1.1                          A bill for an act 
  1.2             relating to gambling; state lottery; providing for 
  1.3             gaming machines; establishing horse racing purse 
  1.4             payments; amending Minnesota Statutes 2000, sections 
  1.5             299L.07, subdivision 2a; 349A.01, by adding 
  1.6             subdivisions; 541.21; 609.761, subdivision 2; 
  1.7             proposing coding for new law in Minnesota Statutes, 
  1.8             chapter 349A. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2000, section 299L.07, 
  1.11  subdivision 2a, is amended to read: 
  1.12     Subd. 2a.  [RESTRICTIONS.] (a) A manufacturer licensed 
  1.13  under this section may sell, offer to sell, lease, or rent, in 
  1.14  whole or in part, a gambling device only to a distributor 
  1.15  licensed under this section or to the state lottery as 
  1.16  authorized under chapter 349A. 
  1.17     (b) A distributor licensed under this section may sell, 
  1.18  offer to sell, market, rent, lease, or otherwise provide, in 
  1.19  whole or in part, a gambling device only to: 
  1.20     (1) the governing body of a federally recognized Indian 
  1.21  tribe that is authorized to operate the gambling device under a 
  1.22  tribal state compact under the Indian Gaming Regulatory Act, 
  1.23  Public Law Number 100-497, and future amendments to it; 
  1.24     (2) a person for use in the person's dwelling for display 
  1.25  or amusement purposes in a manner that does not afford players 
  1.26  an opportunity to obtain anything of value; 
  1.27     (3) another distributor licensed under this section; or 
  2.1      (4) a person in another state who is authorized under the 
  2.2   laws of that state to possess the gambling device; or 
  2.3      (5) the state lottery as authorized under chapter 349A. 
  2.4      Sec. 2.  Minnesota Statutes 2000, section 349A.01, is 
  2.5   amended by adding a subdivision to read: 
  2.6      Subd. 14.  [GAMING MACHINE.] "Gaming machine" means any 
  2.7   machine in which a coin token or other currency is deposited to 
  2.8   play a game that uses a video display and microprocessors or an 
  2.9   electromechanical device with a spinning reel. 
  2.10     Sec. 3.  Minnesota Statutes 2000, section 349A.01, is 
  2.11  amended by adding a subdivision to read: 
  2.12     Subd. 15.  [GAMING MACHINE GAME.] "Gaming machine game" 
  2.13  means a game operated by a gaming machine as authorized by the 
  2.14  director. 
  2.15     Sec. 4.  Minnesota Statutes 2000, section 349A.01, is 
  2.16  amended by adding a subdivision to read: 
  2.17     Subd. 16.  [GAMING MACHINE PLAY.] "Gaming machine play" 
  2.18  means an electronic record that proves participation in a gaming 
  2.19  machine game. 
  2.20     Sec. 5.  Minnesota Statutes 2000, section 349A.01, is 
  2.21  amended by adding a subdivision to read: 
  2.22     Subd. 17.  [ADJUSTED GROSS GAMING MACHINE 
  2.23  REVENUE.] "Adjusted gross gaming machine revenue" means the sum 
  2.24  of all money received by the lottery for gaming machine plays, 
  2.25  less the amount paid out in prizes for gaming machine games. 
  2.26     Sec. 6.  [349A.161] [VENDOR CONTRACTS; GAMING MACHINES.] 
  2.27     Subdivision 1.  [PROCUREMENT CONTRACTS.] Notwithstanding 
  2.28  the provisions of section 349A.07, the director may enter into 
  2.29  contracts for the procurement of gaming machines or any other 
  2.30  contract necessary for maintaining, advertising, promoting, or 
  2.31  monitoring gaming machines. 
