1.1A bill for an act1.2relating to gambling; establishing video lottery terminals; imposing a tax on 1.3and providing for video lottery revenue; modifying certain lawful gambling 1.4taxes; modifying conduct of electronic bingo; authorizing gambling control 1.5board to establish video pull-tab games;amending Minnesota Statutes 2008, 1.6sections 297E.02, subdivision 1; 299L.02, subdivision 1; 299L.07, subdivisions 1.72, 2a; 340A.410, subdivision 5; 349.12, subdivisions 5, 25b, 25c, 25d, by 1.8adding subdivisions; 349.151, subdivision 4c, by adding a subdivision; 349.16, 1.9subdivision 7; 349.1635, subdivision 1; 349.17, subdivision 8; 349.211, 1.10subdivision 1a; 349A.01, subdivisions 10, 11, 12, by adding subdivisions; 1.11349A.04; 349A.06, subdivisions 1, 5, 8, 10, by adding subdivisions; 349A.08, 1.12subdivisions 1, 5, 8; 349A.09, subdivision 1; 349A.10, subdivisions 2, 3, 4, 6; 1.13349A.11, subdivision 1; 349A.12, subdivisions 1, 2; 349A.13; 541.20; 541.21; 1.14609.651, subdivision 1; 609.75, subdivisions 3, 4; 609.761, subdivision 2; 1.15Minnesota Statutes 2009 Supplement, sections 297A.94; 349.12, subdivision 1.1612a; 349.15, subdivision 1; 349.17, subdivisions 6, 7; 349.18, subdivision 1; 1.17proposing coding for new law in Minnesota Statutes, chapters 297A; 349; 349A; 1.18repealing Minnesota Statutes 2008, sections 297E.01, subdivision 7; 297E.02, 1.19subdivisions 4, 6, 7.1.20BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:1.21ARTICLE 11.22VIDEO LOTTERY TERMINALS1.23    Section 1. [297A.652] LOTTERY GAMING MACHINES; IN-LIEU TAX.1.24    Net terminal income from the operation of video lottery terminals authorized under 1.25section 349A.071 is exempt from the tax imposed under section 297A.62. The State 1.26Lottery must on or before the 20th day of each month transmit to the commissioner an 1.27amount equal to the net terminal income from the operation of video lottery terminals 1.28as defined in section 349A.01, for the previous month multiplied by 28 percent. The 2.1commissioner shall deposit the money transmitted under this section in the state treasury 2.2to be credited as provided in section 297A.94.2.3    Sec. 2. Minnesota Statutes 2009 Supplement, section 297A.94, is amended to read:2.4297A.94 DEPOSIT OF REVENUES.2.5(a) Except as provided in this section, the commissioner shall deposit the revenues, 2.6including interest and penalties, derived from the taxes imposed by this chapter in the state 2.7treasury and credit them to the general fund.2.8(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic 2.9account in the special revenue fund if:2.10(1) the taxes are derived from sales and use of property and services purchased for 2.11the construction and operation of an agricultural resource project; and2.12(2) the purchase was made on or after the date on which a conditional commitment 2.13was made for a loan guaranty for the project under section 
         41A.04, subdivision 3.2.14The commissioner of management and budget shall certify to the commissioner the date 2.15on which the project received the conditional commitment. The amount deposited in 2.16the loan guaranty account must be reduced by any refunds and by the costs incurred by 2.17the Department of Revenue to administer and enforce the assessment and collection of 2.18the taxes.2.19(c) The commissioner shall deposit the revenues, including interest and penalties, 2.20derived from the taxes imposed on sales and purchases included in section 
         297A.61, 2.21subdivision 3
         , paragraph (g), clauses (1) and (4), in the state treasury, and credit them 2.22as follows:2.23(1) first to the general obligation special tax bond debt service account in each fiscal 2.24year the amount required by section 
         16A.661, subdivision 3, paragraph (b); and2.25(2) after the requirements of clause (1) have been met, the balance to the general 2.26fund.2.27(d) The commissioner shall deposit the revenues, including interest and penalties, 2.28collected under section 
         297A.64, subdivision 5, in the state treasury and credit them to the 2.29general fund. By July 15 of each year the commissioner shall transfer to the highway user 2.30tax distribution fund an amount equal to the excess fees collected under section 
         297A.64, 2.31subdivision 5
         , for the previous calendar year.2.32(e) For fiscal year 2001, 97 percent; for fiscal years 2002 and 2003, 87 percent; and 2.33for fiscal year 2004 and thereafter, 
         72.43 percent of the revenues, including interest and 2.34penalties, transmitted to the commissioner under section 
         297A.65, must be deposited by 2.35the commissioner in the state treasury as follows:3.1(1) 50 percent of the receipts must be deposited in the heritage enhancement account 3.2in the game and fish fund, and may be spent only on activities that improve, enhance, or 3.3protect fish and wildlife resources, including conservation, restoration, and enhancement 3.4of land, water, and other natural resources of the state;3.5(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and 3.6may be spent only for state parks and trails;3.7(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and 3.8may be spent only on metropolitan park and trail grants;3.9(4) three percent of the receipts must be deposited in the natural resources fund, and 3.10may be spent only on local trail grants; and3.11(5) two percent of the receipts must be deposited in the natural resources fund, 3.12and may be spent only for the Minnesota Zoological Garden, the Como Park Zoo and 3.13Conservatory, and the Duluth Zoo.3.14(f) Revenues transmitted to the commissioner under section 297A.652 must be 3.15deposited by the commissioner in the state treasury in the general fund.3.16(f) (g) The revenue dedicated under paragraph paragraphs (e) and (f) may not be 3.17used as a substitute for traditional sources of funding for the purposes specified, but the 3.18dedicated revenue shall supplement traditional sources of funding for those purposes. Land 3.19acquired with money deposited in the game and fish fund under paragraph (e) must be open 3.20to public hunting and fishing during the open season, except that in aquatic management 3.21areas or on lands where angling easements have been acquired, fishing may be prohibited 3.22during certain times of the year and hunting may be prohibited. At least 87 percent of the 3.23money deposited in the game and fish fund for improvement, enhancement, or protection 3.24of fish and wildlife resources under paragraph (e) must be allocated for field operations.3.25(g) (h) The revenues deposited under paragraphs (a) to (f) (g) do not include 3.26the revenues, including interest and penalties, generated by the sales tax imposed 3.27under section 
         297A.62, subdivision 1a, which must be deposited as provided under the 3.28Minnesota Constitution, article XI, section 15.3.29    Sec. 3. Minnesota Statutes 2008, section 297E.02, subdivision 1, is amended to read:3.30    Subdivision 1. Imposition. A tax is imposed on all lawful gambling other than 3.31(1) pull-tab deals or games; (2) tipboard deals or games; and (3) items listed in section 3.32297E.01, subdivision 8, clauses (4) and (5), at the rate of 8.5 percent on the gross receipts 3.33as defined in section 297E.01, subdivision 8, less prizes actually paid.  The tax imposed 3.34by this subdivision is in lieu of the tax imposed by section 297A.62 and all local taxes 4.1and license fees except a fee authorized under section 349.16, subdivision 8, or a tax 4.2authorized under subdivision 5.4.3     The tax imposed under this subdivision is payable by the organization or party 4.4conducting, directly or indirectly, the gambling.4.5EFFECTIVE DATE.This section is effective July 1, 2010.4.6    Sec. 4. Minnesota Statutes 2008, section 299L.02, subdivision 1, is amended to read:4.7    Subdivision 1. Lottery.  (a) The director shall when required under chapter 349A or 4.8when requested by the director of the lottery conduct background checks on employees of 4.9the State Lottery, lottery retailers, and bidders of lottery procurement contracts.4.10    (b) The director shall, when so requested by the director of the State Lottery or when 4.11the director believes it to be reasonable and necessary, conduct investigations of lottery 4.12retailers, applicants for lottery retailer contracts, suppliers of goods or services to the State 4.13Lottery, and persons bidding on contracts for goods or services with the State Lottery.4.14    (c) The director shall conduct an annual security audit of the State Lottery, or arrange 4.15for such an audit by an outside agency or person, firm, or corporation.  