1.1                          A bill for an act 
  1.2             relating to the state lottery; gaming machines and 
  1.3             card games; establishing horse racing purse payments; 
  1.4             amending Minnesota Statutes 1998, sections 297A.259; 
  1.5             299L.07, subdivision 2a; 349A.01, by adding 
  1.6             subdivisions; 541.21; and 609.761, subdivision 2; 
  1.7             proposing coding for new law in Minnesota Statutes, 
  1.8             chapter 349A. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1998, section 297A.259, is 
  1.11  amended to read: 
  1.12     297A.259 [LOTTERY TICKETS; IN LIEU TAX.] 
  1.13     Sales of state lottery tickets are exempt from the tax 
  1.14  imposed under section 297A.02.  The state lottery must on or 
  1.15  before the 20th day of each month transmit to the commissioner 
  1.16  of revenue an amount equal to the gross receipts from the sale 
  1.17  of lottery tickets for the previous month multiplied by the tax 
  1.18  rate under section 297A.02, subdivision 1.  The gross receipts 
  1.19  from the operation of gaming machines operated by the state 
  1.20  lottery and the conduct of card games under section 349A.19 are 
  1.21  exempt from the tax imposed under section 297A.02 and the in 
  1.22  lieu tax payment under this section.  The resulting payment is 
  1.23  in lieu of the sales tax that otherwise would be imposed by this 
  1.24  chapter.  The commissioner shall deposit the money transmitted 
  1.25  as provided by section 297A.44 and the money must be treated as 
  1.26  other proceeds of the sales tax.  Gross receipts for purposes of 
  1.27  this section mean the proceeds of the sale of tickets before 
  2.1   deduction of a commission or other compensation paid to the 
  2.2   vendor or retailer for selling tickets. 
  2.3      Sec. 2.  Minnesota Statutes 1998, section 299L.07, 
  2.4   subdivision 2a, is amended to read: 
  2.5      Subd. 2a.  [RESTRICTIONS.] (a) A manufacturer licensed 
  2.6   under this section may sell, offer to sell, lease, or rent, in 
  2.7   whole or in part, a gambling device only to a distributor 
  2.8   licensed under this section or to the state lottery as 
  2.9   authorized under chapter 349A. 
  2.10     (b) A distributor licensed under this section may sell, 
  2.11  offer to sell, market, rent, lease, or otherwise provide, in 
  2.12  whole or in part, a gambling device only to: 
  2.13     (1) the governing body of a federally recognized Indian 
  2.14  tribe that is authorized to operate the gambling device under a 
  2.15  tribal state compact under the Indian Gaming Regulatory Act, 
  2.16  Public Law Number 100-497, and future amendments to it; 
  2.17     (2) a person for use in the person's dwelling for display 
  2.18  or amusement purposes in a manner that does not afford players 
  2.19  an opportunity to obtain anything of value; and 
  2.20     (3) the state lottery as authorized under chapter 349A. 
  2.21     Sec. 3.  Minnesota Statutes 1998, section 349A.01, is 
  2.22  amended by adding a subdivision to read: 
  2.23     Subd. 14.  [GAMING MACHINE.] "Gaming machine" means any 
  2.24  machine in which a coin token or other currency is deposited to 
  2.25  play a game that uses a video display and microprocessors or an 
  2.26  electromechanical device with a spinning reel. 
  2.27     Sec. 4.  Minnesota Statutes 1998, section 349A.01, is 
  2.28  amended by adding a subdivision to read: 
  2.29     Subd. 15.  [GAMING MACHINE GAME.] "Gaming machine game" 
  2.30  means a game operated by a gaming machine as authorized by the 
  2.31  director. 
  2.32     Sec. 5.  Minnesota Statutes 1998, section 349A.01, is 
  2.33  amended by adding a subdivision to read: 
  2.34     Subd. 16.  [GAMING MACHINE PLAY.] "Gaming machine play" 
  2.35  means an electronic record that proves participation in a gaming 
  2.36  machine game. 
  3.1      Sec. 6.  Minnesota Statutes 1998, section 349A.01, is 
  3.2   amended by adding a subdivision to read: 
  3.3      Subd. 17.  [ADJUSTED GROSS GAMING MACHINE 
  3.4   REVENUE.] "Adjusted gross gaming machine revenue" means the sum 
  3.5   of all money received by the lottery for gaming machine plays, 
  3.6   less the amount paid out in prizes for gaming machine games. 
