1.1                          A bill for an act
  1.2             relating to lotteries; authorizing the state lottery 
  1.3             to operate video lottery terminals; changing method of 
  1.4             taxation on pull-tabs and tipboards; renaming the 
  1.5             Minnesota amateur sports commission as the Minnesota 
  1.6             sports commission; prescribing penalties; amending 
  1.7             Minnesota Statutes 1994, sections 240A.01, subdivision 
  1.8             2; 240A.04; 240A.08; 297A.259; 297E.02, subdivision 4; 
  1.9             297E.031, subdivisions 1 and 2; 299L.03, subdivision 
  1.10            1; 349.12, subdivision 21; 349.15, subdivision 1; 
  1.11            349A.01, subdivisions 10, 11, 12, and by adding 
  1.12            subdivisions; 349A.06, subdivisions 1, 5, 8, 10, 11, 
  1.13            and by adding subdivisions; 349A.07, subdivision 1; 
  1.14            349A.08, subdivisions 1, 5, and by adding a 
  1.15            subdivision; 349A.09, subdivision 1; 349A.10, 
  1.16            subdivisions 2, 3, 4, 5, and by adding a subdivision; 
  1.17            349A.11; 349A.12, subdivisions 1 and 2; 349A.13; 
  1.18            609.651, subdivision 1; 609.75, subdivision 4; and 
  1.19            609.761, subdivision 2; proposing coding for new law 
  1.20            in Minnesota Statutes, chapter 349A; repealing 
  1.21            Minnesota Statutes 1994, section 297E.01, subdivision 
  1.22            9. 
  1.23  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.24     Section 1.  Minnesota Statutes 1994, section 240A.01, 
  1.25  subdivision 2, is amended to read: 
  1.26     Subd. 2.  [COMMISSION.] "Commission" means the 
  1.27  Minnesota amateur sports commission.  
  1.28     Sec. 2.  Minnesota Statutes 1994, section 240A.04, is 
  1.29  amended to read: 
  1.30     240A.04 [PROMOTION AND DEVELOPMENT OF AMATEUR SPORTS.] 
  1.31     In addition to the powers and duties granted under section 
  1.32  240A.03, the commission shall:  
  1.33     (1) promote the development of olympic training centers; 
  1.34     (2) promote physical fitness by promoting participation in 
  2.1   sports; 
  2.2      (3) develop, foster, and coordinate physical fitness 
  2.3   services and programs; 
  2.4      (4) sponsor amateur sport workshops, clinics, and 
  2.5   conferences; 
  2.6      (5) provide recognition for outstanding developments, 
  2.7   achievements, and contributions to amateur sports; 
  2.8      (6) stimulate and promote amateur sport research; 
  2.9      (7) collect, disseminate, and communicate amateur sport 
  2.10  information; 
  2.11     (8) promote amateur sport and physical fitness programs in 
  2.12  schools and local communities; 
  2.13     (9) develop programs to promote personal health and 
  2.14  physical fitness by participation in amateur sports in 
  2.15  cooperation with medical, dental, sports medicine, and similar 
  2.16  professional societies; 
  2.17     (10) promote the development of recreational amateur sport 
  2.18  opportunities and activities in the state, including the means 
  2.19  of facilitating acquisition, financing, construction, and 
  2.20  rehabilitation of sports facilities for the holding of amateur 
  2.21  sporting events; 
  2.22     (11) promote national and international amateur sport 
  2.23  competitions and events; 
  2.24     (12) sanction or sponsor amateur sport competition; 
  2.25     (13) take membership in regional or national amateur sports 
  2.26  associations or organizations; and 
  2.27     (14) promote the mainstreaming and normalization of people 
  2.28  with physical disabilities and visual and hearing impairments in 
  2.29  amateur sports; and 
  2.30     (15) promote the development of professional sports in 
  2.31  Minnesota. 
  2.32     Sec. 3.  Minnesota Statutes 1994, section 240A.08, is 
  2.33  amended to read: 
  2.34     240A.08 [APPROPRIATION.] 
  2.35     Subdivision 1.  [SPORTS FACILITIES.] $750,000 is 
  2.36  appropriated annually from the general fund to the 
  3.1   Minnesota amateur sports commission for the purpose of entering 
  3.2   into long-term leases, use, or other agreements with the 
  3.3   metropolitan sports facilities commission for the conduct of 
  3.4   amateur sports activities at the basketball and hockey arena, 
  3.5   consistent with the purposes set forth in this chapter, 
  3.6   including (1) stimulating and promoting amateur sports, (2) 
  3.7   promoting physical fitness by promoting participation in sports, 
  3.8   (3) promoting the development of recreational amateur sport 
  3.9   opportunities and activities, and (4) promoting local, regional, 
  3.10  national, and international amateur sport competitions and 
  3.11  events.  The metropolitan sports facilities commission may 
  3.12  allocate 50 dates a year for the conduct of amateur sports 
  3.13  activities at the basketball and hockey arena by the amateur 
  3.14  sports commission.  At least 12 of the dates must be on a 
  3.15  Friday, Saturday, or Sunday.  If any amateur sports activities 
  3.16  conducted by the amateur sports commission at the basketball and 
  3.17  hockey arena are restricted to participants of one gender, an 
  3.18  equal number of activities on comparable days of the week must 
  3.19  be conducted for participants of the other gender, but not 
  3.20  necessarily in the same year.  The legislature reserves the 
  3.21  right to repeal or amend this appropriation, and does not intend 
  3.22  this appropriation to create public debt. 
  3.23     Subd. 2.  [FUND CREATED.] A Minnesota sports commission 
  3.24  fund is established in the state treasury.  The fund consists of 
  3.25  money appropriated to it under section 349A.10, subdivision 5, 
  3.26  and other money appropriated to the Minnesota sports commission 
  3.27  for the promotion and development of amateur and professional 
  3.28  sports in Minnesota. 
  3.29     Sec. 4.  Minnesota Statutes 1994, section 297A.259, is 
  3.30  amended to read: 
  3.31     297A.259 [LOTTERY TICKETS; IN LIEU TAX.] 
  3.32     Sales of state lottery tickets are exempt from the tax 
  3.33  imposed under section 297A.02.  The state lottery must on or 
  3.34  before the 20th day of each month transmit to the commissioner 
  3.35  of revenue an amount equal to the gross receipts from the sale 
  3.36  of lottery tickets for the previous month, excluding gross 
  4.1   receipts from the operation of video lottery terminals, 
  4.2   multiplied by the combined tax rate under sections 297A.02, 
  4.3   subdivision 1, and 297A.021, subdivision 1.  The resulting 
  4.4   payment is in lieu of the sales tax that otherwise would be 
  4.5   imposed by this chapter.  The commissioner shall deposit the 
  4.6   money transmitted as provided by section 297A.44 and the money 
  4.7   must be treated as other proceeds of the sales tax.  Gross 
  4.8   receipts for purposes of this section mean the proceeds of the 
  4.9   sale of tickets before deduction of a commission or other 
  4.10  compensation paid to the vendor or retailer for selling tickets. 