The director shall 4.16report to the director of the lottery on the results of the audit.4.17    (d) The director shall deposit in a separate account in the state treasury all money 4.18received from the director of the State Lottery for charges for investigations and 4.19background checks relating to the owning and operating of video lottery terminals under 4.20chapter 349A. Money in the account is appropriated to the director for the purpose of 4.21carrying out the director's powers and duties under this subdivision.4.22    Sec. 5. Minnesota Statutes 2008, section 299L.07, subdivision 2, is amended to read:4.23    Subd. 2. Exclusions. Notwithstanding subdivision 1, a gambling device:4.24(1) may be sold by a person who is not licensed under this section, if the person (i) is 4.25not engaged in the trade or business of selling gambling devices, and (ii) does not sell 4.26more than one gambling device in any calendar year;4.27(2) may be sold by the governing body of a federally recognized Indian tribe 4.28described in subdivision 2a, paragraph (b), clause (1), which is not licensed under this 4.29section, if (i) the gambling device was operated by the Indian tribe, (ii) the sale is to 4.30a distributor licensed under this section, and (iii) the licensed distributor notifies the 4.31commissioner of the purchase, in the same manner as is required when the licensed 4.32distributor ships a gambling device into Minnesota;4.33(3) may be possessed by a person not licensed under this section if the person holds 4.34a permit issued under section  
         299L.08; and5.1(4) may be possessed by a state agency, with the written authorization of the director, 5.2for display or evaluation purposes only and not for the conduct of gambling; and5.3(5) may be possessed by the State Lottery as authorized under chapter 349A.5.4    Sec. 6. Minnesota Statutes 2008, section 299L.07, subdivision 2a, is amended to read:5.5    Subd. 2a. Restrictions. (a) A manufacturer licensed under this section may sell, 5.6offer to sell, lease, or rent, in whole or in part, a gambling device only to a distributor 5.7licensed under this section or to the State Lottery as authorized under chapter 349A.5.8(b) A distributor licensed under this section may sell, offer to sell, market, rent, 5.9lease, or otherwise provide, in whole or in part, a gambling device only to:5.10(1) the governing body of a federally recognized Indian tribe that is authorized 5.11to operate the gambling device under a tribal state compact under the Indian Gaming 5.12Regulatory Act, Public Law 100-497, and future amendments to it;5.13(2) a person for use in the person's dwelling for display or amusement purposes in a 5.14manner that does not afford players an opportunity to obtain anything of value;5.15(3) another distributor licensed under this section; or5.16(4) a person in another state who is authorized under the laws of that state to possess 5.17the gambling device; or5.18(5) the State Lottery as authorized under chapter 349A.5.19    Sec. 7. Minnesota Statutes 2008, section 340A.410, subdivision 5, is amended to read:5.20    Subd. 5. Gambling prohibited. (a) Except as otherwise provided in this 5.21subdivision, no retail establishment licensed to sell alcoholic beverages may keep, possess, 5.22or operate, or permit the keeping, possession, or operation on the licensed premises of dice 5.23or any gambling device as defined in section  
         349.30, or permit gambling therein.5.24(b) Gambling equipment may be kept or operated and raffles conducted on licensed 5.25premises and adjoining rooms when the use of the gambling equipment is authorized by 5.26(1) chapter 349, (2) a tribal ordinance in conformity with the Indian Gaming Regulatory 5.27Act, Public Law 100-497, or (3) a tribal-state compact authorized under section  
         3.9221.5.28(c) Lottery tickets may be purchased and sold within the licensed premises as 5.29authorized by the director of the lottery under chapter 349A.5.30(d) Dice may be kept and used on licensed premises and adjoining rooms as 5.31authorized by section  
         609.761, subdivision 4.5.32(e) Gambling devices may be operated and gambling permitted as authorized by 5.33chapter 349A.6.1    Sec. 8. Minnesota Statutes 2009 Supplement, section 349.15, subdivision 1, is 6.2amended to read:6.3    Subdivision 1. Expenditure restrictions, requirements, and civil penalties.6.4    (a) Gross profits from lawful gambling may be expended only for lawful purposes or 6.5allowable expenses as authorized by the membership of the conducting organization at a 6.6monthly meeting of the organization's membership.6.7(b) Provided that Except as provided in paragraph (e), no more than 70 percent of 6.8the gross profit from bingo, and no more than 60 percent of the gross profit from other 6.9forms of lawful gambling, may be expended biennially during the term of the license for 6.10allowable expenses related to lawful gambling, except that for the period of July 1, 2008, 6.11to June 30, 2009, no more than 75 percent of the gross profit from bingo, and no more than 6.1265 percent of the gross profit from other forms of lawful gambling, may be expended for 6.13allowable expenses related to lawful gambling. This provision expires June 30, 2009.6.14(c) For each 12-month period beginning July 1, 2009, a licensed organization will 6.15be evaluated by the board to determine a rating based on the percentage of annual lawful 6.16purpose expenditures when compared to available gross profits for the same period. The 6.17rating will be used to determine the organization's profitability percent and is not a rating 6.18of the organization's lawful gambling operation. An organization will be evaluated 6.19according to the following criteria:6.20(1) an organization that expends 50 percent or more of gross profits on lawful 6.21purposes will receive a five-star rating;6.22(2) an organization that expends 40 percent or more but less than 50 percent of gross 6.23profits on lawful purposes will receive a four-star rating;6.24(3) an organization that expends 30 percent or more but less than 40 percent of gross 6.25profits on lawful purposes will receive a three-star rating;6.26(4) an organization that expends 20 percent or more but less than 30 percent of gross 6.27profits on lawful purposes will receive a two-star rating; and6.28(5) an organization that expends less than 20 percent of gross profits on lawful 6.29purposes will receive a one-star rating.6.30(d) An organization that fails to expend a minimum of 30 percent annually of gross 6.31profits on lawful purposes is automatically on probation effective July 1 for a period of 6.32one year. The organization must increase its rating to a minimum of 30 percent or be 6.33subject to sanctions by the board. If an organization fails to meet the minimum after a 6.34one-year probation, the board may suspend the organization's license or impose a civil 6.35penalty as follows:7.1(1) in determining any suspension or penalty for a violation of this paragraph, the 7.2board must consider any unique factors or extraordinary circumstances that caused the 7.3organization to not meet the minimum rate of profitability. Unique factors or extraordinary 7.4circumstances include, but are not limited to, the purchase of capital assets necessary to 7.5conduct lawful gambling; road or other construction causing impaired access to the lawful 7.6gambling premises; and flood, tornado, or other catastrophe that had a direct impact on the 7.7continuing lawful gambling operation; and7.8(2) notwithstanding section 
