Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1989, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1989
CHAPTER 334-H.F.No. 66
An act relating to gambling; creating a department of
gaming; authorizing a state lottery to be conducted by
a division of state lottery; creating a division of
gambling enforcement in the department of public
safety and providing for its duties; prescribing
penalties; appropriating money; amending Minnesota
Statutes 1988, sections 10A.01, subdivision 18;
10A.09, subdivision 1; 15A.081, subdivision 1; 16B.54,
subdivision 2; 240.01, by adding subdivisions; 240.02,
subdivisions 1 and 2; 240.04, subdivisions 1 and 7;
240.06, subdivisions 3 and 8; 240.07, subdivision 2;
240.08, subdivision 3; 240.13, by adding a
subdivision; 240.21; 240.28; 340A.410, subdivision 5;
349.11; 349.12, subdivisions 3, 11, 12, 13, 15, 16,
17, 20, and by adding subdivisions; 349.15; 349.151;
349.16, subdivisions 3 and 4; 349.161; 349.162;
349.163; 349.164; 349.17, subdivision 2a; 349.18,
subdivision 1, and by adding a subdivision; 349.19,
subdivisions 2, 3, 6, and by adding subdivisions;
349.20; 349.21; 349.2121, subdivisions 2, 3, and 10;
349.2122; 349.2125, subdivisions 1, 2, and 3;
349.2127, subdivision 2; 349.213, subdivisions 1 and
2; 349.214, subdivision 2; 349.22, subdivisions 1 and
3; 541.20; 541.21; 609.75, subdivision 3; 609.76,
subdivision 1; 609.761; 626.05, subdivision 2; 626.13;
and 626.84, subdivision 1; Laws 1989, chapter 184,
sections 7, by adding a subdivision and 12, by adding
a subdivision; proposing coding for new law as
Minnesota Statutes, chapters 299K; 349A; and 349B;
proposing coding for new law in Minnesota Statutes,
chapters 240; 245; 349; and 609; repealing Minnesota
Statutes 1988, sections 349.151, subdivisions 3 and 5;
and 349.171.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
PARI-MUTUEL HORSE RACING
Section 1. Minnesota Statutes 1988, section 240.01, is
amended by adding a subdivision to read:
Subd. 14. [DIRECTOR.] "Director" is the director of
pari-mutuel racing.
Sec. 2. Minnesota Statutes 1988, section 240.01, is
amended by adding a subdivision to read:
Subd. 15. [DIVISION.] "Division" is the division of
pari-mutuel racing in the department of gaming.
Sec. 3. [240.011] [DIVISION OF PARI-MUTUEL RACING.]
Subdivision 1. [DIVISION CREATED.] A division of
pari-mutuel racing is created in the department of gaming. The
division is under the supervision and control of the Minnesota
racing commission.
Subd. 2. [DIRECTOR OF PARI-MUTUEL RACING.] The governor
shall appoint the director of pari-mutuel racing, who serves in
the unclassified service at the governor's pleasure. The
director must be a person qualified by experience in the
administration and regulation of pari-mutuel racing to discharge
the duties of the director. The governor must select a director
from a list of one or more names submitted by the commission.
Sec. 4. Minnesota Statutes 1988, section 240.02,
subdivision 1, is amended to read:
Subdivision 1. [COMMISSION CREATED.] A Minnesota racing
commission is established within the division of pari-mutuel
racing with the powers and duties specified in Laws 1983,
chapter 214 this section. Until the effective date of the first
vacancy on the commission that occurs after the effective date
of this act, including a vacancy caused by the expiration of a
term, the commission consists of nine members appointed by the
governor with the advice and consent of the senate and the
commissioner of gaming as a nonvoting member. After the date of
the first vacancy, the commission consists of eight members
appointed by the governor with the advice and consent of the
senate, plus the commissioner as a voting member. Not more than
five of the members may belong to the same political party. The
governor shall designate the chair of the commission. Of the
members first appointed, three are for terms expiring June 30,
1985, three are for terms expiring June 30, 1987, and three are
for terms expiring June 30, 1989. After the expiration of the
initial term, Appointments by the governor are for terms of six
years. An appointment to fill a vacancy in an unexpired term is
for the remainder of the term and is with the advice and consent
of the senate.
Sec. 5. Minnesota Statutes 1988, section 240.02,
subdivision 2, is amended to read:
Subd. 2. [QUALIFICATIONS.] A member of the commission,
other than the commissioner, must have been a resident of
Minnesota for at least five years before appointment, and must
have a background and experience as would qualify for membership
on the commission. A member must, before taking a place on the
commission, file a bond in the principal sum of $100,000 payable
to the state, conditioned upon the faithful performance of
duties. No commissioner, nor any member of the commissioner's
immediate family residing in the same household, may hold a
license issued by the commission or have a direct or indirect
financial interest in a corporation, partnership, or association
which holds a license issued by the commission.
Sec. 6. Minnesota Statutes 1988, section 240.04,
subdivision 1, is amended to read:
Subdivision 1. [EXECUTIVE DIRECTOR; DUTIES.] The
commission shall appoint an executive director, who is its chief
administrative officer and who serves at its pleasure in the
unclassified service. The executive director shall perform the
following duties:
(a) take and preserve records of all proceedings before the
commission, maintain its books, documents, and records, and make
them available for public inspection as the commission directs;
(b) if so designated by the commission, act as a hearing
officer in hearings which need not be conducted under the
administrative procedure act to conduct hearings, receive
testimony and exhibits, and certify the record of proceedings to
the commission;
(c) act as the commission's chief personnel officer and
supervise the employment, conduct, duties, and discipline of
commission employees; and
(d) perform other duties as directed by the commission.
Sec. 7. Minnesota Statutes 1988, section 240.04,
subdivision 7, is amended to read:
Subd. 7. [ASSISTANCE.] The commission and director may
request assistance from any department or agency of the state in
fulfilling its duties, and shall make appropriate reimbursement
for all such assistance.
Sec. 8. Minnesota Statutes 1988, section 240.06,
subdivision 3, is amended to read:
Subd. 3. [INVESTIGATION.] Before granting a class A
license the commission shall conduct, or request the bureau of
criminal apprehension division of gambling enforcement to
conduct, a comprehensive background and financial investigation
of the applicant and sources of financing. The commission may
charge an applicant an investigation fee to cover the cost of
the investigation, and shall from this fee reimburse the bureau
division of gambling enforcement for its share of the cost of
the investigation. The commission has access to all criminal
history data compiled by the bureau of criminal apprehension
division of gambling enforcement on class A licensees and
applicants.
Sec. 9. Minnesota Statutes 1988, section 240.06,
subdivision 8, is amended to read:
Subd. 8. [WORK AREAS.] A class A licensee must provide at
no cost to the commission division suitable work areas for
commission members, officers, employees, and agents, including
agents of the division of gambling enforcement, who are directed
or requested by the commission to supervise and control racing
at the licensed racetrack.
Sec. 10. Minnesota Statutes 1988, section 240.07,
subdivision 2, is amended to read:
Subd. 2. [HEARINGS; INVESTIGATIONS.] Before granting an
initial class B license the commission shall hold at least one
public hearing on the license. Comprehensive investigations
must be conducted and their costs paid in the manner prescribed
by section 240.06, subdivision 3. The commission has access to
all criminal history data compiled by the bureau of criminal
apprehension division of gambling enforcement on class B
licensees and applicants.
Sec. 11. Minnesota Statutes 1988, section 240.08,
subdivision 3, is amended to read:
Subd. 3. [INVESTIGATIONS.] The commission shall
investigate each applicant for a class C license to the extent
it deems necessary, and may request the assistance of and may
reimburse the bureau of criminal apprehension division of
gambling enforcement in investigating applicants. The
commission may by rule require that an applicant be
fingerprinted or furnish the applicant's fingerprints.
Investigations must be conducted and their costs paid in the
manner prescribed by section 240.06, subdivision 3. The
commission may cooperate with national and international
organizations and agencies in conducting investigations. The
commission may by rule provide for examining the qualifications
of an applicant for the license being applied for. The
commission has access to all criminal history data compiled by
the bureau of criminal apprehension division of gambling
enforcement on class C applicants and licensees.
Sec. 12. Minnesota Statutes 1988, section 240.13, is
amended by adding a subdivision to read:
Subd. 9. [TRANSMISSION TO INDIAN LANDS; POOLING OF
BETS.] A licensed racetrack may, with the approval of the
horsepersons' organization representing the majority of
horsepersons racing the breed involved, transmit telecasts of
races the licensee conducts to sites on Indian lands of tribes
who are lawfully conducting pari-mutuel wagering authorized by a
tribal-state compact entered into pursuant to the Indian Gaming
Regulatory Act, Public Law Number 100-497, or through
litigation, arbitration, or mediation relative to that act.
Nothing in this subdivision shall be construed to indicate that
state policy or law permits or encourages the transmission of
telecasts to sites on Indian lands. With prior approval of the
commission, a licensed racetrack transmitting telecasts of races
it conducts, to sites on Indian lands within or outside of
Minnesota or to other locations outside the state, may commingle
the amounts bet at the receiving entity with the pools at the
sending licensed racetrack.
Sec. 13. Minnesota Statutes 1988, section 240.21, is
amended to read:
240.21 [RIGHT OF INSPECTION.]
The commission and its representatives, including
representatives of the division of gambling enforcement, have
the right to inspect the licensed premises of a licensee and to
examine the licensee's books and other records at any time
without a search warrant.
Sec. 14. Minnesota Statutes 1988, section 240.28, is
amended to read:
240.28 [CONFLICT OF INTEREST.]
Subdivision 1. [FINANCIAL INTEREST.] No person may serve
on the commission or be employed by it the division 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, including concessions contracts. No member of the
commission or employee of the commission division may own,
wholly or in part, or have an interest in a horse which races at
a licensed racetrack in Minnesota. No member of the commission
or employee of the commission division 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.
Subd. 2. [BETTING.] No member of the commission or
employee of the commission division may bet or cause a bet to be
made on a race at a licensed racetrack while serving on the
commission or being employed by the commission division. No
person appointed or approved by the commission director as a
steward may bet or cause a bet to be made at a licensed
racetrack during a racing meeting at which the person is serving
as a steward. The commission shall by rule prescribe such
restrictions on betting by its licensees as it deems necessary
to protect the integrity of racing.
Subd. 3. [VIOLATION.] A violation of subdivisions 1 and 2
is grounds for removal from the commission or termination of
employment. A bet made directly or indirectly by a licensee in
violation of a rule made by the commission under subdivision 2
is grounds for suspension or revocation of the license.
Sec. 15. [EFFECTIVE DATE.]
Sections 1 to 14 are effective July 1, 1989.
ARTICLE 2
LAWFUL GAMBLING
Section 1. Minnesota Statutes 1988, section 349.11, is
amended to read:
349.11 [PURPOSE.]
The purpose of sections 349.11 to 349.22 is to regulate
legal forms of lawful gambling to prevent their its
commercialization, to insure integrity of operations, and to
provide for the use of net profits only for lawful purposes.
Sec. 2. Minnesota Statutes 1988, section 349.12,
subdivision 3, is amended to read:
Subd. 3. [ACTIVE MEMBER.] "Active member" means a member
who has paid all dues to the organization, who is 18 years of
age or older, who has equal voting rights with all other
members, who has equal opportunity to be an elected officer, who
has equal right and responsibilities of attendance at the
regularly scheduled meetings of the organization, whose name and
membership origination date appear with the member's knowledge
and consent on a list of members of the organization, and who
has been a member of the organization for at least six months.
Sec. 3. Minnesota Statutes 1988, section 349.12,
subdivision 11, is amended to read:
Subd. 11. [LAWFUL PURPOSE.] "Lawful purpose" means one or
more of the following: (a) benefiting persons by enhancing
their opportunity for religious or educational advancement, by
relieving or protecting them from disease, suffering or
distress, by contributing to their physical well-being, by
assisting them in establishing themselves in life as worthy and
useful citizens, or by increasing their comprehension of and
devotion to the principles upon which this nation was founded;
(b) initiating, performing, or fostering worthy public works or
enabling or furthering the erection or maintenance of public
structures; (c) lessening the burdens borne by government or
voluntarily supporting, augmenting or supplementing services
which government would normally render to the people; or (d)
payment of taxes imposed under this chapter, and other taxes
imposed by the state or the United States on receipts from
lawful gambling; (e) any expenditure by, or any contribution to,
a hospital or nursing home exempt from taxation under section
501(c)(3) of the Internal Revenue Code; or (f) payment of
reasonable costs incurred in complying with the performing of
annual audits required under section 349.19, subdivision 9.
"Lawful purpose" does not include the erection,
acquisition, improvement, expansion, repair, or maintenance of
any real property or capital assets owned or leased by the
organization, other than a hospital or nursing home exempt from
taxation under section 501(c)(3) of the Internal Revenue Code,
unless the board specifically authorizes the expenditures after
finding that the property or capital assets will be used
exclusively for one or more of the purposes specified in clauses
(a) to (c). The board may by rule adopt procedures and
standards to administer this subdivision.
