROGRAMS.] An organization that makes a greater 
        percentage of its lawful purpose expenditures under section 
        349.12, subdivision 25, paragraph (a), clause (7) on facilities 
        or activities for one gender rather than another may not deny a 
        reasonable request for funding of a facility or activity for the 
        underrepresented gender if the request is for funding for a 
        facility or activity that is a lawful purpose under that 
        clause.  An applicant for funding for a facility or activity for 
        an underrepresented gender who believes that an application for 
        funding was denied in violation of this subdivision may file a 
        complaint with the board.  The board shall prescribe a form for 
        the complaint and shall furnish a copy of the form to any 
        requester.  The board shall investigate each complaint filed 
        and, if the board finds that the organization against which the 
        complaint was filed has violated this subdivision, shall issue 
        an order directing the organization to take such corrective 
        action as the board deems necessary to bring the organization 
        into compliance with this subdivision. 
           Sec. 36.  [349.155] [LICENSES; LICENSE ACTIONS.] 
           Subdivision 1.  [FORMS.] All applications for a license 
        must be on a form prescribed by the board.  In the case of 
        applications by an organization the board may require the 
        organization to submit a copy of its articles of incorporation 
        and other documents the board deems necessary. 
           Subd. 2.  [INVESTIGATION FEE.] In addition to initial and 
        renewal application fees, the board may charge license and 
        renewal applicants a fee to cover the costs of background 
        investigations conducted under this chapter. 
           Subd. 3.  [MANDATORY DISQUALIFICATIONS.] (a) In the case of 
        licenses for manufacturers, distributors, bingo halls, 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, person in a supervisory or management 
        position of the applicant or licensee, or an employee eligible 
        to make sales on behalf 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 is 
        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; 
           (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. 
           Subd. 4.  [LICENSE REVOCATION, SUSPENSION, DENIAL; 
        CENSURE.] The board may by order (i) deny, suspend, revoke, or 
        refuse to renew a license or premises permit, or (ii) censure a 
        licensee or applicant, if it finds that the order is in the 
        public interest and that the applicant or licensee, or a 
        director, officer, partner, governor, person in a supervisory or 
        management position of the applicant or licensee, an employee 
        eligible to make sales on behalf of the applicant or licensee, 
        or direct or indirect holder of more than a five percent 
        financial interest in the applicant or licensee: 
           (1) has violated or failed to comply with any provision of 
        chapter 297E, 299L, or 349, or any rule adopted or order issued 
        thereunder; 
           (2) has filed an application for a license that is 
        incomplete in any material respect, or contains a statement 
        that, in light of the circumstances under which it was made, is 
        false, misleading, fraudulent, or a misrepresentation; 
           (3) has made a false statement in a document or report 
        required to be submitted to the board or the commissioner of 
        revenue, or has made a false statement to the board, the 
        compliance review group, or the director; 
           (4) has been convicted of a crime in another jurisdiction 
        that would be a felony if committed in Minnesota; 
           (5) is permanently or temporarily enjoined by any gambling 
        regulatory agency from engaging in or continuing any conduct or 
        practice involving any aspect of gambling; 
           (6) has had a gambling-related license revoked or 
        suspended, or has paid or been required to pay a monetary 
        penalty of $2,500 or more, by a gambling regulator in another 
        state or jurisdiction; 
           (7) has been the subject of any of the following actions by 
        the director of gambling enforcement or commissioner of public 
        safety:  (i) had a license under chapter 299L denied, suspended 
        or revoked, (ii) been censured, reprimanded, has paid or been 
        required to pay a monetary penalty or fine, or (iii) has been 
        the subject of any other discipline by the director or 
        commissioner; or 
           (8) has engaged in conduct that is contrary to the public 
        health, welfare, or safety, or to the integrity of gambling; or 
           (9) based on past activities or criminal record poses a 
        threat to the public interest or to the effective regulation and 
        control of gambling, or creates or enhances the dangers of 
        unsuitable, unfair, or illegal practices, methods, and 
        activities in the conduct of gambling or the carrying on of the 
        business and financial arrangements incidental to the conduct of 
        gambling. 
           Subd. 5.  [CONTESTED CASE.] When the board, or director if 
        the director is authorized to act on behalf of the board, 
        determines that a license should be revoked, suspended or a 
        licensee be censured under subdivision 3 or 4, or a civil 
        penalty be imposed or a person be required to take corrective 
        action, the board or director shall issue an order initiating a 
        contested case hearing.  Hearings under this subdivision must be 
        conducted in accordance with chapter 14. 
           Subd. 6.  [NOTICE OF DENIAL.] When the board, or director 
        if authorized to act on behalf of the board, determines that a 
        license or premises permit application or renewal should be 
        denied under subdivision 3 or 4, the board or director shall 
        promptly give a written notice to the licensee or applicant 
        stating ground for the action and giving reasonable notice of 
        the rights of the licensee or applicant to request a hearing.  A 
        hearing must be held not later than 30 days after the board 
        receives the request for the hearing, unless the licensee or 
        applicant and the board agree on a later date.  If no hearing is 
        requested within 30 days of the service of the notice, the 
        denial becomes final.  Hearings under this subdivision must be 
        conducted in accordance with chapter 14.  After the hearing the 
        board may enter an order making such disposition as the facts 
        require.  If the applicant fails to appear at the hearing after 
        having been notified of it under this subdivision, the applicant 
        is considered in default and the proceeding may be determined 
        against the person on consideration of the written notice of 
        denial, the allegations of which may be considered to be true.  
        All fees accompanying the license or renewal application are 
        considered earned and are not refundable. 
           Subd. 7.  [LAPSED LICENSES.] If a license lapses, or is 
        surrendered, withdrawn, terminated, or otherwise becomes 
        ineffective, the board may (1) institute a proceeding under this 
        section within two years after the last date on which the 
        license was effective, (2) enter a revocation or suspension 
        order as of the date on which the license was effective, (3) 
        impose a civil penalty as provided under section 349.151, 
        subdivision 4, or (4) order corrective action as provided in 
        section 349.151, subdivision 7. 
           Subd. 8.  [ACTIONS IN ANOTHER STATE.] A licensee under this 
        chapter must notify the board within 30 days of the action 
        whenever any of the actions listed in subdivision 4, clause (6) 
        have been taken against the licensee in another state or 
        jurisdiction. 
           Sec. 37.  Minnesota Statutes 1992, 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 must not have as an officer or member 
        of the governing body any person who, within the five years 
        before the issuance of the license, has been convicted in a 
        federal or state court of a felony or gross misdemeanor or who 
        has ever been convicted of a crime involving gambling or who has 
        had a license issued by the board or director revoked for a 
        violation of law or board rule. 
           (f) The organization has identified in its license 
        application the lawful purposes on which it proposes to expend 
        net profits from lawful gambling. 
           (g) (f) The organization has identified on its license 
        application a gambling manager and certifies that the manager is 
        qualified under this chapter. 
           (h) (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 349.212, subdivision 6. 
           Sec. 38.  Minnesota Statutes 1992, section 349.16, 
        subdivision 3, is amended to read: 
           Subd. 3.  [TERM OF LICENSE:  SUSPENSION AND REVOCATION.] 
        Licenses issued under this section are valid for two years and 
        may be suspended by the board for a violation of law or board 
        rule or revoked for what the board determines to be a willful 
        violation of law or board rule.  A revocation or suspension is a 
        contested case under sections 14.57 to 14.69 of the 
        administrative procedure act.  
           Sec. 39.  Minnesota Statutes 1992, section 349.16, 
        subdivision 6, is amended to read: 
           Subd. 6.  [FEES LICENSE CLASSIFICATIONS.] The board may 
        issue four classes of organization licenses:  a class A license 
        authorizing all forms of lawful gambling; a class B license 
        authorizing all forms of lawful gambling except bingo; a class C 
        license authorizing bingo only, or bingo and pull-tabs if the 
        gross receipts for any combination of bingo and pull-tabs does 
        not exceed $50,000 per year; and a class D license authorizing 
        raffles only.  The board shall not charge a fee for an 
        organization license. 
           Sec. 40.  Minnesota Statutes 1992, 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 license to conduct 
        lawful gambling premises permit or operate 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. 41.  Minnesota Statutes 1992, section 349.16, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [LICENSE RENEWALS; NOTICE.] The board may not 
        deny or delay the renewal of a license under this section, a 
        premises permit, or a gambling manager's license under section 
        349.167 because of the licensee's failure to submit a complete 
        application by a specified date before the expiration of the 
        license or permit, unless the board has first (1) sent the 
        applicant by registered mail a written notice of the incomplete 
        application, and (2) given the applicant at least five business 
        days from the date of receipt of the notice to submit a complete 
        application, or the information necessary to complete the 
        application. 
           Sec. 42.  Minnesota Statutes 1992, section 349.161, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PROHIBITED ACTS; LICENSES REQUIRED.] No 
        person may:  
           (1) sell, offer for sale, or furnish gambling equipment for 
        use within the state for gambling purposes, other than for 
        lawful gambling exempt or excluded from licensing, except to an 
        organization licensed for lawful gambling; 
           (2) sell, offer for sale, or furnish gambling equipment for 
        lawful gambling use within the state without having obtained a 
        distributor license under this section; 
           (3) sell, offer for sale, or furnish gambling equipment for 
        use within the state that is not purchased or obtained from a 
        manufacturer or distributor licensed under this chapter; or 
           (4) sell, offer for sale, or furnish gambling equipment for 
        use within the state that has the same serial number as another 
        item of gambling equipment of the same type sold or offered for 
        sale or furnished for use in the state by that distributor.  
