1.2relating to gambling; authorizing the director of the State Lottery to establish
1.3gaming machines; imposing a fee on gaming machine revenue; providing powers
1.4and duties to the director;amending Minnesota Statutes 2010, sections 240.13,
1.5by adding a subdivision; 299L.07, subdivisions 2, 2a; 340A.410, subdivision
1.65; 349A.01, subdivision 10, by adding subdivisions; 349A.10, subdivision
1.73; 349A.13; 541.20; 541.21; 609.75, subdivision 3; 609.761, subdivision 2;
1.8proposing coding for new law in Minnesota Statutes, chapters 297A; 349A;
1.9repealing Minnesota Statutes 2010, section 240.30, subdivision 8.
1.10BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:


1.13    Section 1. [297A.651] LOTTERY GAMING MACHINES; FEE.
1.14(a) Adjusted gross revenue from the operation of gaming machines authorized under
1.15chapter 349A is exempt from the taxes imposed under section 297A.62, chapter 297E,
1.16or any other tax, permit, or assessment for conducting a gambling activity that is not
1.17imposed herein. The State Lottery must, on or before the 20th day of each month, transmit
1.18to the commissioner an amount equal to the adjusted gross revenue from the operation
1.19of gaming machines, as defined in section 349A.01, for the previous month multiplied
1.20by: (1) 25 percent of annual adjusted gross revenue generated by the licensee up to
1.21$125,000,000; (2) 30 percent of annual adjusted gross revenue generated by the licensee
1.22between $125,000,000 and $200,000,000; and (3) 40 percent of annual adjusted gross
1.23revenue generated by the licensee in excess of $200,000,000. The commissioner shall
1.24deposit the money transmitted under this section in the state treasury. From the amounts
1.25transmitted by the commissioner, $1,000,000 is annually appropriated to the commissioner
1.26of human services for the compulsive gambling treatment program established in section
2.1245.98; provided, however, that this appropriation supplement and not replace existing
2.2funding for the program. The remainder of money transmitted under this section shall be
2.3deposited in the state treasury and allocated as provided in paragraph (b).
2.4(b) Money deposited in the state treasury under paragraph (a) must be allocated by
2.5the commissioner to the following funds and purposes in priority order:
2.6(1) to the general fund, the amount necessary to increase the aid payment schedule
2.7for school district aids and credits payments in section 127A.45, to not more than 90
2.8percent rounded to the nearest tenth of a percent without exceeding the amount available
2.9and with any remaining funds deposited in the budget reserve;
2.10(2) to the general fund, the amount necessary to restore all or a portion of the net
2.11aid reduction under section 127A.441, and to reduce the property tax revenue recognition
2.12shift under section 123B.75, subdivision 5, paragraph (a), and Laws 2003, First Special
2.13Session chapter 9, article 5, section 34, as amended by Laws 2003, First Special Session
2.14chapter 23, section 20, by the same amount; and
2.15(3) to the bond proceeds fund, to pay, redeem, or defease bonds of the state sold and
2.16issued pursuant to sections 16A.631 to 16A.675, and the Minnesota Constitution, article
2.17XI, sections 4 to 7.

2.18    Sec. 2. Minnesota Statutes 2010, section 299L.07, subdivision 2, is amended to read:
2.19    Subd. 2. Exclusions. Notwithstanding subdivision 1, a gambling device:
2.20(1) may be sold by a person who is not licensed under this section, if the person (i) is
2.21not engaged in the trade or business of selling gambling devices, and (ii) does not sell
2.22more than one gambling device in any calendar year;
2.23(2) may be sold by the governing body of a federally recognized Indian tribe
2.24described in subdivision 2a, paragraph (b), clause (1), which is not licensed under this
2.25section, if (i) the gambling device was operated by the Indian tribe, (ii) the sale is to
2.26a distributor licensed under this section, and (iii) the licensed distributor notifies the
2.27commissioner of the purchase, in the same manner as is required when the licensed
2.28distributor ships a gambling device into Minnesota;
2.29(3) may be possessed by a person not licensed under this section if the person holds
2.30a permit issued under section 299L.08; and
2.31(4) may be possessed by a state agency, with the written authorization of the director,
2.32for display or evaluation purposes only and not for the conduct of gambling.; and
2.33(5) may be possessed by the State Lottery as authorized under chapter 349A.

