Laws of Minnesota 1987 

                        CHAPTER 327-H.F.No. 169 
           An act relating to lawful gambling; providing for 
          representation of horsepersons contracting with a 
          licensee; including payment of taxes as a lawful 
          purpose; increasing the percentage of profits that may 
          be used for necessary expenses; changing requirements 
          for distributors; allowing the board to summarily 
          suspend licenses under certain conditions; providing 
          for a limit on the number of bingo occasions which an 
          organization may conduct in a week, and the number of 
          occasions which may occur on any site in a week; 
          authorizing the board to adopt rules restricting the 
          amount of rent charged by organizations; prohibiting 
          local units of government from requiring organizations 
          to make certain expenditures; making various technical 
          changes; amending Minnesota Statutes 1986, sections 
          240.13, subdivision 5; 349.12, subdivisions 11, 12, 
          13, and 15; 349.14; 349.15; 349.151, subdivision 3, 
          and by adding a subdivision; 349.161, subdivisions 3, 
          5, and 7; 349.162, by adding subdivisions; 349.17, 
          subdivisions 1 and 2; 349.18, subdivisions 1 and 3; 
          349.19, subdivision 3; 349.21; and 349.213, 
          subdivision 1. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 240.13, 
subdivision 5, is amended to read:  
    Subd. 5.  [PURSES.] (a) From the amounts deducted from all 
pari-mutuel pools by a licensee, an amount equal to not less 
than five percent of all money in all pools must be set aside by 
the licensee and used for purses for races conducted by the 
licensee.  The commission may by rule provide for the 
administration and enforcement of this subdivision.  
    (b) From the money set aside for purses, the licensee shall 
pay to the horseperson's organization representing the majority 
of the horsepersons racing the breed involved and contracting 
with the licensee with respect to purses and the conduct of the 
racing meetings and providing representation, benevolent 
programs, benefits, and services for horsepersons and their 
on-track employees, an amount, sufficient to perform these 
services, as may be determined by agreement by the licensee and 
the horseperson's organization.  The amount paid may be deducted 
only from the money set aside for purses to be paid in races for 
the breed represented by the horseperson's organization.  With 
respect to racing meetings where more than one breed is racing, 
the licensee may contract independently with the horseperson's 
organization representing each breed racing. 
    Sec. 2.  Minnesota Statutes 1986, section 349.12, 
subdivision 11, is amended to read:  
    Subd. 11.  "Lawful purpose" means one or more of the 
following:  (a) benefiting persons by enhancing their 
opportunity for religious or educational advancement, by 
relieving or protecting them from disease, suffering or 
distress, by contributing to their physical well-being, by 
assisting them in establishing themselves in life as worthy and 
useful citizens, or by increasing their comprehension of and 
devotion to the principles upon which this nation was founded; 
(b) initiating, performing, or fostering worthy public works or 
enabling or furthering the erection or maintenance of public 
structures; (c) lessening the burdens borne by government or 
voluntarily supporting, augmenting or supplementing services 
which government would normally render to the people; or (d) the 
improving, expanding, maintaining or repairing real property 
owned or leased by an organization; or (e) payment of taxes 
imposed under this chapter, and other taxes imposed by the state 
or the United States on receipts from lawful gambling. 
    "Lawful purpose" does not include the erection or 
acquisition of any real property, unless the board specifically 
authorizes the expenditures after finding that the property will 
be used exclusively for one or more of the purposes specified in 
this clause. 
    Sec. 3.  Minnesota Statutes 1986, section 349.12, 
subdivision 12, is amended to read:  
    Subd. 12.  "Organization" means any fraternal, religious, 
veterans, or other nonprofit organization which has been in 
existence for at least three years and has at least 15 active 
members. 
    Sec. 4.  Minnesota Statutes 1986, section 349.12, 
subdivision 13, is amended to read:  
    Subd. 13.  "Profit" means the gross receipts collected from 
lawful gambling, less reasonable sums necessarily and actually 
expended for prizes and taxes imposed by this chapter. 
    Sec. 5.  Minnesota Statutes 1986, section 349.12, 
subdivision 15, is amended to read:  
    Subd. 15.  "Gambling equipment" means:  bingo cards and 
devices for selecting bingo numbers, pull-tabs, ticket jars jar 
tickets, paddlewheels, and tipboards.  
    Sec. 6.  Minnesota Statutes 1986, section 349.14, is 
amended to read:  
    349.14 [ORGANIZATION MAY CONDUCT LAWFUL GAMBLING; LICENSE.] 
    An organization may conduct lawful gambling if it has been 
in existence for at least three years, has at least 15 active 
members, has a license to conduct lawful gambling from the board 
and complies with this chapter. 
    Sec. 7.  Minnesota Statutes 1986, section 349.15, is 
amended to read: 
    349.15 [USE OF PROFITS.] 
    Profits from lawful gambling may be expended only for 
lawful purposes or expenses as authorized at a regular meeting 
of the conducting organization.  Provided that no more than 50 
55 percent of profits from bingo, and no more than 40 45 percent 
for other forms of lawful gambling, may be expended for 
necessary expenses related to lawful gambling.  