         349.151, subdivision 4, paragraph (a), clause (10), the 7.9board may impose a civil penalty under this subdivision up to $10,000.7.10(e) Money received by an organization from net video lottery terminal income under 7.11section 349A.06, subdivision 6a, may be expended only for lawful purposes.7.12    Sec. 9. Minnesota Statutes 2008, section 349A.01, is amended by adding a subdivision 7.13to read:7.14    Subd. 9a.Lottery game."Lottery game" means any game operated by the lottery 7.15where the prize is determined primarily by chance.7.16    Sec. 10. Minnesota Statutes 2008, section 349A.01, subdivision 10, is amended to read:7.17    Subd. 10. Lottery procurement contract. "Lottery procurement contract" means a 7.18contract to provide lottery products, computer hardware and software used to monitor sales 7.19of lottery tickets and sales on a video lottery terminal, and lottery tickets, video lottery 7.20terminals, and maintenance of video lottery terminals. "Lottery procurement contract"7.21does not include a contract to provide an annuity or prize payment agreement or materials, 7.22supplies, equipment, or services common to the ordinary operation of a state agency.7.23    Sec. 11. Minnesota Statutes 2008, section 349A.01, subdivision 11, is amended to read:7.24    Subd. 11. Lottery retailer. "Lottery retailer" means a person with whom the 7.25director has contracted to sell lottery tickets to the public. A lottery retailer includes a 7.26person with whom the director has contracted to place a video lottery terminal within its 7.27premises where video lottery terminal plays are sold.7.28    Sec. 12. Minnesota Statutes 2008, section 349A.01, subdivision 12, is amended to read:7.29    Subd. 12. Lottery ticket or ticket. "Lottery ticket" or "ticket" means any tangible 7.30evidence issued by the lottery to prove participation in a lottery game other than a video 7.31lottery game.8.1    Sec. 13. Minnesota Statutes 2008, section 349A.01, is amended by adding a 8.2subdivision to read:8.3    Subd. 14.Net terminal income."Net terminal income" means the sum of all 8.4money spent for video lottery terminal plays less the value of video lottery credit receipts.8.5    Sec. 14. Minnesota Statutes 2008, section 349A.01, is amended by adding a 8.6subdivision to read:8.7    Subd. 15.Video lottery credit."Video lottery credit" means the basic unit of 8.8play for a video lottery terminal.8.9    Sec. 15. Minnesota Statutes 2008, section 349A.01, is amended by adding a 8.10subdivision to read:8.11    Subd. 16.Video lottery credit receipt."Video lottery credit receipt" means a 8.12receipt generated by a video lottery terminal that provides evidence of cash payment due a 8.13player from play on a video lottery terminal.8.14    Sec. 16. Minnesota Statutes 2008, section 349A.01, is amended by adding a 8.15subdivision to read:8.16    Subd. 17.Video lottery game."Video lottery game" means an electronically 8.17simulated game authorized by the director that is displayed and played on a video lottery 8.18terminal for consideration and with prizes awarded for designated results. Video lottery 8.19game includes video poker games, keno, and video pull-tabs.8.20    Sec. 17. Minnesota Statutes 2008, section 349A.01, is amended by adding a 8.21subdivision to read:8.22    Subd. 18.Video lottery terminal."Video lottery terminal" means any machine, 8.23system, or device which upon payment of consideration permits the play of a video 8.24lottery game.8.25    Sec. 18. Minnesota Statutes 2008, section 349A.01, is amended by adding a 8.26subdivision to read:8.27    Subd. 19.Video lottery terminal play."Video lottery terminal play" means an 8.28electronic record that proves participation in a video lottery game.8.29    Sec. 19. Minnesota Statutes 2008, section 349A.01, is amended by adding a 8.30subdivision to read:9.1    Subd. 20.Win percentage."Win percentage" means the portion of the money 9.2wagered by players on a video lottery terminal that is available for the payment of prizes 9.3to winning players.9.4    Sec. 20. Minnesota Statutes 2008, section 349A.04, is amended to read:9.5349A.04 LOTTERY GAME PROCEDURES.9.6The director may adopt game procedures governing the following elements of the 9.7lottery:9.8(1) lottery games;9.9(2) ticket prices;9.10(3) number and size of prizes;9.11(4) methods of selecting winning tickets; and9.12(5) frequency and method of drawings.;9.13(6) video lottery terminals; and9.14(7) cost of video lottery plays.9.15The adoption of lottery game procedures is not subject to chapter 14.9.16    Sec. 21. Minnesota Statutes 2008, section 349A.06, subdivision 1, is amended to read:9.17    Subdivision 1. Contracts.  The director shall sell tickets and operate video lottery 9.18terminals for the lottery through lottery retailers with whom the director contracts. 9.19Contracts under this section are not subject to the provisions of sections 16C.03, 16C.05, 9.2016C.06, 16C.08, 16C.09, and 16C.10, and are valid for a period of one year.  The director 9.21may permit a retailer to sell tickets and operate video lottery terminals at more than one 9.22business location under a contract entered into under this section.9.23    Sec. 22. Minnesota Statutes 2008, section 349A.06, subdivision 5, is amended to read:9.24    Subd. 5. Restrictions on lottery retailers. (a) A lottery retailer may sell lottery 9.25tickets or have a video lottery terminal placed only on the premises described in the 9.26contract.9.27    (b) A lottery retailer must prominently display a certificate issued by the director 9.28on the premises where lottery tickets will be sold or where video lottery terminals are 9.29operated.9.30    (c) A lottery retailer must keep a complete set of books of account, correspondence, 9.31and all other records necessary to show fully the retailer's lottery transactions, and make 9.32them available for inspection by employees of the lottery at all times during business 9.33hours.  The director may require a lottery retailer to furnish information as the director 10.1deems necessary to carry out the purposes of this chapter, and may require an audit to be 10.2made of the books of account and records.  The director may select an auditor to perform 10.3the audit and may require the retailer to pay the cost of the audit.  The auditor has the same 10.4right of access to the books of account, correspondence, and other records as is given to 10.5employees of the lottery.10.6    (d) A contract issued under this section may not be transferred or assigned.10.7    (e) The director shall require that lottery tickets may be sold by retailers only for 10.8cash.10.9    (f) A lottery retailer must prominently post at the point of sale of lottery tickets10.10and the area where video lottery terminals are located, in a manner approved by the 10.11commissioner of human services, the toll-free telephone number established by the 10.12commissioner of human services in connection with the compulsive gambling program 10.13established under section 245.98.10.14    Sec. 23. Minnesota Statutes 2008, section 349A.06, is amended by adding a 10.15subdivision to read:10.16    Subd. 5a.Restrictions on lottery retailers; video lottery terminals.(a) The 10.17director may only enter into a lottery retailer contract for games operated by a video lottery 10.18terminal with a retailer that has a license to sell alcoholic beverages for consumption on 10.19the premises where sold. This does not include a retailer who has only a temporary on-sale 10.20license or a retailer of 3.2 percent malt liquor whose total gross receipts from the premises 10.21were less than 50 percent attributable to the sale of 3.2 percent malt liquor.10.22    (b) The director may not contract with a retailer for games operated by a video 10.23lottery terminal unless the retailer has an organization licensed under chapter 349 10.24authorized and conducting lawful gambling on the premises.10.25    (c) A lottery retailer authorized to sell games operated by a video lottery terminal 10.26may not cancel or refuse to renew a lease with an organization licensed under chapter 349 10.27authorized and conducting lawful gambling on its premises for three years following 10.28the effective date of this act, unless the organization has failed to comply with its lease 10.29with the retailer.10.30    (d) A lottery retailer may have up to five video lottery terminals on the retailer's 10.31premises, as determined by the director.10.32    (e) A lottery retailer that is authorized to operate a video lottery terminal may not 10.33make reference to the establishment being a "casino," or use the word "casino" in its name 10.34or in any of its advertisements.11.1    (f) The director, or any employee of the director, may inspect any video lottery 11.2terminal at any time during the hours when alcoholic beverages may be sold at on-sale 11.3under section 340A.504, subdivisions 1, 2, and 3, without notice, to ensure compliance 11.4with this chapter and any rules adopted by the director.11.5    Sec. 24. Minnesota Statutes 2008, section 349A.06, is amended by adding a 11.6subdivision to read:11.7    Subd. 6a.Retention by retailers; video lottery terminals.A lottery retailer who 11.8has a contract for placement of video lottery terminals may retain 31 percent of the net 11.9terminal income from the terminals located within its premises as commission. The lottery 11.10retailer receiving commission under this subdivision shall transmit to an organization 11.11licensed under chapter 349, and conducting lawful gambling on the premises of the 11.12retailer, 29 percent of the lottery retailer's commission received under this subdivision. 