Sec. 4. Minnesota Statutes 1988, section 349.12,
subdivision 12, is amended to read:
Subd. 12. [ORGANIZATION.] "Organization" means any
fraternal, religious, veterans, or other nonprofit organization
which has been in existence for at least three years and has at
least 15 active members, and either has been duly incorporated
as a nonprofit organization for at least three years, or has
been recognized by the Internal Revenue Service as exempt from
income taxation for the most recent three years.
Sec. 5. Minnesota Statutes 1988, section 349.12,
subdivision 13, is amended to read:
Subd. 13. [GROSS PROFIT.] "Gross profit" means the gross
receipts collected from lawful gambling, less reasonable sums
necessarily and actually expended for prizes.
Sec. 6. Minnesota Statutes 1988, section 349.12, is
amended by adding a subdivision to read:
Subd. 13a. [NET PROFIT.] "Net profit" means gross profit
less reasonable sums actually expended for allowable expenses.
Sec. 7. Minnesota Statutes 1988, section 349.12,
subdivision 15, is amended to read:
Subd. 15. [GAMBLING EQUIPMENT.] "Gambling equipment" means:
bingo cards and or sheets, devices for selecting bingo numbers,
pull-tabs, jar tickets, paddlewheels, and tipboards.
Sec. 8. Minnesota Statutes 1988, section 349.12,
subdivision 16, is amended to read:
Subd. 16. "Board" is the charitable gambling control board.
Sec. 9. Minnesota Statutes 1988, section 349.12,
subdivision 17, is amended to read:
Subd. 17. [DISTRIBUTOR.] "Distributor" is a person who
sells gambling equipment the distributor manufactures or
purchases for resale within the state to licensed organizations,
to organizations conducting exempt activities under section
349.214, or to other distributors.
Sec. 10. Minnesota Statutes 1988, section 349.12,
subdivision 20, is amended to read:
Subd. 20. [IDEAL NET.] "Ideal net" means the pull-tab or
tipboard deal's ideal gross, as defined under subdivision 19,
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 1988, section 349.12, is
amended by adding a subdivision to read:
Subd. 23. [CAPITAL ASSETS.] "Capital assets" means
property, real or personal, except gambling equipment, with an
expected useful life of at least one year.
Sec. 12. Minnesota Statutes 1988, section 349.12, is
amended by adding a subdivision to read:
Subd. 24. [DIRECTOR.] "Director" is the director of the
division of gambling control.
Sec. 13. Minnesota Statutes 1988, section 349.12, is
amended by adding a subdivision to read:
Subd. 25. [MANUFACTURER.] "Manufacturer" means a person or
entity who assembles from raw materials or subparts a completed
piece of gambling equipment, and who sells or furnishes the
equipment for resale or for use in the state. The term includes
a person who converts, modifies, adds to, or removes parts or a
portion from an item, device, or assembly to further its
promotion, sale, or use as gambling equipment in this state. A
person only adding or modifying promotional flares to advise the
public of the prizes available, the rules of play, and the
consideration required is not a manufacturer.
Sec. 14. Minnesota Statutes 1988, section 349.12, is
amended by adding a subdivision to read:
Subd. 26. [PROMOTIONAL TICKET.] A pull-tab or tipboard
ticket with the words "no purchase necessary" and "for
promotional use only" and for which no consideration is given is
a promotional ticket.
Sec. 15. Minnesota Statutes 1988, section 349.12, is
amended by adding a subdivision to read:
Subd. 27. [DIVISION.] "Division" is the division of
gambling control in the department of gaming.
Sec. 16. Minnesota Statutes 1988, section 349.15, is
amended to read:
349.15 [USE OF GROSS PROFITS.]
(a) Gross profits from lawful gambling may be expended only
for lawful purposes or allowable expenses as authorized at a
regular meeting of the conducting organization. Provided that
no more than 55 percent of gross profits from bingo, and no more
than 45 percent for other forms of lawful gambling, may be
expended for necessary allowable expenses related to lawful
gambling.
(b) The board shall provide by rule for the administration
of this section, including specifying allowable expenses. The
rules must specify that no more than one-third of the annual
premium on a policy of liability insurance procured by the
organization may be taken as an allowable expense from the gross
receipts from lawful gambling. This expense shall be allowed by
the board only to the extent that it relates directly to the
conduct of lawful gambling and is verified in the manner the
board prescribes by rule. The rules may provide a maximum
percentage of gross receipts profits which may be expended for
certain expenses.
(c) Allowable expenses also include reasonable costs of
bank account service charges, and the reasonable costs of an
audit required by the board, except an audit required under
section 349.19, subdivision 9.
Sec. 17. Minnesota Statutes 1988, section 349.151, is
amended to read:
349.151 [CHARITABLE GAMBLING CONTROL BOARD.]
Subdivision 1. [BOARD CREATED.] The charitable gambling
control board is created with the powers and duties established
by subdivision 4.
Subd. 2. [MEMBERSHIP.] The board consists of 13 six
members appointed as follows:
(1) eleven persons appointed by the governor with the
advice and consent of the senate, at least four of whom must
reside outside of the seven-county metropolitan area;
(2) the commissioner of public safety or a designee; and
(3) the attorney general or a designee.
A member serving on the board by appointment must have been
a resident of Minnesota for at least five years. Of the
appointees of the governor not more than six may belong to the
same political party. A member appointed to the board may be
removed at any time by the appointing authority. Vacancies on
the board are filled in the same manner as the original
appointment. Of the members appointed by the governor, three
are for terms expiring June 30, 1985, four are for terms
expiring June 30, 1986, and four are for terms expiring June 30,
1987. After the expiration of the initial terms, appointments
are for three years. The governor shall appoint the chair from
among the governor's appointees and the commissioner of gaming
as a voting member. Of the members first appointed, one is for
a term expiring June 30, 1990, two are for a term expiring June
30, 1991, two are for a term expiring June 30, 1992, and one is
for a term expiring June 30, 1993. After expiration of the
initial terms, appointments are for four years. The board shall
select one of its members, other than the commissioner, to serve
as chair. No more than three members appointed by the governor
under this subdivision may belong to the same political party.
Subd. 3. [COMPENSATION.] The compensation, and removal of
board members is and filling of membership vacancies are as
provided in section 15.0575, subdivision 3 except for the
commissioner of gaming.
Subd. 4. [POWERS AND DUTIES.] (a) The board has the
following powers and duties:
(1) to issue, revoke, and suspend licenses to
organizations, distributors, bingo halls, and manufacturers
under sections 349.16, 349.161, and 349.163, and 349.164;
(2) to collect and deposit license fees and taxes due under
this chapter;
(3) to receive reports required by this chapter and inspect
the records, books, and other documents of organizations and
suppliers to insure compliance with all applicable laws and
rules;
(4) to make rules, including emergency rules, required by
this chapter;
(5) to register gambling equipment and issue registration
stamps under section 349.162;
(6) 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;
(7) to report annually to the governor and legislature on
its activities and on recommended changes in the laws governing
charitable gambling; and
(8) impose civil penalties of not more than $500 per
violation on organizations, distributors, and manufacturers for
failure to comply with any provision of sections 349.12 to
349.23 or any rule of the board;
(9) to notify city councils, county boards, and town boards
before issuing or renewing licenses to organizations and bingo
halls as specified under section 349.213; and
(10) delegate to the director the authority to issue
licenses under criteria established by the board.
(b) Any organization, distributor, bingo hall operator, or
manufacturer assessed a civil penalty may request a hearing
before the board. Hearings conducted on appeals of imposition
of penalties 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.
Subd. 4a. [ADDITIONAL POWERS.] Whenever it appears to
the board director that any person has engaged or is about to
engage in any act or practice constituting a violation of this
chapter or any rule:
(a) The board director has the power to issue and cause to
be served upon the person an order requiring the person to cease
and desist from violations of 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. 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 the board shall issue
a further an order vacating the cease and desist order or making
it permanent as the facts require. 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) 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 rule 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.
Subd. 5. [EMPLOYEES.] The board shall employ an executive
secretary in the unclassified service and such other employees
in the classified service as are required to enable it to carry
out its functions. One or more of the employees must be bingo
inspectors.
Subd. 6. [ATTORNEY GENERAL.] The attorney general is the
attorney for the board.
Sec. 18. [349.152] [DIRECTOR.]
Subdivision 1. [APPOINTED.] The governor shall appoint,
with the advice and consent of the senate, a director from a
list of one or more persons submitted by the board. The
director serves in the unclassified service at the pleasure of
the governor.
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 as authorized by the board;
(5) to issue cease and desist orders;
(6) to make recommendations to the board on license
issuance, denial, suspension and revocation, and civil penalties
the board imposes; and
(7) to ensure that board rules, policy, and decisions are
adequately and accurately conveyed to the board's licensees.
Sec. 19. [349.153] [CONFLICT OF INTEREST.]
(a) A person may not serve on the board, be the director,
or be an employee of the division who has an interest in any
corporation, association, 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 division may not participate in the conducting of lawful
gambling.
Sec. 20. Minnesota Statutes 1988, section 349.16,
subdivision 3, is amended to read:
Subd. 3. [FEES.] The board shall by rule establish a
schedule of fees for licenses under this section. The schedule
must establish may issue four classes of license, licenses: a
class A license authorizing all forms of lawful gambling,; a
class B license authorizing all forms of lawful gambling except
bingo, raffles; a class C license authorizing bingo only,;
and bingo a class D license authorizing raffles only. The
annual license fee for each class of license is:
(1) $200 for a class A license;
(2) $125 for a class B license;
(3) $100 for a class C license; and
(4) $75 for a class D license.
Sec. 21. Minnesota Statutes 1988, section 349.16,
subdivision 4, is amended to read:
Subd. 4. [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 or operate a bingo hall. 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; and
(3) for all other cities and counties, $100; and
(4) for counties, $375.
Sec. 22. Minnesota Statutes 1988, section 349.161, is
amended to read:
349.161 [DISTRIBUTOR LICENSES.]
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 from licensing under section 349.214,
except to an organization licensed for lawful gambling; or
(2) sell, offer for sale, or furnish gambling equipment to
an organization licensed for lawful gambling without having
obtained a distributor license under this section.
No licensed organization may purchase gambling equipment
from any person not licensed as a distributor under this section.
Subd. 2. [LICENSE APPLICATION.] The board may issue
licenses for the sale of gambling equipment to persons who meet
the qualifications of this section if the board determines that
a license is consistent with the purpose of sections 349.11 to
349.22. Applications must be on a form the board prescribes.
Subd. 3. [QUALIFICATIONS.] A license may not be issued
under this section to a person, or to a corporation, firm, or
partnership which has as an officer, director, other person in a
supervisory or management position, or employee eligible to make
sales on behalf of the distributor a person, who:
(1) has been convicted of a felony in a state or federal
court within the past five years or who has a felony charge
pending;
(2) has ever been convicted in a state or federal court of
a gambling-related offense within ten years of the date of
license application felony involving fraud or misrepresentation
or a crime involving gambling; or
(3) is or has ever been engaged in an illegal business;
(4) owes $500 or more in delinquent taxes as defined in
section 270.72;
(5) has had a sales and use tax permit revoked by the
commissioner of revenue within the last two years; or
(6) after demand, has not filed tax returns required by the
commissioner of revenue.
Subd. 4. [FEES.] The annual fee for a supplier's
distributor's license is $1,500 $2,500.
Subd. 5. [PROHIBITION.] (a) No distributor, or
employee eligible to make sales on behalf of a distributor, may
also be a wholesale distributor of liquor or alcoholic beverages
or an employee of a wholesale distributor of alcoholic beverages.
(b) No distributor, distributor's representative, or
employee authorized to make sales on behalf of a distributor,
may be involved directly in the operation of lawful gambling
conducted by an organization.
(c) No manufacturer or distributor or person acting as a
representative, agent, or employee of a manufacturer or
distributor may provide a lessor of gambling premises any
compensation, gift, gratuity, premium, or other thing of value.
(d) No distributor, distributor's representative, 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, distributor's representative, or
employee of a distributor may alter or modify any gambling
equipment, except to add a "last ticket sold" prize sticker.
Subd. 6. [REVOCATION AND SUSPENSION.] A license under this
section may be suspended by the board for a violation of law or
board rule or for failure to meet the qualifications in
subdivision 3 at any time or revoked for what the board
determines to be a pattern of willful violations 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.
Subd. 7. [CRIMINAL HISTORY.] The board may request the
assistance of the bureau of criminal apprehension division of
gambling enforcement in investigating the background of an
applicant for a distributor's license and may reimburse
the bureau division of gambling enforcement for the costs
thereof. The board has access to all criminal history data
compiled by the bureau division of gambling enforcement on
licensees and applicants.