           Sec. 43.  Minnesota Statutes 1992, section 349.161, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PROHIBITION.] (a) No distributor, or 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, or any representative, agent, 
        affiliate, or employee of a distributor, may be: (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 or any representative, agent, affiliate, 
        or employee of a distributor may provide a lessor of gambling 
        premises any compensation, gift, gratuity, premium, or other 
        thing of value. 
           (d) No distributor or any representative, agent, affiliate, 
        or employee of a distributor may participate in any gambling 
        activity at any gambling site or premises where gambling 
        equipment purchased from that distributor is being used in the 
        conduct of lawful gambling. 
           (e) No distributor or any representative, agent, affiliate, 
        or employee of a distributor may alter or modify any gambling 
        equipment, except to add a "last ticket sold" prize sticker. 
           (f) No distributor or any representative, agent, affiliate, 
        or 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) No distributor 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. 
           (h) No distributor 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) No distributor may sell or otherwise provide a pull-tab 
        or tipboard deal with the symbol required by section 349.163, 
        subdivision 5, paragraph (h), visible on the flare to any person 
        other than in Minnesota to a licensed organization or 
        organization exempt from licensing. 
           Sec. 44.  Minnesota Statutes 1992, section 349.162, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [STAMP REQUIRED.] (a) A distributor may not 
        sell, transfer, furnish, or otherwise provide to a person, 
        organization, or distributor, and no person, organization, or 
        distributor 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.  The board shall charge a fee of five cents 
        for each stamp.  Each stamp must bear a registration number 
        assigned by the board.  A distributor or manufacturer is 
        entitled to a refund for unused registration stamps and 
        replacement for registration stamps which are defective or 
        canceled by the distributor or manufacturer. 
           (b) From January 1, 1991, to June 30, 1992, no distributor, 
        organization, or other person may sell a pull-tab which is not 
        clearly marked "For Sale in Minnesota Only." 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) On and after July 1, 1992, no distributor, 
        organization, or other person may sell a pull-tab which is not 
        clearly marked "Manufactured in Minnesota For Sale in Minnesota 
        Only." 
           (d) Paragraphs (b) and (c) do not apply to pull-tabs sold 
        by a distributor to the governing body of an Indian 
        tribe.  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.  Gambling 
        equipment kept in violation of this paragraph is contraband 
        under section 349.2125. 
           Sec. 45.  Minnesota Statutes 1992, section 349.162, 
        subdivision 2, is amended to read: 
           Subd. 2.  [RECORDS REQUIRED.] A distributor must maintain a 
        record of all gambling equipment which it sells to 
        organizations.  The record must include:  
           (1) the identity of the person or firm from whom the 
        distributor purchased the equipment; 
           (2) the registration number of the equipment; 
           (3) the name, address, and license or exempt permit number 
        of the organization to which the sale was made; 
           (4) the date of the sale; 
           (5) the name of the person who ordered the equipment; 
           (6) the name of the person who received the equipment; 
           (7) the type of equipment; 
           (8) the serial number of the equipment; 
           (9) the name, form number, or other identifying information 
        for each game; and 
           (10) in the case of bingo hard cards or paper sheets sold 
        on and after January 1, 1991, the individual number of each card 
        or sheet. 
           The invoice for each sale must be retained for at least 
        3-1/2 years after the sale is completed and a copy of each 
        invoice is to be delivered to the board in the manner and time 
        prescribed by the board.  For purposes of this section, a sale 
        is completed when the gambling equipment is physically delivered 
        to the purchaser.  
           Each distributor must report monthly to the board, in a 
        form the board prescribes, its sales of each type of gambling 
        equipment.  Employees of the board and the division of gambling 
        enforcement may inspect the business premises, books, records, 
        and other documents of a distributor at any reasonable time 
        without notice and without a search warrant.  
           The board may require that a distributor submit the monthly 
        report and invoices required in this subdivision via magnetic 
        media or electronic data transfer. 
           Sec. 46.  Minnesota Statutes 1992, 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. 
           (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 cards paper sheets that does 
        not contain bingo cards paper sheets in numerical order. 
           Sec. 47.  Minnesota Statutes 1992, 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 sales or 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 gambling enforcement as a sales or storage facility 
        of the distributor's 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 sales or storage facility which 
        has been registered with the division of 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. 
           (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 
        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 sales and 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 
        gambling enforcement or, the division of 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.  
           (c) (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 sales or 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. 
           Sec. 48.  Minnesota Statutes 1992, section 349.163, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LICENSE REQUIRED.] No manufacturer of 
        gambling equipment may sell any gambling equipment to any person 
        for use or resale within the state, unless the manufacturer has 
        a current and valid license issued by the board under this 
        section and has satisfied other criteria prescribed by the board 
        by rule. 
           A manufacturer licensed under this section may not also be 
        directly or indirectly licensed as a distributor under section 
        349.161 unless the manufacturer (1) does not manufacture any 
        gambling equipment other than paddlewheels, and (2) was licensed 
        as both a manufacturer and distributor on May 1, 1990. 
           Sec. 49.  Minnesota Statutes 1992, 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 unless the 
        manufacturer is also a licensed distributor; 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;. 
           (3) from January 1, 1991, to June 30, 1992, sell to any 
        person in Minnesota, other than the governing body of an Indian 
        tribe, a pull-tab on which the manufacturer has not clearly 
        printed the words "For Sale in Minnesota Only"; 
           (4) on and after July 1, 1992, sell to any person in 
        Minnesota, other than the governing body of an Indian tribe, a 
        pull-tab on which the manufacturer has not clearly printed the 
        words "Manufactured in Minnesota For Sale In Minnesota Only"; or 
           (5) sell a pull-tab marked as required in clauses (3) and 
        (4) to any person inside or outside the state, including the 
        governing body of an Indian tribe, who is not a licensed 
        distributor. 
           (b) On and after July 1, 1992, all pull-tabs sold by a 
        licensed manufacturer to a person in Minnesota must be 
        manufactured in Minnesota. 
           (c) 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 section 
        349.163, subdivision 5, paragraph (h), imprinted on the flare to 
        any person other than a licensed distributor unless the 
        manufacturer first renders the symbol permanently invisible. 
           Sec. 50.  Minnesota Statutes 1992, section 349.163, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PULL-TAB AND TIPBOARD FLARES.] (a) A 
        manufacturer may not ship or cause to be shipped into this state 
        or sell for use or resale in this state any deal of pull-tabs or 
        tipboards that does not have its own individual flare as 
        required for that deal by this subdivision and rule of the 
        board.  A person other than a manufacturer may not manufacture, 
        alter, modify, or otherwise change a flare for a deal of 
        pull-tabs or tipboards except as allowed by this chapter or 
        board rules. 
           (b) A manufacturer must comply with either paragraphs (c) 
        to (g) or (f) to (j) with respect to pull-tabs and tipboards 
        sold by the manufacturer before January 1, 1995, for use or 
        resale in Minnesota or shipped into or caused to be shipped into 
        Minnesota by the manufacturer before January 1, 1995.  A 
        manufacturer must comply with paragraphs (f) to (j) with respect 
        to pull-tabs and tipboards sold by the manufacturer on and after 
        January 1, 1995, for use or resale in Minnesota or shipped into 
        or caused to be shipped into Minnesota by the manufacturer on 
        and after January 1, 1995.  Paragraphs (c) to (e) expire January 
        1, 1995. 
           (c) The flare of each deal of pull-tabs and tipboards sold 
        by a manufacturer for use or resale in Minnesota must have the 
        Minnesota gambling stamp affixed.  The flare, with the stamp 
        affixed, must be placed inside the wrapping of the deal which 
        the flare describes. 
           (c) (d) Each pull-tab and tipboard flare must bear the 
        following statement printed in letters large enough to be 
        clearly legible: 
           "Pull-tab (or tipboard) purchasers -- This pull-tab (or 
        tipboard) game is not legal in Minnesota unless: 
           -- a Minnesota gambling stamp is affixed to this sheet, and 
           -- the serial number handwritten on the gambling stamp is 
        the same as the serial number printed on this sheet and on the 
        pull-tab (or tipboard) ticket you have purchased." 
           (d) (e) The flare of each pull-tab and tipboard game must 
        bear the serial number of the game, printed in numbers at least 
        one-half inch high. 
           (e) (f) The flare of each pull-tab and tipboard game must 
        be have affixed to or imprinted at the bottom with a bar code 
        that provides: all information required by the commissioner of 
        revenue under section 297E.04, subdivision 2. 
           (1) the name of the game; 
           (2) the serial number of the game; 
           (3) the name of the manufacturer; 
           (4) the number of tickets in the deal; 
           (5) the odds of winning each prize in the deal; and 
           (6) other information the board by rule requires. 
        The serial number included in the bar code must be the same as 
        the serial number of the tickets included in the deal.  A 
        manufacturer who manufactures a deal of pull-tabs must affix to 
        the outside of the box containing that game the same bar code 
        that is affixed to or imprinted at the bottom of a flare for 
        that deal. 
           (f) (g) No person may alter the bar code that appears on 
        the outside of a box containing a deal of pull-tabs and 
        tipboards.  Possession of a box containing a deal of pull-tabs 
        and tipboards that has a bar code different from the bar code of 
        the deal inside the box is prima facie evidence that the 
        possessor has altered the bar code on the box. 
           (h) The flare of each deal of pull-tabs and tipboards sold 
        by a manufacturer for use or resale in Minnesota must have 
        imprinted on it a symbol that is at least one inch high and one 
        inch wide consisting of an outline of the geographic boundaries 
        of Minnesota with the letters "MN" inside the outline.  The 
        flare must be placed inside the wrapping of the deal which the 
        flare describes.  
