1.1                          A bill for an act 
  1.2             relating to gambling; authorizing a video lottery 
  1.3             pilot project to be conducted by the state lottery; 
  1.4             providing for the allocation of gross receipts; 
  1.5             amending Minnesota Statutes 1998, sections 349A.01, 
  1.6             subdivisions 7, 8, 11, and by adding a subdivision; 
  1.7             349A.04; 349A.05; 349A.06, subdivisions 1, 5, 6, 8, 
  1.8             and 11; 349A.08, subdivisions 1 and 5; 349A.09, 
  1.9             subdivision 1; 349A.10, subdivisions 2, 3, 4, and 5; 
  1.10            349A.11, subdivision 1; 349A.12, subdivisions 1, 2, 6, 
  1.11            and by adding a subdivision; 349A.13; and 609.75, 
  1.12            subdivision 4; proposing coding for new law in 
  1.13            Minnesota Statutes, chapter 349A. 
  1.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.15     Section 1.  Minnesota Statutes 1998, section 349A.01, 
  1.16  subdivision 7, is amended to read: 
  1.17     Subd. 7.  [GROSS RECEIPTS.] "Gross receipts" means all 
  1.18  money received from the sale of lottery tickets and video 
  1.19  lottery machine chances less amounts transmitted to the 
  1.20  commissioner of revenue under section 297A.259. 
  1.21     Sec. 2.  Minnesota Statutes 1998, section 349A.01, 
  1.22  subdivision 8, is amended to read: 
  1.23     Subd. 8.  [GROSS REVENUE.] "Gross revenue" means gross 
  1.24  receipts from the sale of lottery tickets and video lottery 
  1.25  machine chances, fees, or other money received by the director, 
  1.26  and interest earned on money in the lottery fund.  
  1.27     Sec. 3.  Minnesota Statutes 1998, section 349A.01, 
  1.28  subdivision 11, is amended to read: 
  1.29     Subd. 11.  [LOTTERY RETAILER.] "Lottery retailer" means a 
  2.1   person with whom the director has contracted to sell lottery 
  2.2   tickets to the public, or keep a video lottery machine on the 
  2.3   retailer's premises, or both.  
  2.4      Sec. 4.  Minnesota Statutes 1998, section 349A.01, is 
  2.5   amended by adding a subdivision to read: 
  2.6      Subd. 14.  [VIDEO LOTTERY MACHINE.] "Video lottery machine" 
  2.7   means an electronic device owned or leased by the lottery that 
  2.8   on insertion of the coin, currency, or token plays a game on a 
  2.9   video display screen that simulates one or more common gambling 
  2.10  games. 
  2.11     Sec. 5.  Minnesota Statutes 1998, section 349A.04, is 
  2.12  amended to read: 
  2.13     349A.04 [LOTTERY GAME PROCEDURES.] 
  2.14     The director may adopt game procedures governing the 
  2.15  following elements of the lottery: 
  2.16     (1) lottery games; 
  2.17     (2) ticket prices; 
  2.18     (3) number and size of prizes; 
  2.19     (4) methods of selecting winning tickets; and 
  2.20     (5) frequency and method of drawings; and 
  2.21     (6) game types, odds, prizes, and prices for video lottery 
  2.22  machines. 
  2.23     The adoption of lottery game procedures is not subject to 
  2.24  chapter 14.  
  2.25     Sec. 6.  Minnesota Statutes 1998, section 349A.05, is 
  2.26  amended to read: 
  2.27     349A.05 [RULES.] 
  2.28     The director may adopt rules under chapter 14 governing the 
  2.29  following elements of the lottery: 
  2.30     (1) the number and types of lottery retailers' locations; 
  2.31     (2) qualifications of lottery retailers and application 
  2.32  procedures for lottery retailer contracts; 
  2.33     (3) investigation of lottery retailer applicants; 
  2.34     (4) appeal procedures for denial, suspension, or 
  2.35  cancellation of lottery retailer contracts; 
  2.36     (5) compensation of lottery retailers; 
  3.1      (6) accounting for and deposit of lottery revenues by 
  3.2   lottery retailers; 
  3.3      (7) procedures for issuing lottery procurement contracts 
  3.4   and for the investigation of bidders on those contracts; 
  3.5      (8) payment of prizes; 
  3.6      (9) procedures needed to ensure the integrity and security 
  3.7   of the lottery; and 
  3.8      (10) specifications and prize payout requirements for video 
  3.9   lottery machines, as provided in section 349A.091; and 
  3.10     (11) other rules the director considers necessary for the 
  3.11  efficient operation and administration of the lottery.  