  3.7      Sec. 7.  Minnesota Statutes 1998, section 349A.01, is 
  3.8   amended by adding a subdivision to read: 
  3.9      Subd. 18.  [ADJUSTED GROSS CARD REVENUE.] "Adjusted gross 
  3.10  card revenue" means the sum of money received by the lottery 
  3.11  from playing games authorized under section 349A.19, less the 
  3.12  amount paid out in prizes for those games. 
  3.13     Sec. 8.  [349A.161] [VENDOR CONTRACTS; GAMING MACHINES; 
  3.14  CARD GAMES.] 
  3.15     Subdivision 1.  [PROCUREMENT CONTRACTS.] Notwithstanding 
  3.16  the provisions of section 349A.07, the director may enter into 
  3.17  contracts for the procurement of gaming machines or any other 
  3.18  contract necessary for maintaining, advertising, promoting, or 
  3.19  monitoring gaming machines or for conducting, promoting, or 
  3.20  advertising card games authorized under section 349A.19. 
  3.21     Subd. 2.  [LOCATION CONTRACT.] The director may enter into 
  3.22  a contract with a person to provide locations for and services 
  3.23  related to gaming machines, and to conduct card games as 
  3.24  permitted under section 349A.19.  Contracts entered into under 
  3.25  this section are not subject to chapter 16B.  The director may 
  3.26  only enter a contract under this subdivision with a person that 
  3.27  holds a class A license under chapter 240.  The gaming machines 
  3.28  may only be placed, and the card games permitted under section 
  3.29  349A.19 may only be conducted, at the racetrack for which the 
  3.30  class A license under chapter 240 was issued.  The racetrack 
  3.31  must have been operating as a racetrack prior to the effective 
  3.32  date of this act.  Contracts entered into must provide for 
  3.33  reimbursement for any fair market rental, leasehold improvement, 
  3.34  and expenses.  The contract must provide that the location 
  3.35  provider be paid a commission in an amount sufficient to ensure 
  3.36  the financial security of the host facility and of the horse 
  4.1   racing activities that take place there.  The director may also 
  4.2   contract directly with the location provider for other goods and 
  4.3   services deemed necessary for the maintenance and operation of 
  4.4   the gaming machines, card games, or related facilities. 
  4.5      Subd. 3.  [RACING PURSES.] From the commission received 
  4.6   pursuant to the location contract, the location provider must 
  4.7   set aside an amount equal to not less than 13 percent of the 
  4.8   adjusted gross gaming machine and card game revenues must be set 
  4.9   aside and used for purses for live horse races conducted by the 
  4.10  location provider.  Purse payments made pursuant to this 
  4.11  subdivision are in addition to purse payments otherwise 
  4.12  established by law or contract.  Ten percent of the money set 
  4.13  aside for purses pursuant to this subdivision shall be 
  4.14  transferred to the racing commission and used for the purposes 
  4.15  set forth in section 240.18, subdivisions 2, paragraph (d), and 
  4.16  subdivision 3, paragraph (b), subject to the proportionality 
  4.17  requirement set forth in section 240.18, subdivision 1. 
  4.18     Subd. 4.  [CONFLICT OF INTEREST.] The director or any 
  4.19  employee of the lottery, or a member of their immediate family 
  4.20  residing in the same household, must not have any personal 
  4.21  pecuniary interest in a vendor holding a contract with the 
  4.22  lottery under this section. 
  4.23     Sec. 9.  [349A.17] [GAMING MACHINES.] 
  4.24     Subdivision 1.  [SPECIFICATIONS.] Gaming machines must: 
  4.25     (1) maintain on nonresettable meters a permanent record, 
  4.26  capable of being printed out, of all transactions by the machine 
  4.27  and all entries into the machine; and 
  4.28     (2) be capable of being linked electronically to a central 
  4.29  communication system to provide auditing program information as 
  4.30  required by the director. 
  4.31     Subd. 2.  [GAMES.] The director shall specify the games 
  4.32  that may be placed on a gaming machine as set forth under 
  4.33  section 349A.04.  Gaming machines may conduct pari-mutuel 
  4.34  wagering and display horse races pursuant to specifications set 
  4.35  forth by the director. 