           (i) Each pull-tab and tipboard flare must bear the 
        following statement printed in letters large enough to be 
        clearly legible: 
           "Pull-tab (or tipboard) purchasers -- This pull-tab (or 
        tipboard) game is not legal in Minnesota unless: 
           -- an outline of Minnesota with letters "MN" inside it is 
        imprinted on this sheet, and 
           -- the serial number imprinted on the bar code at the 
        bottom of this sheet is the same as the serial number on the 
        pull-tab (or tipboard) ticket you have purchased." 
           (j) The flare of each pull-tab and tipboard game must have 
        the serial number of the game imprinted on the bar code at the 
        bottom of the flare in numerals at least one-half inch high. 
           Sec. 51.  Minnesota Statutes 1992, section 349.163, 
        subdivision 6, is amended to read: 
           Subd. 6.  [SAMPLES OF GAMBLING EQUIPMENT.] The board shall 
        require each licensed manufacturer to submit to the board one or 
        more samples of each item of gambling equipment the manufacturer 
        manufactures for sale use or resale in this state.  The board 
        shall inspect and test all the equipment it deems necessary to 
        determine the equipment's compliance with law and board rules.  
        Samples required under this subdivision must be approved by the 
        board before the equipment being sampled is shipped into or sold 
        for use or resale in this state.  The board may request the 
        assistance of the commissioner of public safety and the director 
        of the state lottery board in performing the tests.  
           Sec. 52.  Minnesota Statutes 1992, section 349.163, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [PADDLETICKET CARD MASTER FLARES.] Each sealed 
        grouping of 100 paddleticket cards must have its own individual 
        master flare.  The manufacturer must affix to or imprint at the 
        bottom of the master flare a bar code that provides all 
        information required by the commissioner of revenue under 
        section 297E.04, subdivision 3. 
           This subdivision applies to paddleticket cards sold by a 
        manufacturer after June 30, 1995, for use or resale in Minnesota 
        or shipped into or caused to be shipped into Minnesota by a 
        manufacturer after June 30, 1995.  Paddleticket cards which are 
        subject to this subdivision shall not have a registration stamp 
        affixed to the master flare. 
           Sec. 53.  Minnesota Statutes 1992, section 349.164, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LICENSE REQUIRED.] No person may lease a 
        facility to more than one individual, corporation, partnership, 
        or organization to conduct bingo without a current and valid 
        bingo hall license under this section. 
           Sec. 54.  Minnesota Statutes 1992, section 349.164, 
        subdivision 6, is amended to read: 
           Subd. 6.  [PROHIBITED ACTS.] No bingo hall licensee, person 
        holding a financial or managerial interest in a bingo hall, or 
        affiliate thereof may: 
           (1) be a licensed distributor or licensed manufacturer or 
        affiliate of the distributor or manufacturer under section 
        349.161 or 349.163 or a wholesale distributor of alcoholic 
        beverages; 
           (2) provide any staff to conduct or assist in the conduct 
        of bingo or any other form of lawful gambling on the premises; 
           (3) acquire, provide storage or inventory control for, or 
        report the use of any gambling equipment used by an organization 
        that conducts lawful gambling on the premises; 
           (4) provide accounting services to an organization 
        conducting lawful gambling on the premises; 
           (5) solicit, suggest, encourage, or make any expenditures 
        of gross receipts of an organization from lawful gambling; 
           (6) charge any fee to a person without which the person 
        could not play a bingo game or participate in another form of 
        lawful gambling on the premises; 
           (7) provide assistance or participate in the conduct of 
        lawful gambling on the premises; or 
           (8) permit more than 21 bingo occasions to be conducted on 
        the premises in any week.  
           Sec. 55.  Minnesota Statutes 1992, section 349.164, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [RECORDS.] A bingo hall licensee must maintain 
        and preserve for at least 3-1/2 years records of all 
        remuneration it receives from organizations conducting lawful 
        gambling. 
           Sec. 56.  Minnesota Statutes 1992, section 349.1641, is 
        amended to read: 
           349.1641 [LICENSES; SUMMARY SUSPENSION.] 
           The board may (1) summarily suspend the license of an 
        organization that is more than three months late in filing a tax 
        return or in paying a tax required under this chapter 297E and 
        may keep the suspension in effect until all required returns are 
        filed and required taxes are paid; and (2) summarily suspend for 
        not more than 90 days any license issued by the board or 
        director for what the board determines are actions detrimental 
        to the integrity of lawful gambling in Minnesota.  The board 
        must notify the licensee at least 14 days before suspending the 
        license under this paragraph section.  A contested case hearing 
        must be held within 20 days of the summary suspension and If a 
        license is summarily suspended under this section, a contested 
        case hearing on the merits must be held within 20 days of the 
        issuance of the order of suspension, unless the parties agree to 
        a later hearing date.  The administrative law judge's report 
        must be issued within 20 days after the close of the hearing 
        record.  In all cases involving summary suspension, the board 
        must issue its final decision within 30 days after receipt of 
        the report of the administrative law judge and subsequent 
        exceptions and argument under section 14.61.  When an 
        organization's license is suspended or revoked under 
        this subdivision section, the board shall within three days 
        notify all municipalities in which the organization's gambling 
        premises are located and all licensed distributors in the state. 
           Sec. 57.  Minnesota Statutes 1992, section 349.166, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EXCLUSIONS.] (a) Bingo may be conducted 
        without a license and without complying with sections 349.168, 
        subdivisions 1 and 2; 349.17, subdivision 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 if it 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 without compliance with sections 349.11 to 349.15 
        and 349.153 to 349.213 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, a manager is 
        appointed to supervise the bingo, and the manager registers 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 349.11 to 349.13 and 
        349.151 349.154 to 349.165 and 349.167 to 349.213 if the value 
        of all raffle prizes awarded by the organization in a calendar 
        year does not exceed $750.  
           (d) The organization must maintain all required records of 
        excluded gambling activity for 3-1/2 years. 
           Sec. 58.  Minnesota Statutes 1992, section 349.166, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXEMPTIONS.] (a) Lawful gambling may be 
        conducted by an organization as defined in section 349.12, 
        subdivision 28, without a license and without complying with 
        sections 349.151 to 349.16; 349.167; 349.168, subdivisions 1 and 
        2; 349.17, subdivisions 4 and 5; 349.18, subdivision 1; and 
        349.19; and 349.212 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 $25 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), a $250 penalty is 
        imposed on the organization.  Failure to file a timely report 
        does not disqualify the organization as exempt under this 
        paragraph subdivision if a report is later filed and the penalty 
        paid. 
           (c) Merchandise prizes must be valued at their fair market 
        value. 
           (d) 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) An organization that is exempt from taxation on 
        purchases of pull-tabs and tipboards under section 349.212, 
        subdivision 4, paragraph (c), 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) The organization must maintain all required records of 
        exempt gambling activity for 3-1/2 years. 
           Sec. 59.  Minnesota Statutes 1992, section 349.166, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RAFFLES; CERTAIN ORGANIZATIONS.] Sections 349.21 
        349.168, subdivisions 3 and 4; and 349.211, subdivision 3, and 
        the membership requirements of sections 349.14 and 349.20 
        section 349.16, subdivision 2, paragraph (c), do not apply to 
        raffles conducted by an organization that directly or under 
        contract to the state or a political subdivision delivers health 
        or social services and that is a 501(c)(3) organization if the 
        prizes awarded in the raffles are real or personal property 
        donated by an individual, firm, or other organization.  The 
        person who accounts for the gross receipts, expenses, and 
        profits of the raffles may be the same person who accounts for 
        other funds of the organization.  
           Sec. 60.  Minnesota Statutes 1992, 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 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.  The board must be notified in 
        writing of a change in gambling managers.  Notification must be 
        made within ten days of the date the gambling manager assumes 
        the manager's duties. 
           (d) An organization may not have more than one gambling 
        manager at any time. 
           Sec. 61.  Minnesota Statutes 1992, section 349.167, 
        subdivision 2, is amended to read: 
           Subd. 2.  [GAMBLING MANAGERS; LICENSES.] A person may not 
        serve as a gambling manager for an organization unless the 
        person possesses a valid gambling manager's license issued by 
        the board.  In addition to the disqualifications in section 
        349.155, subdivision 3, the board may not issue a gambling 
        manager's license to a person applying for the license who: 
           (1) has not complied with subdivision 4, clause (1); 
           (2) has never been convicted of a felony; 
           (3) within the five years before the date of the license 
        application, has not committed a violation of law or board rule 
        that resulted in the revocation of a license issued by the 
        board; 
           (4) (3) has never ever been convicted of a criminal 
        violation involving fraud, theft, tax evasion, 
        misrepresentation, or gambling; or 
           (5) has never been convicted of (i) assault, (ii) a 
        criminal violation involving the use of a firearm, or (iii) 
        making terroristic threats; and 
           (6) (4) has not engaged in conduct the board determines is 
        contrary to the public health, welfare, or safety or the 
        integrity of lawful gambling. 
           A gambling manager's license is valid for one year runs 
        concurrent with the organization's license unless the gambling 
        manager's license is suspended or revoked.  The annual fee for a 
        gambling manager's license is $100 $200.  During the second year 
        of an organization's license the license fee for a new gambling 
        manager is $100. 