  3.12     Sec. 7.  Minnesota Statutes 1998, section 349A.06, 
  3.13  subdivision 1, is amended to read: 
  3.14     Subdivision 1.  [CONTRACTS.] The director shall sell 
  3.15  tickets and operate video lottery machines for the lottery 
  3.16  through lottery retailers with whom the director contracts.  
  3.17  Contracts under this section are not subject to the provisions 
  3.18  of sections 16C.03, 16C.05, 16C.06, 16C.08, 16C.09, and 16C.10, 
  3.19  and are valid for a period of one year.  The director may permit 
  3.20  a retailer to sell tickets at more than one business location 
  3.21  under a contract entered into under this section. 
  3.22     Sec. 8.  Minnesota Statutes 1998, section 349A.06, 
  3.23  subdivision 5, is amended to read: 
  3.24     Subd. 5.  [RESTRICTIONS ON LOTTERY RETAILERS.] (a) A 
  3.25  lottery retailer may sell lottery tickets or have a video 
  3.26  lottery machine placed only on the premises described in the 
  3.27  contract. 
  3.28     (b) A lottery retailer must prominently display a 
  3.29  certificate issued by the director on the premises where lottery 
  3.30  tickets will be sold or where video lottery machines are 
  3.31  operated. 
  3.32     (c) A lottery retailer must keep a complete set of books of 
  3.33  account, correspondence, and all other records necessary to show 
  3.34  fully the retailer's lottery transactions, and make them 
  3.35  available for inspection by employees of the lottery at all 
  3.36  times during business hours.  The director may require a lottery 
  4.1   retailer to furnish information as the director deems necessary 
  4.2   to carry out the purposes of this chapter, and may require an 
  4.3   audit to be made of the books of account and records.  The 
  4.4   director may select an auditor to perform the audit and may 
  4.5   require the retailer to pay the cost of the audit.  The auditor 
  4.6   has the same right of access to the books of account, 
  4.7   correspondence, and other records as is given to employees of 
  4.8   the lottery. 
  4.9      (d) A contract issued under this section may not be 
  4.10  transferred or assigned. 
  4.11     (e) The director shall require that lottery tickets may be 
  4.12  sold by retailers only for cash.  
  4.13     (f) A lottery retailer must prominently post at the point 
  4.14  of sale of lottery tickets and the area where video lottery 
  4.15  machines are located, in a manner approved by the commissioner 
  4.16  of human services, the toll-free telephone number established by 
  4.17  the commissioner of human services in connection with the 
  4.18  compulsive gambling program established under section 245.98. 
  4.19     Sec. 9.  Minnesota Statutes 1998, section 349A.06, 
  4.20  subdivision 6, is amended to read: 
  4.21     Subd. 6.  [RETENTION BY RETAILERS.] The director may by 
  4.22  rule provide for: 
  4.23     (1) amounts which a lottery retailer may retain from gross 
  4.24  receipts from the sale of lottery tickets and from video lottery 
  4.25  machines in order to pay prizes to holders of winning tickets; 
  4.26  and 
  4.27     (2) amounts which a lottery retailer may retain from gross 
  4.28  receipts from the sale of lottery tickets and from video lottery 
  4.29  machines as a commission.  
  4.30     Sec. 10.  Minnesota Statutes 1998, section 349A.06, 
  4.31  subdivision 8, is amended to read: 
  4.32     Subd. 8.  [PROCEEDS OF SALES.] All proceeds from the sale 
  4.33  of lottery tickets and from video lottery machines received by a 
  4.34  lottery retailer constitute a trust fund until paid to the 
  4.35  director.  The lottery retailer is personally liable for all 
  4.36  proceeds. 
  5.1      Sec. 11.  Minnesota Statutes 1998, section 349A.06, 
  5.2   subdivision 11, is amended to read: 
  5.3      Subd. 11.  [CANCELLATION, SUSPENSION, AND REFUSAL TO RENEW 
  5.4   CONTRACTS OR LOCATIONS.] (a) The director shall cancel the 
  5.5   contract of any lottery retailer or prohibit a lottery retailer 
  5.6   from selling lottery tickets at a business location who: 
  5.7      (1) has been convicted of a felony or gross misdemeanor; 
  5.8      (2) has committed fraud, misrepresentation, or deceit; 
  5.9      (3) has provided false or misleading information to the 
  5.10  lottery; or 
  5.11     (4) has acted in a manner prejudicial to public confidence 
  5.12  in the integrity of the lottery. 
