1.1                          A bill for an act 
  1.2             relating to gambling; authorizing the state lottery to 
  1.3             offer games involving sports wagering and sports 
  1.4             wagering pools; authorizing sports bookmaking under 
  1.5             licenses issued by the director of the state lottery; 
  1.6             imposing a tax on licensed sports bookmaking; creating 
  1.7             a Minnesota active recreation fund; amending Minnesota 
  1.8             Statutes 2002, sections 349A.01, by adding a 
  1.9             subdivision; 349A.02, subdivision 3; 349A.04; 349A.06, 
  1.10            subdivisions 1, 5, 6, 7, 8, and 11; 349A.08; 349A.09; 
  1.11            349A.10, subdivisions 4 and 5; 349A.11, subdivision 1; 
  1.12            349A.12; 349A.13; 609.75, subdivision 7; proposing 
  1.13            coding for new law in Minnesota Statutes, chapter 349A.
  1.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.15     Section 1.  Minnesota Statutes 2002, section 349A.01, is 
  1.16  amended by adding a subdivision to read: 
  1.17     Subd. 14.  [SPORTS GAMES.] "Sports games" are wagering 
  1.18  pools and sports wagering systems in which winning chances or 
  1.19  wagers are determined by the outcome of professional sports 
  1.20  events. 
  1.21     Sec. 2.  Minnesota Statutes 2002, section 349A.02, 
  1.22  subdivision 3, is amended to read: 
  1.23     Subd. 3.  [POWERS AND DUTIES.] In operating the lottery the 
  1.24  director shall exercise the following powers and duties: 
  1.25     (1) adopt rules and game procedures, including game 
  1.26  procedures for sports games; 
  1.27     (2) issue lottery retailer contracts and rule on appeals of 
  1.28  decisions relating to those contracts; 
  1.29     (3) enter into lottery procurement contracts for the 
  2.1   provision of goods and services to the lottery; 
  2.2      (4) employ personnel as are required to operate the 
  2.3   lottery; 
  2.4      (5) enter into written agreements with one or more 
  2.5   government-authorized lotteries, or with an organization created 
  2.6   and controlled by those lotteries, for the operation, marketing, 
  2.7   and promotion of a joint lottery; 
  2.8      (6) adopt and publish advertising and promotional materials 
  2.9   consistent with section 349A.09; and 
  2.10     (7) take all necessary steps to ensure the integrity of, 
  2.11  and public confidence in, the state lottery. 
  2.12     Sec. 3.  Minnesota Statutes 2002, section 349A.04, is 
  2.13  amended to read: 
  2.14     349A.04 [LOTTERY GAME PROCEDURES.] 
  2.15     The director may adopt game procedures governing the 
  2.16  following elements of the lottery: 
  2.17     (1) lottery games, including sports games; 
  2.18     (2) ticket prices; 
  2.19     (3) number and size of prizes; 
  2.20     (4) methods of selecting winning tickets and determining 
  2.21  winners of sports games; and 
  2.22     (5) frequency and method of drawings. 
  2.23     The adoption of lottery game procedures is not subject to 
  2.24  chapter 14.  
  2.25     Sec. 4.  Minnesota Statutes 2002, section 349A.06, 
  2.26  subdivision 1, is amended to read: 
  2.27     Subdivision 1.  [CONTRACTS.] The director shall sell 
  2.28  tickets for the lottery and conduct sports games through lottery 
  2.29  retailers with whom the director contracts.  Contracts under 
  2.30  this section are not subject to the provisions of sections 
  2.31  16C.03, 16C.05, 16C.06, 16C.08, 16C.09, and 16C.10, and are 
  2.32  valid for a period of one year.  The director may permit a 
  2.33  retailer to sell tickets and participate in the conduct of 
  2.34  sports games at more than one business location under a contract 
  2.35  entered into under this section. 
  2.36     Sec. 5.  Minnesota Statutes 2002, section 349A.06, 
  3.1   subdivision 5, is amended to read: 
  3.2      Subd. 5.  [RESTRICTIONS ON LOTTERY RETAILERS.] (a) A 
  3.3   lottery retailer may sell lottery tickets and participate in the 
  3.4   conduct of sports games only on the premises described in the 
  3.5   contract. 
  3.6      (b) A lottery retailer must prominently display a 
  3.7   certificate issued by the director on the premises where lottery 
  3.8   tickets will be sold and sports games conducted. 