  4.11     Sec. 5.  Minnesota Statutes 1994, section 297E.02, 
  4.12  subdivision 4, is amended to read: 
  4.13     Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax at the 
  4.14  rate of two percent is imposed on the sale of each deal of 
  4.15  pull-tabs and tipboards sold by a distributor an organization's 
  4.16  gross receipts from sales of pull-tab and tipboard deals.  The 
  4.17  rate of the tax is two percent of the ideal gross of the 
  4.18  pull-tab or tipboard deal.  The sales tax imposed by chapter 
  4.19  297A on the sale of the pull-tabs and tipboards by the 
  4.20  distributor is imposed on the retail sales price less the tax 
  4.21  imposed by this subdivision.  The retail sale of pull-tabs or 
  4.22  tipboards by the organization is exempt from taxes imposed by 
  4.23  chapter 297A and is exempt from all local taxes and license fees 
  4.24  except a fee authorized under section 349.16, subdivision 8.  
  4.25     (b) The liability for the tax imposed by this section is 
  4.26  incurred when the pull-tabs and tipboards are delivered by the 
  4.27  distributor to the customer or to a common or contract carrier 
  4.28  for delivery to the customer, or when received by the customer's 
  4.29  authorized representative at the distributor's place of 
  4.30  business, regardless of the distributor's method of accounting 
  4.31  or the terms of the sale.  
  4.32     The tax imposed by this subdivision is imposed on all sales 
  4.33  of pull-tabs and tipboards, except the following:  
  4.34     (1) sales to the governing body of an Indian tribal 
  4.35  organization for use on an Indian reservation; 
  4.36     (2) sales to distributors licensed under the laws of 
  5.1   another state or of a province of Canada, as long as all 
  5.2   statutory and regulatory requirements are met in the other state 
  5.3   or province; 
  5.4      (3) sales of promotional tickets as defined in section 
  5.5   349.12; and 
  5.6      (4) pull-tabs and tipboards sold to by an organization that 
  5.7   sells pull-tabs and tipboards under the exemption from licensing 
  5.8   in section 349.166, subdivision 2.  A distributor shall require 
  5.9   an organization conducting exempt gambling to show proof of its 
  5.10  exempt status before making a tax-exempt sale of pull-tabs or 
  5.11  tipboards to the organization.  A distributor An organization 
  5.12  shall identify, on all reports submitted to the commissioner, 
  5.13  all sales of pull-tabs and tipboards that are exempt from tax 
  5.14  under this subdivision.  
  5.15     (c) A distributor having a liability of $120,000 or more 
  5.16  during a fiscal year ending June 30 must remit all liabilities 
  5.17  in the subsequent calendar year by a funds transfer as defined 
  5.18  in section 336.4A-104, paragraph (a).  The funds transfer 
  5.19  payment date, as defined in section 336.4A-401, must be on or 
  5.20  before the date the tax is due.  If the date the tax is due is 
  5.21  not a funds transfer business day, as defined in section 
  5.22  336.4A-105, paragraph (a), clause (4), the payment date must be 
  5.23  on or before the funds transfer business day next following the 
  5.24  date the tax is due. 
  5.25     Sec. 6.  Minnesota Statutes 1994, section 297E.031, 
  5.26  subdivision 1, is amended to read: 
  5.27     Subdivision 1.  [APPLICATION AND ISSUANCE.] A distributor 
  5.28  who An organization that sells gambling products pull-tabs and 
  5.29  tipboards under this chapter must file with the commissioner an 
  5.30  application, on a form prescribed by the commissioner, for a 
  5.31  gambling tax permit and identification number.  The 
  5.32  commissioner, when satisfied that the applicant has a valid 
  5.33  license from the board, shall issue the applicant a permit and 
  5.34  number.  A permit is not assignable and is valid only for 
  5.35  the distributor organization in whose name it is issued. 
  5.36     Sec. 7.  Minnesota Statutes 1994, section 297E.031, 
  6.1   subdivision 2, is amended to read: 
  6.2      Subd. 2.  [SUSPENSION; REVOCATION.] (a) If a distributor an 
  6.3   organization fails to comply with this chapter or a rule of the 
  6.4   commissioner, or if a license issued under chapter 349 is 
  6.5   revoked or suspended, the commissioner, after giving notice, may 
  6.6   for reasonable cause revoke or suspend a permit held by a 
  6.7   distributor an organization.  A notice must be sent to 
  6.8   the distributor organization at least 15 days before the 
  6.9   proposed suspension or revocation is to take effect.  The notice 
  6.10  must give the reason for the proposed suspension or revocation 
  6.11  and must require the distributor organization to show cause why 
  6.12  the proposed action should not be taken.  The notice may be 
  6.13  served personally or by mail.  
  6.14     (b) The notice must inform the distributor organization of 
  6.15  the right to a contested case hearing.  If a request in writing 
  6.16  is made to the commissioner within 14 days of the date of the 
  6.17  notice, the commissioner shall defer action on the suspension or 
  6.18  revocation and shall refer the case to the office of 
  6.19  administrative hearings for the scheduling of a contested case 
  6.20  hearing.  The distributor organization must be served with 20 
  6.21  days' notice in writing specifying the time and place of the 
  6.22  hearing and the allegations against the distributor organization.
  6.23     (c) The commissioner shall issue a final order following 
  6.24  receipt of the recommendation of the administrative law judge.  
  6.25     (d) Under section 271.06, subdivision 1, an appeal to the 
  6.26  tax court may be taken from the commissioner's order of 
  6.27  revocation or suspension.  The commissioner may not issue a new 
  6.28  permit after revocation except upon application accompanied by 
  6.29  reasonable evidence of the intention of the applicant to comply 
  6.30  with all applicable laws and rules.  
  6.31     Sec. 8.  Minnesota Statutes 1994, section 299L.03, 
  6.32  subdivision 1, is amended to read: 
  6.33     Subdivision 1.  [INSPECTIONS; ACCESS.] In conducting any 
  6.34  inspection authorized under this chapter or chapter 240, 349, or 
  6.35  349A, the employees of the division of gambling enforcement have 
  6.36  free and open access to all parts of the regulated business 
  7.1   premises, and may conduct the inspection at any reasonable time 
  7.2   without notice and without a search warrant.  For purposes of 
  7.3   this subdivision, "regulated business premises" means premises 
  7.4   where: 
  7.5      (1) lawful gambling is conducted by an organization 
  7.6   licensed under chapter 349 or by an organization exempt from 
  7.7   licensing under section 349.166; 
  7.8      (2) gambling equipment is manufactured, sold, distributed, 
  7.9   or serviced by a manufacturer or distributor licensed under 
  7.10  chapter 349; 
  7.11     (3) records required to be maintained under chapter 240, 
  7.12  297E, 349, or 349A are prepared or retained; 
  7.13     (4) lottery tickets are sold by a lottery retailer or video 
  7.14  lottery terminals are placed under chapter 340A 349A; 
  7.15     (5) races are conducted by a person licensed under chapter 
  7.16  240; or 
  7.17     (6) gambling devices are manufactured or distributed, 
  7.18  including places of storage under section 299L.07. 