    The board shall provide by rule for the administration of 
this section, including specifying allowable expenses.  The 
rules must specify that no more than one-third of the annual 
premium on a policy of liability insurance procured by the 
organization may be taken as an allowable expense from the gross 
receipts from lawful gambling.  This expense shall be allowed by 
the board only to the extent that it relates directly to the 
conduct of lawful gambling and is verified in the manner the 
board prescribes by rule.  The rules may provide a maximum 
percentage of gross receipts which may be expended for certain 
expenses.  
    Sec. 8.  Minnesota Statutes 1986, section 349.151, 
subdivision 3, is amended to read:  
    Subd. 3.  [COMPENSATION.] The compensation of board members 
is $35 per day spent on commission activities, when authorized 
by the board, plus expenses in the same manner and amount as 
provided in the commissioner's plan adopted according to section 
43A.18, subdivision 2 as provided in section 15.0575, 
subdivision 3. 
    Sec. 9.  Minnesota Statutes 1986, section 349.151, is 
amended by adding a subdivision to read: 
    Subd. 4a.  [ADDITIONAL POWERS.] Whenever it appears to the 
board that any person has engaged or is about to engage in any 
act or practice constituting a violation of this chapter or any 
rule: 
    (a) The board has the power to issue and cause to be served 
upon the person an order requiring the person to cease and 
desist from violations of this chapter.  The order must give 
reasonable notice of the rights of the person to request a 
hearing and must state the reason for the entry of the order.  A 
hearing shall be held not later than seven days after the 
request for the hearing is received by the board after which and 
within 20 days of the date of the hearing the board shall issue 
a further order vacating the cease and desist order or making it 
permanent as the facts require.  All hearings shall be conducted 
in accordance with the provisions of chapter 14.  If the person 
to whom a cease and desist order is issued fails to appear at 
the hearing after being duly notified, the person shall be 
deemed in default, and the proceeding may be determined against 
the person upon consideration of the cease and desist order, the 
allegations of which may be deemed to be true.  
    (b) The board may bring an action in the district court in 
the appropriate county to enjoin the acts or practices and to 
enforce compliance with this chapter or any rule and may refer 
the matter to the attorney general.  Upon a proper showing, a 
permanent or temporary injunction, restraining order or writ of 
mandamus shall be granted.  The court may not require the board 
to post a bond. 
    Sec. 10.  Minnesota Statutes 1986, section 349.161, 
subdivision 3, is amended to read: 
    Subd. 3.  [QUALIFICATIONS.] A license may not be issued 
under this section to a person, or to a corporation, firm, or 
partnership which has as an officer, director, or other person 
in a supervisory or management position, or employee eligible to 
make sales on behalf of the distributor a person, who:  
    (1) has been convicted of a felony in a state or federal 
court within the past five years or who has a felony charge 
pending;  
    (2) has ever been convicted in a state or federal court of 
a gambling-related offense within ten years of the date of 
license application; or 
    (3) is or has ever been engaged in an illegal business.  
    Sec. 11.  Minnesota Statutes 1986, section 349.161, 
subdivision 5, is amended to read: 
    Subd. 5.  [PROHIBITION.] (a) No distributor, or employee 
eligible to make sales on behalf of a distributor, may also be a 
wholesale distributor of liquor or alcoholic beverages.  
    (b) No distributor, or employee authorized to make sales on 
behalf of a distributor, may be involved directly in the 
operation of lawful gambling conducted by an organization. 
    Sec. 12.  Minnesota Statutes 1986, section 349.161, 
subdivision 7, is amended to read: 
    Subd. 7.  [CRIMINAL HISTORY.] The board may request the 
assistance of the bureau of criminal apprehension in 
investigating the background of an applicant for a supplier's 
distributor's license and may reimburse the bureau for the costs 
thereof.  The board has access to all criminal history data 
compiled by the bureau on licensees and applicants.  
    Sec. 13.  Minnesota Statutes 1986, section 349.162, is 
amended by adding a subdivision to read: 
    Subd. 4.  [PROHIBITION.] No person other than a licensed 
organization or a licensed distributor may possess registration 
stamps issued by the board.  
    Sec. 14.  Minnesota Statutes 1986, section 349.162, is 
amended by adding a subdivision to read: 
    Subd. 5.  [SALES FROM FACILITIES.] All gambling equipment 
purchased by a licensed distributor for resale in Minnesota must 
prior to its resale be unloaded into a facility located in 
Minnesota which the distributor owns or leases. 
    Sec. 15.  Minnesota Statutes 1986, section 349.17, 
subdivision 1, is amended to read:  
    Subdivision 1.  [BINGO OCCASIONS.] Not more than 104 bingo 
occasions each year or two six bingo occasions each week may be 
conducted by an organization, except as provided in this 
subdivision.  A bingo occasion may not continue for more than 
four consecutive hours. 
