1.1 	A bill for an act
1.2 	relating to the State Lottery; authorizing the
1.3 	director of the State Lottery to establish video
1.4 	lottery terminals; providing duties and powers to the
1.5 	director of the State Lottery; providing for the use
1.6 	of video lottery revenues; amending Minnesota Statutes
1.7 	2004, sections 297E.02, subdivision 1; 299L.02,
1.8 	subdivision 1; 349.15, subdivision 1; 349A.01,
1.9 	subdivisions 10, 11, 12, by adding subdivisions;
1.10 	349A.06, subdivisions 1, 5, 8, 10, by adding
1.11 	subdivisions; 349A.08, subdivisions 1, 5, 8; 349A.09,
1.12 	subdivision 1; 349A.10, subdivisions 2, 3, 4; 349A.11,
1.13 	subdivision 1; 349A.12, subdivisions 1, 2; 349A.13;
1.14 	609.651, subdivision 1; 609.75, subdivision 4;
1.15 	609.761, subdivision 2; proposing coding for new law
1.16 	in Minnesota Statutes, chapters 297A; 349A; repealing
1.17 	Minnesota Statutes 2004, sections 297E.01, subdivision
1.18 	7; 297E.02, subdivisions 4, 6, 7.
1.19 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.20 	Section 1. [297A.652] LOTTERY GAMING MACHINES; IN-LIEU
1.21 	TAX.
1.22 	Net terminal income from the operation of video lottery
1.23 	terminals authorized under section 349A.071 is exempt from the
1.24 	tax imposed under section 297A.62.  The State Lottery must on or
1.25 	before the 20th day of each month transmit to the commissioner
1.26 	an amount equal to the net terminal income from the operation of
1.27 	video lottery terminals as defined in section 349A.01, for the
1.28 	previous month multiplied by 30 percent.  The commissioner shall
1.29 	deposit the money transmitted under this section in the state
1.30 	treasury to be credited as provided in section 297A.94.

1.31 	Sec. 2. Minnesota Statutes 2004, section 297E.02,
1.32 	subdivision 1, is amended to read:
2.1 		Subdivision 1.Imposition.  A tax is imposed on all
2.2 	lawful gambling other than (1) pull-tab deals or games; (2)
2.3 	tipboard deals or games; and (3) items listed in section
2.4 	297E.01, subdivision 8, clauses (4) and (5),at the rate of 8.5
2.5 	percent on the gross receipts as defined in section 297E.01,
2.6 	subdivision 8, less prizes actually paid.  The tax imposed by
2.7 	this subdivision is in lieu of the tax imposed by section
2.8 	297A.62 and all local taxes and license fees except a fee
2.9 	authorized under section 349.16, subdivision 8, or a tax
2.10 	authorized under subdivision 5.
2.11 	The tax imposed under this subdivision is payable by the
2.12 	organization or party conducting, directly or indirectly, the
2.13 	gambling.

2.14 	Sec. 3. Minnesota Statutes 2004, section 299L.02,
2.15 	subdivision 1, is amended to read:
2.16 		Subdivision 1.Lottery.  (a) The director shall when
2.17 	required under chapter 349A or when requested by the director of
2.18 	the lottery conduct background checks on employees of the State
2.19 	Lottery, lottery retailers, and bidders of lottery procurement
2.20 	contracts.
2.21 	(b) The director shall, when so requested by the director
2.22 	of the State Lottery or when the director believes it to be
2.23 	reasonable and necessary, conduct investigations of lottery
2.24 	retailers, applicants for lottery retailer contracts, suppliers
2.25 	of goods or services to the State Lottery, and persons bidding
2.26 	on contracts for goods or services with the State Lottery.
2.27 	(c) The director shall conduct an annual security audit of
2.28 	the State Lottery, or arrange for such an audit by an outside
2.29 	agency or person, firm, or corporation.  The director shall
2.30 	report to the director of the lottery on the results of the
2.31 	audit.
2.32 	(d) The director shall deposit in a separate account in the
2.33 	state treasury all money received from the director of the State
2.34 	Lottery for charges for investigations and background checks
2.35 	relating to the owning and operating of video lottery terminals
2.36 	under chapter 349A.  Money in the account is appropriated to the
3.1 	director for the purpose of carrying out the director's powers
3.2 	and duties under this subdivision.

