1.1 	A bill for an act
1.2 	relating to State Lottery; authorizing director of the State Lottery to adopt rules 
1.3 	for video lottery ticket dispensing machines;amending Minnesota Statutes 
1.4 	2010, sections 297A.65; 349.15, subdivision 1; proposing coding for new law 
1.5 	in Minnesota Statutes, chapter 349A.
1.6 	 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2010, section 297A.65, is amended to read:
1.8 	297A.65 LOTTERY TICKETS; IN LIEU TAX.
1.9 	Sales of state lottery tickets are exempt from the tax imposed under section 
1.10 	297A.62. The State Lottery must on or before the 20th day of each month transmit to 
1.11 	the commissioner of revenue an amount equal to the gross receipts from the sale of 
1.12 	lottery tickets for the previous month multiplied by the tax rate under section 297A.62, 
1.13 	subdivision 1, and for lottery tickets sold through video lottery ticket dispensing machines 
1.14 	under section 349A.065, an amount equal to the gross receipts from the sale of the tickets 
1.15 	for the previous month multiplied by two percent. The resulting payment is in lieu of the 
1.16 	sales tax that otherwise would be imposed by this chapter. The commissioner shall deposit 
1.17 	the money transmitted as provided by section 297A.94 and the money must be treated as 
1.18 	other proceeds of the sales tax. For purposes of this section, "gross receipts" means the 
1.19 	proceeds of the sale of tickets before deduction of a commission or other compensation 
1.20 	paid to the vendor or retailer for selling tickets.

1.21 	Sec. 2. Minnesota Statutes 2010, section 349.15, subdivision 1, is amended to read:
1.22 		Subdivision 1.Expenditure restrictions, requirements, and civil penalties.
 1.23 	(a) Gross profits from lawful gambling may be expended only for lawful purposes or 
2.1 	allowable expenses as authorized by the membership of the conducting organization at a 
2.2 	monthly meeting of the organization's membership.
2.3 	(b) Provided that no more than 70 percent of the gross profit from bingo, and no 
2.4 	more than 60 percent of the gross profit from other forms of lawful gambling, may be 
2.5 	expended biennially during the term of the license for allowable expenses related to lawful 
2.6 	gambling, except that for the period of July 1, 2008, to June 30, 2009, no more than 75 
2.7 	percent of the gross profit from bingo, and no more than 65 percent of the gross profit 
2.8 	from other forms of lawful gambling, may be expended for allowable expenses related to 
2.9 	lawful gambling. This provision expires June 30, 2009.
2.10 	(c) For each 12-month period beginning July 1, 2009, a licensed organization will 
2.11 	be evaluated by the board to determine a rating based on the percentage of annual lawful 
2.12 	purpose expenditures when compared to available gross profits for the same period. The 
2.13 	rating will be used to determine the organization's profitability percent and is not a rating 
2.14 	of the organization's lawful gambling operation. An organization will be evaluated 
2.15 	according to the following criteria:
2.16 	(1) an organization that expends 50 percent or more of gross profits on lawful 
2.17 	purposes will receive a five-star rating;
2.18 	(2) an organization that expends 40 percent or more but less than 50 percent of gross 
2.19 	profits on lawful purposes will receive a four-star rating;
2.20 	(3) an organization that expends 30 percent or more but less than 40 percent of gross 
2.21 	profits on lawful purposes will receive a three-star rating;
2.22 	(4) an organization that expends 20 percent or more but less than 30 percent of gross 
2.23 	profits on lawful purposes will receive a two-star rating; and
2.24 	(5) an organization that expends less than 20 percent of gross profits on lawful 
2.25 	purposes will receive a one-star rating.