           Sec. 62.  Minnesota Statutes 1992, section 349.167, 
        subdivision 4, is amended to read: 
           Subd. 4.  [TRAINING OF GAMBLING MANAGERS.] The board shall 
        by rule require all persons licensed as gambling managers to 
        receive periodic training in laws and rules governing lawful 
        gambling.  The rules must contain the following requirements: 
           (1) each gambling manager must receive training before 
        being issued a new license, except that in the case of the 
        death, disability, or termination of a gambling manager, a 
        replacement gambling manager must receive the training within 90 
        days of being issued a license; 
           (2) each gambling manager applying for a renewal of a 
        license must have received continuing education training within 
        the three years prior to the date of application for the 
        renewal, as required by board rule, each year of the two-year 
        license period; and 
           (3) the training required by this subdivision may be 
        provided by a person, firm, association, or organization 
        authorized by the board to provide the training.  Before 
        authorizing a person, firm, association, or organization to 
        provide training, the board must determine that: 
           (i) the provider and all of the provider's personnel 
        conducting the training are qualified to do so; 
           (ii) the curriculum to be used fully and accurately covers 
        all elements of lawful gambling law and rules that the board 
        determines are necessary for a gambling manager to know and 
        understand; 
           (iii) the fee to be charged for participants in the 
        training sessions is fair and reasonable; and 
           (iv) the training provider has an adequate system for 
        documenting completion of training. 
           The rules may provide for differing training requirements 
        for gambling managers based on the class of license held by the 
        gambling manager's organization. 
           The board or the director may provide the training required 
        by this subdivision using employees of the board. 
           Sec. 63.  Minnesota Statutes 1992, section 349.167, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [GAMBLING MANAGER EXAMINATION.] (a) By January 1, 
        1996, each gambling manager must pass an examination prepared 
        and administered by the board that tests the gambling manager's 
        knowledge of the responsibilities of gambling managers and of 
        gambling procedures, laws, and rules.  The board shall revoke 
        the license of any gambling manager who has not passed the 
        examination by January 1, 1996. 
           (b) On and after January 1, 1996, each applicant for a new 
        gambling manager's license must pass the examination provided 
        for in paragraph (a) before being issued the license.  In the 
        case of the death, disability, or termination of a gambling 
        manager, a replacement gambling manager must pass the 
        examination within 90 days of being issued a gambling manager's 
        license.  The board shall revoke the replacement gambling 
        manager's license if the replacement gambling manager fails to 
        pass the examination as required in this paragraph. 
           Sec. 64.  Minnesota Statutes 1992, section 349.168, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COMPENSATION.] Compensation to persons who 
        participate in the conduct of lawful gambling may be paid only 
        to active members of the conducting organization or its 
        auxiliary, or the spouse or surviving spouse of an active 
        member, except that the following persons may receive 
        compensation without being active members:  (1) sellers of 
        pull-tabs, tipboards, raffle tickets, paddlewheel tickets 
        paddletickets, and bingo hard cards or paper sheets; (2) 
        accountants performing auditing or bookkeeping services for the 
        organization; and (3) attorneys providing legal services to the 
        organization.  The board may by rule allow other persons not 
        active members of the organization to receive compensation. 
           Sec. 65.  Minnesota Statutes 1992, section 349.168, 
        subdivision 6, is amended to read: 
           Subd. 6.  [COMPENSATION PAID BY CHECK.] Compensation paid 
        by an organization in connection with lawful gambling must be in 
        the form of a check drawn on the organization's gambling 
        account, as specified in section 349.19, and paid directly to 
        the employee person being compensated.  
           Sec. 66.  Minnesota Statutes 1992, section 349.168, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [COMPENSATION REPORT.] A licensed organization 
        must submit to the board once each year, on a form the board 
        prescribes, a compensation report that specifies for the year 
        being reported:  (1) each job category for which the 
        organization pays compensation, (2) each compensation rate paid 
        in each job category, and (3) the number of employees being paid 
        each compensation rate during the year. 
           Sec. 67.  Minnesota Statutes 1992, section 349.169, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [FILING REQUIRED.] All manufacturers and 
        distributors must file with the director, not later than the 
        first day of each month, the prices at which the manufacturer or 
        distributor will sell all gambling equipment in that month.  The 
        filing must be on a form the director prescribes.  Prices filed 
        must include all charges the manufacturer or distributor makes 
        for each item of gambling equipment sold, including all volume 
        discounts, exclusive of transportation costs.  All filings are 
        effective on the first day of the month for which they are 
        filed, except that a manufacturer or distributor may amend a 
        filed price within five days of filing it and may file a price 
        any time during a month for gambling equipment not previously 
        included on that month's filed pricing report, but may not later 
        amend the price during the month. 
           Sec. 68.  Minnesota Statutes 1992, section 349.17, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BINGO ON LEASED PREMISES.] During any bingo 
        occasion conducted by an organization, the organization is 
        directly responsible for the:  
           (1) staffing of the bingo occasion; 
           (2) conducting of lawful gambling during the bingo 
        occasion; 
           (3) acquiring, storage, inventory control, and reporting of 
        all gambling equipment used by the organization; 
           (4) receipt, accounting, and all expenditures of gross 
        receipts from lawful gambling; and 
           (5) preparation of the bingo packets. 
           Sec. 69.  Minnesota Statutes 1992, section 349.17, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CHECKERS.] One or more checkers must be engaged 
        for each bingo occasion when bingo is conducted using bingo hard 
        cards.  The checker or checkers must record, on a form the board 
        provides, the number of hard cards played in each game and the 
        prizes awarded to recorded hard cards.  The form must provide 
        for the inclusion of the registration face number of 
        each winning hard card and must include a checker's 
        certification that the figures recorded are correct to the best 
        of the checker's knowledge.  
           Sec. 70.  Minnesota Statutes 1992, section 349.17, 
        subdivision 5, is amended to read: 
           Subd. 5.  [BINGO CARD NUMBERING CARDS AND SHEETS.] (a) The 
        board shall by rule require that all licensed organizations:  (1)
        conduct bingo only using liquid daubers on cards bingo paper 
        sheets that bear an individual number recorded by the 
        distributor; and (2) sell all bingo cards only in the order of 
        the numbers appearing on the cards; and (3) use each bingo card 
        paper sheet for no more than one bingo occasion.  In lieu of the 
        requirements of clauses clause (2) and (3), 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) do not shall only 
        apply to a licensed organization that has never received gross 
        receipts from bingo in excess of $150,000 in any the 
        organization's last fiscal year. 
           Sec. 71.  Minnesota Statutes 1992, section 349.17, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [CONDUCT OF BINGO.] (a) Each bingo hard card and 
        paper sheets must have five horizontal rows of spaces with each 
        row except one having five numbers.  The center row must have 
        four numbers and the center space marked "free."  Each column 
        must have one of the letters B-I-N-G-O in order at the top.  
        Bingo paper sheets may also have numbers that are not preprinted 
        but are filled in by players. 
           (b) A game of bingo begins with the first letter and number 
        called.  Each player must cover or mark with a liquid dauber the 
        numbers when bingo balls, similarly numbered, are randomly 
        drawn, announced, and displayed to the players, either manually 
        or with a flashboard or monitor.  The game is won when a player 
        has covered or marked a previously designated arrangement of 
        numbers on the card or sheet and declared bingo.  The game is 
        completed when a winning card or sheet is verified and a prize 
        awarded. 
           Sec. 72.  [349.1711] [CONDUCT OF TIPBOARDS.] 
           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, 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. 
           Subd. 2.  [DETERMINATION OF WINNERS.] When the 
        predesignated numbers or symbols have all been purchased, or all 
        of the tipboard tickets for that game have been sold, the seal 
        must be removed to reveal a number or symbol that determines 
        which of the predesignated numbers or symbols is the winning 
        number or symbol.  A tipboard may also contain consolation 
        winners that need not be determined by the use of the seal. 
           Subd. 3.  [PRIZES.] Cash or merchandise prizes may be 
        awarded in a tipboard game.  All prizes available in each game 
        must be stated on the game flare. 
           Sec. 73.  Minnesota Statutes 1992, section 349.174, is 
        amended to read: 
           349.174 [PULL-TABS; DEADLINE FOR USE.] 
           A deal of pull-tabs and or tipboards received by an 
        organization before September 1, 1989, must be put into play by 
        that organization before September 1, 1990, unless the deal 
        bears a serial number that allows it to be traced back to its 
        manufacturer and to the distributor who sold it to the 
        organization.  An organization in possession on and after 
        September 1, 1990, of a deal of pull-tabs and or tipboards the 
        organization received before September 1, 1989, may not put such 
        a deal in play but must remove it from the organization's 
        inventory and return it to the manufacturer. 
           Sec. 74.  Minnesota Statutes 1992, section 349.18, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LEASE OR OWNERSHIP REQUIRED.] (a) An 
        organization may conduct lawful gambling only on premises it 
        owns or leases.  Leases must be for a period of at least one 
        year and must be on a form prescribed by the board.  Except for 
        leases entered into before the effective date of this section, 
        the term of the lease may not begin before the effective date of 
        the premises permit and must expire on the same day that the 
        premises permit expires.  Copies of all leases must be made 
        available to employees of the board and the division of gambling 
        enforcement on request.  A lease may not provide for payments 
        determined directly or indirectly by the receipts or profits 
        from lawful gambling.  The board may prescribe by rule limits on 
        the amount of rent which an organization may pay to a lessor for 
        premises leased for lawful gambling provided that no rule of the 
        board may prescribe a limit of less than $1,000 per month on 
        rent paid for premises used for lawful gambling other than 
        bingo.  Any rule adopted by the board limiting the amount of 
        rent to be paid may only be effective for leases entered into, 
        or renewed, after the effective date of the rule. 
           (b) No person, distributor, manufacturer, lessor, or 
        organization other than the licensed organization leasing the 
        space may conduct any activity on the leased premises during 
        times when lawful gambling is being conducted on the premises. 
           (c) At a site where the leased premises consists of an area 
        on or behind a bar at which alcoholic beverages are sold and 
        employees of the lessor are employed by the organization as 
        pull-tab sellers at the site, pull-tabs and tipboard tickets may 
        be sold and redeemed by those employees at any place on or 
        behind the bar, but the tipboards and receptacles for pull-tabs 
        and cash drawers for lawful gambling receipts must be maintained 
        only within the leased premises. 
