Revision of Lawful Gambling PolicyREVISION OF LAWFUL GAMBLING POLICY
Overview
The City Council discussed the current City policy on Lawful Gambling during October.
The Council requested that staff provide language addressing various revisions to
Legislative Policy 4-D. The City Council further directed staff to solicit comments and
suggestions from local businesses, fraternal organizations, and other interested parties.
The following issues were raised:
• Establishing a moratorium
• Limiting the number of sites where gambling can take place
• Limiting bingo
• birecting where a percentage of lawful expenditures would have to be made
• Limit the number of sites where an organization can conduct gambling
• Prevent the co-mingling of money from one site to another or from one form
of gambling to another
• Requiring organizations, which conduct gambling on premises that they own,
to offer their halls for public use
The City Council approved a moratorium on October 21, 1997 that took effect on
November 6, 1997. The moratorium is set to expire on January 1, 1998. Language
addressing the above issues was prepared and distributed to the Council and other
interested parties. As of this date the City has received three letters with comments
about the proposed changes. The City also received a letter opposing gambling.
Fraternal organizations, on-sale liquor establishments and other interested parties have
been informed that this issue will be discussed at the December 9 Worksession.
The Council also had questions concerning where lawful expenditures are made and
how much money would be raised if the Council established a "10% fund" as proposed
on page 3. A table on page 5 answers these questions.
Attachments
• An overview of the proposed changes along with a summary of comments that have
been received.
• A summary showing where Lawfu! Expenditures are made.
• Letters.
• Legislative Policy 4-D.
• Resolution 97-107 establishing the moratorium.
A. Genellie, Assistant City Manager
Issues to Consider
1. Moratorium. Staff has prepared a Resolution imposing a moratorium on the
approval of any new premises permits in the City. The moratorium as currently
written, however, may apply to an existing organization seeking a renewal of a
current premises permit. The moratorium could conceivably be rewritten to only
apply to applications for premises permits at new sites in Hopkins.
Jaycees: No response.
American Legion: Opposes any future moratoriums.
2. Limiting the number of sites where gamblingcan be conducted. If the Council
wishes to incorporate this restriction into its policy, staff suggests using the following
language: "The maximum number of premises permits issued pursuant to
Minnesota Statute section 349.165 shall be eleven (11)."
Jaycees: No limit.
American Legion: No limit.
3. Limiting bingo. The State of Minnesota recognizes that bingo is different from other
forms of Lawful Gambling. An organization must get a Class A license, for which it
must pay more, in order to conduct bingo. The only difference between a Class A
license and a Class B license is the ability to conduct bingo.
The City of Hopkins has also, in the past, treated bingo differently from other forms
of lawful gambling. The City has turned down the Jaycees twice when that
organization sought to establish bingo halls. In 1991 the City Council approved
bingo at the Boston Garden but only with the assurance that bingo would be
conducted on just two nights per week.
There are a number of ways that bingo could be restricted:
• Restrict bingo to sites owned and operated by licensed organizations: "A Class A
license will only be approved for an organization that is licensed pursuant to
Minnesota Statute section 349.16 and that conducts gambling on premises that it
owns and operates. Organizations with Class A licenses may not conduct any
other gambling at any other site within the City."
• Restrict the number of bingo occasions per week: "No organization with a Class
A license may conduct more than _ bingo occasions per week."
Jaycees: Only allow bingo at sites owned and operated by the licensed
organization.
American Legion: Limit bingo to premises owned and operated by the holder of a
Class A license. Consider limits to the number of bingo occasions on a case by
case basis.
Bob Lindee: Opposes limiting bingo.
December 2, 1997
2
If the City Council wishes to direct where expenditures of charitable_gambling funds
are made it can adopt a trade area and/or require 10% of the gross profits to be
- contributed to the City.
a) "Of the gross profits derived from Lawful Gambling in Hopkins, percent of
the licensee's expenditures for lawful purposes must be on lawful purposes
conducted or located only within one or more of the following cities of Hennepin
County, Minnesota: Hopkins, Edina, Minnetonka, and St. Louis Park."
Jaycees: Already give a large percentage of their donations to the local area. If
there is a rule, they would support 75%.
American Legion: No restrictions on where lawful expenditures are made.
Bob Lindee: Supports a "75% trade area"
b) Each organization conducting lawful gambling within the City shall contribute at
least ten percent (10%) of its net profits derived from lawful gambling in the City
to a fund administered and regulated by the City. The City then shall make
contributions for the purposes defined in Minnesota Statute 349.12, subdivision
11.
Jaycees: Does not support the creation of a fund.
