1.1                          A bill for an act 
  1.2             relating to gambling; requiring the state lottery to 
  1.3             authorize and regulate the operation of video lottery 
  1.4             terminals and pull-tab dispensing devices at a 
  1.5             licensed racetrack with horse racing on which 
  1.6             pari-mutuel betting is conducted; providing penalties; 
  1.7             proposing coding for new law in Minnesota Statutes, 
  1.8             chapter 349A. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  [349A.16] [DEFINITIONS.] 
  1.11     Subdivision 1.  [APPLICATION.] The definitions in this 
  1.12  subdivision apply to sections 349A.16 to 349A.26. 
  1.13     Subd. 2.  [CREDIT RECEIPT.] "Credit receipt" means a 
  1.14  receipt generated by a video lottery terminal that provides 
  1.15  evidence of cash payment due a player from play on a video 
  1.16  lottery terminal. 
  1.17     Subd. 3.  [DIRECTOR.] "Director" is the director of the 
  1.18  state lottery. 
  1.19     Subd. 4.  [LOTTERY.] "Lottery" is the state lottery 
  1.20  authorized in this chapter. 
  1.21     Subd. 5.  [VIDEO LOTTERY LICENSEE.] "Video lottery licensee"
  1.22  means the holder of a class A license under chapter 240. 
  1.23     Subd. 6.  [NET TERMINAL INCOME.] "Net terminal income" 
  1.24  means the sum of all money spent for video lottery terminal 
  1.25  plays less the amount paid out to winning players. 
  1.26     Subd. 7.  [VIDEO LOTTERY GAME.] "Video lottery game" means 
  1.27  electronically simulated games authorized by the director that 
  2.1   are displayed and played on a video lottery terminal for 
  2.2   consideration and with prizes awarded for designated results. 
  2.3      Subd. 8.  [VIDEO LOTTERY TERMINAL.] "Video lottery terminal"
  2.4   means an electronic machine that, upon the insertion of a coin, 
  2.5   token, or currency, is available to play or simulate the play of 
  2.6   a game utilizing a video display and microprocessors in which 
  2.7   the player may receive free plays or credits that can be 
  2.8   redeemed for cash. 
  2.9      Subd. 9.  [VIDEO LOTTERY TERMINAL PLAY.] "Video lottery 
  2.10  terminal play" means an electronic record that proves 
  2.11  participation in a video lottery game. 
  2.12     Sec. 2.  [349A.17] [VENDOR CONTRACTS FOR VIDEO LOTTERY 
  2.13  TERMINALS.] 
  2.14     The director may enter into contracts for the procurement 
  2.15  of video lottery terminals, or any other contract necessary for 
  2.16  the maintenance or monitoring of video lottery terminals.  In 
  2.17  entering into a contract under this section the director must 
  2.18  comply with the requirements of section 349A.07. 
  2.19     Sec. 3.  [349A.18] [VIDEO LOTTERY LICENSEE.] 
  2.20     Subdivision 1.  [LICENSES.] The director shall license the 
  2.21  video lottery licensee to operate video lottery terminals. 
  2.22     Subd. 2.  [LAWFUL GAMBLING.] The video lottery licensee 
  2.23  shall contract with an organization licensed to conduct lawful 
  2.24  gambling under chapter 349 to place up to 25 pull-tab dispensing 
  2.25  devices at the racetrack for which the class A license under 
  2.26  chapter 240 was issued. 
  2.27     Subd. 3.  [BOND.] The director shall require the video 
  2.28  lottery licensee to post a bond, securities, or an irrevocable 
  2.29  letter of credit, in an amount the director deems necessary, to 
  2.30  protect the interests of the state.  The bond, securities, or 
  2.31  letter of credit must be of a form prescribed under section 
  2.32  349A.06, subdivision 3. 
  2.33     Subd. 4.  [RESTRICTIONS.] (a) The video lottery licensee 
  2.34  may have video lottery terminals placed only at the racetrack 
  2.35  for which the class A license under chapter 240 was issued.  
  2.36     (b) The video lottery licensee may have up to 300 video 
  3.1   lottery terminals at its facility as determined by the director. 
  3.2      (c) The video lottery licensee shall keep a complete set of 
  3.3   books of account, correspondence, and all other records 
  3.4   necessary to show fully the video lottery licensee's lottery 
  3.5   transactions, and make them available for inspection by 
  3.6   employees of the lottery at all times during business hours.  
  3.7   The director may require the video lottery licensee to furnish 
  3.8   information the director deems necessary to carry out the 
  3.9   purposes of this act and may require an audit to be made of the 
  3.10  books of account and records.  The director may select an 
  3.11  auditor to perform the audit and may require the video lottery 
  3.12  licensee to pay the cost of the audit.  The auditor has the same 
  3.13  right of access to the books of account, correspondence, and 
  3.14  other records as is given to employees of the lottery. 
  3.15     (d) The license issued under this section may not be 
  3.16  transferred or assigned. 
  3.17     (e) The video lottery licensee shall prominently post in 
  3.18  the area where video lottery terminals are located, in a manner 
  3.19  provided by the commissioner of human services, the toll-free 
  3.20  telephone number established by the commissioner of human 
  3.21  services in connection with the compulsive gambling program 
  3.22  established under section 245.98. 