           (d)  Employees of a lessor may participate in lawful 
        gambling on the premises provided (1) if pull-tabs or tipboards 
        are sold, the organization voluntarily posts, or is required to 
        post, the major prizes as specified in section 349.172; and (2) 
        any employee of the lessor participating in lawful gambling is 
        not a gambling employee for the organization conducting lawful 
        gambling on the premises. 
           Sec. 75.  Minnesota Statutes 1992, section 349.18, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [STORAGE OF GAMBLING EQUIPMENT.] (a) Gambling 
        equipment owned by or in the possession of an organization must 
        be kept at a licensed gambling permitted premises owned 
        or operated leased by the organization, or at other storage 
        sites within the state that the organization has notified the 
        board are being used as gambling equipment storage sites.  At 
        each storage site or licensed permitted premises, the 
        organization must have the invoices or true and correct copies 
        of the invoices for the purchase of all gambling equipment at 
        the site or premises.  Gambling equipment owned by an 
        organization may not be kept at a distributor's office, 
        warehouse, storage unit, or other place of the distributor's 
        business.  
           (b) Gambling equipment, other than devices for selecting 
        bingo numbers, owned by an organization must be secured and kept 
        separate from gambling equipment owned by other persons, 
        organizations, distributors, or manufacturers. 
           (c) Paddlewheels must be covered or disabled when not in 
        use by the organization in the conduct of lawful gambling. 
           (d) Gambling equipment kept in violation of this 
        subdivision is contraband under section 349.2125.  
           (e) An organization may transport gambling equipment it 
        owns or possesses between approved gambling equipment storage 
        sites and to and from licensed distributors, if the invoices or 
        true and correct copies of the invoices for the organization's 
        acquisition of the gambling equipment accompany the gambling 
        equipment at all times and are available for inspection. 
           Sec. 76.  Minnesota Statutes 1992, section 349.18, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXCEPTIONS.] (a) An organization may conduct 
        raffles on a premise it does not own or lease.  
           (b) An organization may, with the permission of the board, 
        conduct bingo on premises it does not own or lease for up to 12 
        consecutive days in a calendar year, in connection with a county 
        fair, the state fair, or a civic celebration.  
           (c) A licensed organization may, after compliance with 
        section 349.213, conduct lawful gambling on premises other than 
        the organization's licensed premise permitted premises for one 
        day per year for not more than 12 hours that day.  A lease for 
        that time period for the exempted premises must accompany the 
        request to the board. 
           Sec. 77.  Minnesota Statutes 1992, section 349.19, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ACCOUNTS.] Gross receipts from lawful gambling 
        by each organization must be segregated from all other revenues 
        of the conducting organization and placed in a separate 
        account.  All expenditures for expenses, taxes, and lawful 
        purposes must be made from the separate account except in the 
        case of expenditures previously approved by the organization's 
        membership for emergencies as defined by board rule.  The name 
        and address of the bank, the account number for the separate 
        account, and the names of organization members authorized as 
        signatories on the separate account must be provided to the 
        board when the application is submitted.  Changes in the 
        information must be submitted to the board at least ten days 
        before the change is made.  Gambling receipts must be deposited 
        into the gambling bank account within three four business days 
        of completion of the bingo occasion, deal, or game from which 
        they are received.  A deal of pull-tabs is considered complete 
        when either the last pull-tab of the deal is sold or the 
        organization does not continue the play of the deal during the 
        next scheduled period of time in which the organization will 
        conduct pull-tabs.  A tipboard game is considered complete when 
        the seal on the game flare is uncovered.  Deposit records must 
        be sufficient to allow determination of deposits made from each 
        bingo occasion, deal, or game at each permitted premises.  The 
        person who accounts for gambling gross receipts and profits may 
        not be the same person who accounts for other revenues of the 
        organization. 
           Sec. 78.  Minnesota Statutes 1992, section 349.19, 
        subdivision 5, is amended to read: 
           Subd. 5.  [REPORTS.] A licensed organization must report to 
        the board and to its membership monthly, or quarterly in the 
        case of a class C licensee or 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.  In addition, a licensed organization must report to 
        the board monthly on its purchases of gambling equipment and 
        must include the type, quantity, and dollar amount from each 
        supplier separately.  The reports must be on a form the board 
        prescribes.  Submission of the report required by section 
        349.154 satisfies the requirement for reporting monthly to the 
        board on expenditure of net profits. 
           Sec. 79.  Minnesota Statutes 1992, section 349.19, 
        subdivision 8, is amended to read: 
           Subd. 8.  [TERMINATION PLAN.] Upon termination of a license 
        for any reason, a licensed organization must notify the board in 
        writing within 15 30 calendar days of the license termination 
        date of its plan for disposal of registered gambling equipment 
        and distribution of remaining gambling proceeds.  Before 
        implementation, a plan must be approved by the board as provided 
        in board rule.  The board may accept or reject a plan and order 
        submission of a new plan or amend a proposed plan.  The board 
        may specify a time for submission of new or amended plans or for 
        completion of an accepted plan. 
           Sec. 80.  Minnesota Statutes 1992, section 349.19, 
        subdivision 9, is amended to read: 
           Subd. 9.  [ANNUAL AUDIT; FILING REQUIREMENT.] An 
        organization licensed under this chapter must have an annual 
        financial audit of its lawful gambling activities and funds 
        performed by an independent accountant licensed by the state of 
        Minnesota.  The commissioner of revenue shall prescribe 
        standards for the audit.  A complete, true, and correct copy of 
        the audit report must be filed as prescribed by the commissioner 
        of revenue or financial review when required by section 297E.06, 
        subdivision 4. 
           Sec. 81.  Minnesota Statutes 1992, 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 drivers 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, 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.  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. 82.  Minnesota Statutes 1992, section 349.191, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CREDIT RESTRICTION.] A manufacturer may 
        not offer or extend to a distributor, and a distributor may 
        not offer or extend to an organization, credit for a period of 
        more than 30 days for the sale of any gambling equipment.  No 
        right of action exists for the collection of any claim based on 
        credit prohibited by this subdivision.  The 30-day period 
        allowed by this subdivision begins with the day immediately 
        following the day of invoice and includes all successive days, 
        including Sundays and holidays, to and including the 30th 
        successive day. 
           Sec. 83.  Minnesota Statutes 1992, section 349.191, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [CREDIT AND SALES TO DELINQUENT 
        ORGANIZATIONS.] (a) If a distributor does not receive payment in 
        full from an organization within 30 days of the delivery of 
        gambling equipment, the distributor must notify the board in 
        writing of the delinquency. 
           (b) If a distributor who has notified the board under 
        paragraph (a) has not received payment in full from the 
        organization within 60 days of the notification under paragraph 
        (a), the distributor must notify the board of the continuing 
        delinquency. 
           (c) On receipt of a notice under paragraph (a), the board 
        shall order all distributors that until further notice from the 
        board, they may sell gambling equipment to the delinquent 
        organizations only on a cash basis with no credit extended.  On 
        receipt of a notice under paragraph (b), the board shall order 
        all distributors not to sell any gambling equipment to the 
        delinquent organization. 
           (d) No distributor may extend credit or sell gambling 
        equipment to an organization in violation of an order under 
        paragraph (c) until the board has authorized such credit or sale.
           Sec. 84.  Minnesota Statutes 1992, section 349.191, is 
        amended by adding a subdivision to read: 
           Subd. 1b.  [CREDIT AND SALES TO DELINQUENT DISTRIBUTORS.] 
        (a) If a manufacturer does not receive payment in full from a 
        distributor within 30 days of the delivery of gambling 
        equipment, the manufacturer must notify the board in writing of 
        the delinquency. 
           (b) If a manufacturer who has notified the board under 
        paragraph (a) has not received payment in full from the 
        distributor within 60 days of the notification under paragraph 
        (a), the manufacturer must notify the board of the continuing 
        delinquency. 
           (c) On receipt of a notice under paragraph (a), the board 
        shall order all manufacturers that until further notice from the 
        board, they may sell gambling equipment to the delinquent 
        distributor only on a cash basis with no credit extended.  On 
        receipt of a notice under paragraph (b), the board shall order 
        all manufacturers not to sell any gambling equipment to the 
        delinquent distributor. 
           (d) No manufacturer may extend credit or sell gambling 
        equipment to a distributor in violation of an order under 
        paragraph (c) until the board has authorized such credit or sale.
           Sec. 85.  Minnesota Statutes 1992, section 349.191, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CREDIT; POSTDATED CHECKS.] For purposes of 
        this subdivision section, "credit" includes acceptance by a 
        manufacturer or distributor of a postdated check in payment for 
        gambling equipment. 
           Sec. 86.  Minnesota Statutes 1992, section 349.211, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [BINGO.] Except as provided in subdivision 
        2, prizes for a single bingo game may not exceed $100 except 
        prizes for a cover-all game, which may exceed $100 if the 
        aggregate value of all cover-all prizes in a bingo occasion does 
        not exceed $500 $1,000.  Total prizes awarded at a bingo 
        occasion may not exceed $2,500, unless a cover-all game is 
        played in which case the limit is $3,000 $3,500.  For purposes 
        of this subdivision, a cover-all game is one in which a player 
        must cover all spaces except a single free space to win.  
           Sec. 87.  Minnesota Statutes 1992, section 349.211, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BINGO CUMULATIVE PRICES PROGRESSIVE BINGO 
        GAMES.] A prize of up to $1,000 may be awarded for a single 
        progressive bingo game if the prize is an accumulation of prizes 
        not won in games in previous bingo occasions, including a 
        cover-all game.  The prize for a progressive bingo game may 
        start at $300 and be increased by up to $100 for each occasion 
        during which the progressive bingo game is played.  A 
        consolation prize of up to $100 for a progressive bingo game may 
        be awarded in each occasion during which the progressive bingo 
        game is played and the accumulated prize is not won.  The total 
        amount awarded in cumulative progressive bingo game prizes in 
        any calendar year may not exceed $12,000 $36,000. For bingo 
        occasions in which a cumulative prize is awarded the aggregate 
        value of prizes which may be awarded for the occasion is 
        increased by the amount of the cumulative prize so awarded less 
        $100. 