  4.36     Subd. 3.  [EXAMINATION OF MACHINES.] The director shall 
  5.1   examine prototypes of gaming machines and require that the 
  5.2   manufacturer of the machine pay the cost of the examination.  
  5.3   The director may contract for the examination of gaming machines.
  5.4      Subd. 4.  [TESTING OF MACHINES.] The director may require 
  5.5   working models of a gaming machine to be transported to the 
  5.6   locations the director designates for testing, examination, and 
  5.7   analysis.  The manufacturer shall pay all costs for testing, 
  5.8   examination, analysis, and transportation of the machine model. 
  5.9      Subd. 5.  [PRIZES.] A person who plays a gaming machine 
  5.10  agrees to be bound by the rules and game procedures applicable 
  5.11  to that particular gaming machine game.  The player acknowledges 
  5.12  that the determination of whether the player has won a prize is 
  5.13  subject to the rules and game procedures adopted by the 
  5.14  director, claim procedures established by the director for the 
  5.15  game, and any confidential or public validation tests 
  5.16  established by the director for that game.  A person under 18 
  5.17  years of age may not claim a prize from the operation of a 
  5.18  gaming machine.  A prize claimed from the play of a gaming 
  5.19  machine game is not subject to the provisions of section 
  5.20  349A.08, subdivision 8.  
  5.21     Subd. 6.  [PROHIBITIONS.] (a) A person under the age of 18 
  5.22  years may not play a game on a gaming machine and the lottery 
  5.23  may not allow a person under the age of 18 years to play a game 
  5.24  on a gaming machine. 
  5.25     (b) The director or any employee of the lottery, or a 
  5.26  member of their immediate family residing in the same household, 
  5.27  may not play a game on a gaming machine or receive a prize from 
  5.28  the operation of a gaming machine. 
  5.29     Subd. 7.  [COMPULSIVE GAMBLING NOTICE.] The director shall 
  5.30  prominently post, in the area where the gaming machines are 
  5.31  located, the toll-free telephone number established by the 
  5.32  commissioner of human services in connection with the compulsive 
  5.33  gambling program established under section 245.98.  The director 
  5.34  and the location provider shall establish a proactive plan to 
  5.35  identify problem gamblers and take appropriate action. 
  5.36     Sec. 10.  [349A.18] [ADJUSTED GROSS GAMING MACHINE 
  6.1   REVENUE.] 
  6.2      Subdivision 1.  [DEPOSIT OF RECEIPTS.] The director shall 
  6.3   deposit the adjusted gross machine revenue into the lottery fund.
  6.4      Subd. 2.  [LOTTERY OPERATIONS.] Notwithstanding section 
  6.5   349A.10, subdivision 3, paragraphs (b) and (c), the director may 
  6.6   credit, in any fiscal year, up to 60 percent of the adjusted 
  6.7   gross gaming machine revenue to the lottery operations account 
  6.8   established under section 349A.10, subdivision 3, for the 
  6.9   operation, promotion, advertising, and placement of gaming 
  6.10  machines.  The director may credit up to an additional ten 
  6.11  percent for the procurement and maintenance of the machines.  
  6.12  Notwithstanding the provisions of this subdivision, the director 
  6.13  may create a net operation reserve and deposit funds as 
  6.14  necessary to meet the operating expenses of the lottery.  
  6.15  However, the amount credited, in any fiscal year, to the net 
  6.16  operating reserve account, shall not exceed five percent of the 
  6.17  adjusted gross revenue and no more than 75 percent of the 
  6.18  adjusted gross revenue shall be credited to the lottery 
  6.19  operations account and the net operating reserve account in any 
  6.20  one fiscal year.  From the amounts credited to the lottery 
  6.21  operation account, the director, for the purpose of off-setting 
  6.22  some or all of the increased costs of government services, shall 
  6.23  annually remit an amount equal to one percent of the gross 
  6.24  gaming machine revenue to both the city and the county where the 
  6.25  gaming machines are located. 
  6.26     Sec. 11.  [349A.19] [CARD GAMES.] 
  6.27     Subdivision 1.  [DEFINITIONS.] For purposes of this 
  6.28  section, "blackjack" means the banking card game that involves 
  6.29  the use of one or more decks of playing cards, the purpose of 
  6.30  which is to reach the number "21," or as close as possible 
  6.31  without exceeding the number "21," through the cumulative 
  6.32  addition of cards dealt to the player and the house. 