2.34    Sec. 3. Minnesota Statutes 2010, section 299L.07, subdivision 2a, is amended to read:
3.1    Subd. 2a. Restrictions. (a) A manufacturer licensed under this section may sell,
3.2offer to sell, lease, or rent, in whole or in part, a gambling device only to a distributor
3.3licensed under this section or to the State Lottery as authorized under chapter 349A.
3.4(b) A distributor licensed under this section may sell, offer to sell, market, rent,
3.5lease, or otherwise provide, in whole or in part, a gambling device only to:
3.6(1) the governing body of a federally recognized Indian tribe that is authorized
3.7to operate the gambling device under a tribal state compact under the Indian Gaming
3.8Regulatory Act, Public Law 100-497, and future amendments to it;
3.9(2) a person for use in the person's dwelling for display or amusement purposes in a
3.10manner that does not afford players an opportunity to obtain anything of value;
3.11(3) another distributor licensed under this section; or
3.12(4) a person in another state who is authorized under the laws of that state to possess
3.13the gambling device.; or
3.14(5) the State Lottery as authorized under chapter 349A.

3.15    Sec. 4. Minnesota Statutes 2010, section 340A.410, subdivision 5, is amended to read:
3.16    Subd. 5. Gambling prohibited. (a) Except as otherwise provided in this
3.17subdivision, no retail establishment licensed to sell alcoholic beverages may keep, possess,
3.18or operate, or permit the keeping, possession, or operation on the licensed premises of dice
3.19or any gambling device as defined in section 349.30, or permit gambling therein.
3.20(b) Gambling equipment may be kept or operated and raffles conducted on licensed
3.21premises and adjoining rooms when the use of the gambling equipment is authorized by
3.22(1) chapter 349, (2) a tribal ordinance in conformity with the Indian Gaming Regulatory
3.23Act, Public Law 100-497, or (3) a tribal-state compact authorized under section 3.9221.
3.24(c) Lottery tickets may be purchased and sold within the licensed premises as
3.25authorized by the director of the lottery under chapter 349A.
3.26(d) Dice may be kept and used on licensed premises and adjoining rooms as
3.27authorized by section 609.761, subdivision 4.
3.28(e) Gambling devices may be operated on the premises of a licensed racetrack
3.29as authorized by chapter 349A.

3.30    Sec. 5. Minnesota Statutes 2010, section 349A.01, is amended by adding a subdivision
3.31to read:
3.32    Subd. 1a. Adjusted gross gaming machine revenue. "Adjusted gross gaming
3.33machine revenue" means the sum of all money received by the lottery for gaming machine
3.34plays, less the amount paid out in prizes for gaming machine games.

4.1    Sec. 6. Minnesota Statutes 2010, section 349A.01, is amended by adding a subdivision
4.2to read:
4.3    Subd. 6a. Gaming machine. "Gaming machine" means any machine in which a
4.4coin token or other currency is deposited to play a game that uses a video display and
4.5microprocessors.

4.6    Sec. 7. Minnesota Statutes 2010, section 349A.01, is amended by adding a subdivision
4.7to read:
4.8    Subd. 6b. Gaming machine game. "Gaming machine game" means a game
4.9operated by a gaming machine as authorized by the director.

4.10    Sec. 8. Minnesota Statutes 2010, section 349A.01, is amended by adding a subdivision
4.11to read:
4.12    Subd. 6c. Gaming machine play. "Gaming machine play" means an electronic
4.13record that proves participation in a gaming machine game.

4.14    Sec. 9. Minnesota Statutes 2010, section 349A.01, subdivision 10, is amended to read:
4.15    Subd. 10. Lottery procurement contract. "Lottery procurement contract" means a
4.16contract to provide lottery products, gaming machines, maintenance of gaming machines,
4.17computer hardware and software used to monitor sales of lottery tickets and gaming
4.18machine plays, and lottery tickets. "Lottery procurement contract" does not include
4.19a contract to provide an annuity or prize payment agreement or materials, supplies,
4.20equipment, or services common to the ordinary operation of a state agency.

4.21    Sec. 10. Minnesota Statutes 2010, section 349A.10, subdivision 3, is amended to read:
4.22    Subd. 3. Lottery operations. (a) The director shall establish a lottery operations
4.23account in the lottery fund. The director shall pay all costs of operating the lottery,
4.24including payroll costs or amounts transferred to the state treasury for payroll costs, but
4.25not including lottery prizes, from the lottery operating account. The director shall credit to
4.26the lottery operations account amounts sufficient to pay the operating costs of the lottery.
4.27(b) Except as provided in paragraph (e), the director may not credit in any fiscal
4.28year thereafter amounts to the lottery operations account which when totaled exceed
4.29nine percent of gross revenue to the lottery fund in that fiscal year. In computing total
4.30amounts credited to the lottery operations account under this paragraph the director shall
4.31disregard amounts transferred to or retained by lottery retailers as sales commissions or
5.1other compensation and amounts transferred or retained by a racetrack under a location
5.2contract under section 349A.17.
5.3(c) The director of the lottery may not expend after July 1, 1991, more than 2-3/4
5.4percent of gross revenues in a fiscal year for contracts for the preparation, publication, and
5.5placement of advertising.
5.6(d) Except as the director determines, the lottery is not subject to chapter 16A
5.7relating to budgeting, payroll, and the purchase of goods and services.
5.8(e) In addition to the amounts credited to the lottery operations account under
5.9paragraph (b), the director is authorized, if necessary, to meet the current obligations of
5.10the lottery and to credit up to 25 percent of an amount equal to the average annual amount
5.11which was authorized to be credited to the lottery operations account for the previous three
5.12fiscal years but was not needed to meet the obligations of the lottery.

5.13    Sec. 11. Minnesota Statutes 2010, section 349A.13, is amended to read:
5.14349A.13 RESTRICTIONS.
5.15Nothing in this chapter:
5.16(1) authorizes the director to conduct a lottery game or contest the winner or winners
5.17of which are determined by the result of a sporting event other than a horse race conducted
5.18under chapter 240;
5.19(2) authorizes the director to install or operate a lottery device operated by coin or
5.20currency which when operated determines the winner of a game, except as authorized
5.21under section 349A.17; and
5.22(3) authorizes the director to sell pull-tabs as defined under section 349.12,
5.23subdivision 32 .

5.24    Sec. 12. [349A.17] GAMING MACHINES.
5.25    Subdivision 1. Location contract. (a) The director may enter into a contract with
5.26a person to provide locations for gaming machines. Contracts entered into under this
5.27section are not subject to chapter 16C. The director may only enter a contract under this
5.28subdivision with a person who holds a class A license under chapter 240. The gaming
5.29machines may only be placed at the racetrack for which the class A license under chapter
5.30240 was issued. Contracts entered into under this section are void if the racetrack: (1)
5.31has not hosted at least 75 days of live racing, authorized by the Minnesota Racing
5.32Commission, during the previous year, or (2) has not been approved, unless approval is
5.33pending, for at least 75 days of live racing during the present year.
6.1(b) Contracts entered into must provide for compensation to the racetrack in an
6.2amount equal to at least the following percentages of adjusted gross gaming machine
6.3revenue generated at the track: (1) 60 percent of the first $125,000,000 of annual revenue;
6.4(2) 55 percent of annual revenue between $125,000,000 and $200,000,000; and (3) 45
6.5percent of annual revenue in excess of $200,000,000.
6.6(c) From the compensation received by the racetrack under this section, the racetrack
6.7shall annually remit an amount equal to one percent of the adjusted gross gaming machine
6.8revenue to both the city and the county where the racetrack is located.
6.9    Subd. 2. Initial fee. For each location at which gaming machines are provided, the
6.10location contract holder, as a condition of the contract, must agree to pay an initial fee in
6.11the amount of $25,000,000. This fee shall be paid once for each location. For contracts
6.12entered into prior to July 1, 2013, the fee must be paid prior to July 1, 2013. For each
6.13location the initial location contract shall be for a period consisting of the biennium in
6.14which the initial fee is paid plus the succeeding five fiscal years. As part of the location
6.15contract the state shall agree to repay to the location contract holder, $5,000,000, plus
6.16an amount equal to any state authorized fees, taxes, or other charges upon the location
6.17contract holder, related to providing locations for gaming machines, not in existence
6.18when the location contract was executed, in each of the five fiscal years succeeding the
6.19biennium in which the initial fee was paid.
6.20    Subd. 3. Operation. (a) All gaming machines that are placed at a racetrack under
6.21subdivision 1 must be operated and controlled by the director.
6.22(b) Gaming machines must be owned or leased by the director, however, the financial
6.23responsibility for all other activities related to the gaming facility including, but not
6.24limited to, advertising, marketing, facility expenses, staffing, security, and surveillance,
6.25shall be borne by the holder of the location contract.
6.26(c) Gaming machines must be maintained by the lottery, or by a vendor that is under
6.27the control and direction of the director.
6.28(d) The director must have a central communications system that monitors activities
6.29on each gaming machine. The central communications system must be located at a
6.30lottery office.
6.31(e) The director must supervise the general security arrangements associated
6.32with and relating to the operation of the gaming machines and implement procedures
6.33as deemed appropriate.
6.34(f) Advertising and promotional material produced by the racetrack relating to
6.35gaming machines located at the facility must be approved by the director.
7.1(g) The director may implement such other controls as are deemed necessary for the
7.2operation of gaming machines under this section.
7.3    Subd. 4. Specifications. Gaming machines must:
7.4(1) maintain on nonresettable meters a permanent record, capable of being printed
7.5out, of all transactions by the machine and all entries into the machine; and
7.6(2) be capable of being linked electronically to a central communications system to
7.7provide auditing program information as required by the director.
7.8    Subd. 5. Games. The director shall specify the games that may be placed on
7.9a gaming machine as provided in section 349A.04. Gaming machines may conduct
7.10pari-mutuel wagering and display horse races under specifications provided by the director.
7.11    Subd. 6. Examination of machines. The director shall examine prototypes of
7.12gaming machines and require that the manufacturer of the machine pay the cost of the
7.13examination. The director may contract for the examination of gaming machines.
7.14    Subd. 7. Testing of machines. The director may require working models of a
7.15gaming machine to be transported to the locations the director designates for testing,
7.16examination, and analysis. The manufacturer shall pay all costs for testing, examination,
7.17analysis, and transportation of the machine model.
7.18    Subd. 8. Prizes. A person who plays a gaming machine agrees to be bound by the
7.19rules and game procedures applicable to that particular gaming machine game. The player
7.20acknowledges that the determination of whether the player has won a prize is subject to
7.21the rules and game procedures adopted by the director, claim procedures established by
7.22the director for the game, and any confidential or public validation tests established by
7.23the director for the game. A person under 18 years of age may not claim a prize from the
7.24operation of a gaming machine. A prize claimed from the play of a gaming machine game
7.25is not subject to section 349A.08, subdivision 8.
7.26    Subd. 9. Prohibitions. (a) A person under the age of 18 years may not play a
7.27game on a gaming machine.
7.28(b) The director or any employee of the lottery, or a member of the immediate family
7.29residing in the same household, may not play a game on a gaming machine or receive a
7.30prize from the operation of a gaming machine.
7.31    Subd. 10. Compulsive gambling notice. The director shall prominently post, in the
7.32area where the gaming machines are located, the toll-free telephone number established
7.33by the commissioner of human services in connection with the compulsive gambling
7.34program established under section 245.98. The director and the location provider shall
7.35establish a responsible gambling plan in consultation with the National Council on
7.36Problem Gambling or the Minnesota affiliate. By January 15 of each year, the director
8.1shall submit a report to the legislature, of not more than five pages in length, setting forth
8.2the status of the responsible gambling plan.
8.3    Subd. 11. Local licenses. Except as provided in subdivision 1, no political
8.4subdivision may require a license to operate a gaming machine, restrict or regulate the
8.5placement of gaming machines, or impose a tax or fee on the business of operating
8.6gaming machines.

8.7    Sec. 13. Minnesota Statutes 2010, section 541.20, is amended to read:
8.8541.20 RECOVERY OF MONEY LOST.
8.9Every person who, by playing at cards, dice, or other game, or by betting on the
8.10hands or sides of such as are gambling, shall lose to any person so playing or betting
8.11any sum of money or any goods, and pays or delivers the same, or any part thereof, to
8.12the winner, may sue for and recover such money by a civil action, before any court
8.13of competent jurisdiction. For purposes of this section, gambling shall not include
8.14pari-mutuel wagering conducted under a license issued pursuant to chapter 240, purchase
8.15or sale of tickets in the state lottery, purchase of gaming machine plays as authorized under
8.16chapter 349A, or gambling authorized under chapters 349 and 349A.

8.17    Sec. 14. Minnesota Statutes 2010, section 541.21, is amended to read:
8.18541.21 COMMITMENTS FOR GAMBLING DEBT VOID.
8.19Every note, bill, bond, mortgage, or other security or conveyance in which the whole
8.20or any part of the consideration shall be for any money or goods won by gambling or
8.21playing at cards, dice, or any other game whatever, or by betting on the sides or hands
8.22of any person gambling, or for reimbursing or repaying any money knowingly lent or
8.23advanced at the time and place of such gambling or betting, or lent and advanced for any
8.24gambling or betting to any persons so gambling or betting, shall be void and of no effect
8.25as between the parties to the same, and as to all persons except such as hold or claim
8.26under them in good faith, without notice of the illegality of the consideration of such
8.27contract or conveyance. The provisions of this section shall not apply to: (1) pari-mutuel
8.28wagering conducted under a license issued pursuant to chapter 240; (2) purchase of tickets
8.29in the state lottery or other wagering authorized under chapter 349A; (3) gaming activities
8.30conducted pursuant to the Indian Gaming Regulatory Act, United States Code, title 25,
8.31section 2701 et seq.; or (4) lawful gambling activities permitted under chapter 349.

8.32    Sec. 15. Minnesota Statutes 2010, section 609.75, subdivision 3, is amended to read:
8.33    Subd. 3. What are not bets. The following are not bets:
9.1(1) a contract to insure, indemnify, guarantee or otherwise compensate another for a
9.2harm or loss sustained, even though the loss depends upon chance;
9.3(2) a contract for the purchase or sale at a future date of securities or other
9.4commodities;
9.5(3) offers of purses, prizes or premiums to the actual contestants in any bona fide
9.6contest for the determination of skill, speed, strength, endurance, or quality or to the bona
9.7fide owners of animals or other property entered in such a contest;
9.8(4) the game of bingo when conducted in compliance with sections 349.11 to 349.23;
9.9(5) a private social bet not part of or incidental to organized, commercialized, or
9.10systematic gambling;
9.11(6) the operation of equipment or the conduct of a raffle under sections 349.11 to
9.12349.22 , by an organization licensed by the Gambling Control Board or an organization
9.13exempt from licensing under section 349.166;
9.14(7) pari-mutuel betting on horse racing when the betting is conducted under chapter
9.15240; and
9.16(8) the purchase and sale of state lottery tickets and plays on a gaming machine
9.17under chapter 349A.

9.18    Sec. 16. Minnesota Statutes 2010, section 609.761, subdivision 2, is amended to read:
9.19    Subd. 2. State lottery. Sections 609.755 and 609.76 do not prohibit the operation of
9.20the state lottery or the sale, possession, or purchase of tickets for the state lottery under
9.21chapter 349A, or the manufacture, possession, sale, or operation of a gaming machine
9.22under chapter 349A.

9.23    Sec. 17. SEVERABILITY; SAVINGS.
9.24If any provision of this act is found to be invalid because it is in conflict with a
9.25provision of the Minnesota Constitution or the Constitution of the United States, or for any
9.26other reason, all other provisions of this act shall remain valid and any rights, remedies,
9.27and privileges that have been otherwise accrued by this act, shall remain in effect and may
9.28be proceeded with and concluded under this act.

9.29    Sec. 18. EFFECTIVE DATE.
9.30This article is effective the day following final enactment.


10.3    Section 1. Minnesota Statutes 2010, section 240.13, is amended by adding a
10.4subdivision to read:
10.5    Subd. 5a. Purse payments. To mitigate the cost to the horse racing industry
10.6resulting from the dilution of pari-mutuel consumption at a racetrack having a location
10.7contract with the director of the lottery, any person, licensed under this chapter, who enters
10.8into a location contract with the director of the lottery, must transfer, on a quarterly basis,
10.9an amount of money equal to 14 percent of the amount the licensee receives or retains
10.10pursuant to the location contract. This transfer is required of the licensee regardless of
10.11any financial consequences resulting from the location contract. The money transferred
10.12pursuant to this subdivision shall be used as follows:
10.13(a) Eighty percent shall be used to augment purses for live races conducted at the
10.14class A licensed facilities. The commission shall routinely transfer the money in the purse
10.15fund accounts to the licensees conducting racing for each breed and direct the licensee
10.16to augment the purses for that breed with the funds received from the commission.
10.17Purse augmentations required under this subdivision are in addition to purse payments
10.18otherwise established by law or contract. The location contract holder and the organization
10.19representing the majority of horsepersons racing at the location contract holder's racetrack
10.20may, by written contract, agree to use a portion of the transferred funds for racing-related
10.21purposes other than purse augmentation. The commission shall determine the percentages
10.22of the purse fund account to be designated for the augmentation of the purses of each breed
10.23racing at a class A facility. The determination shall be based on consumer preference, the
10.24percentage of the pari-mutuel handle generated in Minnesota by each breed, and a goal of
10.25maximizing the economic impact of horse racing in Minnesota.
10.26(b) Sixteen percent shall be transmitted to the breeder's fund to be used for each
10.27breed racing at a class A licensed facility in amounts determined by the commission.
10.28Amounts transferred to a breeder's fund shall be used for the purposes of section 240.18,
10.29subdivisions 2, paragraph (d), and 3, paragraph (b), subject to the proportionality
10.30requirement in section 240.18, subdivision 1.
10.31(c) Four percent of the contributions received from the licensee shall be placed in an
10.32equine industry enhancement fund established by the commission. The commission shall
10.33award grants from this account designed to support and improve the nonracing equine
10.34industry including, but not limited to, construction of facilities and trails, production of
10.35shows, and issues related to retired horses.

11.1    Sec. 2. REPEALER.
11.2Minnesota Statutes 2010, section 240.30, subdivision 8, is repealed.

11.3    Sec. 3. EFFECTIVE DATE.
11.4This article is effective the day following final enactment.