           Sec. 88.  Minnesota Statutes 1992, section 349.211, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [PULL-TAB PRIZES.] The maximum prize which may 
        be awarded for any single pull-tab is $250 $500.  An 
        organization may not sell any pull-tab for more than $2. 
           Sec. 89.  Minnesota Statutes 1992, section 349.2125, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONTRABAND DEFINED.] The following are 
        contraband: 
           (1) all pull-tab or tipboard deals that do not have stamps 
        affixed to them as provided in section 349.162 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, or from one 
        distributor to another between locations outside this state, the 
        pull-tab and tipboard deals are not contraband, notwithstanding 
        the provisions of clause 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; and 
           (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 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; and 
           (13) any pull-tab or tipboard deals or portions of deals on 
        which the tax imposed under chapter 297E has not been paid. 
           Sec. 90.  Minnesota Statutes 1992, section 349.2125, 
        subdivision 3, is amended to read: 
           Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
        DISPOSITION OF SEIZED PROPERTY.] Within ten days after the 
        seizure of any alleged contraband, the person making the seizure 
        shall make available an inventory of the property seized to the 
        person from whom the property was seized, if known, and file a 
        copy with the commissioner of revenue or the director of 
        gambling enforcement.  Within ten days after the date of service 
        of the inventory, the person from whom the property was seized 
        or any person claiming an interest in the property may file with 
        the seizing authority a demand for judicial determination of 
        whether the property was lawfully subject to seizure and 
        forfeiture.  Within 60 days after the date of filing of the 
        demand, the seizing authority must bring an action in the 
        district court of the county where seizure was made to determine 
        the issue of forfeiture.  The action must be brought in the name 
        of the state and be prosecuted by the county attorney or by the 
        attorney general.  The court shall hear the action without a 
        jury and determine the issues of fact and laws involved.  When a 
        judgment of forfeiture is entered, the seizing authority may, 
        unless the judgment is stayed pending an appeal, either (1) 
        cause the forfeited property to be destroyed; or (2) cause it to 
        be sold at a public auction as provided by law.  
           If demand for judicial determination is made and no action 
        is commenced by the seizing authority as provided in this 
        subdivision, the property must be released by the seizing 
        authority and delivered to the person entitled to it.  If no 
        demand is made, the property seized is considered forfeited to 
        the seizing authority by operation of law and may be disposed of 
        by the seizing authority as provided where there has been a 
        judgment of forfeiture.  When the seizing authority is satisfied 
        that a person from whom property is seized was acting in good 
        faith and without intent to evade the a tax imposed by section 
        349.2121, subdivision 4 chapter 297E, the seizing authority 
        shall release the property seized without further legal 
        proceedings.  
           Sec. 91.  Minnesota Statutes 1992, section 349.2127, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PROHIBITION AGAINST POSSESSION.] (a) A person, 
        other than a licensed distributor, is guilty of a crime who 
        sells, offers for sale, or possesses a pull-tab or tipboard deal 
        or paddleticket cards not stamped or bar coded in accordance 
        with the provisions of this chapter or chapter 297E.  A 
        violation of this paragraph is a gross misdemeanor if it 
        involves ten or fewer pull-tab or tipboard deals.  A violation 
        of this paragraph is a felony if it involves more than ten 
        pull-tab or tipboard deals, or a combination of more than ten 
        deals of pull-tabs and tipboards. 
           (b) A person, other than a licensed manufacturer, a 
        licensed distributor, or an organization licensed or exempt or 
        excluded from licensing under this chapter, is guilty of a crime 
        who sells, offers to sell, or possesses gambling equipment.  A 
        violation of this paragraph is a gross misdemeanor if it 
        involves ten or fewer pull-tab or tipboard deals.  A violation 
        of this paragraph is a felony if it involves more than ten 
        pull-tab or tipboard deals, or a combination of more than ten 
        deals of pull-tabs and tipboards. 
           (c) A person, firm, or organization is guilty of a crime 
        who alters, modifies, or counterfeits pull-tabs, tipboards, or 
        tipboard tickets, or possesses altered, modified, or counterfeit 
        pull-tabs, tipboards, or tipboard tickets.  A violation of this 
        paragraph is a gross misdemeanor if the total face value for all 
        such pull-tabs, tipboards, or tipboard tickets does not exceed 
        $200.  A violation of this paragraph is a felony if the total 
        face value exceeds $200.  For purposes of this paragraph, the 
        face value of all pull-tabs, tipboards, and tipboard tickets 
        altered, modified, or counterfeited within a six-month period 
        may be aggregated and the defendant charged accordingly. 
           (d) A person, other than a licensed distributor or licensed 
        manufacturer, is guilty of a crime who possesses a pull-tab or 
        tipboard deal for which the person, upon demand of a licensed 
        peace officer or authorized agent of the commissioner of revenue 
        or director of 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.  A violation of this paragraph is a gross 
        misdemeanor if it involves ten or fewer pull-tab or tipboard 
        deals.  A violation of this paragraph is a felony if it involves 
        more than ten pull-tab or tipboard deals, or a combination of 
        more than ten deals of pull-tabs and tipboards.  This paragraph 
        does not apply to pull-tab and tipboard deals being transported 
        in interstate commerce between locations outside this state. 
           Sec. 92.  Minnesota Statutes 1992, section 349.2127, 
        subdivision 3, is amended to read: 
           Subd. 3.  [FALSE INFORMATION.] (a) A person is guilty of a 
        felony if the person is required by section 349.2121, 
        subdivision 2, to keep records or to make returns and falsifies 
        or fails to keep the records or falsifies or fails to make the 
        returns.  
           (b) A person is guilty of a felony who: 
           (1) knowingly submits materially false information in any 
        license application or other document or communication submitted 
        to the board; or 
           (2) knowingly submits materially false information in any 
        report, document, or other communication submitted to the 
        commissioner of revenue in connection with lawful gambling or 
        with any provision of this chapter knowingly places materially 
        false information on a pull-tab or tipboard deal invoice or a 
        copy of the invoice; or 
           (3) knowingly presents to a licensed peace officer or 
        authorized agent of the commissioner of revenue or director of 
        gambling enforcement a pull-tab or tipboard deal invoice, or a 
        copy of the invoice, that contains materially false information. 
           Sec. 93.  Minnesota Statutes 1992, section 349.2127, 
        subdivision 4, is amended to read: 
           Subd. 4.  [TRANSPORTING UNSTAMPED DEALS.] A person is 
        guilty of a gross misdemeanor who transports into, or causes to 
        be transported into, receives, carries, or moves from place to 
        place, or causes to be moved from place to place in this state, 
        any paddleticket cards or deals of pull-tabs or tipboards not 
        stamped or bar coded in accordance with this chapter or chapter 
        297E except in the course of interstate commerce between 
        locations outside this state.  A person is guilty of a felony 
        who violates this subdivision with respect to more than ten 
        pull-tab or tipboard deals, or a combination of more than ten 
        deals of pull-tabs and tipboards. 
           Sec. 94.  Minnesota Statutes 1992, section 349.2127, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [MINIMUM AGE.] (a) A person under the age of 18 
        years may not buy a pull-tab, tipboard ticket, paddlewheel 
        ticket, or raffle ticket, or a chance to participate in a bingo 
        game other than a bingo game exempt or excluded from licensing.  
        Violation of this paragraph is a misdemeanor. 
           (b) A licensed organization or employee may not allow a 
        person under age 18 to participate in lawful gambling in 
        violation of paragraph (a).  Violation of this paragraph is a 
        misdemeanor. 
           (c) In a prosecution under paragraph (b), it is a defense 
        for the defendant to prove by a preponderance of the evidence 
        that the defendant reasonably and in good faith relied upon 
        representations of proof of age authorized in section 340A.503, 
        subdivision 6, paragraph (a). 
           Sec. 95.  Minnesota Statutes 1992, section 349.2127, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [TIPBOARD DEFINED.] For purposes of this section 
        "tipboard" includes tipboards as defined in section 349.12, 
        subdivision 34, and any board, placard or other device marked 
        off in a grid or columns, in which each section contains a 
        hidden number or numbers, or other symbol, which determines the 
        winning chances. 
           Sec. 96.  Minnesota Statutes 1992, section 349.213, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LOCAL REGULATION.] (a) A statutory or home 
        rule city or county has the authority to adopt more stringent 
        regulation of lawful gambling within its jurisdiction, including 
        the prohibition of lawful gambling, and may require a permit for 
        the conduct of gambling exempt from licensing under section 
        349.166.  The fee for a permit issued under this subdivision may 
        not exceed $100.  The authority granted by this subdivision does 
        not include the authority to require a license or permit to 
        conduct gambling by organizations or sales by distributors 
        licensed by the board.  The authority granted by this 
        subdivision does not include the authority to require an 
        organization to make specific expenditures of more than ten 
        percent from its net profits derived from lawful gambling.  For 
        the purposes of this subdivision, net profits are gross profits 
        less amounts expended for allowable expenses and paid in taxes 
        assessed on lawful gambling.  A statutory or home rule charter 
        city or a county may not require an organization conducting 
        lawful gambling within its jurisdiction to make an expenditure 
        to the city or county as a condition to operate within that city 
        or county, except as authorized under section 349.16, 
        subdivision 4 8, or 349.212 297E.02; provided, however, that an 
        ordinance requirement that such organizations must contribute 
        ten percent of their net profits derived from lawful 
        gambling conducted at premises within the city's or county's 
        jurisdiction to a fund administered and regulated by the 
        responsible local unit of government without cost to such fund, 
        for disbursement by the responsible local unit of government of 
        the receipts for lawful purposes, is not considered an 
        expenditure to the city or county nor a tax under section 
        349.212, and is valid and lawful.  