  6.33     Subd. 2.  [AUTHORIZATION.] The director may conduct the 
  6.34  game of blackjack at a location authorized under section 
  6.35  349A.161, subdivision 2, subject to the requirements of this 
  6.36  section. 
  7.1      Subd. 3.  [GAME PROCEDURES.] The director shall adopt game 
  7.2   procedures under section 349A.04 for conducting blackjack games. 
  7.3      Subd. 4.  [PROHIBITIONS.] (a) A person under the age of 18 
  7.4   years may not win a prize from the game of blackjack conducted 
  7.5   under this section and the lottery must not permit a person 
  7.6   under the age of 18 years to play a game of blackjack under this 
  7.7   section. 
  7.8      (b) The director or an employee of the lottery, or a member 
  7.9   of their immediate family residing in the same household, may 
  7.10  not play a game authorized by this section or receive a prize 
  7.11  from a game authorized by this section. 
  7.12     Subd. 5.  [COMPULSIVE GAMBLING NOTICE.] The director shall 
  7.13  prominently post, in the area where the games authorized by this 
  7.14  section are conducted, the toll-free telephone number 
  7.15  established by the commissioner of human services in connection 
  7.16  with the compulsive gambling program established under section 
  7.17  245.98.  The director and the location provider shall establish 
  7.18  a proactive plan to identify problem gamblers and take 
  7.19  appropriate action. 
  7.20     Subd. 6.  [PRIZES.] A person who plays a game conducted 
  7.21  under this section agrees to be bound by the rules and game 
  7.22  procedures applicable to that game.  The player acknowledges 
  7.23  that the determination of whether the player has won a prize is 
  7.24  subject to the rules and game procedures adopted by the 
  7.25  director, claim procedures established by the director for that 
  7.26  game, and any confidential or public validation tests 
  7.27  established by the director for that game.  A prize claimed from 
  7.28  the play of the game under this section is not subject to 
  7.29  section 349A.08, subdivision 8. 
  7.30     Subd. 7.  [DEPOSIT OF RECEIPTS.] The director shall deposit 
  7.31  the adjusted gross card revenue into the lottery fund. 
  7.32     Subd. 8.  [LOTTERY OPERATIONS.] The director may not credit 
  7.33  in any fiscal year more than 70 percent of the adjusted gross 
  7.34  card revenue to the lottery operations account established under 
  7.35  section 349A.10, subdivision 3, for conducting, promoting, and 
  7.36  advertising card games authorized under this section and for 
  8.1   commission payments.  Promotion and advertising of card games 
  8.2   authorized under this section are not subject to the provisions 
  8.3   of section 349A.10, subdivision 3, paragraph (c). 
  8.4      Sec. 12.  [349A.20] [LOCAL LICENSES.] 
  8.5      No political subdivision may require a local license to 
  8.6   operate a gaming machine, restrict or regulate the placement of 
  8.7   a gaming machine, restrict or regulate the conduct of games 
  8.8   authorized under section 349A.19, or impose a tax or fee on the 
  8.9   business of operating gaming machines or the conduct of games 
  8.10  under section 349A.19. 
  8.11     Sec. 13.  [349A.21] [CRIMINAL HISTORY.] 
  8.12     The director has access to all criminal history data 
  8.13  compiled by the director of gambling enforcement on a person 
  8.14  under contract with the lottery to provide goods or services 
  8.15  under section 349A.161. 
  8.16     Sec. 14.  [349A.22] [GAMING MACHINES; CARD GAMES.] 
  8.17     Notwithstanding section 349A.13, clause (2), the director 
  8.18  may install and operate a gaming machine operated by coin or 
  8.19  currency that when operated determines the winner of a game 
  8.20  under sections 349A.161 to 349A.18.  Section 340A.410 does not 
  8.21  prohibit the placement, operation, or possession of a gaming 
  8.22  machine under this chapter or the conduct of card games 
  8.23  authorized under section 349A.19. 