  5.13     (b) The director may cancel, suspend, or refuse to renew 
  5.14  the contract of any lottery retailer or prohibit a lottery 
  5.15  retailer from selling lottery tickets at a business location who:
  5.16     (1) changes business location; 
  5.17     (2) fails to account for lottery tickets received or the 
  5.18  proceeds from tickets sold; 
  5.19     (3) fails to remit funds to the director in accordance with 
  5.20  the director's rules; 
  5.21     (4) violates a law or a rule or order of the director; 
  5.22     (5) fails to comply with any of the terms in the lottery 
  5.23  retailer's contract; 
  5.24     (6) fails to file a bond, securities, or a letter of credit 
  5.25  as required under subdivision 3; 
  5.26     (7) in the opinion of the director fails to maintain a 
  5.27  sufficient sales volume to justify continuation as a lottery 
  5.28  retailer; or 
  5.29     (8) has violated section 340A.503, subdivision 2, clause 
  5.30  (1), two or more times within a two-year period; or 
  5.31     (9) has violated or attempted to violate section 349A.12, 
  5.32  subdivision 4a, or knowingly permitted another person to violate 
  5.33  or attempt to violate that subdivision with respect to a video 
  5.34  lottery machine on the retailer's premises. 
  5.35     (c) The director may also cancel, suspend, or refuse to 
  5.36  renew a lottery retailer's contract or prohibit a lottery 
  6.1   retailer from selling lottery tickets at a business location if 
  6.2   there is a material change in any of the factors considered by 
  6.3   the director under subdivision 2.  
  6.4      (d) A contract cancellation, suspension, refusal to renew, 
  6.5   or prohibiting a lottery retailer from selling lottery tickets 
  6.6   at a business location under this subdivision is a contested 
  6.7   case under sections 14.57 to 14.69 and is in addition to any 
  6.8   criminal penalties provided for a violation of law or rule. 
  6.9      (e) The director may temporarily suspend a contract or 
  6.10  temporarily prohibit a lottery retailer from selling lottery 
  6.11  tickets at a business location without notice for any of the 
  6.12  reasons specified in this subdivision provided that a hearing is 
  6.13  conducted within seven days after a request for a hearing is 
  6.14  made by a lottery retailer.  Within 20 days after receiving the 
  6.15  administrative law judge's report, the director shall issue an 
  6.16  order vacating the temporary suspension or prohibition or making 
  6.17  any other appropriate order.  If no hearing is requested within 
  6.18  30 days of the temporary suspension or prohibition taking 
  6.19  effect, the suspension or prohibition becomes permanent unless 
  6.20  the director vacates or modifies the order.  
  6.21     Sec. 12.  Minnesota Statutes 1998, section 349A.08, 
  6.22  subdivision 1, is amended to read: 
  6.23     Subdivision 1.  [AGREEMENT BY PLAYERS.] A person who buys a 
  6.24  lottery ticket or plays a video lottery machine agrees to be 
  6.25  bound by the rules applicable to the particular lottery game for 
  6.26  which the ticket is purchased or video lottery machine played.  
  6.27  The player acknowledges that the determination of whether a 
  6.28  ticket or chance is a valid winning ticket is subject to the 
  6.29  rules of the director, claims procedures established by the 
  6.30  director for that game or machine, and any confidential or 
  6.31  public validation tests established by the director for that 
  6.32  game or machine. 
  6.33     Sec. 13.  Minnesota Statutes 1998, section 349A.08, 
  6.34  subdivision 5, is amended to read: 
  6.35     Subd. 5.  [PAYMENT; UNCLAIMED PRIZES.] A prize in the state 
  6.36  lottery must be claimed by the winner: 
  7.1      (1) within one year of the date of the drawing at which the 
  7.2   prize was awarded or the last day sales were authorized for a 
  7.3   game, other than a video lottery game, where a prize was 
  7.4   determined in a manner other than by means of a drawing; or 
  7.5      (2) in the case of a prize won at a video lottery machine, 
  7.6   within one year of the date on which the prize voucher was 
  7.7   printed. 