Subd. 8. [EMPLOYEES OF DISTRIBUTORS.] Licensed
distributors shall provide the board upon request with the names
and business home addresses of all employees. Each person
eligible to conduct sales on behalf of a distributor, employee
of a distributor, or a person making sales of gambling equipment
on behalf of a distributor must have in their possession a
picture identification card approved by the board.
Sec. 23. Minnesota Statutes 1988, section 349.162, is
amended to read:
349.162 [EQUIPMENT REGISTERED.]
Subdivision 1. [STAMP REQUIRED.] A distributor may not
sell to an organization and an organization may not purchase,
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 unless the equipment has been
registered with the board and has a registration stamp affixed.
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 is entitled to a refund for unused stamps and
replacement for stamps which are defective or canceled by the
distributor.
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
equipment was purchased;
(2) the registration number of the equipment;
(3) the name and address of the organization to which the
sale was made; and
(4) the date of the sale;
(5) the name of the person who ordered the equipment; and
(6) the name of the person who received the equipment.
The invoice for each sale must be retained for at least one
year two years after the sale is completed and a copy of the
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 division and the division of
gambling enforcement may inspect the books, records, and other
documents of a distributor at any reasonable time without notice
and without a search warrant.
Subd. 3. [EXEMPTION.] For purposes of this section, bingo
cards intended to be used for more than one game or sheets need
not be registered stamped.
Subd. 4. [PROHIBITION.] (a) No person other than a
licensed organization or a licensed distributor may possess
unaffixed registration stamps issued by the board.
(b) Unless otherwise provided in this chapter, no person
may possess gambling equipment that has not been registered with
the board.
Subd. 5. [SALES FROM FACILITIES.] (a) All gambling
equipment purchased or possessed by a licensed distributor for
resale in Minnesota must, prior to its 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. 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.
(b) All sales and storage facilities owned, leased, used,
or operated by a licensed distributor may be entered upon and
inspected by the employees of the division of gambling
enforcement or the director's authorized representatives during
reasonable and regular business hours. Obstruction of, or
failure to permit, entry and inspection is cause for revocation
or suspension of a distributor's licenses and permits issued
under this chapter.
(c) Unregistered gambling equipment and unaffixed
registration stamps found at any location in Minnesota other
than a registered sales or storage facility are contraband under
section 349.2125.
Sec. 24. Minnesota Statutes 1988, section 349.163, is
amended to read:
349.163 [REGISTRATION LICENSING OF MANUFACTURERS.]
Subdivision 1. [REGISTRATION LICENSE.] No manufacturer of
gambling equipment may sell any gambling equipment to any person
unless the manufacturer has registered with the board and has
been issued a certificate of registration license by the board
under objective criteria prescribed by the board by rule.
Subd. 2. [CERTIFICATE LICENSE; FEE.] A certificate license
under this section is valid for one year. The annual fee for
registration the license is $500 $2,500.
Subd. 3. [PROHIBITED SALES.] A manufacturer may not sell
gambling equipment to any person not licensed as a distributor
unless the manufacturer is also a licensed distributor.
Subd. 4. [INSPECTION OF MANUFACTURERS.] Employees of the
division and the division of gambling enforcement may inspect
the books, records, inventory, and manufacturing operations of a
licensed manufacturer without notice during the normal business
hours of the manufacturer.
Sec. 25. Minnesota Statutes 1988, section 349.164, is
amended to read:
349.164 [BINGO HALL LICENSES.]
Subdivision 1. [LICENSE REQUIRED.] No person may lease a
facility to more than one licensed individual, corporation,
partnership, or organization to conduct bingo without having
obtained a bingo hall license under this section, unless
the person lessor is a licensed organization.
Subd. 2. [LICENSE APPLICATION.] The board may issue a
bingo hall license to persons who meet the qualifications of
this section if the board determines that a license is
consistent with the purpose of sections 349.11 to 349.22.
Applications must be on a form the board prescribes. The board
may not issue or renew a bingo hall license unless the
conditions of section 349.213, subdivision 2, have been
satisfied.
Subd. 3. [QUALIFICATIONS.] A license may not be issued
under this section to a person, or to a corporation, firm, or
partnership which has as an officer, director, or other person
in a supervisory or management position, who:
(1) has been convicted of a felony in a state or federal
court within the past five years or who has a felony charge
pending; or
(2) has ever been convicted in a state or federal court of
a gambling-related offense within ten years of the date of
license application felony involving fraud or misrepresentation
or a crime involving gambling; or
(3) owes delinquent taxes in excess of $500 as defined in
section 270.72.
Subd. 4. [FEES.] The annual fee for a bingo hall license
is $250 $2,500.
Subd. 5. [CRIMINAL HISTORY.] The board may request the
assistance of the bureau of criminal apprehension division of
gambling enforcement in investigating the background of an
applicant for a bingo hall license and may reimburse the bureau
division of gambling enforcement for the costs. The board has
access to all criminal history data compiled by the bureau of
criminal apprehension and the division of gambling enforcement
on licensees and applicants.
Subd. 6. [PROHIBITION.] No bingo hall licensee may also be
a licensed distributor or registered licensed manufacturer or
affiliate of the distributor or manufacturer under section
349.161 or 349.163 or a wholesale distributor of alcoholic
beverages.
Subd. 7. [RESTRICTIONS.] A bingo hall licensee or
affiliate of the licensee may not:
(1) provide any staff to conduct bingo or any other form of
lawful gambling during the bingo occasion;
(2) acquire, provide storage or inventory control, or
report the use of any gambling equipment used by an organization
that conducts bingo on the premises;
(3) provide accounting services to an organization
conducting bingo on the premises;
(4) make any expenditures of gross receipts of an
organization from lawful gambling; or
(5) charge any fee to a person at a bingo occasion, without
which the person could not play a bingo game.
Subd. 8. [LEASES.] All of the remuneration to be received
from the organization for the conduct of lawful gambling must be
stated in the lease. No amount may be paid by the organization
or received by the operator of the bingo hall based on the
number of participants attending the bingo occasion or on the
gross receipts or profit received by the organization.
Subd. 9. [REVOCATION AND SUSPENSION.] A license under this
section may be suspended by the board for a violation of law or
board rule or for failure to meet the qualifications in
subdivision 3 at any time or revoked for what the board
determines to be a pattern of willful violations 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. 26. Minnesota Statutes 1988, section 349.17,
subdivision 2a, is amended to read:
Subd. 2a. [DISTRIBUTOR LICENSE EXEMPTION FOR LESSOR.] As
part of a lease agreement on a leased bingo premises, the lessor
may furnish bingo equipment without being a licensed
distributor. For purposes of this section, "furnish" does not
include the right to sell or offer for sale.
Sec. 27. Minnesota Statutes 1988, section 349.18,
subdivision 1, is amended to read:
Subdivision 1. [LEASE OR OWNERSHIP REQUIRED.] 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 in writing. Copies of all leases must be made
available to employees of the board division and the division of
gambling enforcement on request. A lease may not provide
for rental payments based on a percentage of 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. 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.
No person, distributor, manufacturer, lessor, or
organization other than the licensed organization leasing the
space may conduct any activity in a leased space during times
when lawful gambling is being conducted in the space.
Sec. 28. Minnesota Statutes 1988, section 349.18, is
amended by adding a subdivision to read:
Subd. 1a. [STORAGE OF GAMBLING EQUIPMENT.] (a) Gambling
equipment owned by or in the possession of a licensed
organization must be kept at a licensed gambling premises owned
or operated 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 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.
(b) Gambling equipment, other than devices for selecting
bingo numbers, owned by a licensed organization must be kept
separate from gambling equipment owned by other persons,
organizations, distributors, or manufacturers consistent with
the organization's internal controls filed with the board.
(c) Gambling equipment kept in violation of this
subdivision is contraband under section 349.2125.
(d) A licensed organization may transport gambling
equipment it owns or possesses between approved gambling
equipment storage sites and to and from licensed distributors.
Sec. 29. Minnesota Statutes 1988, section 349.19,
subdivision 2, is amended to read:
Subd. 2. [ACCOUNTS.] Gross receipts from lawful gambling
by each organization at each licensed premises must be
segregated from all other revenues of the conducting
organization and placed in a separate account. The name and
address of the bank and the account number for that separate
account for that licensed premises, 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
one business day of completion of the bingo occasion, deal, or
game from which they are received, and deposit records must be
sufficient to allow determination of deposits made from each
bingo occasion, deal, or game. 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. 30. Minnesota Statutes 1988, section 349.19,
subdivision 3, is amended to read:
Subd. 3. [EXPENDITURES.] All expenditures of gross profits
from lawful gambling must be itemized as to payee, purpose,
amount, and date of payment. Authorization of the expenditures
must be recorded in the regular meeting minutes of the licensed
organization.
Sec. 31. Minnesota Statutes 1988, section 349.19,
subdivision 6, is amended to read:
Subd. 6. [PRESERVATION OF RECORDS.] The board may require
that records required to be kept by this section must be
preserved by a licensed organization for at least two years and
may be inspected by employees of the board division and the
division of gambling enforcement at any reasonable time without
notice or a search warrant.
Sec. 32. Minnesota Statutes 1988, section 349.19, is
amended by adding a subdivision 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 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. 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. 33. Minnesota Statutes 1988, section 349.19, is
amended by adding a subdivision 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 auditor licensed by the state of
Minnesota or performed by an independent accountant who has had
prior approval of the board. A complete, true, and correct copy
of the audit report must be filed with the board upon completion
of the audit.
Sec. 34. Minnesota Statutes 1988, section 349.20, is
amended to read:
349.20 [MANAGERS.]
(a) All lawful gambling conducted by a licensed
organization must be under the supervision of one or more
gambling managers. A gambling manager designated by an
organization to supervise a gambling occasion is responsible for
the gross receipts from the occasion and for its conduct in
compliance with all laws and rules. An organization may
designate a different person to act as manager for each type of
lawful gambling conducted. Each person designated as a gambling
manager must give a fidelity bond in the sum of $10,000 in favor
of the organization conditioned on the faithful performance of
the manager's duties, and 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.
Sec. 35. Minnesota Statutes 1988, section 349.21, is
amended to read:
349.21 [COMPENSATION.]
Subdivision 1. [TO WHOM PAID.] 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 nonmanagement assistants who are not active
members or spouses may be hired to assist in the conduct of
lawful gambling in nonmanagement positions if approved by a
majority of the organization's members.
Subd. 2. [AMOUNTS PAID.] The amounts of compensation which
may be paid under this section may be provided for in a schedule
of compensation adopted by the board by rule. In adopting a
schedule the board must consider the nature of the participation
and the types of lawful gambling participated in.
Subd. 3. [COMPENSATION RECORDS.] An organization paying
compensation to persons for the conduct of lawful gambling must
maintain a compensation record. The record must be retained for
at least two years after the month in which the compensation is
paid. The record must be an itemization of each payment made to
each recipient of compensation, and must include the amount of
compensation paid and the full name, home address, and
membership status of each recipient.
Subd. 4. [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.
Subd. 5. [PENALTY.] (a) An organization that makes payment
of compensation, or causes compensation to be made, which
violates the provisions of subdivision 4 shall be assessed a
civil penalty not to exceed $1,000 for each violation of
subdivision 4. A second violation within 12 months of
notification by the board to the organization of the first
violation shall result in suspension of the organization's
gambling license for a period of three months, in addition to
any civil penalty assessed. A third violation within 12 months
of the board's notification to the organization of the second
violation shall result in revocation of the organization's
gambling license in addition to any civil penalty assessed.
(b) Upon each violation the director shall notify the
organization in writing of its violation and of the penalties
under this subdivision for future violations. Notification is
effective upon mailing.
(c) For purposes of this subdivision, a violation consists
of a payroll period or compensation date that includes payments
made in violation of subdivision 4.
Subd. 6. [PERCENTAGE OF GROSS PROFIT PAID.] A licensed
organization may pay a percentage of the gross receipts profit
from raffle ticket sales to a nonprofit organization which sells
tickets for the licensed organization.
Subd. 7. [DIRECT PAYMENT.] All compensation must be paid
directly from the organization to the employees of the
organization.
Sec. 36. Minnesota Statutes 1988, section 349.2121,
subdivision 2, is amended to read:
Subd. 2. [RECORDS.] A distributor shall keep at each
licensed place of business complete and accurate records for
that place of business, including itemized invoices of pull-tabs
and tipboards held, purchased, manufactured, or brought in or
caused to be brought in from without this state, and of all
sales of pull-tabs and tipboards. 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 pull-tab and
tipboard deals on hand, and other pertinent papers and documents
relating to the purchase, sale, or disposition of pull-tab and
tipboard deals. Books, records, 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. At any time during usual business hours, the
commissioner of revenue, executive secretary of the charitable
gambling control board director of gambling enforcement, or any
of their duly authorized agents or employees, may enter a place
of business of a distributor, charitable or organization, or any
site from which pull-tabs or tipboards or other gambling
equipment are being sold, or any site at which lawful gambling
is being conducted, and inspect the premises and the records
required to be kept under this section to determine whether or
not all the provisions of this section are being fully complied
with. If the commissioner of revenue, executive
secretary director of gambling enforcement, or their duly
authorized agents or employees are denied free access to or are
hindered or interfered with in making an inspection of the
distributor's place of business, the permit of the distributor
may be revoked by the commissioner, and the license of the
distributor may be revoked by the charitable gambling control
board.