  7.19     Sec. 9.  Minnesota Statutes 1994, section 349.12, 
  7.20  subdivision 21, is amended to read: 
  7.21     Subd. 21.  [GROSS RECEIPTS.] "Gross receipts" means all 
  7.22  receipts derived from lawful gambling activity including, but 
  7.23  not limited to, the following items: 
  7.24     (1) gross sales of bingo hard cards and paper sheets before 
  7.25  reduction for prizes, expenses, shortages, free plays, or any 
  7.26  other charges or offsets; 
  7.27     (2) the ideal gross of pull-tab and tipboard deals or games 
  7.28  less the value of unsold and defective tickets and before 
  7.29  reduction for prizes, expenses, shortages, free plays, or any 
  7.30  other charges or offsets; 
  7.31     (3) gross sales of raffle tickets and paddletickets before 
  7.32  reduction for prizes, expenses, shortages, free plays, or any 
  7.33  other charges or offsets; 
  7.34     (4) admission, commission, cover, or other charges imposed 
  7.35  on participants in lawful gambling activity as a condition for 
  7.36  or cost of participation; and 
  8.1      (5) interest, dividends, annuities, profit from 
  8.2   transactions, or other income derived from the accumulation or 
  8.3   use of gambling proceeds. 
  8.4      Gross receipts does not include proceeds from rental under 
  8.5   section 349.164 or 349.18, subdivision 3, or amounts received 
  8.6   from net video lottery terminal income under section 349A.06, 
  8.7   subdivision 5a. 
  8.8      Sec. 10.  Minnesota Statutes 1994, section 349.15, 
  8.9   subdivision 1, is amended to read: 
  8.10     Subdivision 1.  [EXPENDITURE RESTRICTIONS.] (a) Gross 
  8.11  profits from lawful gambling may be expended only for lawful 
  8.12  purposes or allowable expenses as authorized by the membership 
  8.13  of the conducting organization at a monthly meeting of the 
  8.14  organization's membership.  
  8.15     Provided that (b) Except as provided in paragraph (c), no 
  8.16  more than 60 percent of the gross profit less the tax imposed 
  8.17  under section 297E.02, subdivision 1, from bingo, and no more 
  8.18  than 50 percent of the gross profit from other forms of lawful 
  8.19  gambling, may be expended for allowable expenses related to 
  8.20  lawful gambling.  
  8.21     (c) Money received by an organization from net video 
  8.22  lottery terminal income under section 349A.06, subdivision 6a, 
  8.23  may be expended only for lawful purposes, other than payment of 
  8.24  federal, state, or local taxes on lawful gambling.  In the case 
  8.25  of a licensed organization described in section 349A.06, 
  8.26  subdivision 6a, paragraph (d), this requirement applies only to 
  8.27  the additional ten percent retained by the organization.  This 
  8.28  paragraph does not prohibit an organization from expending money 
  8.29  it receives from net video lottery income to pay federal or 
  8.30  state unrelated business income tax on that money. 
  8.31     Sec. 11.  Minnesota Statutes 1994, section 349A.01, is 
  8.32  amended by adding a subdivision to read: 
  8.33     Subd. 9a.  [LOTTERY GAME.] "Lottery game" means any game 
  8.34  operated by the lottery where the prize is determined primarily 
  8.35  by chance. 
  8.36     Sec. 12.  Minnesota Statutes 1994, section 349A.01, 
  9.1   subdivision 10, is amended to read: 
  9.2      Subd. 10.  [LOTTERY PROCUREMENT CONTRACT.] "Lottery 
  9.3   procurement contract" means a contract to provide lottery 
  9.4   products, computer hardware and software used to monitor sales 
  9.5   of lottery tickets and video lottery terminal plays and 
  9.6   accounting transaction, and lottery tickets, video lottery 
  9.7   terminals, and maintenance of video lottery terminals.  "Lottery 
  9.8   procurement contract" does not include a contract to provide an 
  9.9   annuity or prize payment agreement or materials, supplies, 
  9.10  equipment, or services common to the ordinary operation of a 
  9.11  state agency. 
  9.12     Sec. 13.  Minnesota Statutes 1994, section 349A.01, 
  9.13  subdivision 11, is amended to read: 
  9.14     Subd. 11.  [LOTTERY RETAILER.] "Lottery retailer" means a 
  9.15  person with whom the director has contracted to sell lottery 
  9.16  tickets to the public.  A lottery retailer includes a person 
  9.17  with whom the director has contracted to place a video lottery 
  9.18  terminal within its premises where video lottery terminal plays 
  9.19  are sold.  
  9.20     Sec. 14.  Minnesota Statutes 1994, section 349A.01, 
  9.21  subdivision 12, is amended to read: 
  9.22     Subd. 12.  [LOTTERY TICKET OR TICKET.] "Lottery ticket" or 
  9.23  "ticket" means any tangible evidence issued by the lottery to 
  9.24  prove participation in a lottery game other than a video lottery 
  9.25  game.  
  9.26     Sec. 15.  Minnesota Statutes 1994, section 349A.01, is 
  9.27  amended by adding a subdivision to read: 
  9.28     Subd. 14.  [NET TERMINAL INCOME.] "Net terminal income" 
  9.29  means the sum of all money inserted into video lottery terminals 
  9.30  less the amount paid out to players on video lottery credit 
  9.31  receipts. 
  9.32     Sec. 16.  Minnesota Statutes 1994, section 349A.01, is 
  9.33  amended by adding a subdivision to read: 
  9.34     Subd. 15.  [VIDEO LOTTERY CREDIT.] "Video lottery credit" 
  9.35  means the basic unit of play for a video lottery terminal which 
  9.36  has a value of 25 cents. 
 10.1      Sec. 17.  Minnesota Statutes 1994, section 349A.01, is 
 10.2   amended by adding a subdivision to read: 
 10.3      Subd. 16.  [VIDEO LOTTERY CREDIT RECEIPT.] "Video lottery 
 10.4   credit receipt" means a receipt generated by a video lottery 
 10.5   terminal that provides evidence of cash payment due a player 
 10.6   from play on a video lottery terminal. 
 10.7      Sec. 18.  Minnesota Statutes 1994, section 349A.01, is 
 10.8   amended by adding a subdivision to read: 
 10.9      Subd. 17.  [VIDEO LOTTERY GAME.] "Video lottery game" means 
 10.10  an electronically simulated game authorized by the director that 
 10.11  is displayed and played on a video lottery terminal for 
 10.12  consideration and with prizes awarded for designated results. 