3.3 	Sec. 4. Minnesota Statutes 2004, section 349.15,
3.4 	subdivision 1, is amended to read:
3.5 		Subdivision 1.Expenditure restrictions. (a) Gross
3.6 	profits from lawful gambling may be expended only for lawful
3.7 	purposes or allowable expenses as authorized by the membership
3.8 	of the conducting organization at a monthly meeting of the
3.9 	organization's membership.
3.10 	Provided that (b) Except as provided in paragraph (c),no
3.11 	more than 70 percent of the gross profit less the tax imposed
3.12 	under section 297E.02, subdivision 1, from bingo, and no more
3.13 	than 55 percent of the gross profit from other forms of lawful
3.14 	gambling, may be expended for allowable expenses related to
3.15 	lawful gambling.
3.16 	(c) Money received by an organization from net video
3.17 	lottery terminal income under section 349A.06, subdivision 6a,
3.18 	may be expended only for lawful purposes.

3.19 	Sec. 5. Minnesota Statutes 2004, section 349A.01, is
3.20 	amended by adding a subdivision to read:
3.21 		Subd. 9a.Lottery game. "Lottery game" means any game
3.22 	operated by the lottery where the prize is determined primarily
3.23 	by chance.

3.24 	Sec. 6. Minnesota Statutes 2004, section 349A.01,
3.25 	subdivision 10, is amended to read:
3.26 		Subd. 10.Lottery procurement contract.  "Lottery
3.27 	procurement contract" means a contract to provide lottery
3.28 	products, computer hardware and software used to monitor sales
3.29 	of lottery tickets and sales on a video lottery terminal, and 
3.30 	lottery tickets, video lottery terminals, and maintenance of
3.31 	video lottery terminals. " Lottery procurement contract " does
3.32 	not include a contract to provide an annuity or prize payment
3.33 	agreement or materials, supplies, equipment, or services common
3.34 	to the ordinary operation of a state agency.

3.35 	Sec. 7. Minnesota Statutes 2004, section 349A.01,
3.36 	subdivision 11, is amended to read:
4.1 		Subd. 11.Lottery retailer.  "Lottery retailer" means a
4.2 	person with whom the director has contracted to sell lottery
4.3 	tickets to the public. A lottery retailer includes a person
4.4 	with whom the director has contracted to place a video lottery
4.5 	terminal within its premises where video lottery terminal plays
4.6 	are sold.

4.7 	Sec. 8. Minnesota Statutes 2004, section 349A.01,
4.8 	subdivision 12, is amended to read:
4.9 		Subd. 12.Lottery ticket or ticket.  "Lottery ticket" or
4.10 	"ticket" means any tangible evidence issued by the lottery to
4.11 	prove participation in a lottery game other than a video lottery
4.12 	game.

4.13 	Sec. 9. Minnesota Statutes 2004, section 349A.01, is
4.14 	amended by adding a subdivision to read:
4.15 		Subd. 14.Net terminal income. "Net terminal income"
4.16 	means the sum of all money spent for video lottery terminal
4.17 	plays less the amount paid out to winning players.

4.18 	Sec. 10. Minnesota Statutes 2004, section 349A.01, is
4.19 	amended by adding a subdivision to read:
4.20 		Subd. 15.Video lottery credit. "Video lottery credit"
4.21 	means the basic unit of play for a video lottery terminal which
4.22 	has a value of 25 cents.

4.23 	Sec. 11. Minnesota Statutes 2004, section 349A.01, is
4.24 	amended by adding a subdivision to read:
4.25 		Subd. 16.Video lottery credit receipt. "Video lottery
4.26 	credit receipt" means a receipt generated by a video lottery
4.27 	terminal that provides evidence of cash payment due a player
4.28 	from play on a video lottery terminal.