  3.9      (c) A lottery retailer must keep a complete set of books of 
  3.10  account, correspondence, and all other records necessary to show 
  3.11  fully the retailer's lottery transactions, and make them 
  3.12  available for inspection by employees of the lottery at all 
  3.13  times during business hours.  The director may require a lottery 
  3.14  retailer to furnish information as the director deems necessary 
  3.15  to carry out the purposes of this chapter, and may require an 
  3.16  audit to be made of the books of account and records.  The 
  3.17  director may select an auditor to perform the audit and may 
  3.18  require the retailer to pay the cost of the audit.  The auditor 
  3.19  has the same right of access to the books of account, 
  3.20  correspondence, and other records as is given to employees of 
  3.21  the lottery. 
  3.22     (d) A contract issued under this section may not be 
  3.23  transferred or assigned. 
  3.24     (e) The director shall require that lottery tickets may be 
  3.25  sold by retailers only for cash.  
  3.26     (f) A lottery retailer must prominently post at the point 
  3.27  of sale of lottery tickets and location where sports games are 
  3.28  conducted, in a manner approved by the commissioner of human 
  3.29  services, the toll-free telephone number established by the 
  3.30  commissioner of human services in connection with the compulsive 
  3.31  gambling program established under section 245.98. 
  3.32     Sec. 6.  Minnesota Statutes 2002, section 349A.06, 
  3.33  subdivision 6, is amended to read: 
  3.34     Subd. 6.  [RETENTION BY RETAILERS.] The director may by 
  3.35  rule provide for: 
  3.36     (1) amounts which a lottery retailer may retain from gross 
  4.1   receipts from the sale of lottery tickets and from sports games 
  4.2   in order to pay prizes to holders of winning tickets and make 
  4.3   payments on winning wagers; and 
  4.4      (2) amounts which a lottery retailer may retain from gross 
  4.5   receipts ~~from the sale of lottery tickets~~ as a commission.  
  4.6      Sec. 7.  Minnesota Statutes 2002, section 349A.06, 
  4.7   subdivision 7, is amended to read: 
  4.8      Subd. 7.  [RETAILER RENTAL PAYMENTS.] If a lottery 
  4.9   retailer's rental payments for the business premises are 
  4.10  contractually computed, in whole or in part, on the basis of a 
  4.11  percentage of retail sales, and the computation of retail sales 
  4.12  is not explicitly defined to include the sale of lottery tickets 
  4.13  and wagering in sports games, the compensation retained by the 
  4.14  sales agent for the sale of lottery tickets and from 
  4.15  participation in sports games shall be considered the amount of 
  4.16  the retail sale for purposes of computing the rental payments. 
  4.17     Sec. 8.  Minnesota Statutes 2002, section 349A.06, 
  4.18  subdivision 8, is amended to read: 
  4.19     Subd. 8.  [PROCEEDS OF SALES.] All proceeds from the sale 
  4.20  of lottery tickets and from participation in sports games 
  4.21  received by a lottery retailer constitute a trust fund until 
  4.22  paid to the director.  The lottery retailer is personally liable 
  4.23  for all proceeds. 
  4.24     Sec. 9.  Minnesota Statutes 2002, section 349A.06, 
  4.25  subdivision 11, is amended to read: 
  4.26     Subd. 11.  [CANCELLATION, SUSPENSION, AND REFUSAL TO RENEW 
  4.27  CONTRACTS OR LOCATIONS.] (a) The director shall cancel the 
  4.28  contract of any lottery retailer or prohibit a lottery retailer 
  4.29  from selling lottery tickets or participating in the conduct of 
  4.30  sports games at a business location who: 
  4.31     (1) has been convicted of a felony or gross misdemeanor; 
  4.32     (2) has committed fraud, misrepresentation, or deceit; 
  4.33     (3) has provided false or misleading information to the 
  4.34  lottery; or 
  4.35     (4) has acted in a manner prejudicial to public confidence 
  4.36  in the integrity of the lottery. 