  7.8      If a valid claim is not made for a prize payable directly 
  7.9   by the lottery by the end of this period, the prize money is 
  7.10  considered unclaimed and the winner of the prize shall have no 
  7.11  further claim to the prize.  A prize won by a person who 
  7.12  purchased the winning ticket in violation of section 349A.12, 
  7.13  subdivision 1, or won by a person ineligible to be awarded a 
  7.14  prize under subdivision 7 must be treated as an unclaimed prize 
  7.15  under this section.  The director shall transfer 70 percent of 
  7.16  all unclaimed prize money at the end of each fiscal year from 
  7.17  the lottery cash flow account as follows:  of the 70 percent, 40 
  7.18  percent must be transferred to the Minnesota environment and 
  7.19  natural resources trust fund and 60 percent must be transferred 
  7.20  to the general fund.  The remaining 30 percent of the unclaimed 
  7.21  prize money must be added by the director to prize pools of 
  7.22  subsequent lottery games. 
  7.23     Sec. 14.  Minnesota Statutes 1998, section 349A.09, 
  7.24  subdivision 1, is amended to read: 
  7.25     Subdivision 1.  [ODDS; REQUIRED INFORMATION.] (a) The 
  7.26  director shall include on each brochure, pamphlet, booklet, or 
  7.27  other similar material the director publishes to promote or 
  7.28  explain any lottery game, a prominent and clear statement of the 
  7.29  approximate odds of winning each prize offered in that lottery 
  7.30  game. 
  7.31     (b) Each lottery retailer must post prominently at or near 
  7.32  the point of ticket sale, and at or near each video lottery 
  7.33  machine, a notice or notices printed and provided by the 
  7.34  director of the approximate odds of winning each prize in each 
  7.35  game for which the lottery retailer sells tickets. 
  7.36     Sec. 15.  [349A.091] [VIDEO LOTTERY MACHINES.] 
  8.1      Subdivision 1.  [PURCHASE OF MACHINES; INSPECTION.] The 
  8.2   director may purchase or lease video lottery machines from a 
  8.3   manufacturer licensed under section 299L.07, and install and 
  8.4   operate video lottery machines as provided in this section.  The 
  8.5   director shall examine samples of video lottery machines and 
  8.6   associated equipment, or alternatively may contract with another 
  8.7   entity to perform examinations, before purchasing or leasing any 
  8.8   type of video lottery machine.  The director shall require the 
  8.9   manufacturer seeking the examination to pay the anticipated 
  8.10  actual costs of the examination in advance and, after 
  8.11  examination, shall refund overpayments or charge and collect 
  8.12  amounts sufficient to reimburse the director for underpayments 
  8.13  of actual costs. 
  8.14     Subd. 2.  [SPECIFICATIONS.] The director shall, by rule, 
  8.15  adopt specifications for video lottery machines and shall 
  8.16  require that all video lottery machines meet these 
  8.17  specifications before their purchase or lease.  The director 
  8.18  shall adopt specifications that ensure that each machine: 
  8.19     (1) maintains on nonresettable meters, and is capable of 
  8.20  printing out, a permanent record of all transactions by the 
  8.21  machine and all entries into the machine; 
  8.22     (2) is capable of being linked electronically to a central 
  8.23  computer; and 
  8.24     (3) is secure from tampering and unauthorized entry. 
  8.25     Subd. 3.  [COMPUTER CONNECTION.] In the operation of video 
  8.26  lottery machines, the director shall ensure that all video 
  8.27  lottery machines are linked electronically with a central 
  8.28  computer maintained by the lottery in such a manner as to: 
  8.29     (1) provide the director with immediate and accurate 
  8.30  information on transactions by and entry into each machine; and 
  8.31     (2) allow the director to disconnect or disable a machine 
  8.32  at any time. 
  8.33     Subd. 4.  [LOCATIONS; PILOT PROJECT COUNTIES.] (a) The 
  8.34  director may locate video lottery machines only in 
  8.35  establishments that: 
  8.36     (1) are located within a county designated by the director 
  9.1   as pilot project counties under paragraph (b); 
  9.2      (2) have a contract with director under section 349A.06; 
  9.3   and 
  9.4      (3) are authorized to sell alcoholic beverages at on-sale 
  9.5   under chapter 340A. 
  9.6      Where the establishment holds a retail alcoholic beverage 
  9.7   license a video lottery machine may be located only on the 
  9.8   licensed premises.  The director may not place more than ten 
  9.9   video lottery machines in any establishment. 