           (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 contiguous to the defining 
        city. 
           (c) A more stringent regulation or prohibition of lawful 
        gambling adopted by a political subdivision under this 
        subdivision must apply equally to all forms of lawful gambling 
        within the jurisdiction of the political subdivision, except a 
        political subdivision may prohibit the use of paddlewheels. 
           Sec. 97.  Minnesota Statutes 1992, section 541.21, is 
        amended to read: 
           541.21 [COMMITMENTS FOR GAMBLING DEBT VOID.] 
           Every note, bill, bond, mortgage, or other security or 
        conveyance in which the whole or any part of the consideration 
        shall be for any money or goods won by gambling or playing at 
        cards, dice, or any other game whatever, or by betting on the 
        sides or hands of any person gambling, or for reimbursing or 
        repaying any money knowingly lent or advanced at the time and 
        place of such gambling or betting, or lent and advanced for any 
        gambling or betting to any persons so gambling or betting, shall 
        be void and of no effect as between the parties to the same, and 
        as to all persons except such as hold or claim under them in 
        good faith, without notice of the illegality of the 
        consideration of such contract or conveyance.  The provisions of 
        this section shall not apply to:  (1) pari-mutuel wagering 
        conducted under a license issued pursuant to chapters chapter 
        240 and 349 or; (2) purchase of tickets in the state lottery 
        under chapter 349A, or to; (3) gaming activities conducted 
        pursuant to the Indian Gaming Regulatory Act, 25 U.S.C. 2701 et 
        seq.; or (4) lawful gambling activities permitted under chapter 
        349. 
           Sec. 98.  [REPORT ON RULES.] 
           The board shall develop and submit to the legislature by 
        January 15, 1995, a detailed implementation plan, including 
        proposed rules and legislation to provide for sale of pull-tabs 
        from dispensing devices.  The rules must not be effective before 
        June 1, 1995. 
           Sec. 99.  [REPEALER.] 
           Minnesota Statutes 1992, sections 349.16, subdivisions 4 
        and 5; 349.161, subdivisions 3, 6, and 7; 349.163, subdivisions 
        1a and 2a; 349.164, subdivisions 3, 5, and 8; and 349.167, 
        subdivisions 3 and 5; are repealed. 
           Sec. 100.  [EFFECTIVE DATE.] 
           The requirement that a paddleticket must have a bar code is 
        effective July 1, 1995.  The rulemaking authority granted in 
        this act is effective the day following final enactment.  
        Section 41 is effective the day following final enactment and 
        applies to all applications submitted to the board on or after 
        December 1, 1993. 
                                   ARTICLE 6
                                 STATE LOTTERY
           Section 1.  Minnesota Statutes 1992, section 349A.06, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [SALES AT AIRPORT.] The metropolitan airports 
        commission shall permit the sale of lottery tickets at the 
        Minneapolis-St. Paul International Airport in at least each 
        concourse of the Lindbergh terminal, or at other locations 
        mutually agreed to by the director and the commission.  The 
        director shall issue a contract to a nonprofit organization to 
        operate an independent kiosk to sell lottery tickets at the 
        airport. 
           Sec. 2.  Minnesota Statutes 1992, section 349A.10, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [BUDGET APPEARANCE.] The director shall appear at 
        least once each fiscal year before the senate and house of 
        representatives committees having jurisdiction over gambling 
        policy to present and explain the lottery's budget and spending 
        plans for the next fiscal year. 
           Sec. 3.  Minnesota Statutes 1992, section 349A.12, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PURCHASE BY MINORS.] A person under the 
        age of 18 years may not buy or redeem for a prize a ticket in 
        the state lottery. 
           Sec. 4.  Minnesota Statutes 1992, section 349A.12, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SALE TO MINORS.] A lottery retailer may not sell 
        and a lottery retailer or other person may not furnish or redeem 
        for a prize a ticket in the state lottery to any person under 
        the age of 18 years.  It is an affirmative defense to a charge 
        under this subdivision for the lottery retailer or other person 
        to prove by a preponderance of the evidence that the lottery 
        retailer or other person reasonably and in good faith relied 
        upon representation of proof of age described in section 
        340A.503, subdivision 6, in making the sale or furnishing or 
        redeeming the ticket. 
           Sec. 5.  Minnesota Statutes 1992, section 349A.12, 
        subdivision 5, is amended to read: 
           Subd. 5.  [EXCEPTIONS.] Nothing in this chapter prohibits 
        giving a state lottery ticket as a gift, or buying provided that 
        a state lottery ticket as a gift for may not be given to a 
        person under the age of 18. 
           Sec. 6.  Minnesota Statutes 1992, section 349A.12, 
        subdivision 6, is amended to read: 
           Subd. 6.  [VIOLATIONS.] A violation of subdivision 1 is a 
        petty misdemeanor.  A violation of subdivision 1 or 2 or a rule 
        adopted by the director is a misdemeanor.  A violation of 
        subdivision 3 or 4 is a gross misdemeanor. 
           Sec. 7.  [TRANSITION.] 
           Sections 2 to 4 shall not prohibit a person under the age 
        of 18 from redeeming a prize for a lottery ticket furnished to 
        that person if the ticket was purchased prior to the effective 
        date of these sections or if the lottery ticket was for an 
        instant game that was introduced by the Minnesota state lottery 
        prior to the effective date of this act.  A person under the age 
        of 18 may only claim a prize for the lottery under this section 
        by presenting the lottery ticket at a Minnesota state lottery 
        office or by mailing the ticket to the Minnesota state lottery.  
        Any prize for the lottery redeemed under this section will be 
        subject to Minnesota Statutes, section 349A.08, subdivision 3, 
        and the applicable game procedures adopted by the director of 
        the lottery. 
           Sec. 8.  [EFFECTIVE DATE.] 
           Section 1 is effective January 1, 1995.  Sections 2 to 7 
        are effective August 1, 1994. 
                                   ARTICLE 7
                                 INDIAN GAMING
           Section 1.  Minnesota Statutes 1992, section 3.9221, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NEGOTIATIONS AUTHORIZED.] The governor or the 
        governor's designated representatives shall, pursuant to section 
        11 of the act, negotiate in good faith a tribal-state compact 
        regulating the conduct of class III gambling, as defined in 
        section 4 of the act, on Indian lands of a tribe requesting 
        negotiations.  The agreement may include any provision 
        authorized under section 11(d)(3)(C) of the act.  The attorney 
        general is the legal counsel for the governor or the governor's 
        representatives in regard to negotiating a compact under this 
        section.  If the governor appoints designees to negotiate under 
        this subdivision, the designees must include at least two 
        members of the senate and two members of the house of 
        representatives, two of whom must be the chairs of the senate 
        and house of representatives standing committees with 
        jurisdiction over gambling policy. 
           Sec. 2.  Minnesota Statutes 1992, section 3.9221, 
        subdivision 5, is amended to read: 
           Subd. 5.  [REPORT.] The governor, the attorney general, and 
        the governor's designated representatives shall report to the 
        house and senate committees having jurisdiction over gambling 
        regulation semiannually annually.  This report shall contain 
        information on compacts negotiated, and an outline of 
        prospective negotiations. 
           Sec. 3.  [INDIAN GAMING REVOLVING ACCOUNT.] 
           The attorney general shall deposit in a separate account in 
        the state treasury all money received from Indian tribal 
        governments for the purpose of defraying the attorney general's 
        costs in providing legal services with respect to Indian 
        gaming.  Money in the account is appropriated to the attorney 
        general for that purpose. 
           Sec. 4.  Minnesota Statutes 1992, section 299L.02, 
        subdivision 5, is amended to read: 
           Subd. 5.  [BACKGROUND CHECKS.] In any background check 
        required to be conducted by the division of gambling enforcement 
        under this chapter, chapter 240, 349, or 349A, or section 
        3.9221, the director may, or shall when required by law, require 
        that fingerprints be taken and the director may forward the 
        fingerprints to the Federal Bureau of Investigation for the 
        conducting of a national criminal history check.  The director 
        may charge a fee for fingerprint recording and investigation 
        under section 3.9221. 
           Sec. 5.  Minnesota Statutes 1992, section 299L.02, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [REVOLVING ACCOUNT.] The director shall deposit 
        in a separate account in the state treasury all money received 
        from Indian tribal governments for charges for investigations 
        and background checks under compacts negotiated under section 
        3.9221. Money in the account is appropriated to the director for 
        the purpose of carrying out the director's powers and duties 
        under those compacts. 
           Sec. 6.  [MINIMUM AGE.] 
           Subdivision 1.  [RENEGOTIATION OF COMPACTS.] The governor, 
        pursuant to Minnesota Statutes, section 3.9221, shall take all 
        feasible steps to renegotiate all compacts negotiated under that 
        section for the purpose of establishing a minimum age of 21 
        years for participating in gambling authorized under the Indian 
        gaming regulatory act, Public Law Number 100-497, and future 
        amendments to it. 
           Subd. 2.  [LEGISLATIVE INTENT.] It is the intent of the 
        legislature that, in the event a minimum age of 21 is negotiated 
        with more than one-half of the tribes that conduct gaming in 
        Minnesota, legislation will be enacted adopting the same minimum 
        age for gambling conducted under Minnesota Statutes, chapters 
        240, 349, and 349A.  
           Sec. 7.  [EFFECTIVE DATE.] 