4.29 	Sec. 12. Minnesota Statutes 2004, section 349A.01, is
4.30 	amended by adding a subdivision to read:
4.31 		Subd. 17.Video lottery game. "Video lottery game" means
4.32 	an electronically simulated game authorized by the director that
4.33 	is displayed and played on a video lottery terminal for
4.34 	consideration and with prizes awarded for designated results.

4.35 	Sec. 13. Minnesota Statutes 2004, section 349A.01, is
4.36 	amended by adding a subdivision to read:
5.1 		Subd. 18.Video lottery terminal. "Video lottery
5.2 	terminal" means an electronic machine that, upon the insertion
5.3 	of a coin, token, or currency, is available to play or simulate
5.4 	the play of a game utilizing a video display and microprocessors
5.5 	in which, primarily by chance, the player may receive free plays
5.6 	or video lottery credits that can be redeemed for cash.

5.7 	Sec. 14. Minnesota Statutes 2004, section 349A.01, is
5.8 	amended by adding a subdivision to read:
5.9 		Subd. 19.Video lottery terminal play. "Video lottery
5.10 	terminal play" means an electronic record that proves
5.11 	participation in a video lottery game.

5.12 	Sec. 15. Minnesota Statutes 2004, section 349A.01, is
5.13 	amended by adding a subdivision to read:
5.14 		Subd. 20.Win percentage. "Win percentage" means the
5.15 	portion of the money wagered by players on a video lottery
5.16 	terminal that is available for the payment of prizes to winning
5.17 	players.

5.18 	Sec. 16. Minnesota Statutes 2004, section 349A.06,
5.19 	subdivision 1, is amended to read:
5.20 		Subdivision 1.Contracts.  The director shall sell
5.21 	tickets and operate video lottery terminals for the lottery
5.22 	through lottery retailers with whom the director contracts.
5.23 	Contracts under this section are not subject to the provisions
5.24 	of sections 16C.03, 16C.05, 16C.06, 16C.08, 16C.09, and 16C.10,
5.25 	and are valid for a period of one year.  The director may permit
5.26 	a retailer to sell tickets and operate video lottery terminals 
5.27 	at more than one business location under a contract entered into
5.28 	under this section.

5.29 	Sec. 17. Minnesota Statutes 2004, section 349A.06,
5.30 	subdivision 5, is amended to read:
5.31 		Subd. 5.Restrictions on lottery retailers.  (a) A
5.32 	lottery retailer may sell lottery tickets or have a video
5.33 	lottery terminal placed only on the premises described in the
5.34 	contract.
5.35 	(b) A lottery retailer must prominently display a
5.36 	certificate issued by the director on the premises where lottery
6.1 	tickets will be sold or where video lottery terminals are
6.2 	operated.
6.3 	(c) A lottery retailer must keep a complete set of books of
6.4 	account, correspondence, and all other records necessary to show
6.5 	fully the retailer's lottery transactions, and make them
6.6 	available for inspection by employees of the lottery at all
6.7 	times during business hours.  The director may require a lottery
6.8 	retailer to furnish information as the director deems necessary
6.9 	to carry out the purposes of this chapter, and may require an
6.10 	audit to be made of the books of account and records.  The
6.11 	director may select an auditor to perform the audit and may
6.12 	require the retailer to pay the cost of the audit.  The auditor
6.13 	has the same right of access to the books of account,
6.14 	correspondence, and other records as is given to employees of
6.15 	the lottery.
6.16 	(d) A contract issued under this section may not be
6.17 	transferred or assigned.
6.18 	(e) The director shall require that lottery tickets may be
6.19 	sold by retailers only for cash.
6.20 	(f) A lottery retailer must prominently post at the point
6.21 	of sale of lottery tickets and the area where video lottery
6.22 	terminals are located, in a manner approved by the commissioner
6.23 	of human services, the toll-free telephone number established by
6.24 	the commissioner of human services in connection with the
6.25 	compulsive gambling program established under section 245.98.