  2.32     Subd. 2.  [LOCATION CONTRACT.] The director may enter into 
  2.33  a contract with a person to provide locations for and services 
  2.34  related to gaming machines.  Contracts entered into under this 
  2.35  section are not subject to chapter 16B.  The director may only 
  2.36  enter a contract under this subdivision with a person that holds 
  3.1   a class A license under chapter 240.  The gaming machines may 
  3.2   only be placed at the racetrack for which the class A license 
  3.3   under chapter 240 was issued.  The racetrack must have been 
  3.4   operating as a racetrack prior to the effective date of this 
  3.5   act.  Contracts entered into must provide for reimbursement for 
  3.6   any fair market rental, leasehold improvement, and expenses.  
  3.7   The contract must provide that the location provider be paid a 
  3.8   commission in an amount sufficient to ensure the financial 
  3.9   security of the host facility and of the horse racing activities 
  3.10  that take place there.  The director may also contract directly 
  3.11  with the location provider for other goods and services deemed 
  3.12  necessary for the maintenance and operation of the gaming 
  3.13  machines or related facilities. 
  3.14     Subd. 3.  [RACING PURSES.] From the commission received 
  3.15  pursuant to the location contract, the location provider must 
  3.16  set aside an amount equal to not less than six percent of the 
  3.17  adjusted gross gaming machine revenues to be used for purses for 
  3.18  live horse races conducted by the location provider.  Purse 
  3.19  payments made pursuant to this subdivision are in addition to 
  3.20  purse payments otherwise established by law or contract.  Twenty 
  3.21  percent of the money set aside for purses pursuant to this 
  3.22  subdivision shall be transferred to the racing commission and 
  3.23  used for the purposes set forth in section 240.18, subdivisions 
  3.24  2, paragraph (d), and subdivision 3, paragraph (b), subject to 
  3.25  the proportionality requirement set forth in section 240.18, 
  3.26  subdivision 1. 
  3.27     Subd. 4.  [CONFLICT OF INTEREST.] The director or any 
  3.28  employee of the lottery, or a member of their immediate family 
  3.29  residing in the same household, must not have any personal 
  3.30  pecuniary interest in a vendor holding a contract with the 
  3.31  lottery under this section. 
  3.32     Sec. 7.  [349A.17] [GAMING MACHINES.] 
  3.33     Subdivision 1.  [SPECIFICATIONS.] Gaming machines must: 
  3.34     (1) maintain on nonresettable meters a permanent record, 
  3.35  capable of being printed out, of all transactions by the machine 
  3.36  and all entries into the machine; and 
  4.1      (2) be capable of being linked electronically to a central 
  4.2   communication system to provide auditing program information as 
  4.3   required by the director. 
  4.4      Subd. 2.  [GAMES.] The director shall specify the games 
  4.5   that may be placed on a gaming machine as set forth under 
  4.6   section 349A.04.  Gaming machines may conduct pari-mutuel 
  4.7   wagering and display horse races pursuant to specifications set 
  4.8   forth by the director. 
  4.9      Subd. 3.  [EXAMINATION OF MACHINES.] The director shall 
  4.10  examine prototypes of gaming machines and require that the 
  4.11  manufacturer of the machine pay the cost of the examination.  
  4.12  The director may contract for the examination of gaming machines.
  4.13     Subd. 4.  [TESTING OF MACHINES.] The director may require 
  4.14  working models of a gaming machine to be transported to the 
  4.15  locations the director designates for testing, examination, and 
  4.16  analysis.  The manufacturer shall pay all costs for testing, 
  4.17  examination, analysis, and transportation of the machine model. 
  4.18     Subd. 5.  [PRIZES.] A person who plays a gaming machine 
  4.19  agrees to be bound by the rules and game procedures applicable 
  4.20  to that particular gaming machine game.  The player acknowledges 
  4.21  that the determination of whether the player has won a prize is 
  4.22  subject to the rules and game procedures adopted by the 
  4.23  director, claim procedures established by the director for the 
  4.24  game, and any confidential or public validation tests 
  4.25  established by the director for that game.  A person under 18 
  4.26  years of age may not claim a prize from the operation of a 
  4.27  gaming machine.  A prize claimed from the play of a gaming 
  4.28  machine game is not subject to the provisions of section 
  4.29  349A.08, subdivision 8.  
