1.1                          A bill for an act 
  1.2             relating to the lottery; authorizing the state lottery 
  1.3             to establish a pilot program in certain counties to 
  1.4             operate video lottery terminals. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [DEFINITIONS.] 
  1.7      Subdivision 1.  [TERMS DEFINED.] For the purposes of this 
  1.8   act, the terms defined in this section have the meanings given 
  1.9   them. 
  1.10     Subd. 2.  [BOARD.] "Board" is the state lottery board. 
  1.11     Subd. 3.  [CREDIT RECEIPT.] "Credit receipt" means a 
  1.12  receipt generated by a video lottery terminal that provides 
  1.13  evidence of cash payment due a player from play on a video 
  1.14  lottery terminal. 
  1.15     Subd. 4.  [DIRECTOR.] "Director" is the director of the 
  1.16  state lottery. 
  1.17     Subd. 5.  [LOTTERY.] "Lottery" is the state lottery 
  1.18  authorized in Minnesota Statutes, chapter 349A. 
  1.19     Subd. 6.  [VIDEO LOTTERY RETAILER.] "Video lottery retailer"
  1.20  means a person whom the director has licensed to place video 
  1.21  lottery terminals within its premises. 
  1.22     Subd. 7.  [NET TERMINAL INCOME.] "Net terminal income" 
  1.23  means the sum of all money spent for video lottery terminal 
  1.24  plays less the amount paid out to winning players. 
  1.25     Subd. 8.  [VIDEO LOTTERY GAME.] "Video lottery game" means 
  2.1   electronically simulated games authorized by the director that 
  2.2   are displayed and played on a video lottery terminal for 
  2.3   consideration and with prizes awarded for designated results. 
  2.4      Subd. 9.  [VIDEO LOTTERY TERMINAL.] "Video lottery terminal"
  2.5   means an electronic machine that, upon the insertion of a coin, 
  2.6   token, or currency, is available to play or simulate the play of 
  2.7   a game utilizing a video display and microprocessors in which 
  2.8   the player may receive free plays or credits that can be 
  2.9   redeemed for cash. 
  2.10     Subd. 10.  [VIDEO LOTTERY TERMINAL PLAY.] "Video lottery 
  2.11  terminal play" means an electronic record that proves 
  2.12  participation in a video lottery game. 
  2.13     Sec. 2.  [VENDOR CONTRACTS.] 
  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 Minnesota Statutes, section 
  2.19  349A.07. 
  2.20     Sec. 3.  [VIDEO LOTTERY RETAILERS.] 
  2.21     Subdivision 1.  [LICENSES.] The director shall operate 
  2.22  video lottery terminals through video lottery retailers licensed 
  2.23  by the director.  The director may only license video lottery 
  2.24  retailers located within Carlton, Pine, Aitkin, Kanabec, Mille 
  2.25  Lacs, Crow Wing, Morrison, Chisago, and Isanti counties under 
  2.26  this section. 
  2.27     Subd. 2.  [QUALIFICATIONS.] A video lottery retailer under 
  2.28  this section must: 
  2.29     (1) meet the qualifications of Minnesota Statutes, section 
  2.30  349A.06, subdivision 2; 
  2.31     (2) be an establishment licensed under Minnesota Statutes, 
  2.32  chapter 340A, to sell, and be engaged in the sale of, 
  2.33  intoxicating liquor for consumption on the premises where sold; 
  2.34  and 
  2.35     (3) be an establishment on whose premises an organization 
  2.36  licensed under Minnesota Statutes, chapter 349, conducts lawful 
  3.1   gambling. 
  3.2      Subd. 3.  [BOND.] The director shall require each video 
  3.3   lottery retailer to post a bond, securities, or an irrevocable 
  3.4   letter of credit, in an amount the director deems necessary, to 
  3.5   protect the interests of the state.  The bond, securities, or 
  3.6   letter of credit must be of a form prescribed under Minnesota 
  3.7   Statutes, section 349A.06, subdivision 3. 
  3.8      Subd. 4.  [RESTRICTIONS.] (a) A video lottery retailer may 
  3.9   only have a video lottery terminal placed on the premises 
  3.10  described in the video lottery retailer's license. 