  3.23     (f) The video lottery licensee shall prominently display 
  3.24  the license issued by the director at its facility. 
  3.25     (g) The video lottery licensee may not make any reference 
  3.26  to its facility being a "casino" nor use the word "casino" in 
  3.27  its name. 
  3.28     (h) The director, or any employee of the lottery, may 
  3.29  inspect any video lottery terminal at any time during normal 
  3.30  business hours, without notice, to ensure compliance with this 
  3.31  act. 
  3.32     Subd. 5.  [LOCAL LICENSES.] No political subdivision may 
  3.33  require a local license to operate as a video lottery licensee, 
  3.34  restrict or regulate the placement of a video lottery terminal, 
  3.35  or impose a tax or fee on the business of operating as a video 
  3.36  lottery licensee. 
  4.1      Subd. 6.  [PROCEEDS OF SALES.] All proceeds from the sale 
  4.2   of video lottery terminal plays received by the video lottery 
  4.3   licensee constitute a trust fund until paid to the director.  
  4.4   The video lottery licensee is personally liable for all proceeds.
  4.5      Subd. 7.  [REVOCATION, SUSPENSION, OR REFUSAL TO RENEW 
  4.6   LICENSE.] The director may revoke, suspend, or refuse to renew a 
  4.7   license issued under this section if the video lottery licensee 
  4.8   violates any provision of sections 349A.16 to 349A.26 or for any 
  4.9   reason specified under section 349A.06, subdivision 11.  The 
  4.10  director may temporarily suspend a license under this section 
  4.11  under the procedures in section 349A.06, subdivision 11, 
  4.12  paragraph (e). 
  4.13     Sec. 4.  [349A.19] [VIDEO LOTTERY TERMINALS.] 
  4.14     Subdivision 1.  [SPECIFICATIONS.] Each video lottery 
  4.15  terminal must: 
  4.16     (1) maintain on nonresettable meters a permanent record, 
  4.17  capable of being printed out, of all transactions by the 
  4.18  terminal and all entries into the terminal; and 
  4.19     (2) be capable of being linked electronically to a central 
  4.20  communication system to provide auditing program information as 
  4.21  required by the director. 
  4.22     Subd. 2.  [LIMIT ON AMOUNT PLAYED.] A video lottery 
  4.23  terminal may not allow less than 25 cents or more than $2 to be 
  4.24  played on a single game. 
  4.25     Subd. 3.  [MAXIMUM PRIZE.] The maximum prize on any single 
  4.26  game played on a video lottery terminal may not exceed $1,000. 
  4.27     Subd. 4.  [PAYOUT PERCENTAGE.] The overall payout 
  4.28  percentage for a game on a video lottery terminal must be at 
  4.29  least 80 percent and not more than 95 percent. 
  4.30     Subd. 5.  [EXAMINATION OF TERMINALS.] The director shall 
  4.31  examine prototypes of video lottery terminals to be used under 
  4.32  this act.  The director shall require that the manufacturer of 
  4.33  the terminal pay the cost of the examination.  The director may 
  4.34  contract for the examination of video lottery terminals. 
  4.35     Subd. 6.  [TESTING OF TERMINALS.] The director may require 
  4.36  working models of a video lottery terminal transported to the 
  5.1   location the director designates for testing, examination, and 
  5.2   analysis.  The manufacturer shall pay all costs of any testing, 
  5.3   examination, analysis, and transportation of the terminal model. 
  5.4      Subd. 7.  [DEACTIVATION OF TERMINAL.] The director may 
  5.5   deactivate a video lottery terminal without notice if the video 
  5.6   lottery licensee has violated any provision of sections 349A.16 
  5.7   to 349A.26 or provision of its contract with the director. 
  5.8      Subd. 8.  [ODDS.] The approximate odds of winning a prize 
  5.9   from a video lottery game must be displayed on the face or 
  5.10  screen of the video lottery terminal. 
  5.11     Sec. 5.  [349A.20] [VIDEO LOTTERY PRIZES.] 
  5.12     Subdivision 1.  [AGREEMENT BY PLAYERS.] A person who plays 
  5.13  a video lottery terminal agrees to be bound by the rules and 
  5.14  game procedures applicable to that particular video lottery game.
  5.15  The player acknowledges that the determination of whether the 
  5.16  credit receipt is valid is subject to the rules and game 
  5.17  procedures adopted by the director, claims procedures 
  5.18  established by the director for that game, and any confidential 
  5.19  or public validation tests established by the director for that 
  5.20  game. 
  5.21     Subd. 2.  [PRIZES CLAIMED BY PERSONS UNDER 21.] A person 
  5.22  under 21 years of age may not claim a prize from the operation 
  5.23  of a video lottery terminal. 