6.26 	Sec. 18. Minnesota Statutes 2004, section 349A.06, is
6.27 	amended by adding a subdivision to read:
6.28 		Subd. 5a.Restrictions on lottery retailers; video
6.29 	lottery terminals. (a) The director may only enter into a
6.30 	lottery retailer contract for games operated by a video lottery
6.31 	terminal with a retailer that has a license to sell alcoholic
6.32 	beverages for consumption on the premises where sold.  This does
6.33 	not include a retailer who has only a temporary on-sale license
6.34 	or a retailer of 3.2 percent malt liquor whose total gross
6.35 	receipts from the premises were less than 50 percent
6.36 	attributable to the sale of 3.2 percent malt liquor.
7.1 	(b) The director may not contract with a retailer for games
7.2 	operated by a video lottery terminal unless the retailer has an
7.3 	organization licensed under chapter 349 authorized and
7.4 	conducting lawful gambling on the premises.
7.5 	(c) A lottery retailer authorized to sell games operated by
7.6 	a video lottery terminal may not cancel or refuse to renew a
7.7 	lease with an organization licensed under chapter 349 authorized
7.8 	and conducting lawful gambling on its premises for three years
7.9 	following the effective date of this act, unless the
7.10 	organization has failed to comply with its lease with the
7.11 	retailer.
7.12 	(d) A lottery retailer may have up to five video lottery
7.13 	terminals on the retailer's premises, as determined by the
7.14 	director.
7.15 	(e) A lottery retailer that is authorized to operate a
7.16 	video lottery terminal may not make reference to the
7.17 	establishment being a "casino," or use the word "casino" in its
7.18 	name or in any of its advertisements.
7.19 	(f) The director, or any employee of the director, may
7.20 	inspect any video lottery terminal at any time during the hours
7.21 	when alcoholic beverages may be sold at on-sale under section
7.22 	340A.504, subdivisions 1, 2, and 3, without notice, to ensure
7.23 	compliance with this chapter and any rules adopted by the
7.24 	director.

7.25 	Sec. 19. Minnesota Statutes 2004, section 349A.06, is
7.26 	amended by adding a subdivision to read:
7.27 		Subd. 6a.Retention by retailers; video lottery
7.28 	terminals. A lottery retailer who has a contract for placement
7.29 	of video lottery terminals may retain 33 percent of the net
7.30 	terminal income from the terminals located within its premises
7.31 	as commission.  The lottery retailer receiving commission under
7.32 	this subdivision shall transmit to an organization licensed
7.33 	under chapter 349, and conducting lawful gambling on the
7.34 	premises of the retailer, 31 percent of the lottery retailer's
7.35 	commission received under this subdivision.  If more than one
7.36 	organization conducts lawful gambling on the premises, the
8.1 	payment must be reasonably allocated between the organizations,
8.2 	pro rata based on their respective gross receipts.

8.3 	Sec. 20. Minnesota Statutes 2004, section 349A.06,
8.4 	subdivision 8, is amended to read:
8.5 		Subd. 8.Proceeds of sales.  All proceeds from the sale
8.6 	of lottery tickets or proceeds from the sale of video lottery
8.7 	terminal plays received by a lottery retailer constitute a trust
8.8 	fund until paid to the director.  The lottery retailer is
8.9 	personally liable for all proceeds.

8.10 	Sec. 21. Minnesota Statutes 2004, section 349A.06,
8.11 	subdivision 10, is amended to read:
8.12 		Subd. 10.Local licenses.  No political subdivision may
8.13 	require a local license to operate as a lottery retailer,
8.14 	restrict or regulate the placement of a video lottery terminal,
8.15 	or impose a tax or fee on the business of operating as a lottery
8.16 	retailer.