  4.30     Subd. 6.  [PROHIBITIONS.] (a) A person under the age of 18 
  4.31  years may not play a game on a gaming machine and the lottery 
  4.32  may not allow a person under the age of 18 years to play a game 
  4.33  on a gaming machine. 
  4.34     (b) The director or any employee of the lottery, or a 
  4.35  member of their immediate family residing in the same household, 
  4.36  may not play a game on a gaming machine or receive a prize from 
  5.1   the operation of a gaming machine. 
  5.2      Subd. 7.  [COMPULSIVE GAMBLING NOTICE.] The director shall 
  5.3   prominently post, in the area where the gaming machines are 
  5.4   located, the toll-free telephone number established by the 
  5.5   commissioner of human services in connection with the compulsive 
  5.6   gambling program established under section 245.98.  The director 
  5.7   and the location provider shall establish a proactive plan to 
  5.8   identify problem gamblers and take appropriate action. 
  5.9      Sec. 8.  [349A.18] [ADJUSTED GROSS GAMING MACHINE REVENUE.] 
  5.10     Subdivision 1.  [DEPOSIT OF RECEIPTS.] The director shall 
  5.11  deposit the adjusted gross machine revenue into the lottery fund.
  5.12     Subd. 2.  [LOTTERY OPERATIONS.] Notwithstanding section 
  5.13  349A.10, subdivision 3, paragraphs (b) and (c), the director may 
  5.14  credit, in any fiscal year, up to 52 percent of the adjusted 
  5.15  gross gaming machine revenue to the lottery operations account 
  5.16  established under section 349A.10, subdivision 3, for the 
  5.17  operation, promotion, advertising, and placement of gaming 
  5.18  machines.  The director may credit up to an additional eight 
  5.19  percent for the procurement and maintenance of the machines.  
  5.20  Notwithstanding the provisions of this subdivision, the director 
  5.21  may create a net operation reserve and deposit funds as 
  5.22  necessary to meet the operating expenses of the lottery.  
  5.23  However, the amount credited, in any fiscal year, to the net 
  5.24  operating reserve account, shall not exceed five percent of the 
  5.25  adjusted gross revenue and no more than 65 percent of the 
  5.26  adjusted gross revenue shall be credited to the lottery 
  5.27  operations account and the net operating reserve account in any 
  5.28  one fiscal year.  From the amounts credited to the lottery 
  5.29  operation account, the director, for the purpose of off-setting 
  5.30  some or all of the increased costs of government services, shall 
  5.31  annually remit an amount equal to one-half of one percent of the 
  5.32  gross gaming machine revenue to both the city and the county 
  5.33  where the gaming machines are located. 
  5.34     Sec. 9.  [349A.20] [LOCAL LICENSES.] 
  5.35     No political subdivision may require a local license to 
  5.36  operate a gaming machine, restrict or regulate the placement of 
  6.1   a gaming machine, or impose a tax or fee on the business of 
  6.2   operating gaming machines. 
  6.3      Sec. 10.  [349A.21] [CRIMINAL HISTORY.] 
  6.4      The director has access to all criminal history data 
  6.5   compiled by the director of gambling enforcement on a person 
  6.6   under contract with the lottery to provide goods or services 
  6.7   under section 349A.161. 
  6.8      Sec. 11.  [349A.22] [GAMING MACHINES.] 
  6.9      Notwithstanding section 349A.13, clause (2), the director 
  6.10  may install and operate a gaming machine operated by coin or 
  6.11  currency that when operated determines the winner of a game 
  6.12  under sections 349A.161 to 349A.18.  Section 340A.410 does not 
  6.13  prohibit the placement, operation, or possession of a gaming 
  6.14  machine under this chapter. 
  6.15     Sec. 12.  [349A.23] [EMPLOYEES; GAMING MACHINES.] 
  6.16     The director may appoint personnel as necessary to operate 
  6.17  gaming machines, to provide support for the conduct of gaming 
  6.18  machine games, except that all employees appointed under this 
  6.19  section are in the unclassified service.  Section 349A.02, 
  6.20  subdivision 6, applies to all employees hired under this section.