Sec. 37. Minnesota Statutes 1988, section 349.2121,
subdivision 3, is amended to read:
Subd. 3. [SUSPENSION, REVOCATION.] (a) The commissioner of
revenue, after giving notice and hearing, may for reasonable
cause revoke or suspend a permit held by a distributor. A
notice must be sent to the distributor at least 30 15 days
before the hearing and give notice of the time and place of the
hearing, 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 in the manner prescribed for
service of notice of a deficiency.
(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 of revenue 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 of revenue 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 of revenue 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. 38. Minnesota Statutes 1988, section 349.2121,
subdivision 10, is amended to read:
Subd. 10. [UNTAXED PULL-TABS OR TIPBOARDS GAMBLING
EQUIPMENT.] It is a gross misdemeanor for any person to
possess pull-tabs or tipboards gambling equipment for resale in
this state that have has not been registered with the board, for
which a registration stamp has not been affixed to the flare,
and upon which the taxes imposed by section 349.212, subdivision
4, or chapter 297A have not been paid. The executive secretary
of the charitable gambling control board director of gambling
enforcement or the commissioner of revenue or their designated
inspectors and employees may seize in the name of the state of
Minnesota any unregistered or untaxed pull-tabs or tipboards
gambling equipment.
Sec. 39. Minnesota Statutes 1988, section 349.2122, is
amended to read:
349.2122 [MANUFACTURERS; REPORTS TO THE COMMISSIONER OF
REVENUE; PENALTY.]
A manufacturer registered licensed with the board who sells
pull-tabs and tipboards to a distributor licensed by the board
must file with the commissioner of revenue, on a form prescribed
by the commissioner, a report of pull-tabs and tipboards sold to
licensed distributors. The report must be filed monthly on or
before the 25th day of the month succeeding the month in which
the sale was made. The commissioner of revenue may inspect the
books, records, and inventory of a licensed manufacturer without
notice during the normal business hours of the manufacturer.
Any person violating this section shall be guilty of a
misdemeanor.
Sec. 40. Minnesota Statutes 1988, 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;
(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; and
(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, the pull-tab and tipboard deals are not
contraband, notwithstanding the provisions of clause (1);
(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; and
(10) any gambling equipment kept in violation of section
349.18.
Sec. 41. Minnesota Statutes 1988, section 349.2125,
subdivision 2, is amended to read:
Subd. 2. [SEIZURE.] Pull-tabs or tipboards or other
Property made contraband by subdivision 1 may be seized by the
commissioner of revenue or the executive secretary of the
charitable gambling control board director of gambling
enforcement or their authorized agents or by any sheriff or
other police officer, hereinafter referred to as the seizing
authority, with or without process, and shall be subject to
forfeiture as provided in subdivisions 3 and 4.
Sec. 42. Minnesota Statutes 1988, section 349.2125,
subdivision 3, is amended to read:
Subd. 3. [INVENTORY; JUDICIAL DETERMINATION; APPEAL;
DISPOSITION OF SEIZED PROPERTY.] Within two days after the
seizure of any alleged contraband, the person making the seizure
shall deliver 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 executive secretary of
the charitable gambling control board 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 30 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 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 state 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 349.2121, subdivision 4, the seizing authority shall
release the property seized without further legal proceedings.
Sec. 43. Minnesota Statutes 1988, section 349.2127,
subdivision 2, is amended to read:
Subd. 2. [PROHIBITION AGAINST POSSESSION.] (a) No person,
other than a licensed distributor, shall sell, offer for sale,
or have in possession with intent to sell or offer for sale, a
pull-tab or tipboard deal not stamped in accordance with the
provisions of this chapter.
(b) No person other than a licensed distributor or licensed
or exempt organization under section 349.214 may possess with
the intent to sell or offer to sell gambling equipment, except
(1) equipment exempt from taxation, or (2) equipment put into
play by a licensed or exempt organization.
(c) No person, firm, or organization may possess altered,
modified, or counterfeit pull-tabs or tipboard tickets with
intent to sell, redeem, or exchange them.
Sec. 44. Minnesota Statutes 1988, section 349.213,
subdivision 1, is amended to read:
Subdivision 1. [LOCAL REGULATION.] A statutory or home
rule city or county has the authority to adopt more stringent
regulation of any form of lawful gambling within its
jurisdiction, including the prohibition of any form of lawful
gambling, and may require a permit for the conduct of gambling
exempt from licensing under section 349.214. 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 profits less amounts expended for
allowable expenses. 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, or section 349.212.
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 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.
Sec. 45. Minnesota Statutes 1988, section 349.213,
subdivision 2, is amended to read:
Subd. 2. [LOCAL APPROVAL.] Before issuing or renewing an
organization license or bingo hall license, the board must
notify the city council of the statutory or home rule city in
which the organization's premises are or the bingo hall is
located or, if the premises are or hall is located outside a
city, by the county board of the county and the town board of
the town where the premises are or hall is located. The board
may require organizations to notify the appropriate local
government at the time of application. This required
notification is sufficient to constitute the notice required by
this subdivision. If the city council or county board adopts a
resolution disapproving the license and so informs the board
within 60 days of receiving notice of the license application,
the license may not be issued or renewed.
Sec. 46. Minnesota Statutes 1988, section 349.214,
subdivision 2, is amended to read:
Subd. 2. [LAWFUL GAMBLING.] (a) Raffles may be conducted
by an organization as defined in section 349.12, subdivision 12,
without complying with sections 349.11 to 349.14 and 349.151 to
349.213 if the value of all raffle prizes awarded by the
organization in a calendar year does not exceed $750.
(b) Lawful gambling may be conducted by an organization as
defined in section 349.12, subdivision 12, without complying
with sections 349.11 to 349.14 and 349.151 to 349.16; 349.171 to
349.21; 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.
(c) If the organization fails to file a timely report as
required by paragraph (b), 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 if a report is subsequently filed and the penalty paid.
(d) Merchandise prizes must be valued at their fair market
value.
(e) Unused pull-tab and tipboard deals must be returned to
the distributor within seven working days after the end of the
lawful gambling occasion. The distributor must accept and pay a
refund for all returns of unopened and undamaged deals returned
under this paragraph.
Sec. 47. Minnesota Statutes 1988, section 349.22,
subdivision 1, is amended to read:
Subdivision 1. [GROSS MISDEMEANOR.] A person who in any
manner violates sections 349.11 to 349.214 349.23 to evade the a
tax imposed by a provision of this chapter, or who aids and
abets evasion of the 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. 48. Minnesota Statutes 1988, section 349.22,
subdivision 3, is amended to read:
Subd. 3. [FELONY.] (a) A person violating section
349.2127, subdivision 1 or 3, is guilty of a felony.
(b) A person violating section 349.2127, subdivisions 2 and
subdivision 2 or 4, by possessing, receiving, or transporting
more than ten pull-tab or tipboard deals not stamped in
accordance with this chapter, or a combination of more than ten
deals of pull-tabs or tipboards, is guilty of a felony.
Sec. 49. Laws 1989, chapter 184, section 7, is amended by
adding a subdivision to read:
Subd. 4. [DISCLOSURE TO GAMBLING CONTROL BOARD.] The
commissioner may disclose return information for the purpose of
and to the extent necessary to administer sections 349.161,
subdivision 3, and 349.164, subdivision 3.
Sec. 50. [GAMBLING CONTROL BOARD.]
The terms of all members serving on the gambling control
board on June 30, 1989, expire on that date.
Sec. 51. [INSTRUCTION TO REVISOR.]
In the next edition of Minnesota Statutes, the revisor of
statutes shall alphabetize the definitions in Minnesota
Statutes, section 349.12, and make all appropriate
cross-reference changes in Minnesota Statutes and Minnesota
Rules.
Sec. 52. [REPEALER.]
Minnesota Statutes 1988, sections 349.151, subdivisions 3
and 5; and 349.171, are repealed. Minnesota Rules, part
7860.0030, is repealed.
Sec. 53. [EFFECTIVE DATE.]
Sections 1 to 26 and 28 to 52 are effective July 1, 1989.
Section 27 is effective July 1, 1989, except that the provisions
in section 27 relating to rules adopted by the gambling control
board apply retroactively to November 1, 1988.
ARTICLE 3
STATE LOTTERY
Section 1. [349A.01] [DEFINITIONS.]
Subdivision 1. [TERMS DEFINED.] For the purposes of this
chapter the terms defined in this section have the meanings
given them.
Subd. 2. [BOARD.] "Board" is the state lottery board.
Subd. 3. [COMMISSIONER.] "Commissioner" is the
commissioner of gaming.
Subd. 4. [DEPARTMENT.] "Department" is the department of
gaming.
Subd. 5. [DIRECTOR.] "Director" is the director of the
state lottery division.
Subd. 6. [DIVISION.] "Division" is the division of the
state lottery in the department of gaming.
Subd. 7. [GROSS RECEIPTS.] "Gross receipts" means all
money received from the sale of lottery tickets less amounts
transmitted to the commissioner of revenue under section
297A.259.
Subd. 8. [GROSS REVENUE.] "Gross revenue" means gross
receipts from the sale of lottery tickets, fees, or other money
received by the director, and interest earned on money in the
lottery fund.
Subd. 9. [LOTTERY.] "Lottery" is the state lottery
operated by the state lottery division of the department.
Subd. 10. [LOTTERY PROCUREMENT CONTRACT.] "Lottery
procurement contract" means a contract to provide lottery
products, computer hardware and software used to monitor sales
of lottery tickets, and lottery tickets. "Lottery procurement
contract" does not include a contract to provide an annuity or
prize payment agreement or materials, supplies, equipment, or
services common to the ordinary operation of a state agency.
Subd. 11. [LOTTERY RETAILER.] "Lottery retailer" means a
person with whom the director has contracted to sell lottery
tickets to the public.
Subd. 12. [LOTTERY TICKET OR TICKET.] "Lottery ticket" or
"ticket" means any tangible evidence issued by the lottery to
prove participation in a lottery game.
Subd. 13. [LOTTERY VENDOR OR VENDOR.] "Lottery vendor" or
"vendor" means a person who has entered into a contract to
provide equipment, supplies, or services for the division. A
lottery vendor does not include a lottery retailer.
Sec. 2. [349A.02] [STATE LOTTERY DIVISION.]
Subdivision 1. [DIRECTOR.] A state lottery division is
established in the department of gaming, under the supervision
and control of the director of the state lottery appointed by
the governor with the advice and consent of the senate. The
governor shall appoint the first director from a list of at
least three persons recommended to the governor by the
governor's commission on the lottery which was appointed by the
governor on December 8, 1988. The director must be qualified by
experience and training to supervise the lottery. The director
serves in the unclassified service.
Subd. 2. [REMOVAL.] (a) The director may be removed from
that position only by the governor after notice and a hearing if
requested, only for:
(1) violating section 11;
(2) malfeasance, nonfeasance, or misfeasance as defined in
section 351.14, subdivisions 2, 3, and 4; or
(3) failure to perform adequately the duties of the
director.
(b) For the purposes of this subdivision, adequate
performance of the director may be determined by:
(1) gross revenue from the sale of lottery tickets;
(2) efficiency of the administration of lottery operations;
(3) public confidence in the integrity of the lottery; and
(4) compliance with advertising requirements in section 9.
A hearing under this subdivision must be conducted by the
governor.
Subd. 3. [POWERS AND DUTIES.] In operating the lottery the
director shall exercise the following powers and duties:
(1) adopt rules and game procedures;
(2) issue lottery retailer contracts and rule on appeals of
decisions relating to those contracts;
(3) enter into lottery procurement contracts for the
provision of goods and services to the lottery;
(4) employ personnel as are required to operate the
lottery;
(5) enter into written agreements with one or more states
for the operation, marketing, and promotion of a joint lottery;
(6) adopt and publish advertising and promotional materials
consistent with section 9; and
(7) take all necessary steps to ensure the integrity of,
and public confidence in, the state lottery.
Subd. 4. [EMPLOYEES; CLASSIFICATION.] The director may
appoint other personnel as are necessary to operate the state
lottery. Employees of the division who are not professional
employees as defined in section 179A.03, subdivision 13, and
employees whose primary responsibilities are in data processing
and accounting, are in the classified service. All other
employees of the division are in the unclassified service. At
least one position in the division must be an attorney position
and the director must employ in that position an attorney to
perform legal services for the division.