  9.10     (b) The director may locate a video lottery machine under 
  9.11  this section only in an establishment that is within a county 
  9.12  that has been designated by the director as a video lottery 
  9.13  pilot project county.  The director shall designate up to two 
  9.14  counties in the seven-county metropolitan area and up to two 
  9.15  counties in the remainder of the state as pilot project counties.
  9.16  The director shall designate pilot project counties only from 
  9.17  those counties that have submitted a request for such 
  9.18  designation in the form of a resolution from the county board.  
  9.19  If more than two counties in the metropolitan area or more than 
  9.20  two counties in the remainder of the state make such a request, 
  9.21  the director shall designate the counties based on:  (1) 
  9.22  geographic and demographic balance, and (2) number of potential 
  9.23  locations and potential sales volumes in each county. 
  9.24     Subd. 5.  [INSPECTION.] The director or any employee of the 
  9.25  director may inspect a video lottery machine without notice at 
  9.26  any time during the hours when alcoholic beverages may legally 
  9.27  be sold at on-sale to ensure compliance with this chapter and 
  9.28  rules of the director. 
  9.29     Sec. 16.  Minnesota Statutes 1998, section 349A.10, 
  9.30  subdivision 2, is amended to read: 
  9.31     Subd. 2.  [DEPOSIT IN PRIZE FUND.] (a) The director shall 
  9.32  establish a lottery prize fund outside the state treasury.  The 
  9.33  fund consists of all money deposited in it under this 
  9.34  subdivision and all interest earned thereon.  
  9.35     (b) The director shall deposit in the lottery prize fund, 
  9.36  from gross receipts from the sale of lottery tickets, an amount 
 10.1   sufficient to pay lottery prizes from the lottery prize fund 
 10.2   according.  Except for prize payments for video lottery 
 10.3   machines, lottery prize payments are subject to the following 
 10.4   provisions: 
 10.5      (1) for games which require on-line terminal connections, 
 10.6   the prizes paid in any fiscal year must be at least 45 percent 
 10.7   of gross receipts from those games in that fiscal year; 
 10.8      (2) for games which do not require on-line terminal 
 10.9   connections, the prizes paid in any fiscal year must be at least 
 10.10  the following percentages of gross receipts from those games:  
 10.11     (i) 50 percent through fiscal year 1991; 
 10.12     (ii) 55 percent from July 1, 1991, to June 30, 1992; and 
 10.13     (iii) 60 percent thereafter.  
 10.14     Sec. 17.  Minnesota Statutes 1998, section 349A.10, 
 10.15  subdivision 3, is amended to read: 
 10.16     Subd. 3.  [LOTTERY OPERATIONS.] (a) The director shall 
 10.17  establish a lottery operations account in the lottery fund.  The 
 10.18  director shall pay all costs of operating the lottery, including 
 10.19  payroll costs or amounts transferred to the state treasury for 
 10.20  payroll costs, but not including lottery prizes, from the 
 10.21  lottery operating account.  The director shall credit to the 
 10.22  lottery operations account amounts sufficient to pay the 
 10.23  operating costs of the lottery. 
 10.24     (b) Except as provided in paragraph (e), the director may 
 10.25  not credit in any fiscal year thereafter amounts to the lottery 
 10.26  operations account which when totaled exceed 15 percent of gross 
 10.27  revenue, other than gross revenue from video lottery machines, 
 10.28  to the lottery fund in that fiscal year.  In computing total 
 10.29  amounts credited to the lottery operations account under this 
 10.30  paragraph the director shall disregard amounts transferred to or 
 10.31  retained by lottery retailers as sales commissions or other 
 10.32  compensation. 
 10.33     (c) The director of the lottery may not expend after July 
 10.34  1, 1991, more than 2-3/4 percent of gross revenues in a fiscal 
 10.35  year, other than gross revenue from video lottery machines, for 
 10.36  contracts for the preparation, publication, and placement of 
 11.1   advertising. 
 11.2      (d) Except as the director determines, the lottery is not 
 11.3   subject to chapter 16A relating to budgeting, payroll, and the 
 11.4   purchase of goods and services. 