  3.11     (b) A video lottery retailer shall prominently display the 
  3.12  license issued by the director on the premises where video 
  3.13  lottery terminals are operated. 
  3.14     (c) A video lottery retailer shall keep a complete set of 
  3.15  books of account, correspondence, and all other records 
  3.16  necessary to show fully the video lottery retailer's lottery 
  3.17  transactions, and make them available for inspection by 
  3.18  employees of the lottery at all times during business hours.  
  3.19  The director may require a video lottery retailer to furnish 
  3.20  information the director deems necessary to carry out the 
  3.21  purposes of this act and may require an audit to be made of the 
  3.22  books of account and records.  The director may select an 
  3.23  auditor to perform the audit and may require the video lottery 
  3.24  retailer to pay the cost of the audit.  The auditor has the same 
  3.25  right of access to the books of account, correspondence, and 
  3.26  other records as is given to employees of the lottery. 
  3.27     (d) A license issued under this section may not be 
  3.28  transferred or assigned. 
  3.29     (e) A video lottery retailer shall prominently post in the 
  3.30  area where video lottery terminals are located, in a manner 
  3.31  provided by the commissioner of human services, the toll-free 
  3.32  telephone number established by the commissioner of human 
  3.33  services in connection with the compulsive gambling program 
  3.34  established under Minnesota Statutes, section 245.98. 
  3.35     (f) A video lottery retailer may have up to five video 
  3.36  lottery terminals on the video lottery retailer's premises, as 
  4.1   determined by the director. 
  4.2      (g) A video lottery retailer that is authorized to have 
  4.3   video lottery terminals placed within its premises may not make 
  4.4   any reference to the establishment being a "casino" nor use the 
  4.5   word "casino" in its name. 
  4.6      (h) The director, or any employee of the lottery, may 
  4.7   inspect any video lottery terminal at any time during normal 
  4.8   business hours, without notice, to ensure compliance with this 
  4.9   act. 
  4.10     Subd. 5.  [LOCAL LICENSES.] No political subdivision may 
  4.11  require a local license to operate as a video lottery retailer, 
  4.12  restrict or regulate the placement of a video lottery terminal, 
  4.13  or impose a tax or fee on the business of operating as a video 
  4.14  lottery retailer. 
  4.15     Subd. 6.  [PROCEEDS OF SALES.] All proceeds from the sale 
  4.16  of video lottery terminal plays received by a video lottery 
  4.17  retailer constitute a trust fund until paid to the director.  
  4.18  The video lottery retailer is personally liable for all proceeds.
  4.19     Subd. 7.  [REVOCATION, SUSPENSION, OR REFUSAL TO RENEW 
  4.20  LICENSE.] The director may revoke, suspend, or refuse to renew a 
  4.21  license issued under this section if the video lottery retailer 
  4.22  violates any provision of this act or for any reason specified 
  4.23  under Minnesota Statutes, section 349A.06, subdivision 11.  The 
  4.24  director may temporarily suspend a license under this section 
  4.25  under the procedures set forth in Minnesota Statutes, section 
  4.26  349A.06, subdivision 11, paragraph (e). 
  4.27     Sec. 4.  [VIDEO LOTTERY TERMINALS.] 
  4.28     Subdivision 1.  [SPECIFICATIONS.] Each video lottery 
  4.29  terminal must: 
  4.30     (1) maintain on nonresettable meters a permanent record, 
  4.31  capable of being printed out, of all transactions by the 
  4.32  terminal and all entries into the terminal; and 
  4.33     (2) be capable of being linked electronically to a central 
  4.34  communication system to provide auditing program information as 
  4.35  required by the director. 
  4.36     Subd. 2.  [LIMIT ON AMOUNT PLAYED.] A video lottery 
  5.1   terminal may not allow less than 25 cents or more than $2 to be 
  5.2   played on a single game. 
  5.3      Subd. 3.  [MAXIMUM PRIZE.] The maximum prize on any single 
  5.4   game played on a video lottery terminal may not exceed $1,000. 
  5.5      Subd. 4.  [PAYOUT PERCENTAGE.] The overall payout 
  5.6   percentage for a game on a video lottery terminal must be at 
  5.7   least 80 percent and not more than 95 percent. 