11.13If more than one organization conducts lawful gambling on the premises, the payment 11.14must be reasonably allocated between the organizations, pro rata based on their respective 11.15gross receipts.11.16    Sec. 25. Minnesota Statutes 2008, section 349A.06, subdivision 8, is amended to read:11.17    Subd. 8. Proceeds of sales. All proceeds from the sale of lottery tickets or proceeds 11.18from the sale of video lottery terminal plays received by a lottery retailer constitute a trust 11.19fund until paid to the director.  The lottery retailer is personally liable for all proceeds.11.20    Sec. 26. Minnesota Statutes 2008, section 349A.06, subdivision 10, is amended to read:11.21    Subd. 10. Local licenses. No political subdivision may require a local license to 11.22operate as a lottery retailer, restrict or regulate the placement of a video lottery terminal,11.23or impose a tax or fee on the business of operating as a lottery retailer.11.24    Sec. 27. [349A.071] VIDEO LOTTERY TERMINALS.11.25    Subdivision 1.Operation.(a) All video lottery terminals must be operated and 11.26controlled by the director.11.27(b) Video lottery terminals must be owned or leased by the director.11.28(c) Video lottery terminals must be maintained by the lottery, or by a vendor that is 11.29under the control and direction of the director.11.30(d) The director must have a central communications system that monitors activities 11.31and provides auditing program information on each video lottery terminal. 12.1(e) The director must approve the general security arrangements associated with and 12.2relating to the operation of the video lottery terminal.12.3(f) Video lottery terminals must maintain on nonresettable meters, a permanent 12.4record, capable of being printed out, of all transactions by the terminal and all entries 12.5into the terminal.12.6(g) The director may implement other controls as are deemed necessary to ensure 12.7and maintain the integrity of video lottery terminals operated under this section.12.8    Subd. 2.Testing and examination of machines.The director shall examine 12.9prototypes of video lottery terminals and require that the manufacturer of the terminal 12.10pay the cost of the examination. The director may contract for the examination of 12.11video lottery terminals. The director may require working models of a video lottery 12.12terminal transported to the locations the director designates for testing, examination, 12.13and analysis. The manufacturer shall pay all costs of any testing, examination, analysis, 12.14and transportation of the terminal model.12.15    Subd. 3.Deactivation of terminal.The director may deactivate a video lottery 12.16terminal without notice if the lottery retailer has violated any provision of this chapter, 12.17rule, or provision of its contract with the director.12.18    Sec. 28. Minnesota Statutes 2008, section 349A.08, subdivision 1, is amended to read:12.19    Subdivision 1. Agreement by players.  A person who buys a lottery ticket or plays a 12.20video lottery game agrees to be bound by the rules and game procedures applicable to the12.21that particular lottery game for which the ticket is purchased.  The player acknowledges 12.22that the determination of whether a ticket or video lottery credit receipt is a valid winning 12.23ticket is subject to under the rules of and game procedures adopted by the director, claims 12.24procedures established by the director for that game, and any confidential or public 12.25validation tests established by the director for that game.12.26    Sec. 29. Minnesota Statutes 2008, section 349A.08, subdivision 5, is amended to read:12.27    Subd. 5. Payment; unclaimed prizes.(a) Except as provided in this subdivision, a 12.28prize in the state lottery must be claimed by the winner within one year of the date of the 12.29drawing at which the prize was awarded or the last day sales were authorized for a game 12.30where a prize was determined in a manner other than by means of a drawing.  If a valid 12.31claim is not made for a prize payable directly by the lottery by the end of this period, the 12.32prize money is considered unclaimed and the winner of the prize shall have no further 12.33claim to the prize.13.1    (b) A video lottery credit receipt from a video lottery terminal must be presented 13.2for payment within 60 days of the date the video lottery credit receipt was printed. If a 13.3valid claim for a video lottery credit receipt is not made by the end of this period, the 13.4video lottery credit receipt is considered unclaimed and the player shall have no further 13.5claim to the amount due from the video lottery credit receipt.13.6    (c) A prize won by a person who purchased the winning ticket or played a video 13.7lottery game in violation of section 349A.12, subdivision 1, or won by a person ineligible 13.8to be awarded a prize under subdivision 7 must be treated as an unclaimed prize under this 13.9section.  The director must transfer all unclaimed prize money at the end of each fiscal 13.10year from the lottery cash flow account to the general fund.13.11    Sec. 30. Minnesota Statutes 2008, section 349A.08, subdivision 8, is amended to read:13.12    Subd. 8. Withholding of delinquent state taxes or other debts. The director 13.13shall report the name, address, and Social Security number of each winner of a lottery 13.14prize of $600 or more, or a video lottery prize of $1,200 or more, to the Department of 13.15Revenue to determine whether the person who has won the prize is delinquent in payment 13.16of state taxes or owes a debt as defined in section 270A.03, subdivision 5.  If the person 13.17is delinquent in payment of state taxes or owes a debt as defined in section 270A.03, 13.18subdivision 5, the director shall withhold the delinquent amount from the person's prize 13.19for remittance to the Department of Revenue for payment of the delinquent taxes or 13.20distribution to a claimant agency in accordance with chapter 270A.  Section 270A.10 13.21applies to the priority of claims.13.22    Sec. 31. Minnesota Statutes 2008, section 349A.09, subdivision 1, is amended to read:13.23    Subdivision 1. Odds; required information.(a) The director shall include on each 13.24brochure, pamphlet, booklet, or other similar material the director publishes to promote 13.25or explain any lottery game, a prominent and clear statement of the approximate odds of 13.26winning each prize offered in that lottery game.13.27    (b) Except for the operation of a video lottery terminal, each lottery retailer must 13.28post prominently at or near the point of ticket sale a notice or notices printed and provided 13.29by the director of the approximate odds of winning each prize in each game for which 13.30the lottery retailer sells tickets.13.31    (c) The approximate odds of winning a prize from a video lottery terminal must be 13.32displayed on the face or screen of the video lottery terminal.13.33    Sec. 32. Minnesota Statutes 2008, section 349A.10, subdivision 2, is amended to read:14.1    Subd. 2. Deposit in Prize fund. (a) The director shall establish a lottery prize 14.2fund outside the state treasury. The fund consists of all money deposited in it under this 14.3subdivision and all interest earned thereon.14.4(b) The director shall deposit in the lottery prize fund, from gross receipts from the 14.5sale of lottery tickets, an amount sufficient to pay lottery prizes from the lottery prize 14.6fund according to the following provisions:14.7(1) for games which require online terminal connections, the prizes paid in any fiscal 14.8year must be at least 45 percent of gross receipts from those games in that fiscal year;14.9(2) for games which do not require online terminal connections, the prizes paid in any 14.10fiscal year must be at least the following percentages of gross receipts from those games:14.11(i) 50 percent through fiscal year 1991;14.12(ii) 55 percent from July 1, 1991, to June 30, 1992; and14.13(iii) 60 percent thereafter of gross receipts from those games in that fiscal year.14.14(c) For lottery games