  6.21     Sec. 13.  [349A.24] [MINNESOTA FUND.] 
  6.22     Subdivision 1.  [REVENUE TO BE CREDITED.] Prior to February 
  6.23  15 of each year, the director shall determine the amount of 
  6.24  revenue produced from the operation of gaming machines operated 
  6.25  by the state lottery after deduction of all related expenses, 
  6.26  commissions, payments, and crediting of the environment and 
  6.27  natural resources trust fund and report the amount to the 
  6.28  commissioner of finance.  Upon verification of the amount, the 
  6.29  commissioner of finance shall credit that amount to the 
  6.30  Minnesota fund. 
  6.31     Subd. 2.  [FUND CREATED.] The Minnesota fund is created as 
  6.32  a separate fund in the state treasury.  The fund consists of 
  6.33  money credited under subdivision 1 and interest earned thereon. 
  6.34     Subd. 3.  [MINNESOTA FUND ADVISORY TASK FORCE.] (a) An 
  6.35  advisory task force on the Minnesota fund is established.  The 
  6.36  purpose of this task force is to study and identify potential 
  7.1   spending needs for the Minnesota fund.  The task force shall 
  7.2   report to the legislature by December 15, 2002, with 
  7.3   recommendations for establishing spending priorities for the 
  7.4   Minnesota fund. 
  7.5      (b) The task force shall consist of nine members.  Of these 
  7.6   nine members: 
  7.7      (1) four members shall be appointed by the legislature, two 
  7.8   by the house and two by the senate; and 
  7.9      (2) five members shall be appointed by the governor. 
  7.10     (c) The Minnesota fund task force shall elect one of its 
  7.11  members to serve as the chair of the task force.  The task force 
  7.12  shall expire and the compensation, terms, and removal of members 
  7.13  shall be as provided in section 15.059. 
  7.14     Sec. 14.  Minnesota Statutes 2000, section 541.21, is 
  7.15  amended to read: 
  7.16     541.21 [COMMITMENTS FOR GAMBLING DEBT VOID.] 
  7.17     Every note, bill, bond, mortgage, or other security or 
  7.18  conveyance in which the whole or any part of the consideration 
  7.19  shall be for any money or goods won by gambling or playing at 
  7.20  cards, dice, or any other game whatever, or by betting on the 
  7.21  sides or hands of any person gambling, or for reimbursing or 
  7.22  repaying any money knowingly lent or advanced at the time and 
  7.23  place of such gambling or betting, or lent and advanced for any 
  7.24  gambling or betting to any persons so gambling or betting, shall 
  7.25  be void and of no effect as between the parties to the same, and 
  7.26  as to all persons except such as hold or claim under them in 
  7.27  good faith, without notice of the illegality of the 
  7.28  consideration of such contract or conveyance.  The provisions of 
  7.29  this section shall not apply to:  (1) pari-mutuel wagering 
  7.30  conducted under a license issued pursuant to chapter 240; (2) 
  7.31  purchase of tickets in the state lottery or other wagering 
  7.32  authorized under chapter 349A; (3) gaming activities conducted 
  7.33  pursuant to the Indian Gaming Regulatory Act, 25 U.S.C. 2701 et 
  7.34  seq.; or (4) lawful gambling activities permitted under chapter 
  7.35  349. 
  7.36     Sec. 15.  Minnesota Statutes 2000, section 609.761, 
  8.1   subdivision 2, is amended to read: 
  8.2      Subd. 2.  [STATE LOTTERY.] Sections 609.755 and 609.76 do 
  8.3   not prohibit the operation of the state lottery or the sale, 
  8.4   possession, or purchase of tickets for the state lottery under 
  8.5   chapter 349A, or the manufacture, possession, sale, or operation 
  8.6   of a gaming machine under chapter 349A. 
  8.7      Sec. 16.  [EFFECTIVE DATE.] 
  8.8      This act is effective the day following final enactment.