  5.1      (b) The director may cancel, suspend, or refuse to renew 
  5.2   the contract of any lottery retailer or prohibit a lottery 
  5.3   retailer from selling lottery tickets or participating in the 
  5.4   conduct of sports games at a business location who: 
  5.5      (1) changes business location; 
  5.6      (2) fails to account for lottery tickets received ~~or~~, the 
  5.7   proceeds from tickets sold, or the proceeds from sports games; 
  5.8      (3) fails to remit funds to the director in accordance with 
  5.9   the director's rules; 
  5.10     (4) violates a law or a rule or order of the director; 
  5.11     (5) fails to comply with any of the terms in the lottery 
  5.12  retailer's contract; 
  5.13     (6) fails to file a bond, securities, or a letter of credit 
  5.14  as required under subdivision 3; 
  5.15     (7) in the opinion of the director fails to maintain a 
  5.16  sufficient sales volume to justify continuation as a lottery 
  5.17  retailer; or 
  5.18     (8) has violated section 340A.503, subdivision 2, clause 
  5.19  (1), two or more times within a two-year period. 
  5.20     (c) The director may also cancel, suspend, or refuse to 
  5.21  renew a lottery retailer's contract or prohibit a lottery 
  5.22  retailer from selling lottery tickets or participating in the 
  5.23  conduct of sports games at a business location if there is a 
  5.24  material change in any of the factors considered by the director 
  5.25  under subdivision 2.  
  5.26     (d) A contract cancellation, suspension, refusal to renew, 
  5.27  or prohibiting a lottery retailer from selling lottery tickets 
  5.28  or participating in the conduct of sports games at a business 
  5.29  location under this subdivision is a contested case under 
  5.30  sections 14.57 to 14.69 and is in addition to any criminal 
  5.31  penalties provided for a violation of law or rule. 
  5.32     (e) The director may temporarily suspend a contract or 
  5.33  temporarily prohibit a lottery retailer from selling lottery 
  5.34  tickets at a business location without notice for any of the 
  5.35  reasons specified in this subdivision provided that a hearing is 
  5.36  conducted within seven days after a request for a hearing is 
  6.1   made by a lottery retailer.  Within 20 days after receiving the 
  6.2   administrative law judge's report, the director shall issue an 
  6.3   order vacating the temporary suspension or prohibition or making 
  6.4   any other appropriate order.  If no hearing is requested within 
  6.5   30 days of the temporary suspension or prohibition taking 
  6.6   effect, the suspension or prohibition becomes permanent unless 
  6.7   the director vacates or modifies the order.  
  6.8      Sec. 10.  Minnesota Statutes 2002, section 349A.08, is 
  6.9   amended to read: 
  6.10     349A.08 [LOTTERY PRIZES.] 
  6.11     Subdivision 1.  [AGREEMENT BY PLAYERS.] A person who buys a 
  6.12  lottery ticket or participates in a sports game agrees to be 
  6.13  bound by the rules applicable to the particular lottery game for 
  6.14  which the ticket is purchased or to the sports game entered.  
  6.15  The player acknowledges that the determination of whether a 
  6.16  ticket or wager is a valid winning ticket or wager is subject to 
  6.17  the rules of the director, claims procedures established by the 
  6.18  director for that game, and any confidential or public 
  6.19  validation tests established by the director for that game. 
  6.20     Subd. 2.  [PRIZES NOT ASSIGNABLE.] A prize or sports game 
  6.21  payout on a winning wager in the state lottery is not assignable 
  6.22  except as provided in subdivision 3 and except that: 
  6.23     (1) if a prize winner dies before the prize or payout is 
  6.24  paid, the director shall pay the prize or payout to the prize 
  6.25  winner's estate; and 
  6.26     (2) the director may pay a prize or payout to a person 
  6.27  other than the winner of that prize or payout under an 
  6.28  appropriate court order. 
  6.29     Subd. 3.  [PRIZES WON BY PERSONS UNDER AGE 18.] The 
  6.30  following provisions govern the payment of a lottery prize and 
  6.31  sports game payout to a person under age 18: 
  6.32     (1) if the prize or payout is less than $5,000, the 
  6.33  director may give a draft, payable to the order of the person 
  6.34  under age 18, to the person's parents, custodial parent if one 
  6.35  parent has custody, guardian, or other adult member of the 
  6.36  person's family; and 
  7.1      (2) if the prize or payout is $5,000 or more, the director 
  7.2   shall deposit the prize with the district court and section 
  7.3   540.08 applies to the investment and distribution of the money. 
  7.4      Subd. 4.  [DISCHARGE OF LIABILITY.] The payment of a 
  7.5   prize or sports game payout by the director discharges the 
  7.6   director and the state of all liability for the prize. 