played on a video lottery terminal, the win percentage in any 14.15fiscal year will be the win percentage established by the game procedures adopted for the 14.16game, but shall be at least 80 percent but not more than 95 percent.14.17    Sec. 33. Minnesota Statutes 2008, section 349A.10, subdivision 3, is amended to read:14.18    Subd. 3. Lottery operations. (a) The director shall establish a lottery operations 14.19account in the lottery fund. The director shall pay all costs of operating the lottery, 14.20including payroll costs or amounts transferred to the state treasury for payroll costs, but 14.21not including lottery prizes, from the lottery operating account. The director shall credit to 14.22the lottery operations account amounts sufficient to pay the operating costs of the lottery.14.23(b) Except as provided in paragraph (e), the director may not credit in any fiscal year 14.24thereafter amounts to the lottery operations account which when totaled exceed nine 14.25percent of gross revenue, exclusive of net terminal income, and 12 percent of net terminal 14.26income to the lottery fund in that fiscal year. In computing total amounts credited to 14.27the lottery operations account under this paragraph the director shall disregard amounts 14.28transferred to or retained by lottery retailers as sales commissions or other compensation.14.29(c) The director of the lottery may not expend after July 1, 1991, more than 2-3/4 14.30percent of gross revenues in a fiscal year for contracts for the preparation, publication, and 14.31placement of advertising.14.32(d) Except as the director determines, the lottery is not subject to chapter 16A 14.33relating to budgeting, payroll, and the purchase of goods and services.14.34(e) In addition to the amounts credited to the lottery operations account under 14.35paragraph (b), the director is authorized, if necessary, to meet the current obligations of 15.1the lottery and to credit up to 25 percent of an amount equal to the average annual amount 15.2which was authorized to be credited to the lottery operations account for the previous three 15.3fiscal years but was not needed to meet the obligations of the lottery.15.4    Sec. 34. Minnesota Statutes 2008, section 349A.10, subdivision 4, is amended to read:15.5    Subd. 4. Deposit of receipts. (a) The director may require lottery retailers to:15.6    (1) deposit in a separate account to the credit of the lottery fund, in banks designated 15.7by the director, all money received by the lottery retailer from the sale of lottery tickets15.8and video lottery terminal plays, less money retained as the lottery retailer's commission 15.9and for payment of prizes;15.10    (2) file with the director reports of the lottery retailer's receipts and transactions in 15.11ticket sales and video lottery terminal plays in a form that the director prescribes; and15.12    (3) allow money deposited by the lottery retailer from the sale of lottery tickets and 15.13video lottery terminal plays to be transferred to the lottery through electronic fund transfer.15.14    (b) The director may make arrangements for any person, including a financial 15.15institution, to perform functions, activities, or services in connection with the receipt and 15.16distribution of lottery revenues.15.17    (c) A lottery retailer who fails to pay any money due to the director within the time 15.18prescribed by the director shall pay interest on the amount owed at the rate determined by 15.19rule.15.20    Sec. 35. Minnesota Statutes 2008, section 349A.10, subdivision 6, is amended to read:15.21    Subd. 6. Budget; plans. The director shall prepare and submit a biennial budget 15.22plan to the commissioner of management and budget. The governor shall recommend 15.23the maximum amount available for the lottery in the budget the governor submits to 15.24the legislature under section 
         16A.11. The maximum amount available to the lottery for 15.25operating expenses and capital expenditures shall be determined by law. Operating 15.26expenses shall not include expenses that are a direct function of lottery sales, which 15.27include the cost of lottery prizes, amounts paid to lottery retailers as sales commissions 15.28or other compensation, amounts paid to produce and deliver scratch lottery games, and15.29amounts paid to an outside vendor to operate and maintain an online gaming system, 15.30amounts paid to an outside vendor to operate and maintain a central system for video 15.31lottery terminals, and amounts paid to acquire and maintain video lottery terminals. In 15.32addition, the director shall appear at least once each fiscal year before the senate and house 15.33of representatives committees having jurisdiction over gambling policy to present and 16.1explain the lottery's plans for future games and the related advertising and promotions 16.2and spending plans for the next fiscal year. 16.3    Sec. 36. Minnesota Statutes 2008, section 349A.11, subdivision 1, is amended to read:16.4    Subdivision 1. Lottery ticket; retailer.  The director, an employee of the lottery, 16.5a member of the immediate family of the director or employee residing in the same 16.6household may not:16.7    (1) purchase a lottery ticket or play a game on a video lottery terminal; or16.8    (2) have any personal pecuniary interest in any vendor holding a lottery procurement 16.9contract, or in any lottery retailer; or16.10    (3) receive any gift, gratuity, or other thing of value, excluding food or beverage, 16.11from any lottery vendor or lottery retailer, or person applying to be a retailer or vendor, in 16.12excess of $100 in any calendar year.16.13    Sec. 37. Minnesota Statutes 2008, section 349A.12, subdivision 1, is amended to read:16.14    Subdivision 1. Purchase by minors.  A person under the age of 18 years may not 16.15buy or redeem for a prize a ticket in the state lottery and a person under the age of 21 years 16.16may not play a game or redeem a video lottery credit receipt from a video lottery terminal.16.17    Sec. 38. Minnesota Statutes 2008, section 349A.12, subdivision 2, is amended to read:16.18    Subd. 2. Sale to minors. A lottery retailer may not sell and a lottery retailer or other 16.19person may not furnish or redeem for a prize a ticket in the state lottery to any person 16.20under the age of 18 years, or allow a person under the age of 21 years to play a game or 16.21redeem a video lottery credit receipt from a video lottery terminal.  It is an affirmative 16.22defense to a charge under this subdivision for the lottery retailer or other person to prove 16.23by a preponderance of the evidence that the lottery retailer or other person reasonably and 16.24in good faith relied upon representation of proof of age described in section 340A.503, 16.25subdivision 6, in making the sale or furnishing or redeeming the ticket or allowing the 16.26play of a video lottery game or redeem a video lottery credit receipt from a video lottery 16.27terminal.16.28    Sec. 39. Minnesota Statutes 2008, section 349A.13, is amended to read:16.29349A.13 RESTRICTIONS.16.30    Nothing in this chapter:17.1    (1) authorizes the director to conduct a lottery game or contest the winner or winners 17.2of which are determined by the result of a sporting event other than a horse race conducted 17.3under chapter 240; or17.4    (2) authorizes the director to install or operate a lottery device operated by coin or 17.5currency which when operated determines the winner of a game; and 17.6    (3) (2) authorizes the director to sell pull-tabs as defined under section 349.12, 17.7subdivision 32.17.8    Sec. 40. Minnesota Statutes 2008, section 541.20, is amended to read:17.9541.20 RECOVERY OF MONEY LOST.17.10Every person who, by playing at cards, dice, or other game, or by betting on the 17.11hands or sides of such as are gambling, shall lose to any person so playing or betting 17.12any sum of money or any goods, and pays or delivers the same, or any part thereof, to 17.13the winner, may sue for and recover such money by a civil action, before any court 17.14of competent jurisdiction. For purposes of this section, gambling shall not include 17.15pari-mutuel wagering conducted under a license issued pursuant to chapter 240, purchase 17.16or sale of tickets in the state lottery, purchase of video lottery plays as authorized under 17.17chapter 349A, or gambling authorized under chapters 349 and 349A.17.18    Sec. 41. Minnesota Statutes 2008, section 541.21, is amended