8.17 	Sec. 22. [349A.071] VIDEO LOTTERY TERMINALS.
8.18 		Subdivision 1.Specifications. Each video lottery
8.19 	terminal must:
8.20 	(1) maintain on nonresettable meters a permanent record,
8.21 	capable of being printed out, of all transactions by the
8.22 	terminal and all entries into the terminal; and 
8.23 	(2) be capable of being linked electronically to a central
8.24 	communication system to provide auditing program information as
8.25 	required by the director.
8.26 		Subd. 2.Limit on amount played. A video lottery
8.27 	terminal may not allow less than 25 cents and not more than $2
8.28 	to be played on a single game.
8.29 		Subd. 3.Maximum prize. The maximum prize on any single
8.30 	game played on a video lottery terminal may not exceed $1,000.
8.31 		Subd. 4.Testing and examination of terminals. The
8.32 	director may require working models of a video lottery terminal
8.33 	transported to the location the director designates for testing,
8.34 	examination, and analysis.  The manufacturer shall pay all costs
8.35 	of any testing, examination, analysis, and transportation of the
8.36 	terminal model.
9.1 		Subd. 5.Deactivation of terminal. The director may
9.2 	deactivate a video lottery terminal without notice if the
9.3 	lottery retailer has violated any provision of this chapter,
9.4 	rule, or provision of its contract with the director.

9.5 	Sec. 23. Minnesota Statutes 2004, section 349A.08,
9.6 	subdivision 1, is amended to read:
9.7 		Subdivision 1.Agreement by players.  A person who buys a
9.8 	lottery ticket or plays a video lottery game agrees to be bound
9.9 	by the rules and game procedures applicable to the that 
9.10 	particular lottery game for which the ticket is purchased.  The
9.11 	player acknowledges that the determination of whether a
9.12 	ticket or video lottery credit receipt is a valid winning ticket
9.13 	is subject to under the rules of and game procedures adopted by 
9.14 	the director, claims procedures established by the director for
9.15 	that game, and any confidential or public validation tests
9.16 	established by the director for that game.

9.17 	Sec. 24. Minnesota Statutes 2004, section 349A.08,
9.18 	subdivision 5, is amended to read:
9.19 		Subd. 5.Payment; unclaimed prizes. (a) Except as
9.20 	provided in this subdivision,a prize in the State Lottery must
9.21 	be claimed by the winner within one year of the date of the
9.22 	drawing at which the prize was awarded or the last day sales
9.23 	were authorized for a game where a prize was determined in a
9.24 	manner other than by means of a drawing.  If a valid claim is
9.25 	not made for a prize payable directly by the lottery by the end
9.26 	of this period, the prize money is considered unclaimed and the
9.27 	winner of the prize shall have no further claim to the prize.
9.28 	(b) A video lottery credit receipt from a video lottery
9.29 	terminal must be presented for payment before the close of the
9.30 	business day on the date the video lottery credit receipt was
9.31 	printed.  If a valid claim is not made for a prize from a video
9.32 	lottery terminal by the end of this period, the unclaimed prize
9.33 	must be paid by the lottery retailer to the lottery.
9.34 	(c) A prize won by a person who purchased the winning
9.35 	ticket or played a video lottery game in violation of section
9.36 	349A.12, subdivision 1, or won by a person ineligible to be
10.1 	awarded a prize under subdivision 7 must be treated as an
10.2 	unclaimed prize under this section.  The director must transfer
10.3 	all unclaimed prize money at the end of each fiscal year from
10.4 	the lottery cash flow account to the general fund.