  5.8      Subd. 5.  [EXAMINATION OF TERMINALS.] The director shall 
  5.9   examine prototypes of video lottery terminals to be used under 
  5.10  this act.  The director shall require that the manufacturer of 
  5.11  the terminal pay the cost of the examination.  The director may 
  5.12  contract for the examination of video lottery terminals. 
  5.13     Subd. 6.  [TESTING OF TERMINALS.] The director may require 
  5.14  working models of a video lottery terminal transported to the 
  5.15  location the director designates for testing, examination, and 
  5.16  analysis.  The manufacturer shall pay all costs of any testing, 
  5.17  examination, analysis, and transportation of the terminal model. 
  5.18     Subd. 7.  [DEACTIVATION OF TERMINAL.] The director may 
  5.19  deactivate a video lottery terminal without notice if the video 
  5.20  lottery retailer has violated any provision of this act or 
  5.21  provision of its contract with the director. 
  5.22     Subd. 8.  [ODDS.] The approximate odds of winning a prize 
  5.23  from a video lottery game must be displayed on the face or 
  5.24  screen of the video lottery terminal. 
  5.25     Sec. 5.  [PRIZES.] 
  5.26     Subdivision 1.  [AGREEMENT BY PLAYERS.] A person who plays 
  5.27  a video lottery terminal agrees to be bound by the rules and 
  5.28  game procedures applicable to that particular video lottery game.
  5.29  The player acknowledges that the determination of whether the 
  5.30  credit receipt is valid is subject to the rules and game 
  5.31  procedures adopted by the director, claims procedures 
  5.32  established by the director for that game, and any confidential 
  5.33  or public validation tests established by the director for that 
  5.34  game. 
  5.35     Subd. 2.  [PRIZES CLAIMED BY PERSONS UNDER 21.] A person 
  5.36  under 21 years of age may not claim a prize from the operation 
  6.1   of a video lottery terminal. 
  6.2      Subd. 3.  [PAYMENT; UNCLAIMED PRIZES.] (a) A credit receipt 
  6.3   must be presented for payment before the close of business on 
  6.4   the date the credit receipt was printed.  If a valid claim is 
  6.5   not made for a prize by the end of this period, the unclaimed 
  6.6   prize must be paid by the video lottery retailer to the 
  6.7   lottery.  A prize won by a person who is ineligible to be 
  6.8   awarded a prize under this act must be treated an an unclaimed 
  6.9   prize under this subdivision. 
  6.10     (b) Prizes claimed under this act from a video lottery 
  6.11  terminal are not subject to the requirements of Minnesota 
  6.12  Statutes, section 349A.08, subdivision 8. 
  6.13     Sec. 6.  [NET TERMINAL INCOME.] 
  6.14     Subdivision 1.  [VIDEO LOTTERY RETAILER.] The video lottery 
  6.15  retailer licensed by the director may retain 33 percent of net 
  6.16  terminal income as a commission. 
  6.17     Subd. 2.  [NONPROFIT ORGANIZATION.] The video lottery 
  6.18  retailer receiving a commission under this section shall 
  6.19  transmit to an organization licensed under Minnesota Statutes, 
  6.20  chapter 349, and conducting lawful gambling on the premises of 
  6.21  the video lottery retailer, 50 percent of the video lottery 
  6.22  retailer's commission.  If more than one organization conducts 
  6.23  lawful gambling on the premises, the payment must be reasonably 
  6.24  allocated between the organizations, pro rata based on their 
  6.25  respective gross receipts. 
  6.26     Subd. 3.  [LOTTERY OPERATIONS.] The director may not credit 
  6.27  in any fiscal year more than 20 percent of net terminal income 
  6.28  to the lottery operations account established under Minnesota 
  6.29  Statutes, section 349A.10, subdivision 3, for the operation of 
  6.30  the video lottery terminal system. 