Subd. 5. [COMPENSATION.] The compensation of employees in
the division is as provided in chapter 43A. The commissioner of
employee relations may, at the request of the director, develop
and implement a plan for making incentive payments to employees
of the division whose primary responsibilities are in marketing.
Subd. 6. [EMPLOYEES; BACKGROUND CHECKS.] The director
shall conduct background checks, or request the director of
gambling enforcement to conduct background checks, on all
prospective employees who are finalists, and shall require that
all employees of the division be fingerprinted. No person may
be employed by the division who has been convicted of a felony
or a crime involving fraud or misrepresentation within five
years of starting employment with the division, or has ever been
convicted of a gambling-related offense. The director has
access to all criminal history data compiled by the the division
of gambling enforcement on employees and prospective employees
of the lottery. The director may employ necessary persons
pending the completion of a background check.
Subd. 7. [ASSISTANCE.] (a) The director may request any
other department or agency of the state, including the division
of gambling enforcement, to provide reasonable assistance to the
director in carrying out the director's duties. All provision
of services to the director from another state agency, must be
by agreement made between the director and the agency. An
agreement must include provisions specifying the duration of the
services, the assignment of personnel of other agencies to
provide the services, the determination of the cost of the
services, and the transfer, from the lottery operations account
to the agency, of funds sufficient to pay the costs of the
services.
(b) The director may enter into agreements with the
commissioner of finance for the purpose of making payroll and
other financial transactions.
Subd. 8. [ATTORNEY GENERAL.] The attorney general is the
attorney for the division.
Sec. 3. [349A.03] [STATE LOTTERY BOARD.]
Subdivision 1. [BOARD CREATED.] There is created within
the division a state lottery board. The board consists of six
members appointed by the governor plus the commissioner as a
voting member. Not more than three of the members appointed by
the governor under this subdivision may belong to the same
political party and at least three members must reside outside
the seven-county metropolitan area. The terms of office,
removal from office, and compensation of members of the board,
other than the commissioner, are as provided in section 15.059
except the board does not expire as provided under section
15.059, subdivision 5. The members of the board shall select
the chair of the board, who shall not be the commissioner.
Subd. 2. [BOARD DUTIES.] The board has the following
duties:
(1) to advise the director on all aspects of the lottery;
(2) to review and comment on rules and game procedures
adopted by the director;
(3) review and comment on lottery procurement contracts;
(4) review and comment on agreements between the director
and one or more other lotteries relating to a joint lottery;
(5) to review and comment on advertising promulgated by the
director at least quarterly to ensure that all advertising is
consistent with the dignity of the state and with section 9; and
(6) to approve additional compensation for the director
under subdivision 3.
Subd. 3. [DIRECTOR; ADDITIONAL COMPENSATION.] The board
shall adopt objective criteria for evaluating the performance of
the director. The criteria must include, but is not limited to,
the performance factors in section 2, subdivision 2, paragraph
(b), clauses (1) to (4). The board may approve, by majority
vote of all members, compensation for the director in addition
to the compensation provided under section 15A.081, subdivision
1, based on the director's performance in office as evaluated
according to the board's criteria. The additional compensation
shall be paid from the lottery operations account. The board
may not approve additional compensation under this subdivision
more often than once in a 12-month period.
Sec. 4. [349A.04] [LOTTERY GAME PROCEDURES.]
The director may adopt game procedures governing the
following elements of the lottery:
(1) lottery games;
(2) ticket prices;
(3) number and size of prizes;
(4) methods of selecting winning tickets; and
(5) frequency and method of drawings.
The adoption of lottery game procedures is not subject to
chapter 14. Before adopting a lottery game procedure, the
director shall submit the procedure to the board for its review
and comment.
Sec. 5. [349A.05] [RULES.]
The director may adopt rules, including emergency rules,
under chapter 14 governing the following elements of the lottery:
(1) the number and types of lottery retailers' locations;
(2) qualifications of lottery retailers and application
procedures for lottery retailer contracts;
(3) investigation of lottery retailer applicants;
(4) appeal procedures for denial, suspension, or
cancellation of lottery retailer contracts;
(5) compensation of lottery retailers;
(6) accounting for and deposit of lottery revenues by
lottery retailers;
(7) procedures for issuing lottery procurement contracts
and for the investigation of bidders on those contracts;
(8) payment of prizes;
(9) procedures needed to ensure the integrity and security
of the lottery; and
(10) other rules the director considers necessary for the
efficient operation and administration of the lottery.
Before adopting a rule the director shall submit the rule
to the board for its review and comment.
Sec. 6. [349A.06] [LOTTERY RETAILERS.]
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 16B.06 to 16B.102, and
16B.17, and are valid for a period of one year.
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 270.72;
(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, board member, or any employee
of the division; or
(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.
(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 shall require that each
lottery retailer post a bond, in an amount as the director deems
necessary, to protect the financial interests of the state.
Subd. 4. [CRIMINAL HISTORY.] The director may request the
director of 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.
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 division 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 division.
(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.
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. [REVOCATION, SUSPENSION, AND REFUSAL TO RENEW
LICENSES.] (a) The director shall cancel the contract of any
lottery retailer 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
division; 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 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 comply with bond requirements under this
section;
(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 if there is a material
change in any of the factors considered by the director under
subdivision 2.
(d) A contract cancellation, suspension, or refusal to
renew 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 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 making any other appropriate order. If no hearing is
requested within 30 days of the temporary suspension taking
effect, the director may issue an order making the suspension
permanent.
Sec. 7. [349A.07] [VENDOR CONTRACTS.]
Subdivision 1. [CONTRACTS AUTHORIZED.] The director may
enter into lottery procurement contracts for the purchase,
lease, or lease-purchase of the goods or services. In entering
into a lottery procurement contract, the director shall utilize
an open bid process and shall take into account the particularly
sensitive nature of the state lottery and shall consider the
competence, quality of product, experience, and timely
performance of each potential vendor in order to promote and
ensure security, honesty, fairness, and integrity in the
operation and administration of the lottery. The director shall
also consider the extent to which a bidder for a contract for
printing preprinted lottery tickets would utilize employees and
facilities within Minnesota in fulfilling the contract.
Subd. 2. [INVESTIGATION OF POTENTIAL VENDORS.] The
director shall request the director of the division of gambling
enforcement to investigate the background, financial
responsibility, security, and integrity of any person who
submits a bid, proposal, or offer as part of a lottery
procurement contract issuance by the director. The director may
require the person making the bid, proposal, or offer to pay for
the cost of the investigation. Any fee collected under this
subdivision must be deposited into the lottery fund. At the
time of submitting any bid, proposal, or offer, the bidder shall
disclose to the director the information the director considers
necessary to carry out the purposes of this section. The
director has access to all criminal history data compiled by the
division of gambling enforcement on all vendors and potential
vendors who have submitted a bid to the division.
Subd. 3. [PERSONS INELIGIBLE FOR CONTRACT.] (a) The
director may not enter into a lottery procurement contract with
an applicant that has been convicted of a felony within the last
ten years, has been convicted of a gross misdemeanor or
gambling-related misdemeanor within the last five years, or has
been found guilty of any crime involving fraud or
misrepresentation within the last five years.
(b) The director may not enter into a lottery procurement
contract with an applicant that has (1) a person who owns more
than five percent of the stock in the applicant that does not
meet the requirements of this subdivision, or (2) a partner,
officer, or director that does not meet the requirements of this
subdivision.
(c) The restrictions under this subdivision do not apply to
an applicant for a lottery procurement contract if the director
determines that the applicant has terminated its relationship
with the individuals whose actions directly contributed to the
disqualification of the applicant under this subdivision.
Subd. 4. [CONFLICT OF INTEREST.] The director may not
enter into a lottery procurement contract with a person to
supply goods or services if that person has an ownership
interest in an entity that had supplied consultation services
under a contract to the lottery regarding the request for
proposal pertaining to those particular goods or services.
Subd. 5. [BOND.] (a) The director shall require securities
to be deposited, or a performance bond or a letter of credit to
be executed by the person or corporation that is awarded a
lottery procurement contract in an amount as determined by the
director.
(b) Any securities deposited with the director under this
subdivision must be interest-bearing and limited to:
(1) certificates of deposit issued by a solvent bank or
savings association organized and existing under the laws of
this state or under the laws of the United States and having its
principal place of business in this state;
(2) United States bonds, notes, and bills, for which the
full faith and credit of the government of the United States is
pledged for the payment of principal and interest; and
(3) general obligation bonds of any political subdivision
of this state, or corporate bonds of a corporation that is not
an affiliate or subsidiary of the vendor, if the general
obligation bonds or corporate bonds are rated in one of the four
highest classifications by an established nationally recognized
investment rating service.
(c) Any letter of credit executed under this subdivision
must provide that:
(1) nothing more than a demand for payment is necessary for
payment and is not conditional on the delivery of any other
documents or materials;
(2) the letter of credit is irrevocable and cannot be
modified or revoked without the consent of the director;
(3) the letter of credit cannot expire without notice from
the issuer and the notice must occur at least 60 days before the
expiration date of the letter of credit;
(4) the letter of credit is issued by a bank which is a
member of the federal reserve system which has a long-term debt
rating by a recognized national rating agency of investment
grade or better, if no long-term debt rating is available, the
financial institution must have investment grade financial
characteristics;
(5) the letter of credit is unconditional, is not
conditional upon reimbursement to the bank or the bank's ability
to perfect any lien or security interest, and does not contain
references to any other agreement, document, or entity; and
(6) the letter of credit designates the director as
beneficiary.
Subd. 6. [EXEMPTIONS.] Lottery procurement contracts
entered into by the director are not subject to the provisions
of sections 16B.06 to 16B.102 or 16B.17, provided that the
director must utilize an open and competitive bid process, and
as nearly as practicable follow the procedures of chapter 16B
governing contracts, consistent with the provisions of this
section.
Subd. 7. [ASSIGNMENT.] A lottery procurement contract
entered into under this section may not be assigned without the
specific written approval of the director.
Sec. 8. [349A.08] [LOTTERY PRIZES.]
Subdivision 1. [AGREEMENT BY PLAYERS.] A person who buys a
lottery ticket agrees to be bound by the rules applicable to the
particular lottery game for which the ticket is purchased. The
player acknowledges that the determination of whether a ticket
is a valid winning ticket is subject to the rules of the
director, claims procedures established by the director for that
game, and any confidential or public validation tests
established by the director for that game.
Subd. 2. [PRIZES NOT ASSIGNABLE.] A prize in the state
lottery is not assignable except as provided in subdivision 3
and except that:
(1) if a prize winner dies before the prize is paid, the
director shall pay the prize to the prize winner's estate; and
(2) the director may pay a prize to a person other than the
winner of that prize under an appropriate court order.
Subd. 3. [PRIZES WON BY PERSONS UNDER AGE 18.] The
following provisions govern the payment of a lottery prize to a
person under age 18:
(1) if the prize is less than $5,000, the director may give
a draft, payable to the order of the person under age 18, to the
person's parents, custodial parent if one parent has custody,
guardian, or other adult member of the person's family; and
(2) if the prize is $5,000 or more, the director shall
deposit the prize with the district court and section 540.08
applies to the investment and distribution of the money.
Subd. 4. [DISCHARGE OF LIABILITY.] The payment of a prize
by the director discharges the director and the state of all
liability for the prize.
Subd. 5. [PAYMENT; UNCLAIMED PRIZES.] A prize in the state
lottery must be claimed by the winner within one year of the
date of the drawing at which the prize was awarded or the last
day sales were authorized for a game where a prize was
determined in a manner other than by means of a drawing. If a
valid claim is not made for a prize payable directly by the
lottery by the end of this period, the unclaimed prize money
must be added by the director to prize pools of subsequent
lottery games and the winner of the prize shall have no further
claim to the prize. A prize won by a person who purchased the
winning ticket in violation of section 12, subdivision 1, or won
by a person ineligible to be awarded a prize under subdivision 7
must be treated as an unclaimed prize under this section.
Subd. 6. [INSTALLMENT PAYMENTS.] If the director decides
to pay all or part of a prize in the form of installments over a
period of years, the director shall provide for the payment of
all installments by:
(1) entering into a contract with a financially responsible
person or firm or by purchasing an annuity to provide for the
payment of the installments; or
(2) establishing and maintaining as a separate and
independent fund outside the state treasury a reserve account
with sufficient funds for the payment of the installments as
they become due.
Subd. 7. [PAYMENTS PROHIBITED.] (a) No prize may be paid
to a member of the board, the director or an employee of the
division, or a member of their families residing in the same
household of the member, director, or employee. No prize may be
paid to an officer or employee of a vendor which at the time the
game or drawing was being conducted was involved with providing
goods or services to the lottery under a lottery procurement
contract.
(b) No prize may be paid for a stolen, altered, or
fraudulent ticket.