 10.13     Sec. 19.  Minnesota Statutes 1994, section 349A.01, is 
 10.14  amended by adding a subdivision to read: 
 10.15     Subd. 18.  [VIDEO LOTTERY TERMINAL.] "Video lottery 
 10.16  terminal" means an electronic machine that, upon the insertion 
 10.17  of a coin, token, or currency, is available to play or simulate 
 10.18  the play of a game using a video display and microprocessors in 
 10.19  which, primarily by chance, the player may receive free plays or 
 10.20  video lottery credits that can be redeemed for cash. 
 10.21     Sec. 20.  Minnesota Statutes 1994, section 349A.01, is 
 10.22  amended by adding a subdivision to read: 
 10.23     Subd. 19.  [VIDEO LOTTERY TERMINAL PLAY.] "Video lottery 
 10.24  terminal play" means an electronic record that proves 
 10.25  participation in a video lottery game. 
 10.26     Sec. 21.  Minnesota Statutes 1994, section 349A.01, is 
 10.27  amended by adding a subdivision to read: 
 10.28     Subd. 20.  [WIN PERCENTAGE.] "Win percentage" means the 
 10.29  portion of the money wagered by players on a video lottery 
 10.30  terminal that is available for the payment of prizes to winning 
 10.31  players. 
 10.32     Sec. 22.  Minnesota Statutes 1994, section 349A.06, 
 10.33  subdivision 1, is amended to read: 
 10.34     Subdivision 1.  [CONTRACTS.] The director shall sell 
 10.35  tickets and operate video lottery terminals for the lottery 
 10.36  through lottery retailers with whom the director contracts.  
 11.1   Contracts under this section are not subject to the provisions 
 11.2   of sections 16B.06 to 16B.102, and 16B.17, and are valid for a 
 11.3   period of one year. 
 11.4      Sec. 23.  Minnesota Statutes 1994, section 349A.06, 
 11.5   subdivision 5, is amended to read: 
 11.6      Subd. 5.  [RESTRICTIONS ON LOTTERY RETAILERS.] (a) A 
 11.7   lottery retailer may sell lottery tickets or have a video 
 11.8   lottery terminal placed only on the premises described in the 
 11.9   contract. 
 11.10     (b) A lottery retailer must prominently display a 
 11.11  certificate issued by the director on the premises where lottery 
 11.12  tickets will be sold or where video lottery terminals are 
 11.13  operated. 
 11.14     (c) A lottery retailer must keep a complete set of books of 
 11.15  account, correspondence, and all other records necessary to show 
 11.16  fully the retailer's lottery transactions, and make them 
 11.17  available for inspection by employees of the lottery at all 
 11.18  times during business hours.  The director may require a lottery 
 11.19  retailer to furnish information as the director deems necessary 
 11.20  to carry out the purposes of this chapter, and may require an 
 11.21  audit to be made of the books of account and records.  The 
 11.22  director may select an auditor to perform the audit and may 
 11.23  require the retailer to pay the cost of the audit.  The auditor 
 11.24  has the same right of access to the books of account, 
 11.25  correspondence, and other records as is given to employees of 
 11.26  the lottery. 
 11.27     (d) A contract issued under this section may not be 
 11.28  transferred or assigned. 
 11.29     (e) The director shall require that lottery tickets may be 
 11.30  sold by retailers only for cash.  
 11.31     (f) A lottery retailer must prominently post at the point 
 11.32  of sale of lottery tickets and the area where video lottery 
 11.33  terminals are located, in a manner approved by the commissioner 
 11.34  of human services, the toll-free telephone number established by 
 11.35  the commissioner of human services in connection with the 
 11.36  compulsive gambling program established under section 245.98. 
 12.1      Sec. 24.  Minnesota Statutes 1994, section 349A.06, is 
 12.2   amended by adding a subdivision to read: 
 12.3      Subd. 5a.  [RESTRICTIONS ON LOTTERY RETAILERS; VIDEO 
 12.4   LOTTERY TERMINALS.] (a) The director may only enter into a 
 12.5   lottery retailer contract for games operated by a video lottery 
 12.6   terminal with a retailer that has a license to sell alcoholic 
 12.7   beverages for consumption on the premises where sold, other than 
 12.8   (1) a retailer who has only a temporary on-sale license, or (2) 
 12.9   a retailer of 3.2 percent malt liquor whose total gross receipts 
 12.10  from the premises were less than 50 percent attributable to the 
 12.11  sale of 3.2 percent malt liquor at on-sale.  For purposes of 
 12.12  this section, a "retailer that has a license to sell alcoholic 
 12.13  beverages for consumption on the premises where sold" includes a 
 12.14  municipal liquor store that sells alcoholic beverages at on-sale.
 12.15     (b) A lottery retailer may have up to ten video lottery 
 12.16  terminals on the retailer's premises, as determined by the 
 12.17  director. 
 12.18     (c) A lottery retailer who has a contract for placement of 
 12.19  video lottery terminals may not make reference to the 
 12.20  establishment being a "casino" or use the word "casino" in its 
 12.21  name or in any of its advertisements. 
 12.22     (d) The director, or any employee of the director, may 
 12.23  inspect a video lottery terminal at any time during the hours 
 12.24  when alcoholic beverages may be sold at on-sale under section 
 12.25  340A.504, subdivisions 1 to 3, without notice, to ensure 
 12.26  compliance with this chapter and any rules adopted by the 
 12.27  director. 
 12.28     (e) A lottery retailer with a contract for video lottery 
 12.29  terminal placement who, as of January 1, 1995, leases space to 
 12.30  an organization under section 349.18 for the conduct of lawful 
 12.31  gambling, may not at any time within three years of first making 
 12.32  the contract cancel or refuse to renew the lease unless the 
 12.33  organization fails to comply with the terms of the lease. 
 12.34     Sec. 25.  Minnesota Statutes 1994, section 349A.06, is 
 12.35  amended by adding a subdivision to read: 
 12.36     Subd. 6a.  [RETENTION BY RETAILERS; VIDEO LOTTERY 
 13.1   TERMINAL.] (a) A lottery retailer who has a contract for 
 13.2   placement of video lottery terminals shall retain a percentage 
 13.3   of the net terminal income from all terminals on the retailer's 
 13.4   premises as provided in this subdivision. 
 13.5      (b) A lottery retailer who does not lease space to a 
 13.6   licensed organization for the conduct of lawful gambling on the 
 13.7   retailer's premises and who is not a licensed organization under 
 13.8   section 349.16 shall retain 25 percent of the net terminal 
 13.9   income. 
 13.10     (c) A lottery retailer who leases space to a licensed 
 13.11  organization for the conduct of lawful gambling on the premises 
 13.12  where the video lottery machines are located shall retain 35 
 13.13  percent of net terminal income.  The retailer shall pay to the 
 13.14  licensed organization, at a time and in a manner that the 
 13.15  director shall prescribe in the contract, the additional 10 
 13.16  percent retained by the retailer under this paragraph.  If the 
 13.17  retailer leases space to more than one licensed organization on 
 13.18  the premises where the video lottery machines are located, the 
 13.19  retailer must allocate the payment among those organizations in 
 13.20  proportion to their gross receipts, as defined in section 
 13.21  349.12, subdivision 21, on those premises. 