  7.7      Subd. 5.  [PAYMENT; UNCLAIMED PRIZES.] A prize in the state 
  7.8   lottery and payout from a sports game must be claimed by the 
  7.9   winner within one year of (1) the date of the drawing at which 
  7.10  the prize was awarded or the last day sales were authorized for 
  7.11  a game where a prize was determined in a manner other than by 
  7.12  means of a drawing, or (2) the date on which the sports game was 
  7.13  entered, whichever applies.  If a valid claim is not made for a 
  7.14  prize or payout payable directly by the lottery by the end of 
  7.15  this period, the prize money or payout is considered unclaimed 
  7.16  and the winner of the prize or payout shall have no further 
  7.17  claim to the prize.  A prize or payout won by a person who 
  7.18  purchased the winning ticket or entered the sports game in 
  7.19  violation of section 349A.12, subdivision 1, or won by a person 
  7.20  ineligible to be awarded a prize or payout under subdivision 7 
  7.21  must be treated as an unclaimed prize or payout under this 
  7.22  section.  The director shall transfer 70 percent of all 
  7.23  unclaimed prize and payout money at the end of each fiscal year 
  7.24  from the lottery cash flow account as follows:  of the 70 
  7.25  percent, 40 percent must be transferred to the Minnesota 
  7.26  environment and natural resources trust fund and 60 percent must 
  7.27  be transferred to the general fund.  The remaining 30 percent of 
  7.28  the unclaimed prize money must be added by the director to prize 
  7.29  pools of subsequent lottery games. 
  7.30     Subd. 6.  [INSTALLMENT PAYMENTS.] If the director decides 
  7.31  to pay all or part of a prize or sports game payout in the form 
  7.32  of installments over a period of years, the director shall 
  7.33  provide for the payment of all installments by: 
  7.34     (1) entering into a contract with a financially responsible 
  7.35  person or firm or by purchasing an annuity to provide for the 
  7.36  payment of the installments; or 
  8.1      (2) establishing and maintaining as a separate and 
  8.2   independent fund outside the state treasury a reserve account 
  8.3   with sufficient funds for the payment of the installments as 
  8.4   they become due. 
  8.5      Subd. 7.  [PAYMENTS PROHIBITED.] (a) No prize or sports 
  8.6   game payout may be paid to the director or an employee of the 
  8.7   lottery, or a member of their families residing in the same 
  8.8   household of the member, director, or employee.  No prize or 
  8.9   payout may be paid to an officer or employee of a vendor which 
  8.10  at the time the game or drawing was being conducted was involved 
  8.11  with providing goods or services to the lottery under a lottery 
  8.12  procurement contract. 
  8.13     (b) No prize may be paid for a stolen, altered, or 
  8.14  fraudulent ticket. 
  8.15     Subd. 8.  [WITHHOLDING OF DELINQUENT STATE TAXES OR OTHER 
  8.16  DEBTS.] The director shall report the name, address, and social 
  8.17  security number of each winner of a lottery prize or sports game 
  8.18  payout of $600 or more to the department of revenue to determine 
  8.19  whether the person who has won the prize is delinquent in 
  8.20  payment of state taxes or owes a debt as defined in section 
  8.21  270A.03, subdivision 5.  If the person is delinquent in payment 
  8.22  of state taxes or owes a debt as defined in section 270A.03, 
  8.23  subdivision 5, the director shall withhold the delinquent amount 
  8.24  from the person's prize for remittance to the department of 
  8.25  revenue for payment of the delinquent taxes or distribution to a 
  8.26  claimant agency in accordance with chapter 270A.  Section 
  8.27  270A.10 applies to the priority of claims. 
  8.28     Subd. 9.  [PRIVACY.] The phone number and street address of 
  8.29  a winner of a lottery prize or sports game payout is private 
  8.30  data on individuals under chapter 13. 
  8.31     Sec. 11.  Minnesota Statutes 2002, section 349A.09, is 
  8.32  amended to read: 
  8.33     349A.09 [LOTTERY ADVERTISING.] 
  8.34     Subdivision 1.  [ODDS; REQUIRED INFORMATION.] The director 
  8.35  shall include on each brochure, pamphlet, booklet, or other 
  8.36  similar material the director publishes to promote or explain 
  9.1   any lottery game or sports game, a prominent and clear statement 
  9.2   of the approximate odds of winning each prize offered in that 
  9.3   lottery game or sports game.  Each lottery retailer must post 
  9.4   prominently at or near the point of ticket sale or point of 
  9.5   entry into a sports game a notice or notices printed and 
  9.6   provided by the director of the approximate odds of winning each 
  9.7   prize in each game for which the lottery retailer sells 
  9.8   tickets and each sports game which the retailer conducts on 
  9.9   behalf of the director. 