2.26 	(d) An organization that fails to expend a minimum of 30 percent annually of gross 
2.27 	profits on lawful purposes is automatically on probation effective July 1 for a period of 
2.28 	one year. The organization must increase its rating to a minimum of 30 percent or be 
2.29 	subject to sanctions by the board. If an organization fails to meet the minimum after a 
2.30 	one-year probation, the board may suspend the organization's license or impose a civil 
2.31 	penalty as follows:
2.32 	(1) in determining any suspension or penalty for a violation of this paragraph, the 
2.33 	board must consider any unique factors or extraordinary circumstances that caused the 
2.34 	organization to not meet the minimum rate of profitability. Unique factors or extraordinary 
2.35 	circumstances include, but are not limited to, the purchase of capital assets necessary to 
2.36 	conduct lawful gambling; road or other construction causing impaired access to the lawful 
3.1 	gambling premises; and flood, tornado, or other catastrophe that had a direct impact on the 
3.2 	continuing lawful gambling operation; and
3.3 	(2) notwithstanding section 349.151, subdivision 4, paragraph (a), clause (10), the 
3.4 	board may impose a civil penalty under this subdivision up to $10,000.
3.5 	(e) Money received by an organization from video lottery ticket dispensing 
3.6 	machines under section 349A.065 may be expended only for lawful purposes or allowable 
3.7 	expenses as authorized by the membership of the organization at a monthly meeting of 
3.8 	the organization's membership.

3.9 	Sec. 3. [349A.065] VIDEO LOTTERY TICKET DISPENSING MACHINES.
3.10 		Subdivision 1.Rules. The director of the State Lottery shall adopt rules under 
3.11 	chapter 14 governing the sale of lottery tickets through video lottery ticket dispensing 
3.12 	machines.
3.13 		Subd. 2.Definition. For purposes of this section, a "video lottery ticket dispensing 
3.14 	machine" means a device authorized by the director that dispenses a tangible, preprinted 
3.15 	lottery ticket and that may read the ticket, display the result of the ticket on a video 
3.16 	monitor in an entertaining manner, and accumulate winning prize amounts to the player's 
3.17 	account balance. The video lottery ticket dispensing machine may be operated by cash or 
3.18 	currency and must:
3.19 	(1) have a finite number of tickets for sale; and
3.20 	(2) have a predetermined number of winning and losing tickets.
3.21 		Subd. 3.Retailers. (a) The director may only enter into a lottery retailer contract for 
3.22 	video lottery ticket dispensing machines with a retailer that:
3.23 	(1) has an on-sale intoxicating liquor license under chapter 340A. This does not 
3.24 	include a retailer that has only a temporary on-sale license; and
3.25 	(2) has an organization licensed under chapter 349 to conduct lawful gambling on 
3.26 	the premises.
3.27 	(b) A lottery retailer authorized to operate video lottery ticket dispensing machines 
3.28 	may not cancel or refuse to renew a lease with an organization on its premises for three 
3.29 	years following the effective date of this act, unless the organization has failed to comply 
3.30 	with terms of its lease with the retailer.
3.31 	(c) A lottery retailer may have up to five video lottery ticket dispensing machines on 
3.32 	the retailer's premises. A lottery retailer that is authorized to operate video lottery ticket 
3.33 	dispensing machines may not make reference to the establishment being a "casino" or use 
3.34 	the word "casino" in its name or in any of its advertisements or promotions.
4.1 	(d) The director, or an employee of the director, may inspect a video lottery ticket 
4.2 	dispensing machine at any time during the hours when alcoholic beverages may be sold at 
4.3 	on-sale, without notice, to ensure compliance with chapter 349A and any rules adopted 
4.4 	by the director.
4.5 		Subd. 4.Commission.  The rules adopted by the director under this section must set 
4.6 	the amount that a lottery retailer will receive as a commission for selling lottery tickets 
4.7 	through a video lottery ticket dispensing machine. A lottery retailer shall transmit 29 
4.8 	percent of the retailer's commission from the sale of lottery tickets through the video 
4.9 	lottery ticket dispensing machine, to an organization conducting lawful gambling on the 
4.10 	premises of the retailer. If more than one organization conducts lawful gambling on the 
4.11 	premises, the payment must be reasonably allocated between the organizations, pro rata 
4.12 	based on their respective gross receipts.
4.13 		Subd. 5.Gambling device. For purposes of chapters 299L, 349A, and 609, a video 
4.14 	lottery ticket dispensing machine is not a "gambling device."