American Legion: Does not support the creation of a fund.
4. Limit the number of sites where an organization can conduct gamblinq. The
following language would accomplish this but current sites would probably have to
be grandfathered: "No organization licensed pursuant to Minnesota Statute section
349.16 may conduct lawful gambling at more than one location within the City,
except any organization that has prior to January 1, 1998, operated lawfully at more
than one location, may continue to operate at the locations licensed as of that date."
Jaycees: No limits on the number of sites.
American Legion: No limits on the number of sites.
Bob Lindee: Opposes a limit on the number of sites.
5. Prevent the co-mingling_of money from one site to another or from one form of
gamblinq to another. There is no provision in State law for preventing this practice.
Organizations which conduct gambling, however, are required to make regular
reports on the amount of money earned and the expenses incurred at each site
where they conduct gambling and each type of gambling that occurs at every site.
The City could require copies of these reports that would provide information for
future changes to the City's policy,
Jaycees: If required, we could provide copies of our monthly tax reports.
American Legion: Oppose any attempt to prohibit the co-mingling of funds.
Records indicating where the money is raised could be made available to the City.
December 2, 1997 3
6. Requiring organizations. which conduct aambling on premises that they own, to offer
their halls for public use. Staff is not aware of any way to legally accomplish this,
There is, however, a provision in State law that allows the expenditure of gambling
proceeds for the "Repair or maintenance of real property of capital assets when the
property is or will be used extensively as a meeting place or event location by other
nonprofit organizations or community or service groups and no rental fee is charged
for the use". Depending on how the various service organizations are justifying the
expenditures this provision may apply.
Jaycees: This rule is not necessary.
American Legion: The Legion already makes its facility available to the public. The
Legion opposes any regulation requiring organizations which own their own sites to
offer their facilities free for public use.
December 2, 1997 4
Below is summary of lawful expenditures. I am using the last year for which data is
available. I have assigned expenditures to the various categories based upon the
recipient of the funds. In some cases it is not clear whether a recipient lives in the local
area.
SUMMARY OF CHARITABLE GIVING
1996 1996 1994 1994 1994
City
School
Scholarships
Youth Sports
Local Charities
Civic organizations
Civic celebrations
Other youth
Other charities
TOTAL
Jaycees Raspberry American VFW Elks
Festival Legion
134,005 0 200 0 0
670 0 40 17,645 702
4,165 2,850 0 4,000 4,670
8,588 0 1,250 16,256 1,442
21,513 0 1,000 39,266 771
0 0 0 0 0
43,069 105,000 0 3,483 0
1,400 0 0 5,332 595
16,825 3,500 42 115,820 7,825
230,235 111,350 2,532 201,802 16,005
Percent to Local 92.1 % 96.9% 98.3% 40.0% 47.4%
Area:
Estimated 10% 28,860 14,272 6,906 22,752 2,119
Fund:
The Elks & the VFW support youth camps that may well serve local youth.
VFW supports a variety of veterans' facilities & programs outside of Hopkins.
If the City were to set up a "10% fund" from the net profits of Lawfui Gambling it would
bring in over $70,000 per year. This money, of course, would directly reduce the
amount of money available to each organization for charitable giving.
net profits are gross profits less amounts expended for allowable expenses and paid in taxes assessed
on lawful gambling
December 2, 1997 5
November 11, 1997
To: Hopkins City Council Members
1010 First Street South
Hopkins, Minnesota 55343
From: Hopkins American Legion
Executive Board & Gambling Committee
10 12th Avenue South
Hopkins, Minnesota 55343
Council Members:
This memorandum is to serve as a position paper for the membership of the Hopkins
American Legion as regards the city councils' recent discussion of possible revisions to
the City's' policy on lawful gambling. At a recent meeting, we discussed the seven points
put forth in the paper issued to us by the City Clerk. These points will be addressed
individually in this position paper.
Item #1. Moratorium: As the city council has already passed a limited moratorium, it
is position of the Hopkins American Legion to support the moratorium as passed.
However, The American Legion membership would like the city council to dismiss the
idea of a future moratorium on premises permit applications to permit the free access to
sites in the city for all organizations in compliance with the state guidelines, that have the
backing of the site owner or leasee. All of the charitable gambling organizations
currently operating in the city of Hopkins aze of different size, structure and purpose,
thus, limiting free access to sites could benefit some organizations while hindering
unfairly some others. Current City Policy 4-A, section 2.02 & section 2.03 already
insures that only Hopkins charitable organizations may be granted a site license
Item #2. Limiting the number of sites where gambling can be conducted: After
discussion, it is the view of the American Legion that the city shall place no limits on the
number of sites where chazitable gambling maybe conducted. It is our view that there
have been no problems associated with the number of sites in the past. As the ultimate
beneficiary of charitable gambling is our youth, disadvantaged and the community at
Large, there should be no restriction on the opportunities to develop new sources of
revenue that can be distributed by the volunteer boazds of our service organizations. Of
course, it is important that the site owner or leasee agree to said activities on their
premises. Current State and City laws and policies are sufficient regulation.