Subd. 8. [WITHHOLDING OF DELINQUENT STATE TAXES OR OTHER
DEBTS.] The director shall report the name, address, and social
security number of each winner of a lottery prize of $1,000 or
more to the department of revenue to determine whether the
person who has won the prize is delinquent in payment of state
taxes or owes a debt as defined in section 270A.03, subdivision
5. If the person is delinquent in payment of state taxes or
owes a debt as defined in section 270A.03, subdivision 5, the
director shall withhold the delinquent amount from the person's
prize for remittance to the department of revenue for payment of
the delinquent taxes or distribution to a claimant agency in
accordance with chapter 270A. Section 270A.10 applies to the
priority of claims.
Sec. 9. [349A.09] [LOTTERY ADVERTISING.]
Subdivision 1. [ODDS; REQUIRED INFORMATION.] The director
shall include on each brochure, pamphlet, booklet, or other
similar material the director publishes to promote or explain
any lottery game, a prominent and clear statement of the
approximate odds of winning each prize offered in that lottery
game. Each lottery retailer must post prominently at or near
the point of ticket sale a notice or notices printed and
provided by the director of the approximate odds of winning each
prize in each game for which the lottery retailer sells tickets.
Subd. 2. [CONTENT OF ADVERTISING.] (a) Advertising and
promotional materials for the lottery adopted or published by
the director must be consistent with the dignity of the state
and may only:
(1) present information on how lottery games are played,
prizes offered, where and how tickets may be purchased, when
drawings are held, and odds on the games advertised;
(2) identify state programs supported by lottery net
revenues;
(3) present the lottery as a form of entertainment; or
(4) state the winning numbers or identity of winners of
lottery prizes.
(b) The director may not adopt or publish any advertising
for the lottery which:
(1) presents directly or indirectly any lottery game as a
potential means of relieving any person's financial
difficulties;
(2) is specifically targeted with the intent to exploit a
person, a specific group or an economic class of people;
(3) presents the purchase of a lottery ticket as a
financial investment or a way to achieve financial security;
(4) uses the name or picture of a current elected state
official to promote a lottery game;
(5) exhorts the public to bet by directly or indirectly
misrepresenting a person's chance of winning a prize; or
(6) denigrates a person who does not buy a lottery ticket
or unduly praises a person who does buy a ticket.
Subd. 3. [PRIZES; REQUIRED INFORMATION.] The director must
include, in any publication or print advertising which refers to
a prize which is or may be paid in installments, a statement to
the effect that the prize will be or may be paid in installments.
Sec. 10. [349A.10] [LOTTERY FUNDS.]
Subdivision 1. [STATE LOTTERY FUND.] The director shall
establish a lottery fund outside the state treasury, consisting
of the gross revenues of the lottery and all other money
credited or transferred to it by law, except for money set aside
and deposited in the lottery prize fund under subdivision 2.
Subd. 2. [DEPOSIT IN PRIZE FUND.] (a) The director shall
establish a lottery prize fund outside the state treasury. The
fund consists of all money deposited in it under this
subdivision and all interest earned thereon.
(b) The director shall deposit in the lottery prize fund,
from gross receipts from the sale of lottery tickets, an amount
sufficient to pay lottery prizes from the lottery prize fund
according to the following provisions:
(1) for games which require on-line terminal connections,
the prizes paid in any fiscal year must be at least 45 percent
of gross receipts from those games in that fiscal year;
(2) for games which do not require on-line terminal
connections, the prizes paid in any fiscal year must be at least
the following percentages of gross receipts from those games:
(i) 50 percent through fiscal year 1991;
(ii) 55 percent from July 1, 1991, to June 30, 1992; and
(iii) 60 percent thereafter.
Subd. 3. [LOTTERY OPERATIONS.] (a) The director shall
establish a lottery operations account in the lottery fund. The
director shall pay all costs of operating the lottery, including
payroll costs or amounts transferred to the state treasury for
payroll costs, but not including lottery prizes, from the
lottery operating account. The director shall credit to the
lottery operations account amounts sufficient to pay the
operating costs of the lottery.
(b) The director may not credit in any fiscal year amounts
to the lottery operations account which when totaled exceed 15
percent of gross revenue to the lottery fund in that fiscal
year. In computing total amounts credited to the lottery
operations account under this paragraph the director shall
disregard amounts transferred to or retained by lottery
retailers as sales commissions or other compensation.
(c) The director of the lottery may not expend after July
1, 1992, more than 2-3/4 percent of gross revenues in a fiscal
year for contracts for the preparation, publication, and
placement of advertising.
(d) Except as the director determines, the division is not
subject to chapter 16A relating to budgeting, payroll, and the
purchase of goods and services.
Subd. 4. [DEPOSIT OF RECEIPTS.] (a) The director may
require lottery retailers to:
(1) deposit in a separate account to the credit of the
lottery fund, in banks designated by the director, all money
received by the lottery retailer from the sale of lottery
tickets, less money retained as the lottery retailer's
commission and for payment of prizes;
(2) file with the director reports of the lottery
retailer's receipts and transactions in ticket sales in a form
that the director prescribes; and
(3) allow money deposited by the lottery retailer from the
sale of lottery tickets to be transferred to the division
through electronic fund transfer.
(b) The director may make arrangements for any person,
including a financial institution, to perform functions,
activities, or services in connection with the receipt and
distribution of lottery revenues.
(c) A lottery retailer who fails to pay any money due to
the director within the time prescribed by the director shall
pay interest on the amount owed at the rate determined by rule.
Subd. 5. [DEPOSIT OF NET PROCEEDS.] Within 30 days after
the end of each month, the director shall pay to the state
treasurer the balance in the lottery fund after transfers to the
lottery prize fund and credits to the lottery operations account.
Sec. 11. [349A.11] [CONFLICT OF INTEREST.]
(a) The director, a board member, an employee of the
division, a member of the immediate family of the director,
board member, or employee residing in the same household may not:
(1) purchase a lottery ticket;
(2) have any personal pecuniary interest in any vendor
holding a lottery procurement contract, or in any lottery
retailer; or
(3) receive any gift, gratuity, or other thing of value,
excluding food or beverage, from any lottery vendor or lottery
retailer, or person applying to be a retailer or vendor, in
excess of $100 in any calendar year.
(b) A violation of paragraph (a), clause (1), is a
misdemeanor. A violation of paragraph (a), clause (2), is a
gross misdemeanor. A violation of paragraph (a), clause (3), is
a misdemeanor unless the gift, gratuity, or other item of value
received has a value in excess of $500, in which case a
violation is a gross misdemeanor.
(c) The director or an unclassified employee of the
division may not, within one year of terminating employment with
the division, accept employment with, act as an agent or
attorney for, or otherwise represent any person, corporation, or
entity that had any lottery procurement contract or bid for a
lottery procurement contract with the division within a period
of two years prior to the termination of their employment. A
violation of this paragraph is a misdemeanor.
Sec. 12. [349A.12] [PROHIBITED ACTS.]
Subdivision 1. [PURCHASE BY MINORS.] A person under the
age of 18 years may not buy a ticket in the state lottery.
Subd. 2. [SALE TO MINORS.] A lottery retailer may not sell
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 to prove by a preponderance
of the evidence that the lottery retailer reasonably and in good
faith relied upon representation of proof of age described in
section 340A.503, subdivision 6, in making the sale.
Subd. 3. [PROHIBITED SALES.] (a) A person other than a
lottery retailer may not sell a ticket in the state lottery.
(b) A lottery retailer may not sell a ticket for a price
other than the price set by the director.
Subd. 4. [LOTTERY RETAILERS AND VENDORS.] A person who is
a lottery retailer, or is applying to be a lottery retailer, a
person applying for a contract with the director, or a person
under contract with the director to supply good or services to
division may not pay, give, or make any economic opportunity,
gift, loan, gratuity, special discount, favor, hospitality, or
service, excluding food or beverage, having an aggregate value
of over $100 in any calendar year to the director, board member,
employee of the lottery division, or to a member of the
immediate family residing in the same household as that person.
Subd. 5. [EXCEPTIONS.] Nothing in this chapter prohibits
giving a state lottery ticket as a gift, or buying a state
lottery ticket as a gift for a person under the age of 18.
Subd. 6. [VIOLATIONS.] A violation of subdivision 1 is a
petty misdemeanor. A violation of subdivision 2 or a rule
adopted by the director is a misdemeanor. A violation of
subdivision 3 or 4 is a gross misdemeanor.
Sec. 13. [349A.13] [RESTRICTIONS.]
Nothing in this chapter:
(1) authorizes the director to conduct a lottery game or
contest the winner or winners of which are determined by the
result of a sporting event other than a horse race conducted
under chapter 240;
(2) authorizes the director to install or operate a lottery
device operated by coin or currency which when operated
determines the winner of a game; and
(3) authorizes the director to sell pull-tabs as defined
under section 349.12, subdivision 10.
Sec. 14. [349A.14] [AUDIT.]
The director shall contract for an annual certified audit
of all accounts and transactions of the lottery. The audit must
be conducted by a certified public accountant in accordance with
generally accepted accounting standards. The director shall
file a copy of each audit report of the lottery with the
governor and the legislature.
Sec. 15. [349A.15] [REPORT.]
The director shall file an annual report with the governor
and legislature which must include a complete statement of
lottery revenues, administrative and operating costs, net
proceeds transferred, and other financial transactions for the
period the report covers.
Sec. 16. [609.651] [STATE LOTTERY FRAUD.]
Subdivision 1. [FELONY.] A person is guilty of a felony
and may be sentenced under subdivision 4 if the person does any
of the following with intent to defraud the state lottery:
(1) alters or counterfeits a state lottery ticket;
(2) knowingly presents an altered or counterfeited state
lottery ticket for payment;
(3) knowingly transfers an altered or counterfeited state
lottery ticket to another person; or
(4) otherwise claims a lottery prize by means of fraud,
deceit, or misrepresentation.
Subd. 2. [COMPUTER ACCESS.] A person is guilty of a felony
and may be sentenced under subdivision 4 if the person:
(1) obtains access to a computer data base maintained by
the director without the specific authorization of the director;
(2) obtains access to a computer data base maintained by a
person under contract with the director to maintain the data
base without the specific authorization of the director and the
person maintaining the data base.
Subd. 3. [FALSE STATEMENTS.] A person is guilty of a
felony and may be sentenced under subdivision 4 if the person:
(1) makes a materially false or misleading statement, or a
material omission, in a record required to be submitted under
chapter 349A; or
(2) makes a materially false or misleading statement, or a
material omission, in information submitted to the commissioner
of the state lottery in a lottery retailer's application or a
document related to a bid.
Subd. 4. [PENALTY.] (a) A person who violates subdivision
1 or 2 may be sentenced to imprisonment for not more than ten
years or to payment of a fine of not more than $50,000, or both.
(b) A person who violates subdivision 1 or 2 and defrauds
the state lottery of $35,000 or more may be sentenced to
imprisonment for not more than 20 years or to payment of a fine
of not more than $100,000, or both.
(c) A person who violates subdivision 3 may be sentenced to
imprisonment for not more than three years or to payment of a
fine of not more than $25,000, or both.
Sec. 17. Laws 1989, chapter 184, section 12, is amended by
adding a subdivision to read:
Subd. 7. [LOTTERY DIVISION.] (a) The commissioner of
revenue may disclose to the lottery the amount of delinquent
state taxes, or debt as defined in section 270.03, subdivision
5, of a winner of a lottery prize of $1,000 or more, to the
extent necessary to administer section 349A.08, subdivision 8.
(b) The commissioner of revenue may disclose to the lottery
division that a retailer owes $500 or more in delinquent taxes
as defined in section 270.72, to the extent necessary to
administer section 349A.06, subdivision 2.
Sec. 18. [EFFECTIVE DATE.]
Sections 1 to 17 are effective the day following final
enactment.
ARTICLE 4
DEPARTMENT OF GAMING
Section 1. [349B.01] [DEPARTMENT OF GAMING CREATED;
COMMISSIONER.]
Subdivision 1. [DEPARTMENT CREATED.] A department of
gaming is created containing a commissioner of gaming, which
office is established. The commissioner of gaming is appointed
by the governor with the advice and consent of the senate.
Subd. 2. [DUTIES OF COMMISSIONER.] The duties of the
commissioner are:
(1) to sit as a voting member of the Minnesota racing
commission subject to section 240.02, subdivision 1, the
gambling control board, and the lottery board;
(2) to study the extent and status of legal and illegal
gambling in Minnesota, and social, economic, and legal problems
which may result from legal and illegal gambling; and
(3) to report annually to the governor and legislature on
the activities of the commissioner, including studies under
clause (2), and recommended changes in laws dealing with legal
and illegal gambling.
Subd. 3. [EMPLOYEES.] The commissioner shall appoint and
assign duties to employees as the commissioner deems necessary
to carry out the duties specified in subdivision 2. The
employees are in the unclassified service.
Sec. 2. [EFFECTIVE DATE.]