 13.22     (d) A lottery retailer that is a licensed organization 
 13.23  under section 349.16 and that does not lease space to another 
 13.24  licensed organization shall retain 25 percent of net terminal 
 13.25  income plus an additional ten percent. 
 13.26     Sec. 26.  Minnesota Statutes 1994, section 349A.06, 
 13.27  subdivision 8, is amended to read: 
 13.28     Subd. 8.  [PROCEEDS OF SALES.] All proceeds from the sale 
 13.29  of lottery tickets or proceeds from the sale of video lottery 
 13.30  terminal plays received by a lottery retailer constitute a trust 
 13.31  fund until paid to the director.  The lottery retailer is 
 13.32  personally liable for all proceeds. 
 13.33     Sec. 27.  Minnesota Statutes 1994, section 349A.06, 
 13.34  subdivision 10, is amended to read: 
 13.35     Subd. 10.  [LOCAL LICENSES.] No political subdivision may 
 13.36  require a local license to operate as a lottery retailer, 
 14.1   restrict or regulate the placement of a video lottery terminal, 
 14.2   or impose a tax or fee on the business of operating as a lottery 
 14.3   retailer.  
 14.4      Sec. 28.  Minnesota Statutes 1994, section 349A.06, 
 14.5   subdivision 11, is amended to read: 
 14.6      Subd. 11.  [CANCELLATION, SUSPENSION, AND REFUSAL TO RENEW 
 14.7   CONTRACTS.] (a) The director shall cancel the contract of any 
 14.8   lottery retailer who: 
 14.9      (1) has been convicted of a felony or gross misdemeanor; 
 14.10     (2) has committed fraud, misrepresentation, or deceit; 
 14.11     (3) has provided false or misleading information to the 
 14.12  lottery; or 
 14.13     (4) has been convicted for a third time within five years 
 14.14  of allowing a person under the age of 21 years to play a game on 
 14.15  a video lottery terminal in violation of section 349A.12, 
 14.16  subdivision 2; or 
 14.17     (4) (5) has acted in a manner prejudicial to public 
 14.18  confidence in the integrity of the lottery.  A lottery retailer 
 14.19  whose contract has been canceled under clause (4) may not be 
 14.20  issued a new contract within one year of that cancellation. 
 14.21     (b) The director may cancel, suspend, or refuse to renew 
 14.22  the contract of any lottery retailer who: 
 14.23     (1) changes business location; 
 14.24     (2) fails to account for lottery tickets received or the 
 14.25  proceeds from tickets sold; 
 14.26     (3) fails to remit funds to the director in accordance with 
 14.27  the director's rules; 
 14.28     (4) violates a law or a rule or order of the director; 
 14.29     (5) fails to comply with any of the terms in the lottery 
 14.30  retailer's contract; 
 14.31     (6) fails to file a bond, securities, or a letter of credit 
 14.32  as required under subdivision 3; 
 14.33     (7) in the opinion of the director fails to maintain a 
 14.34  sufficient sales volume to justify continuation as a lottery 
 14.35  retailer; or 
 14.36     (8) has violated section 340A.503, subdivision 2, clause 
 15.1   (1), two or more times within a two-year period. 
 15.2      (c) The director may also cancel, suspend, or refuse to 
 15.3   renew a lottery retailer's contract if there is a material 
 15.4   change in any of the factors considered by the director under 
 15.5   subdivision 2.  
 15.6      (d) A contract cancellation, suspension, or refusal to 
 15.7   renew under this subdivision is a contested case under sections 
 15.8   14.57 to 14.69 and is in addition to any criminal penalties 
 15.9   provided for a violation of law or rule. 
 15.10     (e) The director may temporarily suspend a contract without 
 15.11  notice for any of the reasons specified in this subdivision 
 15.12  provided that a hearing is conducted within seven days after a 
 15.13  request for a hearing is made by a lottery retailer.  Within 20 
 15.14  days after receiving the administrative law judge's report, the 
 15.15  director shall issue an order vacating the temporary suspension 
 15.16  or making any other appropriate order.  If no hearing is 
 15.17  requested within 30 days of the temporary suspension taking 
 15.18  effect, the suspension becomes permanent unless the director 
 15.19  vacates or modifies the order.  
 15.20     Sec. 29.  Minnesota Statutes 1994, section 349A.07, 
 15.21  subdivision 1, is amended to read: 
 15.22     Subdivision 1.  [CONTRACTS AUTHORIZED.] The director may 
 15.23  enter into lottery procurement contracts for the purchase, 
 15.24  lease, or lease-purchase of the goods or services.  The director 
 15.25  shall enter into contracts for the maintenance of video lottery 
 15.26  terminals.  In entering into a lottery procurement contract, the 
 15.27  director shall utilize an open bid process and shall take into 
 15.28  account the particularly sensitive nature of the state lottery 
 15.29  and shall consider the competence, quality of product, 
 15.30  experience, and timely performance of each potential vendor in 
 15.31  order to promote and ensure security, honesty, fairness, and 
 15.32  integrity in the operation and administration of the lottery.  
 15.33  The director shall also consider the extent to which a bidder 
 15.34  for a contract for printing preprinted lottery tickets would 
 15.35  utilize employees and facilities within Minnesota in fulfilling 
 15.36  the contract.  In entering into contracts for the maintenance of 
 16.1   video lottery terminals, the director may only contract with a 
 16.2   person that is a Minnesota resident that uses employees and 
 16.3   facilities within Minnesota to fulfill the contract.  Except for 
 16.4   repairs made under any applicable warranty, the director may not 
 16.5   enter into a contract with a manufacturer of video lottery 
 16.6   terminals or an agent or associate of a manufacturer of video 
 16.7   lottery terminals for the maintenance of video lottery 
 16.8   terminals.  A person contracting with the director for the 
 16.9   maintenance of video lottery terminals may not employ for the 
 16.10  performance of such maintenance a person who would be ineligible 
 16.11  for a contract under subdivision 3, paragraph (a).  The director 
 16.12  shall require all lottery retailers who have contracts with the 
 16.13  director for the placement of video lottery terminals to obtain 
 16.14  maintenance services for those terminals only with a person with 
 16.15  whom the director has entered into a contract under this 
 16.16  subdivision, but the retailer shall determine which of these 
 16.17  contractors shall provide those maintenance services in the 
 16.18  retailer's establishment. 