  6.31     Subd. 4.  [COMPULSIVE GAMBLING.] The director shall remit 
  6.32  two percent of net terminal income to be held in trust by the 
  6.33  commissioner of human services in a compulsive gambling trust 
  6.34  account until July 1, 1998.  Money in the account must not be 
  6.35  spent until appropriated by law for the period beginning after 
  6.36  July 1, 1998. 
  7.1      Subd. 5.  [DEPOSIT OF RECEIPTS.] The director may require 
  7.2   video lottery retailers to deposit in a separate account to the 
  7.3   credit of the lottery, in banks designated by the director, net 
  7.4   terminal income, less money retained as the video lottery 
  7.5   retailer's commission, and to allow money deposited to be 
  7.6   transferred to the lottery through electronic fund transfer.  
  7.7      Subd. 6.  [PENALTY; INTEREST.] A video lottery retailer who 
  7.8   fails to pay any money due to the director within the time 
  7.9   prescribed by the director shall pay interest on the amount owed 
  7.10  at the rate established for purposes of Minnesota Statutes, 
  7.11  section 349A.10, subdivision 4, paragraph (c). 
  7.12     Subd. 7.  [DEPOSIT OF NET PROCEEDS.] Within 30 days after 
  7.13  the end of each month, the director shall deposit in the state 
  7.14  treasury the net terminal income, less amounts paid to video 
  7.15  lottery retailers, amounts credited to the lottery operations 
  7.16  account, and amounts credited to the compulsive gambling trust 
  7.17  account. 
  7.18     Sec. 7.  [CONFLICT OF INTEREST.] 
  7.19     The director, a board member, an employee of the lottery, a 
  7.20  member of the immediate family of the director, board member, or 
  7.21  employee residing in the same household may not play a game on a 
  7.22  video lottery terminal nor have any personal pecuniary interest 
  7.23  in any vendor holding a contract with the lottery for purchase 
  7.24  of video lottery terminals, or in any video lottery retailer. 
  7.25     Sec. 8.  [SALES TAX EXEMPTION.] Sales of plays on a video 
  7.26  lottery terminal are exempt from the sales tax imposed by 
  7.27  Minnesota Statutes, section 297A.02, and the in-lieu tax imposed 
  7.28  by Minnesota Statutes, section 297A.259. 
  7.29     Sec. 9.  [PROHIBITIONS.] 
  7.30     Subdivision 1.  [PURCHASE BY MINORS.] A person under the 
  7.31  age of 21 years may not play a game on a video lottery terminal. 
  7.32     Subd. 2.  [SALE TO MINORS.] A video lottery retailer may 
  7.33  not allow a person under the age of 21 years to play a game on a 
  7.34  video lottery terminal. 
  7.35     Sec. 10.  [CRIMINAL HISTORY.] 
  7.36     The director may request the director of gambling 
  8.1   enforcement to investigate video lottery retailer applicants 
  8.2   under this act.  The director has access to all criminal history 
  8.3   data compiled by the director of gambling enforcement on any 
  8.4   person holding or applying for a video lottery retailer 
  8.5   contract, or any person under contract with the lottery to 
  8.6   provide goods or services relating to video lottery terminals. 
  8.7      Sec. 11.  [GAMBLING DEVICE; VIDEO LOTTERY TERMINALS.] 
  8.8      Subdivision 1.  [VIDEO LOTTERY TERMINAL.] (a) 
  8.9   Notwithstanding Minnesota Statutes, section 349A.13, clause (2), 
  8.10  sections 1 to 10 authorize the director to install or operate a 
  8.11  video lottery terminal operated by coin or currency which when 
  8.12  operated determines the winner of a game. 
  8.13     (b) Minnesota Statutes, sections 340A.410, 609.755, and 
  8.14  609.76, do not prohibit the manufacture, sale, placement, 
  8.15  operation, or possession of a video lottery terminal under 
  8.16  sections 1 to 10. 
  8.17     Subd. 2.  [GAMBLING DEVICE.] Notwithstanding Minnesota 
  8.18  Statutes, section 609.75, subdivision 4, a gambling device does 
  8.19  not include a video lottery terminal operated by the lottery 
  8.20  under sections 1 to 10. 
  8.21     Sec. 12.  [REPEALER.] 
  8.22     Sections 1 to 11 are repealed July 1, 1998. 
  8.23     Sec. 13.  [EFFECTIVE DATE.] 
  8.24     Sections 1 to 11 are effective the day following final 
  8.25  enactment.