  9.10     Subd. 2.  [CONTENT OF ADVERTISING.] (a) Advertising and 
  9.11  promotional materials for the lottery, including advertising and 
  9.12  promotional materials for sports games, adopted or published by 
  9.13  the director must be consistent with the dignity of the state 
  9.14  and may only: 
  9.15     (1) present information on how lottery games or sports 
  9.16  games are played, prizes or payouts offered, where and how 
  9.17  tickets may be purchased or sports games entered, when lottery 
  9.18  game drawings are held, and odds on the games advertised; 
  9.19     (2) identify state programs supported by lottery net 
  9.20  revenues; 
  9.21     (3) present the lottery or sports game as a form of 
  9.22  entertainment; or 
  9.23     (4) state the winning numbers or identity of winners of 
  9.24  lottery prizes or sports game payouts.  
  9.25     (b) The director may not adopt or publish any advertising 
  9.26  for the lottery which: 
  9.27     (1) presents directly or indirectly any lottery game or 
  9.28  sports game as a potential means of relieving any person's 
  9.29  financial difficulties; 
  9.30     (2) is specifically targeted with the intent to exploit a 
  9.31  person, a specific group or economic class of people, or a 
  9.32  religious holiday by use of a religious theme or symbol; 
  9.33     (3) presents the purchase of a lottery ticket or 
  9.34  participation in a sports game as a financial investment or a 
  9.35  way to achieve financial security; 
  9.36     (4) uses the name or picture of a current elected state 
 10.1   official to promote a lottery or sports game; 
 10.2      (5) exhorts the public to bet by directly or indirectly 
 10.3   misrepresenting a person's chance of winning a prize or a 
 10.4   payout; or 
 10.5      (6) denigrates a person who does not buy a lottery ticket 
 10.6   or participate in a sports game, or unduly praises a person who 
 10.7   does buy a ticket or participates in a sports game. 
 10.8      Subd. 3.  [PRIZES; REQUIRED INFORMATION.] The director must 
 10.9   include, in any publication or print advertising which refers to 
 10.10  a prize or payout which is or may be paid in installments, a 
 10.11  statement to the effect that the prize or payout will be or may 
 10.12  be paid in installments. 
 10.13     Sec. 12.  Minnesota Statutes 2002, section 349A.10, 
 10.14  subdivision 4, is amended to read: 
 10.15     Subd. 4.  [DEPOSIT OF RECEIPTS.] (a) The director may 
 10.16  require lottery retailers to: 
 10.17     (1) deposit in a separate account to the credit of the 
 10.18  lottery fund, in banks designated by the director, all money 
 10.19  received by the lottery retailer from the sale of lottery 
 10.20  tickets and participation in sports games, less money retained 
 10.21  as the lottery retailer's commission and for payment of 
 10.22  prizes and payouts; 
 10.23     (2) file with the director reports of the lottery 
 10.24  retailer's receipts and transactions in ticket sales and sports 
 10.25  game wagers in a form that the director prescribes; and 
 10.26     (3) allow money deposited by the lottery retailer from the 
 10.27  sale of lottery tickets and participation in sports games to be 
 10.28  transferred to the lottery through electronic fund transfer. 
 10.29     (b) The director may make arrangements for any person, 
 10.30  including a financial institution, to perform functions, 
 10.31  activities, or services in connection with the receipt and 
 10.32  distribution of lottery revenues. 
 10.33     (c) A lottery retailer who fails to pay any money due to 
 10.34  the director within the time prescribed by the director shall 
 10.35  pay interest on the amount owed at the rate determined by rule. 
 10.36     Sec. 13.  Minnesota Statutes 2002, section 349A.10, 
 11.1   subdivision 5, is amended to read: 
 11.2      Subd. 5.  [DEPOSIT OF NET PROCEEDS.] (a) Within 30 days 
 11.3   after the end of each month, the director shall deposit in the 
 11.4   state treasury the net proceeds of the lottery, which is the 
 11.5   balance in the lottery fund after transfers to the lottery prize 
 11.6   fund and credits to the lottery operations account.  