 16.19     Sec. 30.  [349A.071] [VIDEO LOTTERY TERMINALS.] 
 16.20     Subdivision 1.  [SPECIFICATION.] Each video lottery 
 16.21  terminal must meet the following standards: 
 16.22     (1) maintain on nonresettable meters in a readily 
 16.23  accessible locked terminal area, which are capable of printing 
 16.24  out, a permanent record of all transactions by the terminal and 
 16.25  all entries into the terminal; 
 16.26     (2) be capable of being linked electronically to a central 
 16.27  communication system to provide auditing program information as 
 16.28  required by the director, provided that in no event may the 
 16.29  communications system or additional terminal specifications 
 16.30  approved by the director limit participation to only one 
 16.31  manufacturer of video lottery terminals; 
 16.32     (3) be capable of offering only games authorized by the 
 16.33  director; 
 16.34     (4) do not have any means of manipulation that affect the 
 16.35  random probabilities of winning a game played on a video lottery 
 16.36  terminal; 
 17.1      (5) have mechanism that in accepting coins or cash are 
 17.2   designed to prevent obtaining credits without paying by 
 17.3   stringing, slamming, drilling or other means; 
 17.4      (6) be capable of suspending operation if any attempt 
 17.5   involving physical tampering occurs; 
 17.6      (7) be capable of printing a receipt stating the value of 
 17.7   the prize for the player at the completion of each video lottery 
 17.8   game which states the time of day in a twenty-four hour format, 
 17.9   the date, the terminal serial number, the sequential number of 
 17.10  the receipt, and an encrypted validation number from which the 
 17.11  validity of the prize may be determined; and 
 17.12     (8) have accounting software that keeps an electronic 
 17.13  record which includes, but is not limited to, total cash 
 17.14  inserted into the terminal, the value of winning receipts 
 17.15  claimed by players, the total video lottery terminal credits 
 17.16  played, and the total video lottery terminal credits awarded by 
 17.17  each video lottery terminal game, and the payback percentaged 
 17.18  credited players of each video lottery terminal game, and the 
 17.19  payback percentage credited players of each video lottery game. 
 17.20     Subd. 2.  [LIMIT ON AMOUNT PLAYED.] A video lottery 
 17.21  terminal may not allow less than 25 cents and not more than $2 
 17.22  to be played on a single game. 
 17.23     Subd. 3.  [MAXIMUM PRIZE.] The maximum prize on any single 
 17.24  game played on a video lottery terminal may not exceed $1,000. 
 17.25     Subd. 4.  [TESTING AND EXAMINATION OF TERMINALS.] The 
 17.26  director may require working models of a video lottery terminal 
 17.27  transported to the location the director designates for testing, 
 17.28  examination, and analysis.  The manufacturer shall pay all costs 
 17.29  of any testing, examination, analysis, and transportation of the 
 17.30  terminal model. 
 17.31     Subd. 5.  [DEACTIVATION OF TERMINAL.] The director may 
 17.32  deactivate a video lottery terminal without notice if the 
 17.33  lottery retailer has violated any provision of this chapter, or 
 17.34  a rule adopted under it, or provision of its contract with the 
 17.35  director. 
 17.36     Sec. 31.  Minnesota Statutes 1994, section 349A.08, 
 18.1   subdivision 1, is amended to read: 
 18.2      Subdivision 1.  [AGREEMENT BY PLAYERS.] A person who buys a 
 18.3   lottery ticket or plays a video lottery game agrees to be bound 
 18.4   by the rules and game procedures applicable to the that 
 18.5   particular lottery game for which the ticket is purchased.  The 
 18.6   player acknowledges that the determination of whether a 
 18.7   ticket or video lottery credit receipt is a valid winning ticket 
 18.8   is subject to under the rules of and game procedures adopted by 
 18.9   the director, claims procedures established by the director for 
 18.10  that game, and any confidential or public validation tests 
 18.11  established by the director for that game. 
 18.12     Sec. 32.  Minnesota Statutes 1994, section 349A.08, 
 18.13  subdivision 5, is amended to read: 
 18.14     Subd. 5.  [PAYMENT; UNCLAIMED PRIZES.] (a) Except as 
 18.15  provided in this subdivision, a prize in the state lottery must 
 18.16  be claimed by the winner within one year of the date of the 
 18.17  drawing at which the prize was awarded or the last day sales 
 18.18  were authorized for a game where a prize was determined in a 
 18.19  manner other than by means of a drawing.  If a valid claim is 
 18.20  not made for a prize payable directly by the lottery by the end 
 18.21  of this period, the unclaimed prize money must be added by the 
 18.22  director to prize pools of subsequent lottery games and the 
 18.23  winner of the prize shall have no further claim to the prize. 
 18.24     (b) A prize from a video lottery game for less than $600 
 18.25  must be presented for payment before the close of the business 
 18.26  day on the date the video lottery credit receipt was printed.  
 18.27  If a valid claim for a video lottery credit receipt that does 
 18.28  not include a prize from a video lottery game of $600 or more is 
 18.29  not made for a prize from a video lottery terminal by the end of 
 18.30  this period, the unclaimed prize must be paid by the lottery 
 18.31  retailer to the lottery. 
 18.32     (c) A prize won by a person who purchased the winning 
 18.33  ticket or played a video lottery game in violation of section 
 18.34  349A.12, subdivision 1, or won by a person ineligible to be 
 18.35  awarded a prize under subdivision 7 must be treated as an 
 18.36  unclaimed prize under this section. 
 19.1      Sec. 33.  Minnesota Statutes 1994, section 349A.08, is 
 19.2   amended by adding a subdivision to read: 
 19.3      Subd. 10.  [PAYMENT OF VIDEO LOTTERY TERMINAL PRIZE.] The 
 19.4   director shall provide in all contracts that provide for 
 19.5   placement of video lottery terminals that the retailer making 
 19.6   may not pay a prize from a video lottery game of $600 or more.  
 19.7   A prize won from a video lottery game of $600 or more may be 
 19.8   paid only by the director. 
 19.9      Sec. 34.  Minnesota Statutes 1994, section 349A.09, 
 19.10  subdivision 1, is amended to read: 
 19.11     Subdivision 1.  [ODDS; REQUIRED INFORMATION.] (a) The 
 19.12  director shall include on each brochure, pamphlet, booklet, or 
 19.13  other similar material the director publishes to promote or 
 19.14  explain any lottery game, a prominent and clear statement of the 
 19.15  approximate odds of winning each prize offered in that lottery 
 19.16  game. 
 19.17     (b) Except for the operation of a video lottery terminal, 
 19.18  each lottery retailer must post prominently at or near the point 
 19.19  of ticket sale a notice or notices printed and provided by the 
 19.20  director of the approximate odds of winning each prize in each 
 19.21  game for which the lottery retailer sells tickets. 
 19.22     (c) The approximate odds of winning a prize from a video 
 19.23  lottery terminal must be prominently posted in the area where 
 19.24  terminals are located. 