10.5 	Sec. 25. Minnesota Statutes 2004, section 349A.08,
10.6 	subdivision 8, is amended to read:
10.7 		Subd. 8.Withholding of delinquent state taxes or other
10.8 	debts.  The director shall report the name, address, and Social
10.9 	Security number of each winner of a lottery prize of $600 or
10.10 	more, excluding any winner of a prize from a video lottery game,
10.11 	to the Department of Revenue to determine whether the person who
10.12 	has won the prize is delinquent in payment of state taxes or
10.13 	owes a debt as defined in section 270A.03, subdivision 5.  If
10.14 	the person is delinquent in payment of state taxes or owes a
10.15 	debt as defined in section 270A.03, subdivision 5, the director
10.16 	shall withhold the delinquent amount from the person's prize for
10.17 	remittance to the Department of Revenue for payment of the
10.18 	delinquent taxes or distribution to a claimant agency in
10.19 	accordance with chapter 270A.  Section 270A.10 applies to the
10.20 	priority of claims.

10.21 	Sec. 26. Minnesota Statutes 2004, section 349A.09,
10.22 	subdivision 1, is amended to read:
10.23 		Subdivision 1.Odds; required information. (a) The
10.24 	director shall include on each brochure, pamphlet, booklet, or
10.25 	other similar material the director publishes to promote or
10.26 	explain any lottery game, a prominent and clear statement of the
10.27 	approximate odds of winning each prize offered in that lottery
10.28 	game.
10.29 	(b) Except for the operation of a video lottery terminal,
10.30 	each lottery retailer must post prominently at or near the point
10.31 	of ticket sale a notice or notices printed and provided by the
10.32 	director of the approximate odds of winning each prize in each
10.33 	game for which the lottery retailer sells tickets.
10.34 	(c) The approximate odds of winning a prize from a video
10.35 	lottery terminal must be displayed on the face or screen of the
10.36 	video lottery terminal.

11.1 	Sec. 27. Minnesota Statutes 2004, section 349A.10,
11.2 	subdivision 2, is amended to read:
11.3 		Subd. 2.deposit in prize fund.  (a) The director shall
11.4 	establish a lottery prize fund outside the state treasury.  The
11.5 	fund consists of all money deposited in it under this
11.6 	subdivision and all interest earned thereon.
11.7 	(b) The director shall deposit in the lottery prize fund,
11.8 	from gross receipts from the sale of lottery tickets, an amount
11.9 	sufficient to pay lottery prizes from the lottery prize fund
11.10 	according to the following provisions:
11.11 	(1) for games which require on-line terminal connections,
11.12 	the prizes paid in any fiscal year must be at least 45 percent
11.13 	of gross receipts from those games in that fiscal year;
11.14 	(2) for games which do not require on-line terminal
11.15 	connections, the prizes paid in any fiscal year must be at least
11.16 	the following percentages of gross receipts from those games:
11.17 	(i) 50 percent through fiscal year 1991;
11.18 	(ii) 55 percent from July 1, 1991, to June 30, 1992; and 
11.19 	(iii) 60 percent thereafter of gross receipts from those
11.20 	games in that fiscal year.
11.21 	(c) For lottery games played on a video lottery terminal,
11.22 	the win percentage in any fiscal year will be the win percentage
11.23 	established by the game procedures adopted for the game, but
11.24 	shall be at least 80 percent but not more than 95 percent.

