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    Subdivision 1. Contracts. The director shall sell tickets for the lottery through lottery
retailers with whom the director contracts. Contracts under this section are not subject to the
provisions of sections 16C.03, 16C.05, 16C.06, 16C.08, 16C.09, and 16C.10, and are valid for a
period of one year. The director may permit a retailer to sell tickets at more than one business
location under a contract entered into under this section.
    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.
    Subd. 2. Qualifications. (a) The director may not contract with a retailer who:
(1) is under the age of 18;
(2) is in business solely as a seller of lottery tickets;
(3) owes $500 or more in delinquent taxes as defined in section 270C.72;
(4) has been convicted within the previous five years of a felony or gross misdemeanor, any
crime involving fraud or misrepresentation, or a gambling-related offense;
(5) is a member of the immediate family, residing in the same household, as the director or
any employee of the lottery;
(6) in the director's judgment does not have the financial stability or responsibility to act as a
lottery retailer, or whose contracting as a lottery retailer would adversely affect the public health,
welfare, and safety, or endanger the security and integrity of the lottery; or
(7) is a currency exchange, as defined in section 53A.01.
A contract entered into before August 1, 1990, which violates clause (7) may continue in
effect until its expiration but may not be renewed.
(b) An organization, firm, partnership, or corporation that has a stockholder who owns
more than five percent of the business or the stock of the corporation, an officer, or director,
that does not meet the requirements of paragraph (a), clause (4), is not eligible to be a lottery
retailer under this section.
(c) The restrictions under paragraph (a), clause (4), do not apply to an organization,
partnership, or corporation if the director determines that the organization, partnership, or firm
has terminated its relationship with the individual whose actions directly contributed to the
disqualification under this subdivision.
    Subd. 3. Bond. The director may require that a lottery retailer post a bond, securities, or
an irrevocable letter of credit, in an amount as the director deems necessary, to protect the
financial interests of the state. If securities are deposited or an irrevocable letter of credit filed,
the securities or letter of credit must be of a type or in the form provided under section 349A.07,
subdivision 5
, paragraphs (b) and (c).
    Subd. 4. Criminal history. The director may request the director of alcohol and gambling
enforcement to investigate all applicants for lottery retailer contracts to determine their compliance
with the requirements of subdivision 2. The director may issue a temporary contract, valid for
not more than 90 days, to an applicant pending the completion of the investigation or a final
determination of qualifications under this section. The director has access to all criminal history
data compiled by the director of alcohol and gambling enforcement on any person (1) holding
or applying for a retailer contract, (2) any person holding a lottery vendor contract or who has
submitted a bid on such a contract, and (3) any person applying for employment with the lottery.
    Subd. 5. Restrictions on lottery retailers. (a) A lottery retailer may sell lottery tickets
only on the premises described in the contract.
(b) A lottery retailer must prominently display a certificate issued by the director on the
premises where lottery tickets will be sold.
(c) A lottery retailer must keep a complete set of books of account, correspondence, and all
other records necessary to show fully the retailer's lottery transactions, and make them available
for inspection by employees of the lottery at all times during business hours. The director may
require a lottery retailer to furnish information as the director deems necessary to carry out the
purposes of this chapter, and may require an audit to be made of the books of account and records.
The director may select an auditor to perform the audit and may require the retailer to pay the cost
of the audit. The auditor has the same right of access to the books of account, correspondence, and
other records as is given to employees of the lottery.
(d) A contract issued under this section may not be transferred or assigned.
(e) The director shall require that lottery tickets may be sold by retailers only for cash.
(f) A lottery retailer must prominently post at the point of sale of lottery 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.
    Subd. 6. Retention by retailers. The director may by rule provide for:
(1) amounts which a lottery retailer may retain from gross receipts from the sale of lottery
tickets in order to pay prizes to holders of winning tickets; and
(2) amounts which a lottery retailer may retain from gross receipts from the sale of lottery
tickets as a commission.