 19.25     Sec. 35.  Minnesota Statutes 1994, section 349A.10, 
 19.26  subdivision 2, is amended to read: 
 19.27     Subd. 2.  [DEPOSIT IN PRIZE FUND.] (a) The director shall 
 19.28  establish a lottery prize fund outside the state treasury.  The 
 19.29  fund consists of all money deposited in it under this 
 19.30  subdivision and all interest earned thereon.  
 19.31     (b) The director shall deposit in the lottery prize fund, 
 19.32  from gross receipts from the sale of lottery tickets, an amount 
 19.33  sufficient to pay lottery prizes from the lottery prize fund 
 19.34  according to the following provisions: 
 19.35     (1) for games which require on-line terminal connections, 
 19.36  the prizes paid in any fiscal year must be at least 45 percent 
 20.1   of gross receipts from those games in that fiscal year; 
 20.2      (2) for games which do not require on-line terminal 
 20.3   connections, the prizes paid in any fiscal year must be at least 
 20.4   the following percentages of gross receipts from those games:  
 20.5      (i) 50 percent through fiscal year 1991; 
 20.6      (ii) 55 percent from July 1, 1991, to June 30, 1992; and 
 20.7      (iii) 60 percent thereafter of gross receipts from those 
 20.8   games in that fiscal year. 
 20.9      (c) For lottery games played on a video lottery terminal, 
 20.10  the win percentage in any fiscal year must be the win percentage 
 20.11  established by the game procedures adopted for the game and must 
 20.12  be not less than 80 percent and not more than 95 percent. 
 20.13     Sec. 36.  Minnesota Statutes 1994, section 349A.10, 
 20.14  subdivision 3, is amended to read: 
 20.15     Subd. 3.  [LOTTERY OPERATIONS.] (a) The director shall 
 20.16  establish a lottery operations account in the lottery fund.  The 
 20.17  director shall pay all costs of operating the lottery, including 
 20.18  payroll costs or amounts transferred to the state treasury for 
 20.19  payroll costs, but not including lottery prizes, from the 
 20.20  lottery operating account.  The director shall credit to the 
 20.21  lottery operations account amounts sufficient to pay the 
 20.22  operating costs of the lottery. 
 20.23     (b) The director may not credit in any fiscal year 1993 
 20.24  amounts to the lottery operations account which when totaled 
 20.25  exceed 14.5 percent of gross revenue to the lottery fund.  The 
 20.26  director may not credit in any fiscal year thereafter amounts to 
 20.27  the lottery operations account which when totaled exceed 15 
 20.28  percent of gross revenue, not including net terminal income, and 
 20.29  30 percent of net terminal income for fiscal years 1996 and 
 20.30  1997, and 25 percent of net terminal income thereafter to the 
 20.31  lottery fund in that fiscal year.  In computing total amounts 
 20.32  credited to the lottery operations account under this paragraph 
 20.33  the director shall disregard amounts transferred to or retained 
 20.34  by lottery retailers as sales commissions or other compensation. 
 20.35     (c) The director of the lottery may not expend after July 
 20.36  1, 1991, more than 2-3/4 percent of gross revenues in a fiscal 
 21.1   year for contracts for the preparation, publication, and 
 21.2   placement of advertising.  
 21.3      (d)  From the amounts credited to the operations account 
 21.4   for contracts associated with the maintenance of video lottery 
 21.5   terminals, the director shall expend amounts necessary to 
 21.6   maintain those terminals, but the director may not expend more 
 21.7   than three percent of net terminal income for this purpose in 
 21.8   any fiscal year.  This limitation does not apply to costs 
 21.9   related to the installation of video lottery terminals. 
 21.10     (e) Except as the director determines, the lottery is not 
 21.11  subject to chapter 16A relating to budgeting, payroll, and the 
 21.12  purchase of goods and services. 
 21.13     Sec. 37.  Minnesota Statutes 1994, section 349A.10, 
 21.14  subdivision 4, is amended to read: 
 21.15     Subd. 4.  [DEPOSIT OF RECEIPTS.] (a) The director may 
 21.16  require lottery retailers to: 
 21.17     (1) deposit in a separate account to the credit of the 
 21.18  lottery fund, in banks designated by the director, all money 
 21.19  received by the lottery retailer from the sale of lottery 
 21.20  tickets and video lottery terminal plays, less money retained as 
 21.21  the lottery retailer's commission and for payment of prizes; 
 21.22     (2) file with the director reports of the lottery 
 21.23  retailer's receipts and transactions in ticket sales and video 
 21.24  lottery terminal plays in a form that the director prescribes; 
 21.25  and 
 21.26     (3) allow money deposited by the lottery retailer from the 
 21.27  sale of lottery tickets and video lottery terminal plays to be 
 21.28  transferred to the lottery through electronic fund transfer. 
 21.29     (b) The director may make arrangements for any person, 
 21.30  including a financial institution, to perform functions, 
 21.31  activities, or services in connection with the receipt and 
 21.32  distribution of lottery revenues. 
 21.33     (c) A lottery retailer who fails to pay any money due to 
 21.34  the director within the time prescribed by the director shall 
 21.35  pay interest on the amount owed at the rate determined by rule. 
 21.36     Sec. 38.  Minnesota Statutes 1994, section 349A.10, 
 22.1   subdivision 5, is amended to read: 
 22.2      Subd. 5.  [DEPOSIT OF NET PROCEEDS.] Within 30 days after 
 22.3   the end of each month, the director shall deposit in the state 
 22.4   treasury the net proceeds of the lottery, which is the balance 
 22.5   in the lottery fund after transfers to the lottery prize fund 
 22.6   and credits to the lottery operations account.  Of the net 
 22.7   proceeds, excluding the net proceeds from the operation of video 
 22.8   lottery terminals, 40 percent must be credited to the Minnesota 
 22.9   environment and natural resources trust fund, and the remainder 
 22.10  must be credited to the general fund.  Of the net proceeds from 
 22.11  the operation of video lottery terminals: 
 22.12     (1) Until January 1, 2001, 40 percent must be credited to 
 22.13  the Minnesota environment and natural resources trust fund, one 
 22.14  percent must be credited to the compulsive gambling account, 
 22.15  29.5 percent must be credited to the Minnesota sports commission 
 22.16  account established under section 240A.08, subdivision 2, and 
 22.17  29.5 percent must be credited to the permanent school fund 
 22.18  established under section 11A.16, subdivision 1. 
 22.19     (2) On and after January 1, 2001, one percent must be 
 22.20  credited to the compulsive gambling account, 49.5 percent must 
 22.21  be credited to the Minnesota sports commission account, and 49.5 
 22.22  percent must be credited to the permanent school fund. 
 22.23     Sec. 39.  Minnesota Statutes 1994, section 349A.10, is 
 22.24  amended by adding a subdivision to read: 
 22.25     Subd. 6.  [COMPULSIVE GAMBLING ACCOUNT.] A compulsive 
 22.26  gambling account is created in the state treasury.  The account 
 22.27  consists of deposits made under subdivision 5 and interest 
 22.28  thereon.  Money in the account may be appropriated by law only 
 22.29  for the program established in section 245.98. 