11.25 	Sec. 28. Minnesota Statutes 2004, section 349A.10,
11.26 	subdivision 3, is amended to read:
11.27 		Subd. 3.Lottery operations.  (a) The director shall
11.28 	establish a lottery operations account in the lottery fund.  The
11.29 	director shall pay all costs of operating the lottery, including
11.30 	payroll costs or amounts transferred to the state treasury for
11.31 	payroll costs, but not including lottery prizes, from the
11.32 	lottery operating account.  The director shall credit to the
11.33 	lottery operations account amounts sufficient to pay the
11.34 	operating costs of the lottery.
11.35 	(b) Except as provided in paragraph (e), the director may
11.36 	not credit in any fiscal year thereafter amounts to the lottery
12.1 	operations account which when totaled exceed 15 percent of gross
12.2 	revenue, exclusive of net terminal income, and 20 percent of net
12.3 	terminal income to the lottery fund in that fiscal year.  In
12.4 	computing total amounts credited to the lottery operations
12.5 	account under this paragraph the director shall disregard
12.6 	amounts transferred to or retained by lottery retailers as sales
12.7 	commissions or other compensation.
12.8 	(c) The director of the lottery may not expend after July
12.9 	1, 1991,more than 2-3/4 percent of gross revenues in a fiscal
12.10 	year for contracts for the preparation, publication, and
12.11 	placement of advertising.
12.12 	(d) Except as the director determines, the lottery is not
12.13 	subject to chapter 16A relating to budgeting, payroll, and the
12.14 	purchase of goods and services.
12.15 	(e) In addition to the amounts credited to the lottery
12.16 	operations account under paragraph (b), the director is
12.17 	authorized, if necessary, to meet the current obligations of the
12.18 	lottery and to credit up to 25 percent of an amount equal to the
12.19 	average annual amount which was authorized to be credited to the
12.20 	lottery operations account for the previous three fiscal years
12.21 	but was not needed to meet the obligations of the lottery.
12.22 	(f) The director shall remit two percent of net terminal
12.23 	income from the lottery operations account to be held in trust
12.24 	by the commissioner of human services in a compulsive gambling
12.25 	trust account.  Money and interest earned on money deposited
12.26 	into this account may not be spent until appropriated by law for
12.27 	periods beginning July 1, 2005, and thereafter.

12.28 	Sec. 29. Minnesota Statutes 2004, section 349A.10,
12.29 	subdivision 4, is amended to read:
12.30 		Subd. 4.Deposit of receipts.  (a) The director may
12.31 	require lottery retailers to:
12.32 	(1) deposit in a separate account to the credit of the
12.33 	lottery fund, in banks designated by the director, all money
12.34 	received by the lottery retailer from the sale of lottery
12.35 	tickets and video lottery terminal plays, less money retained as
12.36 	the lottery retailer's commission and for payment of prizes;
13.1 	(2) file with the director reports of the lottery
13.2 	retailer's receipts and transactions in ticket sales and video
13.3 	lottery terminal plays in a form that the director prescribes;
13.4 	and
13.5 	(3) allow money deposited by the lottery retailer from the
13.6 	sale of lottery tickets and video lottery terminal plays to be
13.7 	transferred to the lottery through electronic fund transfer.
13.8 	(b) The director may make arrangements for any person,
13.9 	including a financial institution, to perform functions,
13.10 	activities, or services in connection with the receipt and
13.11 	distribution of lottery revenues.
13.12 	(c) A lottery retailer who fails to pay any money due to
13.13 	the director within the time prescribed by the director shall
13.14 	pay interest on the amount owed at the rate determined by rule.

13.15 	Sec. 30. Minnesota Statutes 2004, section 349A.11,
13.16 	subdivision 1, is amended to read:
13.17 		Subdivision 1.Lottery ticket; retailer.  The director,
13.18 	an employee of the lottery, a member of the immediate family of
13.19 	the director or employee residing in the same household may not:
13.20 	(1) purchase a lottery ticket or play a game on a video
13.21 	lottery terminal; or
13.22 	(2) have any personal pecuniary interest in any vendor
13.23 	holding a lottery procurement contract, or in any lottery
13.24 	retailer; or
13.25 	(3) receive any gift, gratuity, or other thing of value,
13.26 	excluding food or beverage, from any lottery vendor or lottery
13.27 	retailer, or person applying to be a retailer or vendor, in
13.28 	excess of $100 in any calendar year.

13.29 	Sec. 31. Minnesota Statutes 2004, section 349A.12,
13.30 	subdivision 1, is amended to read:
13.31 		Subdivision 1.Purchase by minors.  A person under the
13.32 	age of 18 years may not buy or redeem for a prize a ticket in
13.33 	the State Lottery and a person under the age of 21 years may not
13.34 	play a game on a video lottery terminal.