 11.7      (b) Of the net proceeds, other than proceeds from sports 
 11.8   games, 40 percent must be credited to the Minnesota environment 
 11.9   and natural resources trust fund and the remainder must be 
 11.10  credited to the general fund.  
 11.11     (c) The net proceeds from sports games must be deposited in 
 11.12  the Minnesota active recreation fund. 
 11.13     Sec. 14.  Minnesota Statutes 2002, section 349A.11, 
 11.14  subdivision 1, is amended to read: 
 11.15     Subdivision 1.  [LOTTERY TICKET; RETAILER.] The director, 
 11.16  an employee of the lottery, a member of the immediate family of 
 11.17  the director or employee residing in the same household may not: 
 11.18     (1) purchase a lottery ticket or participate in a sports 
 11.19  game; or 
 11.20     (2) have any personal pecuniary interest in any vendor 
 11.21  holding a lottery procurement contract, or in any lottery 
 11.22  retailer; or 
 11.23     (3) receive any gift, gratuity, or other thing of value, 
 11.24  excluding food or beverage, from any lottery vendor or lottery 
 11.25  retailer, or person applying to be a retailer or vendor, in 
 11.26  excess of $100 in any calendar year.  
 11.27     Sec. 15.  Minnesota Statutes 2002, section 349A.12, is 
 11.28  amended to read: 
 11.29     349A.12 [PROHIBITED ACTS.] 
 11.30     Subdivision 1.  [PURCHASE BY MINORS.] A person under the 
 11.31  age of 18 years may not buy or redeem for a prize a ticket in 
 11.32  the state lottery, or participate in a sports game. 
 11.33     Subd. 2.  [SALE TO MINORS.] A lottery retailer may not sell 
 11.34  and a lottery retailer or other person may not (1) furnish or 
 11.35  redeem for a prize a ticket in the state lottery to any person 
 11.36  under the age of 18 years, (2) allow a person under the age of 
 12.1   18 years to participate in a sports game, or (3) make a sports 
 12.2   game payout to a person under the age of 18 years.  It is an 
 12.3   affirmative defense to a charge under this subdivision for the 
 12.4   lottery retailer or other person to prove by a preponderance of 
 12.5   the evidence that the lottery retailer or other person 
 12.6   reasonably and in good faith relied upon representation of proof 
 12.7   of age described in section 340A.503, subdivision 6, in making 
 12.8   the sale or furnishing or redeeming the ticket, or allowing 
 12.9   participation in or making a payout for a sports game. 
 12.10     Subd. 3.  [PROHIBITED SALES.] (a) A person other than a 
 12.11  lottery retailer may not sell a ticket in the state lottery or 
 12.12  participate in the conduct of a sports game. 
 12.13     (b) A lottery retailer may not sell a ticket for a price 
 12.14  other than the price set by the director. 
 12.15     Subd. 4.  [LOTTERY RETAILERS AND VENDORS.] A person who is 
 12.16  a lottery retailer, or is applying to be a lottery retailer, a 
 12.17  person applying for a contract with the director, or a person 
 12.18  under contract with the director to supply goods or services to 
 12.19  lottery may not pay, give, or make any economic opportunity, 
 12.20  gift, loan, gratuity, special discount, favor, hospitality, or 
 12.21  service, excluding food or beverage, having an aggregate value 
 12.22  of over $100 in any calendar year to the director, employee of 
 12.23  the lottery, or to a member of the immediate family residing in 
 12.24  the same household as that person.  
 12.25     Subd. 5.  [EXCEPTIONS.] Nothing in this chapter prohibits 
 12.26  giving a state lottery ticket or a wager in a sports game as a 
 12.27  gift, provided that a state lottery ticket or sports game wager 
 12.28  may not be given to a person under the age of 18. 
 12.29     Subd. 6.  [VIOLATIONS.] A violation of subdivision 1 or 2 
 12.30  or a rule adopted by the director is a misdemeanor.  A violation 
 12.31  of subdivision 3 or 4 is a gross misdemeanor. 
 12.32     Sec. 16.  Minnesota Statutes 2002, section 349A.13, is 
 12.33  amended to read: 
 12.34     349A.13 [RESTRICTIONS.] 