Item #3. Limiting Bingo: The Hopkins American Legion, in agreement with state
policy, agrees that bingo is different from other forms of charitable gambling. The
position of the American Legion is that bingo should be restricted to holder of a Class A
gambling license at locations owned and operated by the Class A license holder. We
recognize that bingo tends to draw larger number of individuals and this can present
problems in areas such as parking. At the time of application for a gambling license, the
City could address these concerns, rather than institute a blanket regulation that could
smother the progress of the local Class A license holders. If the number of nights that
bingo is held is limited, this could be done at the time of license application or renewal.
The city has already indicated that this was done in the case of bingo at the Boston
Garden location. A case by case basis is best as all organizations and situations are
different.
Item #4. Directing where lawful purpose expenditures of charitable gambling funds
are made: The issues to consider as put forth by the city in their memorandum was two
pronged in this item. First was to limit the geographic area of lawful purpose
expenditures to Hennepin County, Hopkins, Minnetonka, Edina, and St. Louis Park,
Minnesota. This could be based on a percentage or required in total for the licensee's
expenditures. The consensus of the American Legion is that no restrictions should be
placed on a trade area for lawful purpose expenditures. Our position is based on the very
essence of the American Legion. We are a veterans service organization and are
committed to helping veterans in need, promoting Americanism, helping our VA
hospitals, and assisting veterans programs, both locally and throughout the state of
Minnesota. Oftentimes, these programs and lawful purpose expenditures fall outside of
the geographic boundaries prescribed by the city's proposal. Still, it is important for the
city leadership to realize that over 85% of our charitable contributions remain within our
local community. Our support of youth athletic programs, both through our schools and
independent programs such as Little League & girls volleyball endeavors, support of
school playgrounds and athletic frelds, donations to various handicapped organizations,
and our contributions to a myriad of local community based charities demonstrate our
commitment to the greater Hopkins Area. First and foremost in our criteria for donations
is - "is the contribution going to a local, community based cause?". We strongly
recognize the need to promote a healthy and growing local area. But we also have a deep
seated responsibility to aid America's veterans and not all of those in need fall within the
geographic parameters proposed, thus we strongly urge the city to not limit the trade area
for lawful purpose expenditures. Additionally, the City's lawful gambling policy, section
2.09 as established 11/19/85 provides that city receive information on expenditures of
lawful gambling funds including the recipient, amount donated and a description of the
expenditure. The State regulations as regards charitable contributions are likewise very
clear and insure that donations are made to justifiable purposes.
The second part of Item #4 was to require a percentage of gross profits from gambling be
contributed to the City of Hopkins into a fund administered and regulated by the city in
accordance with Minnesota Statute 349.12, subdivision 11. The position of the
American Legion is to uQt support this proposal. Our feeling is that the State guidelines
are sufficient in establishing the proper uses of charitable gambling funds. To have the
city administer a pool of charitable gambling funds is going to demand additional cost to
the city for this regulation. We do not feel that this cost effective. It is far more
beneficial to have our volunteer board and membership distribute these funds to the
community -there is no cost involved this way -all of the funds go to the community,
with no cost to the taxpayers of Hopkins. If the fund is established, under state lawful
purpose expenditure guidelines, none of that money could be used to administer the fund,
thus the taxpayers would foot the bill, or it would require current city personnel to handle
this responsibility. As state guidelines are being followed rigorously, another
bureaucratic step is not going to solve a problem that does not exist. As indicated earlier,
the American Legion fosters a sense of community with its' donations and would
strenuously oppose efforts to remove the volunteer aspect of our giving back to the
community.
Item #5. Limit the number if sites where an organization can conduct gambling:
The idea as put forth in the city's memorandum would be to limit the number of sites to
one for all organizations not now conducting gambling at multiple sites. Organizations
that have multiple site locations would be allowed to continue the operation of their
multiple sites. The recommendation of the American Legion is for the city to allow for
free access to the sites in Hopkins in compliance with state guidelines and with the
backing of the site owner and leasee.