    The board may permit an organization to conduct more than 
two bingo occasions in a week and more than 104 bingo occasions 
in a year if the board determines that the additional occasions 
are consistent with the purpose of sections 349.11 to 349.22 and 
if the following procedures are followed:  
    (1) the organization applies for the additional occasions, 
stating the number of additional occasions applied for;  
    (2) the board notifies the governing body of the county or 
home rule or statutory city in which the applicant is located; 
and 
    (3) the governing body fails to adopt a resolution 
disapproving the additional occasions within 30 days of the 
notification.  
    Sec. 16.  Minnesota Statutes 1986, section 349.17, 
subdivision 2, is amended to read:  
    Subd. 2.  [BINGO ON LEASED PREMISES.] A person or 
corporation, other than an organization, which leases any 
premises that it owns to two or more organizations for purposes 
including the conduct of bingo occasions, may not allow more 
than four 18 bingo occasions to be conducted on the premises in 
any week.  The board may waive this restriction and permit a 
person or corporation to allow a specified member of bingo 
occasions on the premises in excess of four per week if it finds 
that the waiver is consistent with the purpose of sections 
349.11 to 349.22 and if the following procedures are followed:  
    (1) the person or corporation applies for the waiver, 
stating the number of additional occasions sought per week;  
    (2) the board notifies the governing body of the county or 
home rule or statutory city in which the premises are located; 
and 
    (3) the governing body fails to adopt a resolution 
disapproving the waiver within 30 days of the notification. 
    Sec. 17.  Minnesota Statutes 1986, section 349.18, 
subdivision 1, is amended to read: 
    Subdivision 1.  [LEASE OR OWNERSHIP REQUIRED.] An 
organization may conduct lawful gambling only on premises it 
owns or leases.  Leases must be for a period of at least one 
year and must be in writing.  Copies of all leases must be made 
available to employees of the board on request.  A lease may not 
provide for rental payments based on a percentage of receipts or 
profits from lawful gambling.  The board may prescribe by rule 
limits on the amount of rent which an organization may pay to a 
lessor for premises leased for lawful gambling. 
    Sec. 18.  Minnesota Statutes 1986, section 349.18, 
subdivision 3, is amended to read:  
    Subd. 3.  [PROCEEDS FROM RENTAL.] A licensed organization 
which leases Rental proceeds from premises it owns owned by a 
licensed organization and leased or subleased to one or more 
other licensed organizations for the purposes including the 
conduct of conducting lawful gambling may expend the rental 
proceeds, less reasonable deductions for maintenance, 
furnishings, and utilities, only for lawful purposes.  The 
rental proceeds must be recorded and reported as proceeds from 
gambling under section 349.19 shall not be reported as gambling 
proceeds under this chapter.  
    Sec. 19.  Minnesota Statutes 1986, section 349.19, 
subdivision 3, is amended to read: 
    Subd. 3.  [EXPENDITURES.] All expenditures of bingo profits 
from lawful gambling must be itemized as to payee, purpose, 
amount, and date of payment.  
    Sec. 20.  Minnesota Statutes 1986, section 349.21, is 
amended to read: 
    349.21 [COMPENSATION.] 
    Compensation to persons who participate in the conduct of 
lawful gambling may be paid only to active members of the 
conducting organization or its auxiliary, or the spouse or 
surviving spouse of an active member, except that nonmanagement 
assistants who are not active members or spouses may be hired to 
assist in the conduct of lawful gambling in nonmanagement 
positions if approved by a majority of the organization's 
members.  
    The amounts of compensation which may be paid under this 
section must may be provided for in a schedule of compensation 
adopted by the board by rule.  In adopting the a schedule the 
board must consider the nature of the participation and the 
types of lawful gambling participated in.  
    A licensed organization may pay a percentage of the gross 
receipts from raffle ticket sales to a nonprofit organization 
which sells tickets for the licensed organization. 
    Sec. 21.  Minnesota Statutes 1986, section 349.213, 
subdivision 1, is amended to read:  
    Subdivision 1.  [LOCAL REGULATION.] A statutory or home 
rule city or county has the authority to adopt more stringent 
regulation of any form of lawful gambling within its 
jurisdiction, including the prohibition of any form of lawful 
gambling, and may require a permit for the conduct of gambling 
exempt from licensing under section 349.214.  The fee for a 
permit issued under this subdivision may not exceed $100.  The 
authority granted by this subdivision does not include the 
authority to require a license or permit to conduct gambling by 
organizations or sales by distributors licensed by the 
board.  The authority granted by this subdivision does not 
include the authority to require an organization to make 
specific expenditures of more than ten percent from its net 
profits derived from lawful gambling.  For the purposes of this 
subdivision, net profits are profits less amounts expended for 
allowable expenses.  A statutory or home rule charter city or a 
county may not require an organization conducting lawful 
gambling within its jurisdiction to make an expenditure to the 
city or county as a condition to operate within that city or 
county, except as authorized under section 349.16, subdivision 
4, or section 349.212.  
    Sec. 22.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment.  
Sections 2 to 13 and 15 to 21 are effective June 1, 1987.  
Section 14 is effective January 1, 1988. 
    Approved May 29, 1987