 12.35     Nothing in this chapter: 
 12.36     (1) authorizes the director to conduct a lottery game or 
 13.1   contest, excluding sports games, the winner or winners of which 
 13.2   are determined by the result of a sporting event other than a 
 13.3   horse race conducted under chapter 240; 
 13.4      (2) authorizes the director to install or operate a lottery 
 13.5   device operated by coin or currency which when operated 
 13.6   determines the winner of a game; and 
 13.7      (3) authorizes the director to sell pull-tabs as defined 
 13.8   under section 349.12, subdivision 32. 
 13.9      Sec. 17.  [349A.18] [MINNESOTA ACTIVE RECREATION FUND.] 
 13.10     Subdivision 1.  [FUND CREATED.] A Minnesota active 
 13.11  recreation fund is created in the state treasury, consisting of 
 13.12  money credit to the fund under section 349A.10, subdivision 5, 
 13.13  paragraph (c), and other money credited to the fund by law. 
 13.14     Subd. 2.  [USES OF FUND.] Money in the Minnesota active 
 13.15  recreation fund may be appropriated by law only for: 
 13.16     (1) children's sports programs; 
 13.17     (2) amateur sports facilities; and 
 13.18     (3) hiking and bicycling trails. 
 13.19     Sec. 18.  [349A.19] [SPORTS BOOKMAKING LICENSE.] 
 13.20     Subdivision 1.  [LICENSE.] Notwithstanding sections 609.755 
 13.21  and 609.76, a person may engage in sports bookmaking if the 
 13.22  person holds a license from the director under this section.  A 
 13.23  license under this section authorizes the licensee to accept 
 13.24  wagers on professional sports events. 
 13.25     Subd. 2.  [LICENSE APPLICATION.] An application for a 
 13.26  license under this section must be made to the director on a 
 13.27  form the director prescribes.  The application must be 
 13.28  accompanied by an affidavit of qualification that the applicant 
 13.29  has not (1) been convicted within the previous five years of a 
 13.30  felony or gross misdemeanor, a crime involving fraud or 
 13.31  misrepresentation, or a gambling-related offense, or (2) been 
 13.32  determined to have violated a rule of the director, the racing 
 13.33  commission, or the gambling control board, or a gambling-related 
 13.34  regulatory body in another state. 
 13.35     Subd. 3.  [INVESTIGATION.] The director shall investigate 
 13.36  each applicant for a license under this section to the extent 
 14.1   the director deems necessary, and may request the assistance of 
 14.2   and may reimburse the division of alcohol and gambling 
 14.3   enforcement in investigating applicants.  The director may 
 14.4   require by rule that an applicant be fingerprinted or furnish 
 14.5   the applicant's fingerprints.  The director may charge an 
 14.6   applicant an investigation fee to cover the cost of the 
 14.7   investigation, and shall from this fee reimburse the division of 
 14.8   alcohol and gambling enforcement for its share of the cost of 
 14.9   the investigation.  The director has access to all criminal 
 14.10  history data compiled by the division of alcohol and gambling 
 14.11  enforcement on licensees and applicants under this section.  The 
 14.12  director may cooperate with national and international 
 14.13  organizations and agencies in conducting investigations.  
 14.14     Subd. 4.  [ISSUANCE.] If the director determines that an 
 14.15  applicant is not disqualified under subdivision 3 and that 
 14.16  licensing the applicant is consistent with the public health, 
 14.17  welfare, and safety, the director shall issue a license to an 
 14.18  applicant or renew a license already issued.  Licenses issued 
 14.19  under this subdivision are valid for one year from the date of 
 14.20  issuance. 
 14.21     Subd. 5.  [REVOCATION; REFUSAL TO RENEW.] (a) The director 
 14.22  may revoke or refuse to renew a license under this section for 
 14.23  (1) conduct, including a violation of a law or rule, that the 
 14.24  director determines adversely affects the integrity of sports 
 14.25  bookmaking, and (2) intentionally making a false statement in a 
 14.26  license application.  The director may suspend a license for a 
 14.27  period of time the director determines for a violation of law or 
 14.28  rule. 
 14.29     (b) A license revocation or suspension under this 
 14.30  subdivision for more than 90 days is a contested case under 
 14.31  sections 14.57 to 14.69 of the Administrative Procedure Act and 
 14.32  is in addition to criminal penalties imposed for a violation of 
 14.33  law or rule.  The director may summarily suspend a license for 
 14.34  more than 90 days prior to a contested case hearing where it is 
 14.35  necessary to ensure the integrity of sports bookmaking.  A 
 14.36  contested case hearing must be held within 20 days of the 
 15.1   summary suspension and the administrative law judge's report 
 15.2   must be issued within 20 days from the close of the hearing 
 15.3   record.  In all cases involving summary suspension the director 
 15.4   must issue its final decision within 30 days from receipt of the 
 15.5   report of the administrative law judge and subsequent exceptions 
 15.6   and argument under section 14.61. 