Section 1 is effective July 1, 1989.
ARTICLE 5
GAMBLING ENFORCEMENT
Section 1. [299L.01] [DIVISION OF GAMBLING ENFORCEMENT.]
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.
Subd. 2. [ESTABLISHED.] The division of gambling
enforcement is a division in the department of public safety
under the control and supervision of a director, appointed by
the commissioner and serving at the commissioner's pleasure in
the unclassified service. The director must be a person who is
licensed or eligible to be licensed as a peace officer under
sections 626.84 to 626.863.
Subd. 3. [EMPLOYEES.] The director shall employ in the
division of gambling enforcement personnel, in the classified
service, necessary to carry out the duties under this chapter.
The director shall request the bureau of criminal apprehension
to perform background checks on persons who are finalists for
employment with the division, but may employ personnel pending
completion of the background check.
Sec. 2. [299L.02] [DUTIES OF DIVISION OF GAMBLING
ENFORCEMENT.]
Subdivision 1. [LOTTERY.] (a) The director shall when
required under chapter 349A or when requested by the director of
the lottery conduct background checks on employees of the state
lottery, lottery retailers, and bidders of lottery procurement
contracts.
(b) The director shall, when so requested by the director
of the state lottery or when the director believes it to be
reasonable and necessary, conduct investigations of lottery
retailers, applicants for lottery retailer contracts, suppliers
of goods or services to the state lottery, and persons bidding
on contracts for goods or services with the state lottery.
(c) The director shall conduct an annual security audit of
the state lottery, or arrange for such an audit by an outside
agency or person, firm, or corporation. The director shall
report to the state lottery board and the director of the
lottery on the results of the audit.
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.
Subd. 3. [HORSE RACING INVESTIGATIONS.] (a) The director
shall conduct background investigations as provided by law on
all applicants for licenses issued by the Minnesota racing
commission.
(b) The director shall, upon request of the director of
pari-mutuel racing, or when the director believes it to be
reasonable and necessary, investigate the activities of a
licensee of the Minnesota racing commission to determine the
licensee's compliance with law and with rules of the commission.
Subd. 4. [OTHER GAMBLING.] The director of gambling
enforcement shall cooperate with all state and local agencies in
the detection and apprehension of unlawful gambling.
Subd. 5. [BACKGROUND CHECKS.] In any background check
required to be conducted by the division of gambling enforcement
under chapter 240, 349, or 349A, 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.
Sec. 3. [299L.03] [POWERS OF DIRECTOR.]
Subdivision 1. [INSPECTIONS; ACCESS.] In conducting any
inspection authorized under 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 349.214;
(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,
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.
Subd. 2. [ITEMS REQUIRED TO BE PRODUCED.] In conducting an
audit or inspection authorized under chapter 240, 349 or 349A
the director may inspect any book, record, or other document the
licensee, retailer, or vendor is required to keep.
Subd. 3. [SUBPOENA POWER.] The director may issue
subpoenas to compel the attendance of witnesses and the
production of documents, books, records, and other evidence
relating to any investigation or audit the director is
authorized to conduct.
Subd. 4. [ACCESS TO CRIMINAL HISTORY.] The director has
access to all criminal history data compiled by the bureau of
criminal apprehension on any person licensed or under contract
with the state lottery, racing commission, or the gambling
control board, or any applicant for licensing or a person who
has submitted a bid on a lottery contractor or any employee and
finalist for employment with the division of state lottery.
Subd. 5. [ARREST POWERS.] The director may designate
certain employees within the division of gambling enforcement
who are authorized to arrest or investigate any person who is
suspected of violating any provision of chapter 240, 349, or
349A, or is suspected of committing any crime involving
gambling, and to conduct searches and seizures to enforce any of
those laws. Any employee authorized by this subdivision to make
an arrest must be licensed under sections 626.84 to 626.863.
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 against
each person participating in the sales and assess a civil
penalty of not more than $1,000 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 against each person participating in such sales, and
assess a civil penalty of not more than $5,000 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.
Subd. 7. [OTHER POWERS.] Nothing in this chapter limits
the authority of the division of gambling enforcement to
exercise any other power specified under chapter 240, 349, or
349A.
Subd. 8. [RULEMAKING.] The commissioner may adopt rules,
including emergency rules, under chapter 14 to carry out the
commissioner's duties under this chapter.
Sec. 4. [299L.04] [CONFLICT OF INTEREST.]
Subdivision 1. [INTEREST.] 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; or
(4) a bingo hall, manufacturer, or distributor licensed
under chapter 349.
Subd. 2. [GAMBLING.] The director or an employee of the
division of gambling enforcement may not participate in the
conducting of lawful gambling under chapter 349.
Sec. 5. [299L.05] [GAMBLING VIOLATIONS; RESTRICTIONS ON
FURTHER ACTIVITY.]
An owner of an establishment is prohibited from having
lawful gambling under chapter 349 conducted on the premises,
selling any lottery tickets under chapter 349A, or having a
video game of chance as defined under section 349.50 located on
the premises, if a person was convicted of violating section
609.76, subdivision 1, clause (7), or 609.76, subdivision (2),
for an activity occurring on the owner's premises.
Sec. 6. [EFFECTIVE DATE.]
Sections 1 to 5 are effective July 1, 1989.
ARTICLE 6
MISCELLANEOUS
Section 1. Minnesota Statutes 1988, section 10A.01,
subdivision 18, is amended to read:
Subd. 18. "Public official" means any:
(a) member of the legislature;
(b) constitutional officer in the executive branch and the
officer's chief administrative deputy;
(c) member, chief administrative officer or deputy chief
administrative officer of a state board or commission which has
at least one of the following powers: (i) the power to adopt,
amend or repeal rules, or (ii) the power to adjudicate contested
cases or appeals;
(d) commissioner, deputy commissioner or assistant
commissioner of any state department as designated pursuant to
section 15.01;
(e) individual employed in the executive branch who is
authorized to adopt, amend or repeal rules or adjudicate
contested cases;
(f) executive director of the state board of investment;
(g) executive director of the Indian affairs intertribal
board;
(h) commissioner of the iron range resources and
rehabilitation board;
(i) director of mediation services;
(j) deputy of any official listed in clauses (e) to (i);
(k) judge of the workers' compensation court of appeals;
(l) administrative law judge or compensation judge in the
state office of administrative hearings or hearing examiner in
the department of jobs and training;
(m) solicitor general or deputy, assistant or special
assistant attorney general;
(n) individual employed by the legislature as secretary of
the senate, legislative auditor, chief clerk of the house,
revisor of statutes, or researcher or attorney in the office of
senate research, senate counsel, or house research; or
(o) member or chief administrative officer of the
metropolitan council, regional transit board, metropolitan
transit commission, metropolitan waste control commission,
metropolitan parks and open spaces commission, metropolitan
airports commission or metropolitan sports facilities
commission;
(p) the commissioner of gaming and director of each
division in the department of gaming and the deputy director of
the division of state lottery; or
(q) director of the division of gambling enforcement in the
department of public safety.
Sec. 2. Minnesota Statutes 1988, section 10A.09,
subdivision 1, is amended to read:
Subdivision 1. [TIME FOR FILING.] Except for a candidate
for elective office in the judicial branch, an individual shall
file a statement of economic interest with the board:
(a) Within 60 days of accepting employment as a public
official;
(b) Within 14 days after filing an affidavit of candidacy
or petition to appear on the ballot for an elective public
office;
(c) In the case of a public official requiring the advice
and consent of the senate, within 14 days after undertaking the
duties of office; or
(d) In the case of members of the Minnesota racing
commission, and its executive secretary, the director of the
division of pari-mutuel racing, chief of security, medical
officer, inspector of pari-mutuels and stewards employed or
approved by the commission or persons who fulfill those duties
under contract, within 60 days of accepting or assuming duties.
Sec. 3. Minnesota Statutes 1988, section 15A.081,
subdivision 1, is amended to read:
Subdivision 1. [SALARY RANGES.] The governor shall set the
salary rate within the ranges listed below for positions
specified in this subdivision, upon approval of the legislative
commission on employee relations and the legislature as provided
by section 43A.18, subdivisions 2 and 5:
Salary Range
Effective
July 1, 1987
$57,500-$78,500
Commissioner of finance;
Commissioner of education;
Commissioner of transportation;
Commissioner of human services;
Commissioner of revenue;
Commissioner of public safety;
Executive director, state board of
investment;
Commissioner of gaming;
Director of the state lottery;
$50,000-$67,500
Commissioner of administration;
Commissioner of agriculture;
Commissioner of commerce;
Commissioner of corrections;
Commissioner of jobs and training;
Commissioner of employee relations;
Commissioner of health;
Commissioner of labor and industry;
Commissioner of natural resources;
Commissioner of public safety;
Commissioner of trade and economic development;
Chair, waste management board;
Chief administrative law judge; office of
administrative hearings;
Commissioner, pollution control agency;
Commissioner, state planning agency;
Executive director, housing finance
agency;
Executive director, public employees
retirement association;
Executive director, teacher's
retirement association;
Executive director, state retirement
system;
Chair, metropolitan council;
Chair, regional transit board;
$42,500-$60,000
Commissioner of human rights;
Commissioner, department of public service;
Commissioner of veterans' affairs;
Commissioner, bureau of mediation services;
Commissioner, public utilities commission;
Member, transportation regulation board;
Ombudsman for corrections;
Ombudsman for mental health and retardation.
Sec. 4. Minnesota Statutes 1988, section 16B.54,
subdivision 2, is amended to read:
Subd. 2. [VEHICLES.] (a) [ACQUISITION FROM AGENCY;
APPROPRIATION.] The commissioner may direct an agency to make a
transfer of a passenger motor vehicle or truck presently
assigned to it. The transfer must be made to the commissioner
for use in the central motor pool. The commissioner shall
reimburse an agency whose motor vehicles have been paid for with
funds dedicated by the constitution for a special purpose and
which are assigned to the central motor pool. The amount of
reimbursement for a motor vehicle is its average wholesale price
as determined from the midwest edition of the national
automobile dealers association official used car guide.
(b) [PURCHASE.] To the extent that funds are available for
the purpose, the commissioner may purchase or otherwise acquire
additional passenger motor vehicles and trucks necessary for the
central motor pool. The title to all motor vehicles assigned to
or purchased or acquired for the central motor pool is in the
name of the department of administration.
(c) [TRANSFER AT AGENCY REQUEST.] On the request of an
agency, the commissioner may transfer to the central motor pool
any passenger motor vehicle or truck for the purpose of
disposing of it. The department or agency transferring the
vehicle or truck shall be paid for it from the motor pool
revolving account established by this section in an amount equal
to two-thirds of the average wholesale price of the vehicle or
truck as determined from the midwest edition of the National
Automobile Dealers Association official used car guide.
(d) [VEHICLES; MARKING.] The commissioner shall provide for
the uniform marking of all motor vehicles. Motor vehicle colors
must be selected from the regular color chart provided by the
manufacturer each year. The commissioner may further provide by
rule for the use of motor vehicles without uniform coloring or
marking by the governor, the lieutenant governor, the division
of criminal apprehension, division of gambling enforcement,
arson investigators of the division of fire marshal in the
department of public safety, financial institutions division of
the department of commerce, division of state lottery in the
department of gaming, and the office of the attorney general.
Sec. 5. Minnesota Statutes 1988, section 340A.410,
subdivision 5, is amended to read:
Subd. 5. [GAMBLING PROHIBITED.] (a) No retail
establishment licensed to sell alcoholic beverages may keep,
possess, or operate, or permit the keeping, possession, or
operation on the licensed premises of dice or any gambling
device as defined in section 349.30, or permit gambling therein
except as provided in this subdivision.
(b) Gambling equipment may be kept or operated and raffles
conducted on licensed premises and adjoining rooms when the use
of the gambling equipment is authorized under chapter 349.
(c) Lottery tickets may be purchased and sold within the
licensed premises as authorized by the director of the lottery
under chapter 349A.
Sec. 6. Minnesota Statutes 1988, section 541.20, is
amended to read:
541.20 [RECOVERY OF MONEY LOST.]
Every person who, by playing at cards, dice, or other game,
or by betting on the hands or sides of such as are gambling,
shall lose to any person so playing or betting any sum of money
or any goods, and pays or delivers the same, or any part
thereof, to the winner, may sue for and recover such money by a
civil action, before any court of competent jurisdiction. For
purposes of this section, gambling shall not include pari-mutuel
wagering conducted under a license issued pursuant to chapter
240, purchase or sale of tickets in the state lottery, or
gambling authorized under chapter chapters 349 and 349A.
Sec. 7. Minnesota Statutes 1988, 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 pari-mutuel wagering conducted
under a license issued pursuant to chapter chapters 240 and 349
or purchase of tickets in the state lottery under chapter 349A.