to read:17.19541.21 COMMITMENTS FOR GAMBLING DEBT VOID.17.20Every note, bill, bond, mortgage, or other security or conveyance in which the whole 17.21or any part of the consideration shall be for any money or goods won by gambling or 17.22playing at cards, dice, or any other game whatever, or by betting on the sides or hands 17.23of any person gambling, or for reimbursing or repaying any money knowingly lent or 17.24advanced at the time and place of such gambling or betting, or lent and advanced for any 17.25gambling or betting to any persons so gambling or betting, shall be void and of no effect 17.26as between the parties to the same, and as to all persons except such as hold or claim 17.27under them in good faith, without notice of the illegality of the consideration of such 17.28contract or conveyance. The provisions of this section shall not apply to: (1) pari-mutuel 17.29wagering conducted under a license issued pursuant to chapter 240; (2) purchase of tickets 17.30in the state lottery or other wagering authorized under chapter 349A; (3) gaming activities 17.31conducted pursuant to the Indian Gaming Regulatory Act, 25 U.S.C. 2701 et seq.; or (4) 17.32lawful gambling activities permitted under chapter 349.17.33    Sec. 42. Minnesota Statutes 2008, section 609.651, subdivision 1, is amended to read:18.1    Subdivision 1. Felony Fraud. A person is guilty of a felony and may be sentenced 18.2under subdivision 4 if the person does any of the following with intent to defraud the 18.3State Lottery:18.4    (1) alters or counterfeits a state lottery ticket or a video lottery credit receipt from a 18.5State Lottery video lottery terminal;18.6    (2) knowingly presents an altered or counterfeited state lottery ticket or video lottery 18.7credit receipt from a State Lottery video lottery terminal for payment;18.8    (3) knowingly transfers an altered or counterfeited state lottery ticket or video lottery 18.9credit receipt from a State Lottery video lottery terminal to another person; or18.10    (4) tampers with or manipulates the outcome, prize payable, or operation of a State 18.11Lottery video lottery terminal; or18.12    (5) otherwise claims a lottery prize by means of fraud, deceit, or misrepresentation.18.13    Sec. 43. Minnesota Statutes 2008, section 609.75, subdivision 3, is amended to read:18.14    Subd. 3. What are not bets. The following are not bets:18.15(1) a contract to insure, indemnify, guarantee or otherwise compensate another for a 18.16harm or loss sustained, even though the loss depends upon chance;18.17(2) a contract for the purchase or sale at a future date of securities or other 18.18commodities;18.19(3) offers of purses, prizes or premiums to the actual contestants in any bona fide 18.20contest for the determination of skill, speed, strength, endurance, or quality or to the bona 18.21fide owners of animals or other property entered in such a contest;18.22(4) the game of bingo when conducted in compliance with sections 
         349.11 to 
         349.23;18.23(5) a private social bet not part of or incidental to organized, commercialized, or 18.24systematic gambling;18.25(6) the operation of equipment or the conduct of a raffle under sections 
         349.11 to 18.26349.22
         , by an organization licensed by the Gambling Control Board or an organization 18.27exempt from licensing under section 
         349.166;18.28(7) pari-mutuel betting on horse racing when the betting is conducted under chapter 18.29240; and18.30(8) the purchase and sale of state lottery tickets and plays on a video lottery terminal 18.31under chapter 349A.18.32    Sec. 44. Minnesota Statutes 2008, section 609.75, subdivision 4, is amended to read:18.33    Subd. 4.  Gambling device. A gambling device is a contrivance the purpose of which 18.34is that for a consideration a player is afforded an opportunity to obtain something of value, 19.1other than free plays, automatically from the machine or otherwise, the award of which 19.2is determined principally by chance, whether or not the contrivance is actually played. 19.3"Gambling device" also includes a video game of chance, as defined in subdivision 8, but 19.4does not include a video lottery terminal operated by the State Lottery under chapter 349A.19.5    Sec. 45. Minnesota Statutes 2008, section 609.761, subdivision 2, is amended to read:19.6    Subd. 2. State lottery.  Sections 609.755 and 609.76 do not prohibit the operation 19.7of the state lottery or; the sale, possession, or purchase of tickets for the state lottery; or 19.8the manufacture, possession, or operation of a video lottery terminal for the state lottery 19.9under chapter 349A.19.10    Sec. 46. LOTTERY BUDGET; VIDEO LOTTERY TERMINALS.19.11The director of the State Lottery shall submit a budget for the operation of video 19.12lottery terminals as authorized under Minnesota Statutes, section 349A.071, to the 19.13commissioner of finance. Notwithstanding Minnesota Statutes, section 349A.10, 19.14subdivision 6, the director of the State Lottery may expend amounts necessary to operate 19.15video lottery terminals. Amounts expended by the director of the State Lottery for the 19.16conduct of video lottery terminals in fiscal year 2010 are not subject to the maximum 19.17amount set in law for the operation of the lottery.19.18    Sec. 47. REPEALER.19.19Minnesota Statutes 2008, sections 297E.01, subdivision 7; and 297E.02, subdivisions 19.204, 6, and 7, are repealed.19.21EFFECTIVE DATE.This section is effective July 1, 2010.19.22    Sec. 48. EFFECTIVE DATE.19.23    Except as otherwise provided, this article is effective the day following final 19.24enactment.19.25ARTICLE 219.26ELECTRONIC LINKED BINGO19.27    Section 1. Minnesota Statutes 2008, section 349.12, subdivision 5, is amended to read:19.28    Subd. 5. Bingo occasion. "Bingo occasion" means a single gathering or session 19.29at which a series of one or more successive bingo games is played. There is no limit on 19.30the number of games conducted during a bingo occasion but. A bingo occasion must not 20.1last longer than eight consecutive hours, except that all linked bingo games played on 20.2electronic bingo devices during the regular daily business hours of the permitted premises 20.3are considered a separate bingo occasion.20.4    Sec. 2. Minnesota Statutes 2009 Supplement, section 349.12, subdivision 12a, is 20.5amended to read:20.6    Subd. 12a. Electronic bingo device.(a) "Electronic bingo device" means an 20.7electronic bingo device used by a bingo player to (1) monitor bingo paper sheets or a 20.8facsimile of a bingo paper sheet when purchased at the time and place of an organization's 20.9bingo occasion and which (1) provides a means for bingo players to; (2)  activate numbers 20.10announced by a bingo caller; (2) comparesor displayed and compare the numbers entered 20.11by the player to the bingo faces previously stored in the memory of the device; and (3) 20.12identifiesidentify a winning bingo pattern.20.13(b) An electronic bingo device may be used only in the conduct of bingo permitted 20.14under this chapter and may not display or simulate any other form of gambling or 20.15entertainment and must be provided by a licensed distributor to a licensed organization.20.16    (c) An electronic bingo device used in conjunction with a linked bingo game system 20.17must be provided by a linked bingo game provider as part of its linked bingo game system. 