    Subd. 7. Retailer rental payments. If a lottery retailer's rental payments for the business
premises are contractually computed, in whole or in part, on the basis of a percentage of retail
sales, and the computation of retail sales is not explicitly defined to include the sale of lottery
tickets, the compensation retained by the sales agent for the sale of lottery tickets shall be
considered the amount of the retail sale for purposes of computing the rental payments.
    Subd. 8. Proceeds of sales. All proceeds from the sale of lottery tickets received by a lottery
retailer constitute a trust fund until paid to the director. The lottery retailer is personally liable
for all proceeds.
    Subd. 9. Fee. The director may charge a nonrefundable application fee to a person applying
for a lottery retailer contract, in an amount sufficient to cover the costs of making the investigation
required under subdivision 4. The fee collected under this subdivision must be deposited in
the lottery fund.
    Subd. 10. Local licenses. No political subdivision may require a local license to operate as a
lottery retailer or impose a tax or fee on the business of operating as a lottery retailer.
    Subd. 11. Cancellation, suspension, and refusal to renew contracts or locations. (a) The
director shall cancel the contract of any lottery retailer or prohibit a lottery retailer from selling
lottery tickets at a business location who:
(1) has been convicted of a felony or gross misdemeanor;
(2) has committed fraud, misrepresentation, or deceit;
(3) has provided false or misleading information to the lottery; or
(4) has acted in a manner prejudicial to public confidence in the integrity of the lottery.
(b) The director may cancel, suspend, or refuse to renew the contract of any lottery retailer or
prohibit a lottery retailer from selling lottery tickets at a business location who:
(1) changes business location;
(2) fails to account for lottery tickets received or the proceeds from tickets sold;
(3) fails to remit funds to the director in accordance with the director's rules;
(4) violates a law or a rule or order of the director;
(5) fails to comply with any of the terms in the lottery retailer's contract;
(6) fails to file a bond, securities, or a letter of credit as required under subdivision 3;
(7) in the opinion of the director fails to maintain a sufficient sales volume to justify
continuation as a lottery retailer; or
(8) has violated section 340A.503, subdivision 2, clause (1), two or more times within a
two-year period.
(c) The director may also cancel, suspend, or refuse to renew a lottery retailer's contract or
prohibit a lottery retailer from selling lottery tickets at a business location if there is a material
change in any of the factors considered by the director under subdivision 2.
(d) A contract cancellation, suspension, refusal to renew, or prohibiting a lottery retailer from
selling lottery tickets at a business location under this subdivision is a contested case under
sections 14.57 to 14.69 and is in addition to any criminal penalties provided for a violation
of law or rule.
(e) The director may temporarily suspend a contract or temporarily prohibit a lottery retailer
from selling lottery tickets at a business location without notice for any of the reasons specified
in this subdivision provided that a hearing is conducted within seven days after a request for a
hearing is made by a lottery retailer. Within 20 days after receiving the administrative law judge's
report, the director shall issue an order vacating the temporary suspension or prohibition or
making any other appropriate order. If no hearing is requested within 30 days of the temporary
suspension or prohibition taking effect, the suspension or prohibition becomes permanent unless
the director vacates or modifies the order.
    Subd. 12. Retailer bonus. The director may adopt a plan whereby eligible lottery retailers
will receive a bonus payment, in addition to commissions or incentives earned for the sale of
lottery tickets, if total lottery sales for a fiscal year increase when compared to the total lottery
sales for the previous fiscal year. The bonus payment shall be no more than ten percent of any
increase in total lottery sale, which shall be paid to active lottery retailers at the end of a fiscal
year on the basis of each lottery retailer's market share.
History: 1989 c 334 art 3 s 6; 1990 c 590 art 1 s 50,51; 1991 c 233 s 109; 1991 c 336 art 2
s 36-38; 1994 c 633 art 6 s 1; 1995 c 254 art 1 s 83; 1996 c 288 s 1-3; 1997 c 129 art 2 s 15;
1998 c 366 s 70; 1998 c 386 art 2 s 83; 2005 c 151 art 2 s 17

Official Publication of the State of Minnesota
Revisor of Statutes