 11.5      (e) In addition to the amounts credited to the lottery 
 11.6   operations account under paragraph (b), the director is 
 11.7   authorized, if necessary, to meet the current obligations of the 
 11.8   lottery and to credit up to 25 percent of an amount equal to the 
 11.9   average annual amount which was authorized to be credited to the 
 11.10  lottery operations account for the previous three fiscal years 
 11.11  but was not needed to meet the obligations of the lottery. 
 11.12     Sec. 18.  Minnesota Statutes 1998, section 349A.10, 
 11.13  subdivision 4, is amended to read: 
 11.14     Subd. 4.  [DEPOSIT OF RECEIPTS.] (a) The director may 
 11.15  require lottery retailers to: 
 11.16     (1) deposit in a separate account to the credit of the 
 11.17  lottery fund, in banks designated by the director, all money 
 11.18  received by the lottery retailer from the sale of lottery 
 11.19  tickets, and all money received from the operation of video 
 11.20  lottery machines, less money retained as the lottery retailer's 
 11.21  commission and for payment of prizes; 
 11.22     (2) file with the director reports of the lottery 
 11.23  retailer's receipts and transactions in ticket sales and video 
 11.24  lottery machine plays and prizes in a form that the director 
 11.25  prescribes; and 
 11.26     (3) allow money deposited by the lottery retailer from the 
 11.27  sale of lottery tickets and video lottery machine operation to 
 11.28  be transferred to the lottery through electronic fund transfer. 
 11.29     (b) The director may make arrangements for any person, 
 11.30  including a financial institution, to perform functions, 
 11.31  activities, or services in connection with the receipt and 
 11.32  distribution of lottery revenues. 
 11.33     (c) A lottery retailer who fails to pay any money due to 
 11.34  the director within the time prescribed by the director shall 
 11.35  pay interest on the amount owed at the rate determined by rule. 
 11.36     Sec. 19.  Minnesota Statutes 1998, section 349A.10, 
 12.1   subdivision 5, is amended to read: 
 12.2      Subd. 5.  [DEPOSIT OF NET PROCEEDS.] (a) Within 30 days 
 12.3   after the end of each month, the director shall deposit in the 
 12.4   state treasury the net proceeds of the lottery, which is the 
 12.5   balance in the lottery fund after transfers to the lottery prize 
 12.6   fund and credits to the lottery operations account. 
 12.7      (b) Of the net proceeds other than the net proceeds from 
 12.8   video lottery machines, 40 percent must be credited to the 
 12.9   Minnesota environment and natural resources trust fund, and the 
 12.10  remainder must be credited to the special revenue fund created 
 12.11  in section 16A.67, subdivision 3.  Money credited to the special 
 12.12  revenue fund must be transferred to the debt service fund 
 12.13  established in section 16A.67, subdivision 4, at the times and 
 12.14  in the amounts determined by the commissioner of finance to be 
 12.15  necessary to provide for the payment and security of bonds 
 12.16  issued pursuant to section 16A.67.  On or before the tenth day 
 12.17  of each month, any money in the special revenue fund not 
 12.18  required to be transferred to the debt service fund must be 
 12.19  transferred to the general fund. 
 12.20     (c) Of the net proceeds from the operation of video lottery 
 12.21  machines, 40 percent must be credited to the Minnesota 
 12.22  environment and natural resources trust fund, and the remainder 
 12.23  must be credited to the permanent school fund. 
 12.24     Sec. 20.  Minnesota Statutes 1998, section 349A.11, 
 12.25  subdivision 1, is amended to read: 
 12.26     Subdivision 1.  [LOTTERY TICKET; RETAILER.] The director, 
 12.27  an employee of the lottery, a member of the immediate family of 
 12.28  the director or employee residing in the same household may not: 
 12.29     (1) purchase a lottery ticket or play a video lottery 
 12.30  machine; or 
 12.31     (2) have any personal pecuniary interest in any vendor 
 12.32  holding a lottery procurement contract, or in any lottery 
 12.33  retailer; or 
 12.34     (3) receive any gift, gratuity, or other thing of value, 
 12.35  excluding food or beverage, from any lottery vendor or lottery 
 12.36  retailer, or person applying to be a retailer or vendor, in 
 13.1   excess of $100 in any calendar year.  
 13.2      Sec. 21.  Minnesota Statutes 1998, section 349A.12, 
 13.3   subdivision 1, is amended to read: 
 13.4      Subdivision 1.  [PURCHASE OR OPERATION BY MINORS UNDERAGE 
 13.5   PERSONS.] A person under the age of 18 years may not buy or 
 13.6   redeem for a prize a ticket in the state lottery.  A person 
 13.7   under the age of 21 years may not play a game on or redeem a 
 13.8   prize won at a video lottery machine installed by the director. 