  8.24     Sec. 15.  [349A.23] [EMPLOYEES; GAMING MACHINES; CARD 
  8.25  GAMES.] 
  8.26     The director may appoint personnel as necessary to operate 
  8.27  gaming machines, to provide support for the conduct of gaming 
  8.28  machine games, and to conduct games authorized under section 
  8.29  349A.19, except that all employees appointed under this section 
  8.30  are in the unclassified service.  Section 349A.02, subdivision 
  8.31  6, applies to all employees hired under this section. 
  8.32     Sec. 16.  [349A.24] [MINNESOTA FUND.] 
  8.33     Subdivision 1.  [REVENUE TO BE CREDITED.] Prior to February 
  8.34  15 of each year, the director shall determine the amount of 
  8.35  revenue produced from the operation of gaming machines operated 
  8.36  by the state lottery and the conduct of card games after 
  9.1   deduction of all related expenses, commissions, payments, and 
  9.2   crediting of the environment and natural resources trust fund 
  9.3   and report the amount to the commissioner of finance.  Upon 
  9.4   verification of the amount, the commissioner of finance shall 
  9.5   credit that amount to the Minnesota fund. 
  9.6      Subd. 2.  [FUND CREATED.] The Minnesota fund is created as 
  9.7   a separate fund in the state treasury.  The fund consists of 
  9.8   money credited under subdivision 1 and interest earned thereon. 
  9.9      Subd. 3.  [MINNESOTA FUND ADVISORY TASK FORCE.] (a) An 
  9.10  advisory task force on the Minnesota fund is established.  The 
  9.11  purpose of this task force is to study and identify potential 
  9.12  spending needs for the Minnesota fund.  The task force shall 
  9.13  report to the legislature by December 15, 1999, with 
  9.14  recommendations for establishing spending priorities for the 
  9.15  Minnesota fund. 
  9.16     (b) The task force shall consist of nine members.  Of these 
  9.17  nine members: 
  9.18     (1) four members shall be appointed by the legislature, two 
  9.19  by the house and two by the senate; and 
  9.20     (2) five members shall be appointed by the governor. 
  9.21     (c) The Minnesota fund task force shall elect one of its 
  9.22  members to serve as the chair of the task force.  The task force 
  9.23  shall expire and the compensation, terms, and removal of members 
  9.24  shall be as provided in section 15.059. 
  9.25     Sec. 17.  Minnesota Statutes 1998, section 541.21, is 
  9.26  amended to read: 
  9.27     541.21 [COMMITMENTS FOR GAMBLING DEBT VOID.] 
  9.28     Every note, bill, bond, mortgage, or other security or 
  9.29  conveyance in which the whole or any part of the consideration 
  9.30  shall be for any money or goods won by gambling or playing at 
  9.31  cards, dice, or any other game whatever, or by betting on the 
  9.32  sides or hands of any person gambling, or for reimbursing or 
  9.33  repaying any money knowingly lent or advanced at the time and 
  9.34  place of such gambling or betting, or lent and advanced for any 
  9.35  gambling or betting to any persons so gambling or betting, shall 
  9.36  be void and of no effect as between the parties to the same, and 
 10.1   as to all persons except such as hold or claim under them in 
 10.2   good faith, without notice of the illegality of the 
 10.3   consideration of such contract or conveyance.  The provisions of 
 10.4   this section shall not apply to:  (1) pari-mutuel wagering 
 10.5   conducted under a license issued pursuant to chapter 240; (2) 
 10.6   purchase of tickets in the state lottery or other wagering 
 10.7   authorized under chapter 349A; (3) gaming activities conducted 
 10.8   pursuant to the Indian Gaming Regulatory Act, 25 U.S.C. 2701 et 
 10.9   seq.; or (4) lawful gambling activities permitted under chapter 
 10.10  349. 
 10.11     Sec. 18.  Minnesota Statutes 1998, section 609.761, 
 10.12  subdivision 2, is amended to read: 
 10.13     Subd. 2.  [STATE LOTTERY.] Sections 609.755 and 609.76 do 
 10.14  not prohibit the operation of the state lottery or the sale, 
 10.15  possession, or purchase of tickets for the state lottery under 
 10.16  chapter 349A, the manufacture, possession, sale, or operation of 
 10.17  a gaming machine under chapter 349A, or the conduct or playing 
 10.18  of a card game as authorized under section 349A.19.  
 10.19     Sec. 19.  [EFFECTIVE DATE.] 
 10.20     This act is effective the day following final enactment.