20.18Electronic bingo device does not mean any device into which coin, currency, or tokens are 20.19inserted to activate play.20.20    Sec. 3. Minnesota Statutes 2008, section 349.12, subdivision 25b, is amended to read:20.21    Subd. 25b. Linked bingo game provider. "Linked bingo game provider" means 20.22any person who provides the means to link bingo prizes in a linked bingo game, who 20.23provides linked bingo paper sheets to the participating organizations games, who provides 20.24linked bingo prize management, and who provides the linked bingo game system.20.25    Sec. 4. Minnesota Statutes 2008, section 349.12, subdivision 25c, is amended to read:20.26    Subd. 25c. Linked bingo game system. "Linked bingo game system" means the 20.27equipment used by the linked bingo provider to conduct, transmit, and track a linked bingo 20.28game. The system must be approved by the board before its use in this state and it must 20.29have dial-up or otherthe capability to permit the board to monitor its operation remotely.20.30    Sec. 5. Minnesota Statutes 2008, section 349.12, subdivision 25d, is amended to read:20.31    Subd. 25d. Linked bingo prize pool. "Linked bingo prize pool" means the total of 20.32all prize money that each participating organization has contributed to a linked bingo game 21.1prize and includes any portion of the prize pool that is carried over from one occasion21.2game to another in a progressive linked bingo game. 21.3    Sec. 6. Minnesota Statutes 2008, section 349.151, subdivision 4c, is amended to read:21.4    Subd. 4c. Electronic bingo. (a) The board may by rule authorize but not require the 21.5use of electronic bingo devices.21.6(b) Rules adopted under paragraph (a):21.7(1) must limit the number of bingo faces that can be played using an electronic 21.8bingo device to 36;21.9(2) must require that an electronic bingo device be used with corresponding bingo 21.10paper sheets or a facsimile, printed at the point of sale,of a bingo paper sheet as approved 21.11by the board;21.12(3) must require that the electronic bingo device site system have dial-upthe 21.13capability to permit the board to remotely monitor the operation of the device and the 21.14internal accounting systems; and21.15(4) must prohibit the price of a face played on an electronic bingo device from being 21.16less than the price of a face on a bingo paper sheet sold at the same occasion.21.17    Sec. 7. Minnesota Statutes 2008, section 349.16, subdivision 7, is amended to read:21.18    Subd. 7. Purchase of gambling equipment. An organization may purchase or 21.19lease gambling equipment only from a person licensed as a distributor or linked bingo 21.20game provider.21.21    Sec. 8. Minnesota Statutes 2008, section 349.1635, subdivision 1, is amended to read:21.22    Subdivision 1. License required. No person may do any of the following without 21.23having first obtained a license from the board:21.24(1) provide the means to link prizes in a linked bingo game;21.25(2) provide linked bingo game prize management;21.26(3) provide the linked bingo system; or21.27(4) provide linked bingo paper sheets or electronic bingo devices to an organization.21.28    Sec. 9. Minnesota Statutes 2009 Supplement, section 349.17, subdivision 6, is 21.29amended to read:21.30    Subd. 6. Conduct of bingo.(a) Each bingo hard card and paper sheet must have 21.31five horizontal rows of spaces with each row except one having five numbers. The center 21.32row must have four numbers and the center space marked "free." Each column must 22.1have one of the letters B-I-N-G-O in order at the top. Bingo paper sheets may also have 22.2numbers that are not preprinted but are filled in by players.22.3(b) A game of bingo begins with the first letter and number called or displayed. Each 22.4player must cover, mark, or activate the numbers when bingo numbers are randomly 22.5selected, and announced, andor displayed to the players, either manually or with a 22.6flashboard and monitor. The game is won when a player, using bingo paper, bingo hard 22.7card, or a facsimile of a bingo paper sheet, has completed, as described in the bingo 22.8program, a previously designated pattern or previously determined requirements of the 22.9game and declared bingo. The game is completed when a winning card, sheet, or facsimile 22.10is verified and a prize awarded pursuant to subdivision 3.22.11    Sec. 10. Minnesota Statutes 2009 Supplement, section 349.17, subdivision 7, is 22.12amended to read:22.13    Subd. 7. Bar bingo. An organization may conduct bar bingo subject to the 22.14following restrictions:22.15    (1) the bingo is conducted at a site the organization owns or leases and which has a 22.16license for the sale of intoxicating beverages on the premises under chapter 340A; and22.17    (2) the bingo is conducted using only bingo paper sheets or facsimiles of bingo paper 22.18sheets purchased from a licensed distributor or licensed linked bingo game provider; and22.19    (3) no rent may be paid for a bar bingo occasion.22.20(2) bingo hard cards are not used.22.21    Sec. 11. Minnesota Statutes 2008, section 349.17, subdivision 8, is amended to read:22.22    Subd. 8.  Linked bingo games. (a) A licensed organization may conduct or 22.23participate in not more than two linked bingo games per occasion, one, some of which 22.24may be a progressive game in which a portion of the prize is carried over from one 22.25occasiongame to another until won by a player achieving a bingo within a predetermined 22.26amount of bingo numbers called. 22.27    (b) Each participating licensed organization shall contribute to each prize awarded 22.28in a linked bingo game in an amount not to exceed $300. 22.29    (c)(b) An electronic bingo device as defined in section 
         349.12, subdivision 12a, 22.30may be used for a linked bingo game. No more than six electronic bingo devices may be 22.31located at a permitted premises with 200 seats or less. No more than 12 electronic bingo 22.32devices may be located at a permitted premises with 201 seats or more. Seating capacity is 22.33determined as specified under local fire code.23.1(c) An electronic bingo device may be located only at a permitted premises where 23.2the organization conducts another form of gambling and the premises is: (1) a licensed 23.3premises for on-sale or off-sale of intoxicating liquor or 3.2 percent malt beverages except 23.4that electronic bingo may not be allowed at a licensee for a general foods store or drug 23.5store permitted to operate under section 340A.405, subdivision 1; or (2) where bingo is 23.6conducted and admission is restricted to persons 18 years or older.23.7(d) Prior to a bingo occasion for linked bingo games played on electronic bingo 23.8devices, the linked bingo game provider, on behalf of the participating organizations, must 23.9provide to the board a bingo program in a format prescribed by the board.23.10    (d)(e) The board may adopt rules to: 23.11    (1) specify the manner in which a linked bingo game must be played and how the 23.12linked bingo prizes must be awarded; 23.13    (2) specify the records to be maintained by a linked bingo game provider; 23.14    (3) require the submission of periodic reports by the linked bingo game provider and 23.15specify the content of the reports; 23.16    (4) establish the qualifications required to be licensed as a linked bingo game 23.17provider; and 23.18    (5) any other matter involving the operation of a linked bingo game. 23.19    Sec. 12. Minnesota Statutes 2009 Supplement, section 349.18, subdivision 1, is 23.20amended to read:23.21    Subdivision 1. Lease or ownership required; rent limitations. (a) An organization 23.22may conduct lawful gambling only on premises it owns or leases. Leases must be on a 23.23form prescribed by the board. The term of the lease is concurrent with the premises permit. 23.24Leases approved by the board must specify that the board may authorize an organization 23.25to withhold rent from a lessor for a period of up to 90 days if the board determines that 23.26illegal gambling occurred on the premises or that the lessor or its employees participated 23.27in the illegal gambling or knew of the gambling and did not take prompt action to stop the 23.28gambling. The lease must authorize the continued tenancy of the organization without 23.29the payment of rent during the time period determined by the board under this paragraph. 