Sec. 8. Minnesota Statutes 1988, section 609.75,
subdivision 3, is amended to read:
Subd. 3. [WHAT ARE NOT BETS.] The following are not bets:
(1) A contract to insure, indemnify, guarantee or otherwise
compensate another for a harm or loss sustained, even though the
loss depends upon chance.
(2) A contract for the purchase or sale at a future date of
securities or other commodities.
(3) Offers of purses, prizes or premiums to the actual
contestants in any bona fide contest for the determination of
skill, speed, strength, endurance, or quality or to the bona
fide owners of animals or other property entered in such a
contest.
(4) The game of bingo when conducted in compliance with
sections 349.11 to 349.23.
(5) A private social bet not part of or incidental to
organized, commercialized, or systematic gambling.
(6) The operation of equipment or the conduct of a raffle
under sections 349.11 to 349.22, by an organization licensed by
the charitable gambling control board or an organization exempt
from licensing under section 349.214.
(7) Pari-mutuel betting on horse racing when the betting is
conducted under chapter 240.
(8) The purchase and sale of state lottery tickets under
chapter 349A.
Sec. 9. Minnesota Statutes 1988, section 609.76,
subdivision 1, is amended to read:
Subdivision 1. [GROSS MISDEMEANORS.] Whoever does any of
the following may be sentenced to imprisonment for not more than
one year or to payment of a fine of not more than $3,000, or
both:
(1) maintains or operates a gambling place or operates a
bucket shop;
(2) intentionally participates in the income of a gambling
place or bucket shop;
(3) conducts a lottery, or, with intent to conduct a
lottery, possesses facilities for doing so;
(4) sets up for use for the purpose of gambling, or
collects the proceeds of, any gambling device or bucket shop;
(5) with intent that it shall be so used, manufactures,
sells or offers for sale, in whole or any part thereof, any
gambling device including those defined in section 349.30,
subdivision 2, and any facility for conducting a lottery, except
as provided by section 349.40; or
(6) receives, records, or forwards bets or offers to bet
or, with intent to receive, record, or forward bets or offers to
bet, possesses facilities to do so; or
(7) pays any compensation for game credits earned on or
otherwise rewards players of video games of chance as defined
under section 349.50, subdivision 8.
Sec. 10. Minnesota Statutes 1988, section 609.761, is
amended to read:
609.761 [OPERATIONS PERMITTED.]
Subdivision 1. [LAWFUL GAMBLING.] Notwithstanding sections
609.755 and 609.76, an organization may conduct lawful gambling
as defined in section 349.12, if authorized under chapter 349,
and a person may manufacture, sell, or offer for sale a gambling
device to an organization authorized under chapter 349 to
conduct lawful gambling, and pari-mutuel betting on horse racing
may be conducted under chapter 240.
Subd. 2. [STATE LOTTERY.] Sections 609.755 and 609.76 do
not prohibit the operation of the state lottery or the sale,
possession, or purchase of tickets for the state lottery under
chapter 349A.
Sec. 11. Minnesota Statutes 1988, section 626.05,
subdivision 2, is amended to read:
Subd. 2. The term "peace officer" as used in sections
626.04 to 626.17 means a sheriff, deputy sheriff, police
officer, constable, agent of the bureau of criminal
apprehension, agent of the division of gambling enforcement, or
University of Minnesota peace officer.
Sec. 12. Minnesota Statutes 1988, section 626.13, is
amended to read:
626.13 [SERVICE, PERSONS MAKING.]
A search warrant may in all cases be served by any of the
officers mentioned in its directions, but by no other person,
except in aid of the officer on the officer's requiring it, the
officer being present and acting in its execution. If the
warrant is to be served by an agent of the bureau of criminal
apprehension or an agent of the division of gambling
enforcement, the agent shall notify the chief of police of an
organized full-time police department of the municipality or, if
there is no such local chief of police, the sheriff or a deputy
sheriff of the county in which service is to be made prior to
execution.
Sec. 13. Minnesota Statutes 1988, section 626.84,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] For purposes of sections
626.84 to 626.863, the following terms have the meanings given
them:
(a) "Board" means the board of peace officer standards and
training.
(b) "Director" means the executive director of the board.
(c) "Peace officer" means an employee or an elected or
appointed official of a political subdivision or law enforcement
agency who is licensed by the board, charged with the prevention
and detection of crime and the enforcement of the general
criminal laws of the state and who has the full power of arrest,
and shall also include the Minnesota state patrol, agents of the
division of gambling enforcement, and state conservation
officers.
(d) "Constable" has the meaning assigned to it in section
367.40.
(e) "Deputy constable" has the meaning assigned to it in
section 367.40.
(f) "Part-time peace officer" means an individual licensed
by the board whose services are utilized by law enforcement
agencies no more than an average of 20 hours per week, not
including time spent on call when no call to active duty is
received, calculated on an annual basis, who has either full
powers of arrest or authorization to carry a firearm while on
active duty. The term shall apply even though the individual
receives no compensation for time spent on active duty, and
shall apply irrespective of the title conferred upon the
individual by any law enforcement agency. The limitation on the
average number of hours in which the services of a part-time
peace officer may be utilized shall not apply to a part-time
peace officer who has formally notified the board pursuant to
rules adopted by the board of the part-time peace officer's
intention to pursue the specialized training for part-time peace
officers who desire to become peace officers pursuant to
sections 626.843, subdivision 1, clause (g) and 626.845,
subdivision 1, clause (g).
(g) "Reserve officer" means an individual whose services
are utilized by a law enforcement agency to provide
supplementary assistance at special events, traffic or crowd
control, and administrative or clerical assistance. A reserve
officer's duties do not include enforcement of the general
criminal laws of the state, and the officer does not have full
powers of arrest or authorization to carry a firearm on duty.
(h) "Law enforcement agency" means a unit of state or local
government that is authorized by law to grant full powers of
arrest and to charge a person with the duties of preventing and
detecting crime and enforcing the general criminal laws of the
state.
Sec. 14. [INDIAN COMPACTS.]
Section 9 may not be construed as prohibiting the state
from entering into a tribal-state compact under the provisions
of the Federal Gaming Regulatory Act, Public Law No. 100-497, as
it relates to video poker or video blackjack games of chance
currently operated by Indian tribes in this state.
Sec. 15. [EFFECTIVE DATE.]
Sections 1 to 14 are effective July 1, 1989, except that
the provisions of section 3 relating to the director of the
division of state lottery are effective the day following final
enactment.
ARTICLE 7
COMPULSIVE GAMBLING
Section 1. [245.98] [COMPULSIVE GAMBLING TREATMENT
PROGRAM.]
Subdivision 1. [DEFINITION.] For the purposes of this
section, "compulsive gambler" means a person who is chronically
and progressively preoccupied with gambling and with the urge to
gamble to the extent that the gambling behavior compromises,
disrupts, or damages personal, family, or vocational pursuits.
Subd. 2. [PROGRAM.] The commissioner of human services
shall establish a program for the treatment of compulsive
gamblers. The commissioner may contract with a nonprofit entity
with expertise regarding the treatment of compulsive gambling to
operate the program. The program may include the establishment
of a statewide toll-free number, resource library, public
education programs; regional in-service training programs and
conferences for health care professionals, educators, treatment
providers, employee assistance programs, and criminal justice
representatives; and the establishment of certification
standards for programs and service providers. The commissioner
may enter into agreements with other governmental or nonprofit
entities and may employ or contract with consultants to
facilitate the provision of these services or the training of
individuals to qualify them to provide these services. The
program may also include inpatient and outpatient treatment and
rehabilitation services and research studies. The research
studies must include baseline and prevalence studies for
adolescents and adults to identify those at the highest risk.
The program must be approved by the commissioner before it is
established.
Subd. 3. [REPORT.] The commissioner must report annually
to the legislature by January 15 of each year of the manner in
which the program to treat and prevent compulsive gamblers is
being implemented.
Sec. 2. [APPROPRIATION.]
$300,000 in fiscal year 1990 and $300,000 in fiscal year
1991 is appropriated from the general fund to the commissioner
of human services to implement the compulsive gambling treatment
program under this section.
The director of the division of state lottery must transfer
$100,000 in fiscal year 1990 and $100,000 in fiscal year 1991
from the amount that would otherwise be credited to the lottery
operations account to the general fund for the costs incurred
for the compulsive gambling program under section 1.
Sec. 3. [EFFECTIVE DATE.]
Sections 1 and 2 are effective July 1, 1989.
ARTICLE 8
APPROPRIATIONS
Section 1. [DEPARTMENT OF GAMING.]
(a) $370,000 is appropriated from the general fund to the
commissioner of gaming for the purposes of carrying out article
4. Of this amount, $182,000 is from the general fund for the
fiscal year ending June 30, 1990, and $188,000 is from the
general fund for the fiscal year ending June 30, 1991. The
director of the state lottery shall by June 30, 1990, transfer
from the lottery operations account to the general fund in
addition to any other transfers required by law $125,000 to
reimburse the general fund for the appropriation to the
commissioner of gaming for fiscal year 1991. If the
appropriation in either year of the 1990-1991 biennium is
insufficient the appropriation for the other year is available.
(b) The approved complement of the department, in addition
to the complements established by law for each of its divisions,
is three positions.
Sec. 2. [LOTTERY DIVISION.]
$8,500,000 is appropriated from the general fund to the
director of the division of state lottery for the purposes of
article 3. This appropriation must be repaid from the lottery
fund, with interest at the average monthly rate on invested
treasurer's cash, not later than June 30, 1990.
The governor or the governor's designee may expend any part
of this appropriation prior to the effective date of the
appointment of the first director of the division of state
lottery for carrying out any of the duties assigned under
article 3 to the director or the governor.
Sec. 3. [GAMBLING CONTROL.]
(a) The 13 positions relating to the responsibility for
processing license applications under Minnesota Statutes,
chapter 349, are transferred from the commissioner of revenue to
the division of gambling control under Minnesota Statutes,
section 15.039.
(b) The commissioner of administration shall, under
Minnesota Statutes, section 15.039, transfer to the director of
gambling control, from the appropriations made by law to the
commissioner of revenue for the 1990-1991 biennium for lawful
gambling activities, amounts necessary for the division to carry
out the responsibilities of Minnesota Statutes, sections 349.11
to 349.23.
(c) Reorganization order No. 152 of the commissioner of
administration is void.
Sec. 4. [PARI-MUTUEL RACING.]
(a) The commissioner of administration shall transfer,
under Minnesota Statutes, section 15.039, the amounts
appropriated by law to the Minnesota racing commission for the
fiscal years 1990 and 1991 to the director of pari-mutuel racing
for the purposes of carrying out the duties assigned to the
division of pari-mutuel racing in article 1.
(b) The commissioner of administration shall, under
Minnesota Statutes, section 15.039, transfer the authorized
complement of the Minnesota racing commission to the division of
pari-mutuel racing.
Sec. 5. [DEPARTMENT OF PUBLIC SAFETY.]
Subdivision 1. [TRANSFER FROM REVENUE.] The two positions
relating to the responsibility for auditing and investigation of
gambling under Minnesota Statutes, chapter 349, except for the
responsibility for auditing tax returns are transferred from the
commissioner of revenue to the commissioner of public safety for
the division of gambling enforcement under Minnesota Statutes,
section 15.039.
Subd. 2. [PUBLIC SAFETY.] $750,000 is appropriated from
the general fund to the commissioner of public safety to
implement articles 1, 2, 3, and 5. $375,000 is for the fiscal
year ending June 30, 1990, and $375,000 is for the fiscal year
ending June 30, 1991. The approved complement of the department
of public safety is increased by ten positions. At least six of
the additional positions authorized by this subdivision must be
used to employ persons that are licensed under Minnesota
Statutes, sections 626.84 to 626.863.
Sec. 6. [ATTORNEY GENERAL.]
(a) $136,000 is appropriated from the general fund to the
attorney general to administer articles 1 to 3 and 5. $68,000
is for the fiscal year ending June 30, 1990, and $68,000 is for
the fiscal year ending June 30, 1991. If the appropriation in
either year of the 1990-1991 biennium is insufficient, the
appropriation for the other year is available. The approved
complement of the attorney general's office is increased by one
and one-half positions.
(b) The director of the state lottery shall by June 30,
1990, transfer from the lottery operations account to the
general fund, in addition to any other transfers required by
law, $46,000 to reimburse the general fund for the appropriation
to the attorney general under this section.
Sec. 7. [COMMISSIONER OF REVENUE.]
$388,000 is appropriated from the general fund to the
commissioner of revenue to provide for computer modifications
necessary to administer Minnesota Statutes, chapter 349.
$194,000 is for the fiscal year ending June 30, 1990, and
$194,000 is for the fiscal year ending June 30, 1991.
Sec. 8. [EFFECTIVE DATE.]
Section 2 is effective the day following final enactment.
Sections 1 and 3 to 7 are effective July 1, 1989.
Presented to the governor May 30, 1989
Signed by the governor June 2, 1989, 10:55 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes