Bill Text: MN HF1485 | 2011-2012 | 87th Legislature | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: New National Football League stadium provided for in Minnesota; Minnesota Stadium Authority established; and Metropolitan Sports Facilities Commission abolished; local tax revenue use, electronic pull-tab games, electronic linked bingo games, and sports-themed tipboard games provided for; conditional imposition of taxes and revenue collection provided for; lawful gambling tax rates modified; bonds issued; and money appropriated.

Spectrum: Slight Partisan Bill (Republican 9-3)

Status: (Engrossed - Dead) 2012-05-08 - Laid on table [HF1485 Detail]

Download: Minnesota-2011-HF1485-Engrossed.html

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A bill for an act

relating to gambling; modifying certain rates of tax on lawful gambling;
providing for linked bingo and electronic pull-tabs; making clarifying,
conforming, and technical changes; appropriating money;amending Minnesota
Statutes 2010, sections 297E.02; 349.12, subdivisions 5, 12a, 25b, 25c, 25d,
29, 32, 32a; 349.13; 349.151, subdivisions 4b, 4c; 349.155, subdivisions 3, 4;
349.161, subdivision 1; 349.163, subdivisions 1, 6; 349.1635, subdivision 2,
by adding a subdivision; 349.165, subdivision 2; 349.17, subdivisions 6, 7, 8;
349.1721, by adding subdivisions; 349.18, subdivision 1; 349.211, subdivision
1a; proposing coding for new law in Minnesota Statutes, chapter 349.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

    Section 1. Minnesota Statutes 2010, section 297E.02, is amended to read:
297E.02 TAX IMPOSED.
    Subdivision 1. Imposition. (a) A tax is imposed on all lawful gambling other than
(1) paper pull-tab deals or games; (2) tipboard deals or games; and (3) items listed in
section 297E.01, subdivision 8, clauses (4) and (5), at the rate of 8.5 percent on the gross
receipts as defined in section 297E.01, subdivision 8, less prizes actually paid. This
paragraph expires effective for gross receipts received after June 30, 2012.
(b) Effective July 1, 2012, a tax is imposed on all lawful gambling at the rate of nine
percent of the gross receipts as defined in section 297E.01, subdivision 8, less prizes
actually paid.
(c) The tax imposed by this subdivision is in lieu of the tax imposed by section
297A.62 and all local taxes and license fees except a fee authorized under section 349.16,
subdivision 8 , or a tax authorized under subdivision 5.
(d) The tax imposed under this subdivision is payable by the organization or party
conducting, directly or indirectly, the gambling.
(e) Effective July 1, 2012, for any pull-tab and tipboard game sold to the distributor
by a manufacturer, which the distributor cannot account for, the distributor incurs the tax
in this subdivision on the ideal gross receipts as defined in section 297E.01, subdivision
8, less the ideal prizes of the pull-tab or tipboard game.
    Subd. 1a. Paper pull-tab. For purposes of this section, the term "paper pull-tab"
excludes pull-tabs played using a pull-tab (electronic) dispensing device that displays
a facsimile of a paper pull-tab.
    Subd. 2. Tax-exempt gambling. An organization's receipts from lawful gambling
that are excluded or exempt from licensing under section 349.166, are not subject to the
tax imposed by this section or section 297A.62. This exclusion from tax is only valid if
at the time of the event giving rise to the tax the organization either has an exclusion
under section 349.166, subdivision 1, or has applied for and received a valid exemption
from the lawful gambling control board.
    Subd. 2a. Tax credit for certain raffles. An organization may claim a credit equal
to the tax reported under subdivision 1 resulting from a raffle the net proceeds of which
have been used exclusively for the purposes of section 349.12, subdivision 25, paragraph
(a), clause (2). The organization claiming the credit must do so on the monthly gambling
tax return on which the raffle activity is reported under subdivision 1.
    Subd. 3. Collection; disposition. (a) Taxes imposed by this section other than in
subdivision 4 are due and payable to the commissioner when the gambling tax return is
required to be filed.
(b) Taxes imposed by subdivision 4 are due and payable to the commissioner on or
before the last business day of the month following the month in which the taxable sale
was made. This paragraph expires after June 30, 2012.
(c) Returns covering the taxes imposed under this section must be filed with the
commissioner on or before the 20th day of the month following the close of the previous
calendar month. The commissioner may require that the returns be filed via magnetic
media or electronic data transfer. The proceeds, along with the revenue received from all
license fees and other fees under sections 349.11 to 349.191, 349.211, and 349.213, must
be paid to the commissioner of management and budget for deposit in the general fund.
(d) One-half of one percent of the revenue deposited in the general fund under
paragraph (c) is appropriated to the commissioner of human services for the compulsive
gambling treatment program established under section 245.98. One-half of one percent
of the revenue deposited in the general fund under paragraph (c) is appropriated to the
Gambling Control Board for a grant to the state affiliate recognized by the National
Council on Problem Gambling to increase public awareness of problem gambling,
education and training for individuals and organizations providing effective treatment
services to problem gamblers and their families, and research relating to problem
gambling. Money appropriated by this paragraph must supplement and must not replace
existing state funding for these programs.
    Subd. 4. Pull-tab and tipboard tax. (a) A tax is imposed on the sale of each deal
of paper pull-tabs and tipboards sold by a distributor. The rate of the tax is 1.7 percent
of the ideal gross of the paper pull-tab or tipboard deal. This paragraph expires after
June 30, 2012.
(b) The sales tax imposed by chapter 297A on the sale of the pull-tabs and tipboards
by the distributor is imposed on the retail sales price less the tax imposed by this
subdivision. The retail sale of pull-tabs or tipboards by the organization is exempt from
taxes imposed by chapter 297A and is exempt from all local taxes and license fees except
a fee authorized under section 349.16, subdivision 8.
(b) (c) The liability for the tax imposed by this section subdivision is incurred
when the pull-tabs and tipboards are delivered by the distributor to the customer or to
a common or contract carrier for delivery to the customer, or when received by the
customer's authorized representative at the distributor's place of business, regardless of the
distributor's method of accounting or the terms of the sale. This paragraph applies to sales
by distributors made before July 1, 2012.
(d) The tax imposed by this subdivision section is imposed on all sales of pull-tabs
and tipboards, except the following:
(1) sales to the governing body of an Indian tribal organization for use on an Indian
reservation;
(2) sales to distributors licensed under the laws of another state or of a province of
Canada, as long as all statutory and regulatory requirements are met in the other state or
province;
(3) sales of promotional tickets as defined in section 349.12; and
(4) pull-tabs and tipboards sold to an organization that sells pull-tabs and tipboards
under the exemption from licensing in section 349.166, subdivision 2. A distributor shall
require an organization conducting exempt gambling to show proof of its exempt status
before making a tax-exempt sale of pull-tabs or tipboards to the organization. A distributor
shall identify, on all reports submitted to the commissioner, all sales of pull-tabs and
tipboards that are exempt from tax under this subdivision.
(c) (e) A distributor having a liability of $10,000 or more during a fiscal year ending
June 30 must remit all liabilities in the subsequent calendar year by electronic means.
(d) (f) Any customer who purchases deals of pull-tabs or tipboards from a distributor
may file an annual claim for a refund or credit of taxes paid pursuant to this subdivision
for unsold pull-tab and tipboard tickets. The claim must be filed with the commissioner on
a form prescribed by the commissioner by March 20 of the year following the calendar
year for which the refund is claimed. The refund must be filed as part of the customer's
February monthly return. The refund or credit is equal to 1.7 percent of the face value
of the unsold pull-tab or tipboard tickets, provided that the refund or credit will be 1.75
percent of the face value of the unsold pull-tab or tipboard tickets for claims for a refund
or credit of taxes filed on the February 2001 monthly return. The refund claimed will be
applied as a credit against tax owing under this chapter on the February monthly return. If
the refund claimed exceeds the tax owing on the February monthly return, that amount
will be refunded. The amount refunded will bear interest pursuant to section 270C.405
from 90 days after the claim is filed. This paragraph does not apply to games purchased
after June 30, 2012.
    Subd. 6. Combined receipts tax. In addition to the taxes imposed under
subdivisions 1 and 4, a tax is imposed on the combined receipts of the organization. As
used in this section, "combined receipts" is the sum of the organization's gross receipts
from lawful gambling less gross receipts directly derived from the conduct of bingo,
raffles, and paddle wheels, as defined in section 297E.01, subdivision 8, for the fiscal year.
The gross receipts of pull-tabs played using a pull-tab (electronic) dispensing device
that displays a facsimile of a paper pull-tab are not subject to the combined receipts tax.
The combined receipts of an organization are subject to a tax computed according to
the following schedule:

		If the combined receipts for the fiscal year are:		The tax is:
		Not over $500,000		zero
		Over $500,000,
		but not over $700,000		1.7 percent of the amount over $500,000, but not over $700,000
		Over $700,000,
		but not over $900,000		$3,400 plus 3.4 percent of the amount over $700,000, but not over $900,000
		Over $900,000		$10,200 plus 5.1 percent of the amount over $900,000

This subdivision expires after June 30, 2012.
    Subd. 7. Untaxed gambling product. (a) In addition to penalties or criminal
sanctions imposed by this chapter, a person, organization, or business entity possessing or
selling a pull-tab or tipboard upon which the tax imposed by subdivision 4 this chapter
has not been paid is liable for a tax of six percent of the ideal gross of each pull-tab or
tipboard. The tax on a partial deal must be assessed as if it were a full deal.
(b) In addition to penalties and criminal sanctions imposed by this chapter, a person
not licensed by the board who conducts bingo, raffles, or paddle wheel games is liable for
a tax of six percent of the gross receipts from that activity.
(c) The tax must be assessed by the commissioner. An assessment must be
considered a jeopardy assessment or jeopardy collection as provided in section 270C.36.
The commissioner shall assess the tax based on personal knowledge or information
available to the commissioner. The commissioner shall mail to the taxpayer at the
taxpayer's last known address, or serve in person, a written notice of the amount of tax,
demand its immediate payment, and, if payment is not immediately made, collect the tax
by any method described in chapter 270C, except that the commissioner need not await the
expiration of the times specified in chapter 270C. The tax assessed by the commissioner
is presumed to be valid and correctly determined and assessed. The burden is upon the
taxpayer to show its incorrectness or invalidity. The tax imposed under this subdivision
does not apply to gambling that is exempt from taxation under subdivision 2.
    Subd. 8. Personal debt. The tax imposed by this section, and interest and penalties
imposed with respect to it, are a personal debt of the person required to file a return from
the time the liability for it arises, irrespective of when the time for payment of the liability
occurs. The debt must, in the case of the executor or administrator of the estate of a
decedent and in the case of a fiduciary, be that of the person in the person's official or
fiduciary capacity only unless the person has voluntarily distributed the assets held in that
capacity without reserving sufficient assets to pay the tax, interest, and penalties, in which
event the person is personally liable for any deficiency.
    Subd. 9. Public information. All records concerning the administration of the taxes
under this chapter are classified as public information.
    Subd. 10. Refunds; appropriation. A person who has, under this chapter, paid
to the commissioner an amount of tax for a period in excess of the amount legally due
for that period, may file with the commissioner a claim for a refund of the excess. The
amount necessary to pay the refunds under this subdivision and subdivision 4, paragraph
(d) section, is appropriated from the general fund to the commissioner.
    Subd. 11. Unplayed or defective pull-tabs or tipboards. (a) If a deal of pull-tabs
or tipboards registered with the board or bar coded in accordance with this chapter and
chapter 349 and upon which the tax imposed by subdivision 4 has been paid is returned
unplayed to the distributor, the commissioner shall allow a refund of the tax paid. This
paragraph expires after June 30, 2012.
(b) If a defective deal registered with the board or bar coded in accordance with
this chapter and chapter 349 and upon which the taxes have been paid is returned to the
manufacturer, the distributor shall submit to the commissioner of revenue certification
from the manufacturer that the deal was returned and in what respect it was defective.
The certification must be on a form prescribed by the commissioner and must contain
additional information the commissioner requires.
(c) The commissioner may require that no refund under this subdivision be made
unless the returned pull-tabs or tipboards have been set aside for inspection by the
commissioner's employee.
(d) Reductions in previously paid taxes authorized by this subdivision must be made
when and in the manner prescribed by the commissioner.

    Sec. 2. Minnesota Statutes 2010, section 349.12, subdivision 5, is amended to read:
    Subd. 5. Bingo occasion. "Bingo occasion" means a single gathering or session at
which a series of one or more successive bingo games is played. There is no limit on the
number of games conducted during a bingo occasion but. A bingo occasion must not last
longer than eight consecutive hours., except that linked bingo games played on electronic
bingo devices may be played during regular business hours of the permitted premises and
all play during this period is considered a bingo occasion for reporting purposes. For
premises where the primary business is bingo, regular business hours shall be defined as
the hours between 8:00 a.m. and 2:00 a.m.

    Sec. 3. Minnesota Statutes 2010, section 349.12, subdivision 12a, is amended to read:
    Subd. 12a. Electronic bingo device. "Electronic bingo device" means an electronic
bingo device used by a bingo player to (1) monitor bingo paper sheets or a facsimile of
a bingo paper sheet when purchased at the time and place of an organization's bingo
occasion and which (1) provides a means for bingo players to, (2) activate numbers
announced by a bingo caller; (2) compares or displayed and compare the numbers entered
by the player to the bingo faces previously stored in the memory of the device;, and (3)
identifies identify a winning bingo pattern or game requirement.
Electronic bingo device does not mean any device into which coin, currency, or tokens
are inserted to activate play. An electronic bingo device that plays linked bingo games
may only be a device that is handheld and portable. Linked bingo games played on an
electronic bingo device may only be activated by coded data entry. An electronic bingo
device may only be used by a bingo player for play against other electronic bingo players
and may not be used by a bingo player for play against the electronic bingo device itself.

    Sec. 4. Minnesota Statutes 2010, section 349.12, subdivision 25b, is amended to read:
    Subd. 25b. Linked bingo game provider. "Linked bingo game provider" means
any person who provides the means to link bingo prizes in a linked bingo game, who
provides linked bingo paper sheets to the participating organizations games, who provides
linked bingo prize management, and who provides the linked bingo game system.

    Sec. 5. Minnesota Statutes 2010, section 349.12, subdivision 25c, is amended to read:
    Subd. 25c. Linked bingo game system. "Linked bingo game system" means the
equipment used by the linked bingo provider to conduct, transmit, and track a linked
bingo game. The system must be approved by the board before its use in this state and it
must have dial-up or other the capability to permit the board to electronically monitor its
operation remotely.

    Sec. 6. Minnesota Statutes 2010, section 349.12, subdivision 25d, is amended to read:
    Subd. 25d. Linked bingo prize pool. "Linked bingo prize pool" means the total
of all prize money that each participating organization has contributed to a linked bingo
game prize and includes any portion of the prize pool that is carried over from one
occasion game to another in a progressive linked bingo game.

    Sec. 7. Minnesota Statutes 2010, section 349.12, subdivision 29, is amended to read:
    Subd. 29. Paddle wheel. "Paddle wheel" means a wheel marked off into sections
containing one or more numbers, and which, after being turned or spun manually or
electronically, uses a pointer or marker to indicate winning chances. An electronic paddle
wheel would only be allowed to be used to determine a winning number that would match
a paper paddle ticket held by a player.

    Sec. 8. Minnesota Statutes 2010, section 349.12, subdivision 32, is amended to read:
    Subd. 32. Pull-tab. "Pull-tab" means a single folded or banded paper ticket or, a
multi-ply card with perforated break-open tabs, or a facsimile of a paper pull-tab when
used in conjunction with a pull-tab dispensing device, the face of which is initially covered
to conceal one or more numbers or symbols, where one or more of each set of tickets, or
cards, or facsimiles has been designated in advance as a winner.

    Sec. 9. Minnesota Statutes 2010, section 349.12, subdivision 32a, is amended to read:
    Subd. 32a. Pull-tab dispensing device. "Pull-tab dispensing device" means a
mechanical or electronic device that dispenses paper pull-tabs and has no additional
function as an amusement or gambling device or displays facsimiles of paper pull-tabs. A
pull-tab dispensing device may have as a component an auditory or visual enhancement to
promote or provide information about a game being dispensed or displayed, provided the
component does not affect the outcome of a game or display the results of a game or an
individual ticket. A pull-tab dispensing device that displays facsimiles of paper pull-tabs
is not allowed to accept any coin, currency, or tokens, but does allow for activation by
coded data entry. A pull-tab dispensing device that displays facsimiles of paper pull-tabs
may only be a device that is handheld and portable.

    Sec. 10. Minnesota Statutes 2010, section 349.13, is amended to read:
349.13 LAWFUL GAMBLING.
Lawful gambling is not a lottery or gambling within the meaning of sections 609.75
to 609.76 if it is conducted under this chapter. A pull-tab dispensing device permitted by
board rule is not a gambling device within the meaning of sections 609.75 to 609.76
and chapter 299L. Electronic game devices including but not limited to electronic bingo
devices, electronic paddlewheels, and electronic pull-tab dispensing devices authorized
under this chapter may only be used in the conduct of lawful gambling permitted under
this chapter and may not display or simulate any other form of gambling or entertainment.

    Sec. 11. Minnesota Statutes 2010, section 349.151, subdivision 4b, is amended to read:
    Subd. 4b. Pull-tab sales from dispensing devices. (a) The board may by rule
authorize but not require the use of pull-tab dispensing devices.
(b) Rules adopted under paragraph (a):
(1) must limit the number of pull-tab dispensing devices on any permitted premises
to three; and
(2) must limit the use of pull-tab dispensing devices to a permitted premises which is
(i) a licensed premises for on-sales of intoxicating liquor or 3.2 percent malt beverages;
or (ii) a premises where bingo is conducted and admission is restricted to persons 18
years or older.
(c) Notwithstanding rules adopted under paragraph (b), pull-tab dispensing devices
may be used in establishments licensed for the off-sale of intoxicating liquor, other than
drugstores and general food stores licensed under section 340A.405, subdivision 1.

    Sec. 12. Minnesota Statutes 2010, section 349.151, subdivision 4c, is amended to read:
    Subd. 4c. Electronic bingo. (a) The board may by rule authorize but not require the
use of electronic bingo devices.
(b) Rules adopted under paragraph (a):
(1) must limit the number of bingo faces that can be played using an electronic
bingo device to 36;
(2) must require that an electronic bingo device be used with corresponding bingo
paper sheets or a facsimile, printed at the point of sale, of a bingo paper sheet as approved
by the board;
(3) must require that the electronic bingo device site system have dial-up the
capability to permit the board to remotely monitor the operation of the device and the
internal accounting systems; and
(4) must prohibit the price of a face played on an electronic bingo device from
being less than the price of a face on a bingo paper sheet sold for the same game at the
same occasion.

    Sec. 13. Minnesota Statutes 2010, section 349.155, subdivision 3, is amended to read:
    Subd. 3. Mandatory disqualifications. (a) In the case of licenses for manufacturers,
distributors, distributor salespersons, linked bingo game providers, and gambling
managers, the board may not issue or renew a license under this chapter, and shall revoke
a license under this chapter, if the applicant or licensee, or a director, officer, partner,
governor, or person in a supervisory or management position of the applicant or licensee:
(1) has ever been convicted of a felony or a crime involving gambling;
(2) has ever been convicted of (i) assault, (ii) a criminal violation involving the use
of a firearm, or (iii) making terroristic threats;
(3) is or has ever been connected with or engaged in an illegal business;
(4) owes $500 or more in delinquent taxes as defined in section 270C.72;
(5) had a sales and use tax permit revoked by the commissioner of revenue within
the past two years; or
(6) after demand, has not filed tax returns required by the commissioner of revenue.
The board may deny or refuse to renew a license under this chapter, and may revoke a
license under this chapter, if any of the conditions in this paragraph are applicable to
an affiliate or direct or indirect holder of more than a five percent financial interest in
the applicant or licensee.
(b) In the case of licenses for organizations, the board may not issue a license under
this chapter, and shall revoke a license under this chapter, if the organization, or an officer
or member of the governing body of the organization:
(1) has been convicted of a felony or gross misdemeanor involving theft or fraud; or
(2) has ever been convicted of a crime involving gambling; or.
(3) has had a license issued by the board or director permanently revoked for
violation of law or board rule.

    Sec. 14. Minnesota Statutes 2010, section 349.155, subdivision 4, is amended to read:
    Subd. 4. License revocation, suspension, denial; censure. (a) The board may by
order (i) deny, suspend, revoke, or refuse to renew a license or premises permit, or (ii)
censure a licensee or applicant, if it finds that the order is in the public interest and that the
applicant or licensee, or a director, officer, partner, governor, person in a supervisory or
management position of the applicant or licensee, an employee eligible to make sales on
behalf of the applicant or licensee, or direct or indirect holder of more than a five percent
financial interest in the applicant or licensee:
(1) has violated or failed to comply with any provision of this chapter or chapter
297E or 299L, or any rule adopted or order issued thereunder;
(2) has filed an application for a license that is incomplete in any material respect, or
contains a statement that, in light of the circumstances under which it was made, is false,
misleading, fraudulent, or a misrepresentation;
(3) has made a false statement in a document or report required to be submitted to
the board or the commissioner of revenue, or has made a false statement to the board, the
compliance review group, or the director;
(4) has been convicted of a crime in another jurisdiction that would be a felony if
committed in Minnesota;
(5) is permanently or temporarily enjoined by any gambling regulatory agency from
engaging in or continuing any conduct or practice involving any aspect of gambling;
(6) has had a gambling-related license revoked or suspended, or has paid or been
required to pay a monetary penalty of $2,500 or more, by a gambling regulator in another
state or jurisdiction;
(7) has been the subject of any of the following actions by the director of alcohol
and gambling enforcement or commissioner of public safety: (i) had a license under
chapter 299L denied, suspended, or revoked, (ii) been censured, reprimanded, has paid or
been required to pay a monetary penalty or fine, or (iii) has been the subject of any other
discipline by the director or commissioner;
(8) has engaged in conduct that is contrary to the public health, welfare, or safety, or
to the integrity of gambling; or
(9) based on past activities or criminal record poses a threat to the public interest or
to the effective regulation and control of gambling, or creates or enhances the dangers of
unsuitable, unfair, or illegal practices, methods, and activities in the conduct of gambling
or the carrying on of the business and financial arrangements incidental to the conduct of
gambling.
(b) The revocation or suspension of an organization license may not exceed a period
of ten years, including any revocation or suspension imposed by the board prior to the
effective date of this paragraph, except that:
(1) any prohibition placed by the board on who may be involved in the conduct,
oversight, or management of the revoked organization's lawful gambling activity is
permanent; and
(2) a revocation or suspension will remain in effect until the payment of any taxes,
fees, and fines that are delinquent have been paid by the organization to the satisfaction of
the board.

    Sec. 15. Minnesota Statutes 2010, section 349.161, subdivision 1, is amended to read:
    Subdivision 1. Prohibited acts; licenses required. (a) No person may:
    (1) sell, offer for sale, or furnish gambling equipment for use within the state other
than for lawful gambling exempt or excluded from licensing, except to an organization
licensed for lawful gambling;
    (2) sell, offer for sale, or furnish gambling equipment for use within the state
without having obtained a distributor license or a distributor salesperson license under
this section except that an organization authorized to conduct bingo by the board may
loan bingo hard cards and devices for selecting bingo numbers to another organization
authorized to conduct bingo;
    (3) sell, offer for sale, or furnish gambling equipment for use within the state that is
not purchased or obtained from a manufacturer or distributor licensed under this chapter; or
    (4) sell, offer for sale, or furnish gambling equipment for use within the state that
has the same serial number as another item of gambling equipment of the same type sold
or offered for sale or furnished for use in the state by that distributor.
    (b) No licensed distributor salesperson may sell, offer for sale, or furnish gambling
equipment for use within the state without being employed by a licensed distributor or
owning a distributor license.
(c) No distributor or distributor salesperson may also be licensed as a linked bingo
game provider under section 349.1635.

    Sec. 16. Minnesota Statutes 2010, section 349.163, subdivision 1, is amended to read:
    Subdivision 1. License required. No manufacturer of gambling equipment may
sell any gambling equipment to any person for use or resale within the state, unless the
manufacturer has a current and valid license issued by the board under this section and has
satisfied other criteria prescribed by the board by rule. A manufacturer licensed under this
section may also be licensed as a linked bingo game provider under section 349.1635.
A manufacturer licensed under this section may not also be directly or indirectly
licensed as a distributor under section 349.161.

    Sec. 17. Minnesota Statutes 2010, section 349.163, subdivision 6, is amended to read:
    Subd. 6. Samples of gambling equipment. The board shall require each licensed
manufacturer to submit to the board one or more samples of each item of gambling
equipment the manufacturer manufactures for use or resale in this state. For purposes of
this subdivision, a manufacturer is also required to submit the applicable version of any
software necessary to operate electronic devices and related systems. The board shall
inspect and test all the equipment, including software and software upgrades, it deems
necessary to determine the equipment's compliance with law and board rules. Samples
required under this subdivision must be approved by the board before the equipment being
sampled is shipped into or sold for use or resale in this state. The board shall impose a fee
of $25 for each item of gambling equipment that the manufacturer submits for approval
or for which the manufacturer requests approval. The board shall impose a fee of $100
for each sample of gambling equipment that it tests. The board may require samples of
gambling equipment to be tested by an independent testing laboratory prior to submission
to the board for approval. All costs of testing by an independent testing laboratory must be
borne by the manufacturer. An independent testing laboratory used by a manufacturer to
test samples of gambling equipment must be approved by the board before the equipment
is submitted to the laboratory for testing. The board may request the assistance of the
commissioner of public safety and the director of the State Lottery in performing the tests.

    Sec. 18. Minnesota Statutes 2010, section 349.1635, subdivision 2, is amended to read:
    Subd. 2. License application. The board may issue a license to a linked bingo game
provider or to a manufacturer licensed under section 349.163 who meets the qualifications
of this chapter and the rules promulgated by the board. The application shall be on a form
prescribed by the board. The license is valid for two years and the fee for a linked bingo
game provider license is $5,000 per year.

    Sec. 19. Minnesota Statutes 2010, section 349.1635, is amended by adding a
subdivision to read:
    Subd. 5. Linked bingo game services requirements. A linked bingo game
provider shall contract with licensed distributors for linked bingo game services including,
but not limited to, the solicitation of agreements with licensed organizations, and
installation, repair, or maintenance of the linked bingo game system. No linked bingo
game provider may contract with any distributor on an exclusive basis. A linked bingo
game provider may refuse to contract with a licensed distributor if the linked bingo
game provider demonstrates that the licensed distributor is not capable of performing
the services under the contract.

    Sec. 20. Minnesota Statutes 2010, section 349.165, subdivision 2, is amended to read:
    Subd. 2. Contents of application. An application for a premises permit must
contain:
(1) the name and address of the applying organization;
(2) a description of the site for which the permit is sought, including its address and,
where applicable, its placement within another premises or establishment;
(3) if the site is leased, the name and address of the lessor and information about the
lease the board requires, including all rents and other charges for the use of the site. The
lease term is concurrent with the term of the premises permit. The lease must contain a
30-day termination clause. No lease is required for the conduct of a raffle; and
(4) other information the board deems necessary to carry out its purposes.
An organization holding a premises permit must notify the board in writing within
ten days whenever any material change is made in the above information.

    Sec. 21. Minnesota Statutes 2010, section 349.17, subdivision 6, is amended to read:
    Subd. 6. Conduct of bingo. A game of bingo begins with the first letter and number
called or displayed. Each player must cover, mark, or activate the numbers when bingo
numbers are randomly selected, and announced, and or displayed to the players, either
manually or with a flashboard and monitor. The game is won when a player, using
bingo paper, bingo hard card, or a facsimile of a bingo paper sheet, has completed, as
described in the bingo program, a previously designated pattern or previously determined
requirements of the game and declared bingo. The game is completed when a winning
card, sheet, or facsimile is verified and a prize awarded pursuant to subdivision 3.

    Sec. 22. Minnesota Statutes 2010, section 349.17, subdivision 7, is amended to read:
    Subd. 7. Bar bingo. An organization may conduct bar bingo subject to the
following restrictions:
    (1) the bingo is conducted at a site the organization owns or leases and which has a
license for the sale of intoxicating beverages on the premises under chapter 340A;
    (2) the bingo is conducted using only bingo paper sheets or facsimiles of bingo paper
sheets purchased from a licensed distributor or licensed linked bingo game provider; and
    (3) no rent may be paid for a bar bingo occasion, except as allowed in section
349.185.

    Sec. 23. Minnesota Statutes 2010, section 349.17, subdivision 8, is amended to read:
    Subd. 8. Linked bingo games. (a) A licensed organization may conduct or
participate in not more than two linked bingo games per occasion, one of which may be a
including progressive game games in which a portion of the prize is carried over from one
occasion game to another until won by a player achieving a bingo within a predetermined
amount of bingo numbers called.
    (b) Each participating licensed organization shall contribute to each prize awarded in
a linked bingo game in an amount not to exceed $300 Linked bingo games may only be
conducted by licensed organizations who have a valid agreement with the linked bingo
game provider.
    (c) An electronic bingo device as defined in section 349.12, subdivision 12a, may
be used for a linked bingo game.
    (d) Linked bingo games played on an electronic bingo device may be located only at
a permitted premises where the organization conducts another form of lawful gambling
and the premises is:
    (1) a licensed premises for the on-sale or off-sale of intoxicating liquor or 3.2 percent
malt beverages, except for a general food store or drug store permitted to sell alcoholic
beverages under section 340A.405, subdivision 1; or
    (2) where bingo is conducted as the primary business, the premises has a seating
capacity of at least 100, and admission is restricted to persons 18 years or older.
    (e) For linked bingo games played on an electronic bingo device:
(1) no more than six electronic bingo devices may be in play at a permitted premises
with 200 seats or less;
(2) no more than 12 electronic bingo devices may be in play at a permitted premises
with 201 seats or more; and
    (3) no more than 50 electronic bingo devices may be in play for premises where
bingo is the primary business.
Seating capacity is determined as specified under the local fire code.
    (f) Prior to a bingo occasion for linked bingo games played on an electronic bingo
device, the linked bingo game provider, on behalf of the participating organizations, must
provide to the board a bingo program in a format prescribed by the board.
    (d) (g) The board may adopt rules to:
    (1) specify the manner in which a linked bingo game must be played and how the
linked bingo prizes must be awarded;
    (2) specify the records to be maintained by a linked bingo game provider;
    (3) require the submission of periodic reports by the linked bingo game provider and
specify the content of the reports;
    (4) establish the qualifications required to be licensed as a linked bingo game
provider; and
    (5) any other matter involving the operation of a linked bingo game.

    Sec. 24. Minnesota Statutes 2010, section 349.1721, is amended by adding a
subdivision to read:
    Subd. 3. Pull-tab dispensing devices restrictions and requirements. (a) The
number of paper pull-tab dispensing devices located on any permitted premises is limited
to three.
(b) The number of pull-tab dispensing devices that use facsimiles of paper pull-tabs
is limited to:
(1) no more than six devices in play at any permitted premises with 200 seats or less;
(2) no more than 12 devices in play at any permitted premises with 201 seats
or more; and
(3) for premises where the primary business is bingo, the number of devices that
may be in play will be determined by the board.
Seating capacity is determined as specified under the local fire code.
(c) The use of any pull-tab dispensing device must be at a permitted premises
which is:
(1) a licensed premises for on-sales of intoxicating liquor or 3.2 percent malt
beverages; or
(2) a premises where bingo is conducted as the primary business and admission
is restricted to persons 18 years or older.
(d) Pull-tab dispensing devices may be used in establishments licensed for the
off-sale of intoxicating liquor, other than drugstores and general food stores licensed under
section 340A.405, subdivision 1.
(e) An organization may use pull-tab dispensing devices that use facsimiles of paper
pull-tabs if the organization conducts another form of lawful gambling at the permitted
premises.
(f) Pull-tab dispensing devices that use facsimiles of paper pull-tabs must have the
capability to:
(1) allow the board to electronically monitor the operation of the electronic pull-tab
devices and the internal accounting systems;
(2) maintain a printable, permanent record of all transactions involving the device;
and
(3) allow the board to require the deactivation of a device for violation of a law or
rule and to implement any other controls deemed by the board necessary to ensure and
maintain the integrity of games operated under this subdivision.
(g) The board shall examine prototypes of pull-tab dispensing devices that use
facsimiles of paper pull-tabs. The board may contract for the examination of the devices
and may require working models of the devices to be transported to locations the board
designates for testing, examination, and analysis. The manufacturer shall pay all costs of
any testing, examination, analysis, and transportation of the model.
    (h) Pull-tab dispensing devices that use facsimiles of paper pull-tabs shall be limited
to operation between the hours of 8:00 a.m. and 2:00 a.m.

    Sec. 25. Minnesota Statutes 2010, section 349.1721, is amended by adding a
subdivision to read:
    Subd. 4. Electronic facsimile of paper pull-tabs. (a) Tickets and deals must be in
conformance with board rules for pull-tabs.
(b) Deals must contain:
(1) a finite number of tickets in each electronic deal;
(2) a predetermined number of winning and losing tickets;
(3) serialized tracking for each deal;
(4) no regeneration of a serialized deal; and
(5) no spinning symbols which mimic a video slot machine.
(c) All deals in play must not be transferred electronically or otherwise to any other
location by the licensed organization.
(d) Deals must not be shared, commingled, or linked with any other deals or
locations.
    (e) No electronic facsimile of a paper pull-tab may be sold in a denomination of less
than 25 cents per ticket.
    (f) A player must activate or open each electronic facsimile of a pull-tab ticket and
each individual line, row, or column of each electronic facsimile of a pull-tab ticket.

    Sec. 26. Minnesota Statutes 2010, section 349.1721, is amended by adding a
subdivision to read:
    Subd. 5. Multiple chance games. The board may permit pull-tab games in which
the holders of certain predesignated winning tickets, with a prize value not to exceed $75
each, have the option of turning in the winning tickets for the chance to win a prize of
greater value.

    Sec. 27. Minnesota Statutes 2010, section 349.18, subdivision 1, is amended to read:
    Subdivision 1. Lease or ownership required; rent limitations. (a) An organization
may conduct lawful gambling only on premises it owns or leases. Leases must be on a
form prescribed by the board. The term of the lease is concurrent with the premises permit.
Leases approved by the board must specify that the board may authorize an organization
to withhold rent from a lessor for a period of up to 90 days if the board determines that
illegal gambling occurred on the premises or that the lessor or its employees participated
in the illegal gambling or knew of the gambling and did not take prompt action to stop the
gambling. The lease must authorize the continued tenancy of the organization without
the payment of rent during the time period determined by the board under this paragraph.
Copies of all leases must be made available to employees of the board and the Division of
Alcohol and Gambling Enforcement on request.
    (b) Rent paid by an organization for leased premises for the conduct of pull-tabs,
tipboards, and paddle wheels is subject to the following limits:
    (1) for booth operations, including booth operations where a paper pull-tab
dispensing device is located, booth operations where a bar operation is also conducted,
and booth operations where both a paper pull-tab dispensing device is located and a bar
operation is also conducted, the maximum rent is: monthly rent is not more than ten
percent of gross profits for that month;
    (i) in any month where the organization's gross profit at those premises does not
exceed $4,000, up to $400; and
    (ii) in any month where the organization's gross profit at those premises exceeds
$4,000, up to $400 plus not more than ten percent of the gross profit for that month in
excess of $4,000;
    (2) for bar operations, including bar operations where a pull-tab dispensing device is
located but not including bar operations subject to clause (1), and for locations where only
a pull-tab dispensing device is located the monthly rent is subject to the following:
    (i) in any month where the organization's gross profit at those premises does not
exceed $1,000, up to $200; and
    (ii) in any month where the organization's gross profit at those premises exceeds
$1,000, up to $200 plus not more than 20 percent of the gross profit for that month
in excess of $1,000;
(i) not more than 20 percent of the monthly gross profits from the sale of paper
pull-tabs or tipboards; and
(ii) not more than 17 percent of the monthly gross profits from sales of electronic
linked bingo games and electronic facsimiles of paper pull-tabs;
    (3) a lease not governed by clauses (1) and (2) must be approved by the board
before becoming effective;
    (4) total rent paid to a lessor from all organizations from leases governed by clause
(1) may not exceed $1,750 per month.
    (c) Rent paid by an organization for leased premises for the conduct of bingo is
subject to either of the following limits at the option of the parties to the lease:
    (1) not more than ten percent of the monthly gross profit from all lawful gambling
activities held during bingo occasions excluding bar bingo or at a rate based on a cost per
square foot not to exceed 110 percent of a comparable cost per square foot for leased space
as approved by the director; and
    (2) no rent may be paid for bar bingo except as allowed in section 349.185.
    (d) Amounts paid as rent under leases are all-inclusive. No other services or expenses
provided or contracted by the lessor may be paid by the organization, including, but not
limited to, trash removal, janitorial and cleaning services, snow removal, lawn services,
electricity, heat, security, security monitoring, storage, other utilities or services, and, in
the case of bar operations, cash shortages, unless approved by the director. The lessor shall
be responsible for the cost of any communications network or service that is required to
conduct electronic gaming. Any other expenditure made by an organization that is related
to a leased premises must be approved by the director. An organization may not provide
any compensation or thing of value to a lessor or the lessor's employees from any fund
source other than its gambling account. Rent payments may not be made to an individual.
    (e) Notwithstanding paragraph (b), an organization may pay a lessor for food or
beverages or meeting room rental if the charge made is comparable to similar charges
made to other individuals or groups.
    (f) No entity other than the licensed organization may conduct any activity within
a booth operation on a leased premises.
(g) The rent provisions under this subdivision shall be monitored by the board and
shall be reported to the legislature as part of the board's annual report.

    Sec. 28. [349.185] GROSS PROFIT ALLOCATION; LINKED BINGO ON
ELECTRONIC BINGO DEVICES.
(a) The allocation of gross profits from the operation of linked bingo on electronic
bingo devices is as provided in this section. The licensed organization shall receive:
(1) a minimum of 50 percent of gross profits to be used exclusively for lawful
purpose expenditures as defined under section 349.12, subdivision 25; and
(2) no more than 13 percent each fiscal year for allowable expenses as defined
under section 349.12, subdivision 3a, and does not include the expenses allocated under
paragraph (b) or (c).
(b) A linked bingo game provider shall receive no more than 20 percent of gross
profits.
(c) Where the primary business is not bingo and the premises is leased and linked
bingo is played on electronic bingo devices, the lessor is subject to the limits in section
349.18. The licensed organization shall be responsible for the overall conduct of linked
bingo games but the lessor shall provide staffing to operate the linked bingo games at the
premises in order to receive the percentage of profit allocation and the lessor is responsible
for cash shortages.
(d) Where the primary business is bingo and the linked bingo is played on electronic
bingo devices, the lessor is subject to the rent limitations under section 349.18, subdivision
1, paragraph (c), clause (1), and the licensed organization will receive the value identified
under paragraph (c).
(e) The allocation of gross profits under this subdivision shall be monitored by the
board and shall be reported to the legislature as part of the board's annual report.

    Sec. 29. Minnesota Statutes 2010, section 349.211, subdivision 1a, is amended to read:
    Subd. 1a. Linked bingo prizes. Prizes for a linked bingo game shall be limited
as follows:
(1) no organization may contribute more than $300 per linked bingo game to a
linked bingo prize pool for linked bingo games played without electronic bingo devices,
an organization may not contribute to a linked bingo game prize pool more than $300
per linked bingo game per site;
(2) for linked bingo games played with electronic bingo devices, an organization
may not contribute more than 85 percent of the gross receipts per permitted premises to
a linked bingo game prize pool;
(2) (3) no organization may award more than $200 for a linked bingo game
consolation prize. For purposes of this subdivision, a linked bingo game consolation
prize is a prize awarded by an organization after a prize from the linked bingo prize pool
has been won; and
    (3) (4) for a progressive linked bingo game, if no player declares a valid bingo
within the for a progressive prize or prizes based on a predetermined amount of bingo
numbers called and posted win determination, a portion of the prize is gross receipts
may be carried over to another occasion game until the accumulated progressive prize
is won. The portion of the prize that is not carried over must be awarded to the first
player or players who declares a valid bingo as additional numbers are called. If a valid
bingo is declared within the predetermined amount of bingo numbers called, the entire
prize pool for that game is awarded to the winner. The annual limit for progressive bingo
game prizes contained in subdivision 2 must be reduced by the amount an organization
contributes to progressive linked bingo games during the same calendar year.; and
(5) for linked bingo games played on electronic bingo devices, linked bingo prizes
in excess of $599 shall be paid by the linked bingo game provider to the player within
three business days. Winners of linked bingo prizes in excess of $599 will be given a
receipt or claim voucher as proof of a win.

    Sec. 30. APPROPRIATION.
$440,000 in fiscal year 2012 and $880,000 in fiscal year 2013 are appropriated
from the lawful gambling regulation account in the special revenue fund to the Gambling
Control Board for operating expenses related to the regulatory oversight of lawful
gambling.