23.30Copies of all leases must be made available to employees of the board and the Division of 23.31Alcohol and Gambling Enforcement on request.23.32    (b) Rent paid by an organization for leased premises for the conduct of pull-tabs, 23.33tipboards, and paddle wheels is subject to the following limits:23.34    (1) for booth operations, including booth operations where a pull-tab dispensing 23.35device is located, booth operations where a bar operation is also conducted, and booth 24.1operations where both a pull-tab dispensing device is located and a bar operation is also 24.2conducted, the maximum rent is:24.3    (i) in any month where the organization's gross profit at those premises does not 24.4exceed $4,000, up to $400; and24.5    (ii) in any month where the organization's gross profit at those premises exceeds 24.6$4,000, up to $400 plus not more than ten percent of the gross profit for that month in 24.7excess of $4,000;24.8    (2) for bar operations, including bar operations where a pull-tab dispensing device 24.9is located but not including bar operations subject to clause (1), and for locations where 24.10only a pull-tab dispensing device is located:24.11    (i) in any month where the organization's gross profit at those premises does not 24.12exceed $1,000, up to $200; and24.13    (ii) in any month where the organization's gross profit at those premises exceeds 24.14$1,000, up to $200 plus not more than 20 percent of the gross profit for that month 24.15in excess of $1,000;24.16    (3) a lease not governed by clauses (1) and (2) must be approved by the board 24.17before becoming effective;24.18    (4) total rent paid to a lessor from all organizations from leases governed by clause 24.19(1) may not exceed $1,750 per month.24.20    (c) Rent paid by an organization for leased premises for the conduct of bingo is 24.21subject to either of the following limits at the option of the parties to the lease:24.22    (1) not more than ten percent of the monthly gross profit from all lawful gambling 24.23activities held during bingo occasions excluding bar bingo or at a rate based on a cost per 24.24square foot not to exceed 110 percent of a comparable cost per square foot for leased space 24.25as approved by the director; and24.26    (2) no rent may be paid for bar bingo, except as allowed under section 349.185.24.27    (d) Amounts paid as rent under leases are all-inclusive. No other services or 24.28expenses provided or contracted by the lessor may be paid by the organization, including, 24.29but not limited to, trash removal, janitorial and cleaning services, snow removal, lawn 24.30services, electricity, heat, security, security monitoring, storage, other utilities or services, 24.31and, in the case of bar operations, cash shortages, unless approved by the director. Any 24.32other expenditure made by an organization that is related to a leased premises must be 24.33approved by the director. An organization may not provide any compensation or thing of 24.34value to a lessor or the lessor's employees from any fund source other than its gambling 24.35account. Rent payments may not be made to an individual.25.1    (e) Notwithstanding paragraph (b), an organization may pay a lessor for food or 25.2beverages or meeting room rental if the charge made is comparable to similar charges 25.3made to other individuals or groups.25.4    (f) No entity other than the licensed organization may conduct any activity within 25.5a booth operation on a leased premises.25.6    Sec. 13. [349.185] GROSS PROFIT ALLOCATION; ELECTRONIC BINGO.25.7    Subdivision 1.Definition. For the purposes of this section, a "year" is determined to 25.8start on the first date of operation of an electronic bingo device at a permitted premises.25.9    Subd. 2.Gross profit allocation.The allocation of gross profits from the operation 25.10of an electronic bingo device is as follows.25.11(a) The license organization shall receive:25.12(1) a minimum of 50 percent of gross profits to be used exclusively for lawful 25.13purpose expenditures as defined under section 349.12, subdivision 25; and25.14(2) no more than 15 percent each year for allowable expenses as defined under 25.15section 349.12, subdivision 3a, including the cost of a lease or purchase of the electronic 25.16bingo devices.25.17(b) A linked bingo game provider shall receive no more than 25 percent of gross 25.18profits in the first year, no more than 19 percent in the second year, and no more than 15 25.19percent thereafter.25.20(c) When an electronic bingo device is placed in a location where the primary 25.21business is not bingo, the allocation for rent to the lessor shall be no more than ten percent 25.22of gross profits in the first year, no more than 16 percent in the second year, and no more 25.23than 20 percent thereafter. The lessor and the lessor's employees shall operate the devices 25.24on behalf of the licensed organization, and the lessor is responsible for cash shortages.25.25(d) When an electronic bingo device is placed in a location where the primary 25.26business is bingo, the lessor is limited to the rent limitations under section 349.18, 25.27subdivision 1, paragraph (c), clause (1).25.28    Sec. 14. Minnesota Statutes 2008, section 349.211, subdivision 1a, is amended to read:25.29    Subd. 1a. Linked bingo prizes. Prizes for a linked bingo game shall be limited 25.30as follows:25.31(1) nofor each participating permitted premises, an organization may not contribute 25.32more than $300 per linked bingo game to a linked bingo prize pool, and for a linked bingo 25.33game played with electronic bingo devices, an organization may not contribute more than 25.3485 percent of the gross receipts to a linked bingo game prize pool; 26.1(2) noan organization may not award more than $200 for a linked bingo game 26.2consolation prize. For purposes of this subdivision, a linked bingo game consolation 26.3prize is a prize awarded by an organization after a prize from the linked bingo prize pool 26.4has been won; and26.5    (3) for a progressive linked bingo game, if no player declares a valid bingo within 26.6the predetermined amount of bingo numbers called, a portion of the prize is carried over to 26.7another occasiongame until the accumulated prize is won. The portion of the prize that is 26.8not carried over must be awarded to the first player or players who declares a valid bingo 26.9as additional numbers are called. If a valid bingo is declared within the predetermined 26.10amount of bingo numbers called, the entire prize pool for that game is awarded to the 26.11winner. The annual limit for progressive bingo game prizes contained in subdivision 2 26.12must be reduced by the amount an organization contributes to progressive linked bingo 26.13games during the same calendar year.26.14ARTICLE 326.15ELECTRONIC PULL-TABS26.16    Section 1. Minnesota Statutes 2008, section 349.12, is amended by adding a 26.17subdivision to read:26.18    Subd. 12b.Electronic pull-tab device."Electronic pull-tab device" means a 26.19terminal, system, or device authorized by the board that permits, upon payment of 26.20consideration, the play of electronic pull-tab games.26.21    Sec. 2. Minnesota Statutes 2008, section 349.12, is amended by adding a subdivision 26.22to read:26.23    Subd. 12c.Electronic pull-tab game."Electronic pull-tab game" means an 26.24electronically simulated game authorized by the board that is played and displayed on 26.25a video monitor device.26.26    Sec. 3. Minnesota Statutes 2008, section 349.151, is amended by adding a subdivision 26.27to read:26.28    Subd. 4d.Electronic pull-tabs.(a) The board shall by rule authorize, but not 26.29require, the use of electronic pull-tab devices.26.30(b) Rules adopted under this subdivision must follow the guidelines for what is 26.31currently allowed for the conduct of pull-tabs under section 349.1721 in terms of the style 26.32of the game and prize payout and must additionally include:26.33(1) finite number of tickets in each electronic deal;27.1(2) predetermined number of winning and losing tickets;27.2(3) serialized tracking for each deal;27.3(4) no spinning symbols which mimic a video slot machine;27.4(5) no regeneration of serialized deal;27.5(6) all deals must be sold and played on-site and cannot be transferred electronically 27.6or otherwise to any other location by the licensed organization;27.7(7) serialized deals cannot be shared or commingled with any other deals or locations;27.8(8) the number of devices at any single site the organization owns or leases is 27.9limited to five;27.10(9) allowance for the board to remotely monitor the operation of the electronic 27.11pull-tab devices and the internal accounting systems;27.12(10) requirement that electronic pull-tab devices maintain, on nonresettable meters, 27.13a printable, permanent record of all transactions involving the device; and27.14(11) authority for the board to deactivate an electronic pull-tab device without notice 27.15for violation of a law or rule and to implement any other controls deemed by the board 27.16necessary to ensure and maintain the integrity of electronic pull-tab games operated under 27.17this subdivision.27.18(c) The board shall examine prototypes of electronic pull-tab devices. The board 27.19may contract for the examination of electronic pull-tab devices and may require working 27.20models of electronic pull-tab devices to be transported to the locations the board designates 27.21for testing, examination, and analysis. The manufacturer shall pay all costs of any testing, 27.22examination, analysis, and transportation of the model.