           Sections 1 and 2 are effective June 1, 1994.  Sections 3 to 
        5 are effective July 1, 1994.  Section 6 is effective the day 
        following final enactment. 
                                   ARTICLE 8
                                 MISCELLANEOUS
           Section 1.  [4.47] [REPORT ON COMPULSIVE GAMBLING.] 
           The governor shall report to the legislature by February 1 
        of each odd-numbered year on the state's progress in addressing 
        the problem of compulsive gambling.  The report must include: 
           (1) a summary of available data describing the extent of 
        the problem in Minnesota; 
           (2) a summary of programs, both governmental and private, 
        that 
           (i) provide diagnosis and treatment for compulsive 
        gambling, 
           (ii) enhance public awareness of the problem and the 
        availability of compulsive gambling services, 
           (iii) are designed to prevent compulsive gambling and other 
        problem gambling by elementary and secondary school students and 
        vulnerable adults; 
           (iv) offer professional training in the identification, 
        referral, and treatment of compulsive gamblers; 
           (3) the likely impact on compulsive gambling of each form 
        of gambling; and 
           (4) budget recommendations for state-level compulsive 
        gambling programs and activities. 
           Sec. 2.  [325E.42] [DECEPTIVE TRADE PRACTICES; GAMBLING 
        ADVERTISING AND MARKETING CLAIMS.] 
           Subdivision 1.  [REGULATION.] All advertising or marketing 
        materials relating to the conduct of any form of legal gambling 
        in Minnesota, including informational or promotional materials, 
        must: 
           (1) be sufficiently clear to prevent deception; and 
           (2) not overstate expressly, or by implication, the 
        attributes or benefits of participating in legal gambling. 
           Subd. 2.  [ATTORNEY GENERAL'S ACTIONS.] The attorney 
        general may bring an action against any person violating this 
        section in accordance with section 8.31, except that no private 
        action is permitted to redress or correct a violation of this 
        section.  
           Subd. 3.  [ADVERTISING MEDIA EXCLUDED.] This section 
        applies to actions of the owner, publisher, agent, or employee 
        of newspapers, magazines, other printed matter, or radio or 
        television stations or other advertising media used for the 
        publication or dissemination of an advertisement or marketing 
        materials, only if the owner, publisher, agent, or employee has 
        been personally served with a certified copy of a court order or 
        consent judgment or agreement prohibiting the publication of 
        particular gambling advertising or marketing materials and 
        thereafter publishes such materials. 
           Sec. 3.  [LEGISLATIVE FINDINGS.] 
           The legislature finds that: 
           (a) The professional and amateur sports protection act of 
        1992 has been signed into law as Public Law Number 102-559. 
           (b) Public Law Number 102-559 prohibits any state from 
        operating or permitting any organized wagering on sports events, 
        but excludes those states which had as of October 2, 1992, 
        enacted legislation or had a referendum pending that would 
        legalize organized wagering on sports events, either by the 
        state or by private entities. 
           (c) By passage of Public Law Number 102-559 Congress has 
        infringed on the traditional rights of states to make their own 
        determinations as to appropriate methods of controlling or 
        combatting illegal gambling or raising state revenue, and raises 
        serious questions as to possible violations of the tenth 
        amendment to the United States Constitution. 
           (d) The exemptions granted in Public Law Number 102-559 to 
        a handful of states are unreasonable, arbitrary, and 
        discriminatory. 
           Sec. 4.  [ATTORNEY GENERAL TO CONSIDER ACTION.] 
           The attorney general shall examine and analyze the legal 
        issues involved and the propriety of bringing an action in the 
        appropriate federal court to determine the constitutionality of 
        Public Law Number 102-559 to the extent that it infringes on the 
        authority of the legislature to enact legislation relating to 
        organized wagering on sports events.  After this examination and 
        analysis the attorney general may, at the attorney general's 
        discretion, bring such an action to determine the 
        constitutionality of Public Law Number 102-559.  No such action 
        may be brought before May 1, 1995.  By March 1, 1995, the 
        attorney general shall report to the legislature on the attorney 
        general's activities under this section. 
           Sec. 5.  [ADVISORY COUNCIL.] 
           Subdivision 1.  [COUNCIL ESTABLISHED.] An advisory council 
        on gambling is created to study the conduct of all forms of 
        gambling in Minnesota and advise the governor and legislature on 
        all aspects of state policy on gambling. 
           Subd. 2.  [MEMBERSHIP.] The council consists of 14 members, 
        as follows: 
           (1) one member, appointed by the governor, who shall be the 
        person on the governor's staff who is the primary responsible 
        person on the governor's staff for gambling policy, who shall 
        act as chair of the council; 
           (2) eight members appointed by the governor, each of whom 
        must reside in a different congressional district; 
           (3) one member appointed by the attorney general who must 
        be an attorney in the attorney generals' office; and 
           (4) the chairs of the committees having jurisdiction over 
        gambling in the senate and the house of representatives, a 
        member of the minority party in the house of representatives 
        appointed by the speaker of the house and a member of the 
        minority party of the senate appointed by the subcommittee on 
        committees of the senate committee on rules and administration. 
           Subd. 3.  [DUTIES.] The council has the following duties: 
           (1) to consult with state agencies responsible for gambling 
        operation, policy, regulation, or enforcement, either on its own 
        initiative or on the initiative of the agency; 
           (2) to assist the governor in making recommendations 
        contained in the compulsive gambling report required by section 
        1; 
           (3) to advise the governor on the development of a 
        socio-economic model to support decision making on gambling 
        issues; and 
           (4) conduct the study required under subdivision 4. 
           Subd. 4.  [STUDY.] The advisory council shall study all 
        forms of gambling conducted in Minnesota.  The study shall 
        include but not be limited to the following areas and issues: 
           (1) the extent of all forms of gambling in this state; 
           (2) the purpose, intent, application, integration, and 
        relationship of the provisions of Minnesota laws relating to all 
        forms of gambling in the state; 
           (3) the relationship among the state government boards and 
        agencies that regulate gambling, including consideration of 
        abolishing the current boards that regulate gambling and 
        replacing them with a single permanent advisory board; 
           (4) the nature and extent of gambling in the state that is 
        not subject to state regulation; 
           (5) the financial and social impact of the growth of 
        gambling in the last decade; 
           (6) the likely results of authorization of use of video 
        lottery machines in the state; 
           (7) the appropriate level of regulation for the lawful 
        gambling industry in Minnesota; 
           (8) proposals for changes in taxes on pull-tabs and 
        tipboards to reflect unsold tickets; and 
           (9) expenditures of net profits from lawful gambling for 
        real estate taxes on premises used for lawful gambling. 
           Subd. 5.  [CONTENTS OF REPORT.] The advisory council's 
        report to the legislature and governor must include 
        recommendations regarding: 
           (1) development of a comprehensive public policy on 
        gambling; 
           (2) establishment of an efficient state government 
        structure for regulation of gambling; and 
           (3) implementation and funding of compulsive gambling 
        programs. 
           Subd. 6.  [STAFF.] The staff of the state lottery and 
        legislative staff shall provide administrative and staff 
        assistance when requested by the advisory council.  
        Administrative costs of the advisory council will be paid by the 
        state lottery. 
           Subd. 7.  [COOPERATION BY OTHER AGENCIES.] State agencies 
        shall, upon request of the advisory council, provide data or 
        other information that the agencies collect or possess and that 
        is necessary or useful in conducting the study and preparing the 
        report required by this section. 
           Subd. 8.  [REPORTS.] The advisory council shall, on 
        February 1, 1995, and February 1, 1996, report to the governor 
        and legislature on the results of it studies under subdivisions 
        4 and 5. 
           Sec. 6.  [SOCIO-ECONOMIC MODEL.] 
           The governor shall include in the governor's budget 
        proposals for the 1996-1997 biennium a proposal to create and 
        maintain a socio-economic model that will allow executive 
        agencies and the legislature to estimate the social, economic, 
        and public revenue effects of different forms of gambling and 
        changes in Minnesota gambling laws. 
           Sec. 7.  [INTENT.] 
           It is the intent of the legislature to establish a 
        permanent source of funding for compulsive gambling programs 
        using state revenues generated from legal forms of gambling in 
        the state and contributions from Indian tribes conducting gaming 
        under tribal-state compacts. 
           Sec. 8.  [APPROPRIATIONS.] 
           Subdivision 1.  [COMPULSIVE GAMBLING.] For the fiscal year 
        beginning July 1, 1994, the state lottery board shall deposit 
        $1,000,000 in the general fund for use by the commissioner of 
        human services to pay for compulsive gambling services.  The 
        amount deposited by the board shall be deducted from the lottery 
        prize fund established under Minnesota Statutes, section 
        349A.10, subdivision 2.  The amount deposited is appropriated to 
        the commissioner of human services for this purpose.  No more 
        than 12 percent of the amount appropriated for compulsive 
        gambling services under this section may be used to pay 
        administrative costs of the department of human services.  The 
        deposit in this section is in addition to the reimbursement 
        required by Laws 1993, chapter 146, article 3, section 4. 
           Subd. 2.  [GAMBLING CONTROL BOARD.] $45,000 is appropriated 
        from the general fund to the gambling control board for fiscal 
        year 1995.  Of this amount: 
           (1) $5,000 is for rulemaking to provide for implementation 
        of pull-tab dispensing devices; and 
           (2) $40,000 is for increased duties under article 5, 
        section 41. 
           Sec. 9.  [EFFECTIVE DATE.] 
           Sections 3 and 4 are effective the day following final 
        enactment.  Section 5 is effective the day following final 
        enactment and is repealed February 1, 1996.  Section 8 is 
        effective July 1, 1994. 
           Presented to the governor May 6, 1994 
           Signed by the governor May 10, 1994, 4:00 p.m.

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