 15.7      Subd. 6.  [LICENSE FEE.] The director shall set the fee for 
 15.8   a license under this section in an amount necessary to defray 
 15.9   all expenses of the director in issuing and enforcing the terms 
 15.10  of the license. 
 15.11     Subd. 7.  [BOND.] The director may require that a licensee 
 15.12  under this section post a bond, securities, or an irrevocable 
 15.13  letter of credit, in an amount as the director deems necessary, 
 15.14  to protect the integrity of sports bookmaking and the interests 
 15.15  of persons making wagers with the licensee.  If securities are 
 15.16  deposited or an irrevocable letter of credit filed, the 
 15.17  securities or letter of credit must be of a type or in the form 
 15.18  provided under section 349A.07, subdivision 5, paragraphs (b) 
 15.19  and (c). 
 15.20     Subd. 8.  [NONAPPLICABILITY.] Sections 541.20, 541.21, 
 15.21  609.755, 609.76, and 609.762 do not apply to activities licensed 
 15.22  under this section. 
 15.23     Sec. 19.  [349A.20] [LICENSED SPORTS BOOKMAKING TAX.] 
 15.24     Subdivision 1.  [IMPOSITION OF TAX.] An excise tax is 
 15.25  imposed on the gross revenues of persons licensed under section 
 15.26  349A.19.  The rate of the tax is: 
 15.27     (1) For a person with gross revenues of $50,000 or less in 
 15.28  the month being reported, three percent of gross revenues. 
 15.29     (2) For a person with gross revenues of more than $50,000 
 15.30  but less than $134,000 in the month being reported, four percent 
 15.31  of gross revenues.  
 15.32     (3) For a person with gross revenues of $134,000 or more in 
 15.33  the month being reported, 6.25 percent of gross revenues. 
 15.34     Subd. 2.  [GROSS REVENUES DEFINED.] For purposes of this 
 15.35  section, "gross revenues" means the total value of all wagers 
 15.36  accepted by a person licensed under section 349A.19, less 
 16.1   amounts paid out by those persons as payouts on winning wagers.  
 16.2   In determining the value or amount of any wager for purposes of 
 16.3   this section, all charges incident to the placing of the wager 
 16.4   must be included. 
 16.5      Subd. 3.  [TAX RETURNS.] A person licensed under section 
 16.6   349A.19 must file monthly tax returns with the commissioner of 
 16.7   revenue, in the form required by the commissioner, of all 
 16.8   bookmaking activity, and shall include information on all bets 
 16.9   recorded, accepted, forwarded, and placed.  The returns must be 
 16.10  filed on or before the 20th day of the month following the month 
 16.11  in which the bets reported were recorded, accepted, forwarded, 
 16.12  or placed.  The tax imposed by this section is due and payable 
 16.13  at the time when the returns are filed. 
 16.14     Subd. 4.  [DEPOSIT OF REVENUE.] Net proceeds from the tax 
 16.15  imposed under this section must be deposited in the Minnesota 
 16.16  active recreation fund. 
 16.17     Sec. 20.  Minnesota Statutes 2002, section 609.75, 
 16.18  subdivision 7, is amended to read: 
 16.19     Subd. 7.  [SPORTS BOOKMAKING.] Sports bookmaking is the 
 16.20  activity of intentionally receiving, recording or forwarding 
 16.21  within any 30-day period more than five bets, or offers to bet, 
 16.22  that total more than $2,500 on any one or more sporting events.  
 16.23  For purposes of this chapter and chapter 297E, "sports 
 16.24  bookmaking" does not include activities licensed under section 
 16.25  349A.19. 
 16.26     Sec. 21.  [REPORT.] 
 16.27     The director of the state lottery shall report to the 
 16.28  legislature by January 1, 2005, on the present status and future 
 16.29  prospects of legal and illegal sports bookmaking in Minnesota, 
 16.30  and recommended changes in this act. 
 16.31     Sec. 22.  [EFFECTIVE DATE.] 
 16.32     Sections 1 to 21 are effective July 1, 2003.