13.35 	Sec. 32. Minnesota Statutes 2004, section 349A.12,
13.36 	subdivision 2, is amended to read:
14.1 		Subd. 2.Sale to minors.  A lottery retailer may not sell
14.2 	and a lottery retailer or other person may not furnish or redeem
14.3 	for a prize a ticket in the State Lottery to any person under
14.4 	the age of 18 years, or allow a person under the age of 21 years
14.5 	to play a game on a video lottery terminal.  It is an
14.6 	affirmative defense to a charge under this subdivision for the
14.7 	lottery retailer or other person to prove by a preponderance of
14.8 	the evidence that the lottery retailer or other person
14.9 	reasonably and in good faith relied upon representation of proof
14.10 	of age described in section 340A.503, subdivision 6, in making
14.11 	the sale or furnishing or redeeming the ticket or allowing the
14.12 	play on a terminal.

14.13 	Sec. 33. Minnesota Statutes 2004, section 349A.13, is
14.14 	amended to read:
14.15 	349A.13 RESTRICTIONS.
14.16 	Nothing in this chapter:
14.17 	(1) authorizes the director to conduct a lottery game or
14.18 	contest the winner or winners of which are determined by the
14.19 	result of a sporting event other than a horse race conducted
14.20 	under chapter 240; or 
14.21 	(2) authorizes the director to install or operate a lottery
14.22 	device operated by coin or currency which when operated
14.23 	determines the winner of a game; and 
14.24 	(3) authorizes the director to sell pull-tabs as defined
14.25 	under section 349.12, subdivision 32.

14.26 	Sec. 34. Minnesota Statutes 2004, section 609.651,
14.27 	subdivision 1, is amended to read:
14.28 		Subdivision 1.felony fraud.  A person is guilty of a
14.29 	felony and may be sentenced under subdivision 4 if the person
14.30 	does any of the following with intent to defraud the State
14.31 	Lottery:
14.32 	(1) alters or counterfeits a state lottery ticket or a
14.33 	video lottery credit receipt from a state lottery video lottery
14.34 	terminal;
14.35 	(2) knowingly presents an altered or counterfeited state
14.36 	lottery ticket or video lottery credit receipt from a state
15.1 	lottery video lottery terminal for payment;
15.2 	(3) knowingly transfers an altered or counterfeited state
15.3 	lottery ticket or video lottery credit receipt from a state
15.4 	lottery video lottery terminal to another person; or 
15.5 	(4) tampers with or manipulates the outcome, prize payable,
15.6 	or operation of a state lottery video lottery terminal; or 
15.7 	(5) otherwise claims a lottery prize by means of fraud,
15.8 	deceit, or misrepresentation.

15.9 	Sec. 35. Minnesota Statutes 2004, section 609.75,
15.10 	subdivision 4, is amended to read:
15.11 		Subd. 4.Gambling device.  A gambling device is a
15.12 	contrivance which for a consideration affords the player an
15.13 	opportunity to obtain something of value, other than free plays,
15.14 	automatically from the machine or otherwise, the award of which
15.15 	is determined principally by chance.  "Gambling device" also
15.16 	includes a video game of chance, as defined in subdivision 8,
15.17 	but does not include a video lottery terminal operated by the
15.18 	State Lottery under chapter 349A.

15.19 	Sec. 36. Minnesota Statutes 2004, section 609.761,
15.20 	subdivision 2, is amended to read:
15.21 		Subd. 2.State lottery.  Sections 609.755 and 609.76 do
15.22 	not prohibit the operation of the State Lottery or ;the sale,
15.23 	possession, or purchase of tickets for the State Lottery; or the
15.24 	manufacture, possession, or operation of a video lottery
15.25 	terminal for the State Lottery under chapter 349A.

15.26 	Sec. 37. REPEALER.
 15.27 	Minnesota Statutes 2004, sections 297E.01, subdivision 7;
15.28 	and 297E.02, subdivisions 4, 6, and 7, are repealed.

15.29 	Sec. 38. EFFECTIVE DATE.
 15.30 	Sections 1 and 3 to 36 are effective the day following
15.31 	final enactment.  Sections 2 and 37 are effective July 1, 2005.