  5.24     Subd. 3.  [PAYMENT; UNCLAIMED PRIZES.] (a) A credit receipt 
  5.25  must be presented for payment before the close of business on 
  5.26  the date the credit receipt was printed.  If a valid claim is 
  5.27  not made for a prize by the end of this period, the unclaimed 
  5.28  prize must be paid by the video lottery licensee to the 
  5.29  lottery.  A prize won by a person who is ineligible to be 
  5.30  awarded a prize under sections 349A.16 to 349A.26 must be 
  5.31  treated as an unclaimed prize under this subdivision. 
  5.32     (b) Prizes claimed under sections 349A.16 to 349A.26 from a 
  5.33  video lottery terminal are not subject to the requirements of 
  5.34  section 349A.08, subdivision 8. 
  5.35     Sec. 6.  [349A.21] [VIDEO LOTTERY NET TERMINAL INCOME.] 
  5.36     Subdivision 1.  [VIDEO LOTTERY LICENSEE.] The video lottery 
  6.1   licensee shall retain 40 percent of net terminal income to be 
  6.2   distributed as follows: 
  6.3      (1) 20 percent of net terminal income to be set aside and 
  6.4   used for purses for live races conducted by the video lottery 
  6.5   licensee at its facility; and 
  6.6      (2) 20 percent to the video lottery licensee. 
  6.7      Subd. 2.  [LOTTERY OPERATIONS.] The director may not credit 
  6.8   in any fiscal year more than 20 percent of net terminal income 
  6.9   to the lottery operations account established under section 
  6.10  349A.10, subdivision 3, for the operation of the video lottery 
  6.11  terminal system. 
  6.12     Subd. 3.  [DEPOSIT OF RECEIPTS.] The director may require 
  6.13  the video lottery licensee to deposit in a separate account to 
  6.14  the credit of the lottery, in banks designated by the director, 
  6.15  net terminal income, less money retained by the video lottery 
  6.16  licensee as set forth in subdivision 1, and allow money 
  6.17  deposited to be transferred to the lottery through electronic 
  6.18  fund transfer.  
  6.19     Subd. 4.  [PENALTY; INTEREST.] The video lottery licensee 
  6.20  shall pay interest at the rate established for purposes of 
  6.21  section 349A.10, subdivision 4, paragraph (c), on any amount 
  6.22  owed to the director and not paid within the time prescribed by 
  6.23  the director. 
  6.24     Subd. 5.  [DEPOSIT OF NET PROCEEDS.] Within 30 days after 
  6.25  the end of each month, the director shall deposit in the state 
  6.26  treasury the net terminal income, less amounts paid to the video 
  6.27  lottery licensee and amounts credited to the lottery operations 
  6.28  account. 
  6.29     Sec. 7.  [349A.22] [CONFLICT OF INTEREST RELATING TO VIDEO 
  6.30  LOTTERY.] 
  6.31     The director or an employee of the lottery, or a member of 
  6.32  the immediate family of the director or employee residing in the 
  6.33  same household may not play a game on a video lottery terminal 
  6.34  nor have any personal pecuniary interest in any vendor holding a 
  6.35  contract with the lottery for purchase of video lottery 
  6.36  terminals, or in the video lottery licensee. 
  7.1      Sec. 8.  [349A.23] [SALES TAX EXEMPTION.] 
  7.2      Sales of plays on a video lottery terminal are exempt from 
  7.3   the sales tax imposed by section 297A.02 and the in-lieu tax 
  7.4   imposed by section 297A.259. 
  7.5      Sec. 9.  [349A.24] [PROHIBITIONS.] 
  7.6      Subdivision 1.  [PURCHASE BY MINORS.] A person under the 
  7.7   age of 21 years may not play a game on a video lottery terminal. 
  7.8      Subd. 2.  [SALE TO MINORS.] A video lottery licensee may 
  7.9   not allow a person under the age of 21 years to play a game on a 
  7.10  video lottery terminal. 
  7.11     Sec. 10.  [349A.25] [CRIMINAL HISTORY.] 
  7.12     The director has access to all criminal history data 
  7.13  compiled by the director of gambling enforcement on any person 
  7.14  under contract with the lottery to provide goods or services 
  7.15  relating to video lottery terminals. 
  7.16     Sec. 11.  [349A.26] [GAMBLING DEVICE; VIDEO LOTTERY 
  7.17  TERMINALS.] 
  7.18     Subdivision 1.  [VIDEO LOTTERY TERMINAL.] (a) 
  7.19  Notwithstanding section 349A.13, clause (2), sections 349A.16 to 
  7.20  349A.25 authorize the director to install or operate a video 
  7.21  lottery terminal operated by coin or currency which when 
  7.22  operated determines the winner of a game. 
  7.23     (b)  Sections 340A.410, 609.755, and 609.76 do not prohibit 
  7.24  the manufacture, sale, placement, operation, or possession of a 
  7.25  video lottery terminal under sections 349A.16 to 349A.25. 
  7.26     Subd. 2.  [GAMBLING DEVICE.] Notwithstanding section 
  7.27  609.75, subdivision 4, a gambling device does not include a 
  7.28  video lottery terminal operated by the lottery under sections 
  7.29  349A.16 to 349A.25. 
  7.30     Sec. 12.  [EFFECTIVE DATE.] 
  7.31     This act is effective July 1, 1996.