 22.30     Sec. 40.  Minnesota Statutes 1994, section 349A.11, is 
 22.31  amended to read: 
 22.32     349A.11 [CONFLICT OF INTEREST.] 
 22.33     (a) The director, a board member, an employee of the 
 22.34  lottery, a member of the immediate family of the director, board 
 22.35  member, or employee residing in the same household may not: 
 22.36     (1) purchase a lottery ticket or play a game on a video 
 23.1   lottery terminal; 
 23.2      (2) have any personal pecuniary interest in any vendor 
 23.3   holding a lottery procurement contract, or in any lottery 
 23.4   retailer; or 
 23.5      (3) receive any gift, gratuity, or other thing of value, 
 23.6   excluding food or beverage, from any lottery vendor or lottery 
 23.7   retailer, or person applying to be a retailer or vendor, in 
 23.8   excess of $100 in any calendar year.  
 23.9      (b) A violation of paragraph (a), clause (1), is a 
 23.10  misdemeanor.  A violation of paragraph (a), clause (2), is a 
 23.11  gross misdemeanor.  A violation of paragraph (a), clause (3), is 
 23.12  a misdemeanor unless the gift, gratuity, or other item of value 
 23.13  received has a value in excess of $500, in which case a 
 23.14  violation is a gross misdemeanor.  
 23.15     (c) The director or an unclassified employee of the lottery 
 23.16  may not, within one year of terminating employment with the 
 23.17  lottery, accept employment with, act as an agent or attorney 
 23.18  for, or otherwise represent any person, corporation, or entity 
 23.19  that had any lottery procurement contract or bid for a lottery 
 23.20  procurement contract with the lottery within a period of two 
 23.21  years prior to the termination of their employment.  A violation 
 23.22  of this paragraph is a misdemeanor.  
 23.23     Sec. 41.  Minnesota Statutes 1994, section 349A.12, 
 23.24  subdivision 1, is amended to read: 
 23.25     Subdivision 1.  [PURCHASE BY MINORS.] A person under the 
 23.26  age of 18 years may not buy or redeem for a prize a ticket in 
 23.27  the state lottery, and a person under the age of 21 years may 
 23.28  not play a game on a video lottery terminal. 
 23.29     Sec. 42.  Minnesota Statutes 1994, section 349A.12, 
 23.30  subdivision 2, is amended to read: 
 23.31     Subd. 2.  [SALE TO MINORS.] A lottery retailer may not sell 
 23.32  and a lottery retailer or other person may not furnish or redeem 
 23.33  for a prize a ticket in the state lottery to any person under 
 23.34  the age of 18 years or allow a person under the age of 21 years 
 23.35  to play a game on a video lottery terminal.  It is an 
 23.36  affirmative defense to a charge under this subdivision for the 
 24.1   lottery retailer or other person to prove by a preponderance of 
 24.2   the evidence that the lottery retailer or other person 
 24.3   reasonably and in good faith relied upon representation of proof 
 24.4   of age described in section 340A.503, subdivision 6, in 
 24.5   making or allowing the sale or play or furnishing or redeeming 
 24.6   the ticket. 
 24.7      Sec. 43.  Minnesota Statutes 1994, section 349A.13, is 
 24.8   amended to read: 
 24.9      349A.13 [RESTRICTIONS.] 
 24.10     Nothing in this chapter: 
 24.11     (1) authorizes the director to conduct a lottery game or 
 24.12  contest the winner or winners of which are determined by the 
 24.13  result of a sporting event other than a horse race conducted 
 24.14  under chapter 240; or 
 24.15     (2) authorizes the director to install or operate a lottery 
 24.16  device operated by coin or currency which when operated 
 24.17  determines the winner of a game; and 
 24.18     (3) authorizes the director to sell pull-tabs as defined 
 24.19  under section 349.12, subdivision 32. 
 24.20     Sec. 44.  Minnesota Statutes 1994, section 609.651, 
 24.21  subdivision 1, is amended to read: 
 24.22     Subdivision 1.  [FELONY FRAUD.] A person is guilty of a 
 24.23  felony and may be sentenced under subdivision 4 if the person 
 24.24  does any of the following with intent to defraud the state 
 24.25  lottery: 
 24.26     (1) alters or counterfeits a state lottery ticket or a 
 24.27  video lottery credit receipt from a state lottery video lottery 
 24.28  terminal; 
 24.29     (2) knowingly presents an altered or counterfeited state 
 24.30  lottery ticket or video lottery credit receipt from a state 
 24.31  lottery video lottery terminal for payment; 
 24.32     (3) knowingly transfers an altered or counterfeited state 
 24.33  lottery ticket or video lottery credit receipt from a state 
 24.34  lottery video lottery terminal to another person; or 
 24.35     (4) tampers with or manipulates the outcome, prize payable, 
 24.36  or operation of a state lottery video lottery terminal; or 
 25.1      (5) otherwise claims a lottery prize by means of fraud, 
 25.2   deceit, or misrepresentation. 
 25.3      Sec. 45.  Minnesota Statutes 1994, section 609.75, 
 25.4   subdivision 4, is amended to read: 
 25.5      Subd. 4.  [GAMBLING DEVICE.] A gambling device is a 
 25.6   contrivance which for a consideration affords the player an 
 25.7   opportunity to obtain something of value, other than free plays, 
 25.8   automatically from the machine or otherwise, the award of which 
 25.9   is determined principally by chance.  "Gambling device" also 
 25.10  includes a video game of chance, as defined in subdivision 8 but 
 25.11  does not include a video lottery terminal operated by the state 
 25.12  lottery under chapter 349A. 
 25.13     Sec. 46.  Minnesota Statutes 1994, section 609.761, 
 25.14  subdivision 2, is amended to read: 
 25.15     Subd. 2.  [STATE LOTTERY.] Sections 609.755 and 609.76 do 
 25.16  not prohibit the operation of the state lottery or; the sale, 
 25.17  possession, or purchase of tickets for the state lottery; or the 
 25.18  manufacture, possession, or operation of a video lottery 
 25.19  terminal for the state lottery under chapter 349A.  
 25.20     Sec. 47.  [INSTRUCTION TO REVISOR.] 
 25.21     The revisor of statutes shall, in the next and subsequent 
 25.22  editions of Minnesota Statutes, delete the word "amateur" in all 
 25.23  places where it appears as part of the term "amateur sports 
 25.24  commission" or "Minnesota amateur sports commission". 
 25.25     Sec. 48.  [REPEALER.] 
 25.26     Minnesota Statutes 1994, section 297E.01, subdivision 9 is 
 25.27  repealed. 
 25.28     Sec. 49.  [EFFECTIVE DATE.] 
 25.29     Sections 5, 6, 7, and 48 are effective July 1, 1995.  All 
 25.30  other provisions of this act are effective the day following 
 25.31  final enactment.