 13.9      Sec. 22.  Minnesota Statutes 1998, section 349A.12, 
 13.10  subdivision 2, is amended to read: 
 13.11     Subd. 2.  [SALE TO MINORS.] A lottery retailer may not sell 
 13.12  and a lottery retailer or other person may not furnish or redeem 
 13.13  for a prize a ticket in the state lottery to any person under 
 13.14  the age of 18 years.  A lottery retailer may not knowingly allow 
 13.15  a person under the age of 21 years to play a game on or redeem a 
 13.16  prize won at a video lottery machine.  It is an affirmative 
 13.17  defense to a charge under this subdivision for the lottery 
 13.18  retailer or other person to prove by a preponderance of the 
 13.19  evidence that the lottery retailer or other person reasonably 
 13.20  and in good faith relied upon representation of proof of age 
 13.21  described in section 340A.503, subdivision 6, in making the sale 
 13.22  or, furnishing or redeeming the ticket, or allowing play on a 
 13.23  video lottery machine or redeeming a prize won thereon. 
 13.24     Sec. 23.  Minnesota Statutes 1998, section 349A.12, is 
 13.25  amended by adding a subdivision to read: 
 13.26     Subd. 4a.  [TAMPERING WITH VIDEO LOTTERY MACHINES.] No 
 13.27  person may gain access to or tamper with, or attempt to gain 
 13.28  access to or tamper with, a video lottery machine without the 
 13.29  express authorization of the director. 
 13.30     Sec. 24.  Minnesota Statutes 1998, section 349A.12, 
 13.31  subdivision 6, is amended to read: 
 13.32     Subd. 6.  [VIOLATIONS.] A violation of subdivision 1 or 2 
 13.33  or a rule adopted by the director is a misdemeanor.  A violation 
 13.34  of subdivision subdivisions 3 or, 4, or 4a is a gross 
 13.35  misdemeanor. 
 13.36     Sec. 25.  Minnesota Statutes 1998, section 349A.13, is 
 14.1   amended to read: 
 14.2      349A.13 [RESTRICTIONS.] 
 14.3      Nothing in this chapter: 
 14.4      (1) authorizes the director to conduct a lottery game or 
 14.5   contest the winner or winners of which are determined by the 
 14.6   result of a sporting event other than a horse race conducted 
 14.7   under chapter 240; or 
 14.8      (2) authorizes the director to install or operate a lottery 
 14.9   device operated by coin or currency which when operated 
 14.10  determines the winner of a game; and 
 14.11     (3) authorizes the director to sell pull-tabs as defined 
 14.12  under section 349.12, subdivision 32. 
 14.13     Sec. 26.  Minnesota Statutes 1998, section 609.75, 
 14.14  subdivision 4, is amended to read: 
 14.15     Subd. 4.  [GAMBLING DEVICE.] A gambling device is a 
 14.16  contrivance which for a consideration affords the player an 
 14.17  opportunity to obtain something of value, other than free plays, 
 14.18  automatically from the machine or otherwise, the award of which 
 14.19  is determined principally by chance.  "Gambling device" also 
 14.20  includes a video game of chance, as defined in subdivision 8. 
 14.21  "Gambling device" does not include a video lottery machine 
 14.22  installed by the director of the state lottery under chapter 
 14.23  349A. 
 14.24     Sec. 27.  [REPORT.] 
 14.25     The director of the state lottery shall report to the 
 14.26  governor and legislature not later than March 1, 2002, on the 
 14.27  results of the video lottery pilot project.  The report must 
 14.28  include: 
 14.29     (1) a summary of financial transactions with respect to 
 14.30  video lottery machines, including gross revenues, expenses, 
 14.31  commissions, and allocation of net proceeds; 
 14.32     (2) any adverse effects experienced in the counties 
 14.33  participating in the pilot project attributable to video lottery 
 14.34  machines; and 
 14.35     (3) the effect of video lottery machines on charitable 
 14.36  gambling, casino gambling, and other lottery games. 
 15.1      Sec. 28.  [EFFECTIVE DATE.] 
 15.2      Sections 1 to 26 are effective July 1, 2000, and are 
 15.3   repealed June 30, 2002.