To pass a regulation such as this would only serve the organizations currently operating
multiple sites and would be inherently unfair to the smaller organizations within our
community who might wish to grow, through multiple sites, in an effort to better our
community. Additionally, it potentially could have a chilling effect for a site owner or
leasee. That is to say, they would be in effect compelled by the city to only deal with
their current charitable gambling provider. If the organization involved would become a
source of problems or have their gambling license suspended or revoked for wrongdoing,
the site owner or leasee could potentially face economic or community relations
problems not of their doing. Again, this is inherently unfair on its' face to the site
provider. The current site licensing guidelines of the State and City are sufficient in
controlling and monitoring charitable gambling in a fair and equitable manner.
Item #6. Prevent the co-mingling of money from one site to another or from one
form of gambling to another: As the City has stated, there is currently no state law
prohibiting this practice. The Gambling Board now requires organizations to report
individually on each site and on e~ form of gambling. These reports clearly indicate
where the funds come from as to game and site. This information is a matter of public
record and could be obtained by the City at any time. A City regulation prohibiting the
co-mingling of funds would in effect only serve to make money for the banks as separate
bank accounts would have to be maintained. In the case of some organizations, this
could involve ten or more separate bank accounts. The efforts spent in tracking and
balancing such accounts could be substantial. It is the consensus of the American Legion
that this time could be put to better use. Additionally, efforts by the city to develop a
regulation that could withstand legal challenges would almost be pointless, because as
stated, this information is already available from the Gambling Board. We do not
support efforts to prevent the co-mingling of funds.
Item #7. Require organizations, which conduct gambling on premises they own, to
offer their halls for free public use: The American Legion is not in favor of any
regulation by the City to demand that organizations owning their site be required to offer
their facilities free for public use. The Hopkins American Legion has had a long standing
policy to offer their facilities at no charge to non-profit and community based programs.
Our support in this area can be documented by the over SO letters of thanks that we have
on file covering the last sixteen years. Of course, there are many groups that have not
thanked us, but we still continue to provide this community service. Our opposition to
any policy concerning free use of facilities is that it is inherently biased against
organizations that own their facilities. Any organization that does or might simply lease
or own an office space would not be required to comply. It is not evenhanded to require
some, but not all, organizations to absorb the expense, wear and tear of having their
facilities open to the public. This should be a matter for the membership of the lawful
gambling organizations. Also, if the organization wishes to submit a property
expenditure request to the State Gambling Board, proof of free use of the facilities must
be submitted and documented. Any expenditures approved by the State Gambling Board
are only for areas that are approved public meeting~reac or rooms These requests are a
matter of public record and the American Legion maintains complete files on any such
request.
Summary: It is the opinion of the Hopkins American Legion membership that the city
has done a terrific job in the past on the overseeing of charitable gambling in the city
limits. The policies put into effect on 11/19/85 by resolution 85-3218 take into account
the needs of the community and the service organizations conducting lawful gambling.
Further, the recent changes in the State guidelines have strengthened the ability of the
organizations to keep accurate and proper records. The State has toughened its stance on
offenders of the regulations for gambling. The State's no nonsense approach in many
ways has simplified our tasks and ability to help the community. We feel the State is the
best way to monitor the gambling industry as they have the staff and legal resources to
accomplish this.
Thank you for your considerations on these matters and for consulting with the charitable
organizations within our great city.
Cordially,
James R Terwedo Erv Maier Daniel Krawczak
Post 320 Comma~nde~r Gambling Manag/er~ Gamb~li/ng~Committepe~
Clarence Strachota Dwayne Denchfield
Gambling Committee Gambling Committee
11/17/97
To: City of Hopkins
From: Hopkins Jaycees
Subject: Possible Revisions to the Lawful Gambling Policy
In response to your letter about revising the lawful gambling policy we offer the
following suggestions.
1. no response
2. No 1_imits on number of sites
3. Only ailow bingo at sites owned and operated by the licensed organization.
These sites would still need to comply with zoning rules.
4A. The Jaycees already give a very large percentage of their profits to the local trade
area. We have always used the Hopkins school district boundaries as a guideline.
We have made donations to groups such as the MS Society, MDA and the Minnesota
Jaycees foundation. Most of the time these donations are in the form of a pledge to a
Hopkins Jaycee member to participate in a walk- a- thon, bike-a-thon or some other a-
thon.. Obviously, there are people who live in our area who suffer from MS, MD etc.
If there is a rule, 75 % percent would be fine with the Jaycees.
4B. With the 75% rule in place you would not need to establish a fund. We believe the
groups that sponsor charitable gambling do a very good job with distributing the money
to a variety of projects and programs. Unfortunately, there will always be more
requests for donations than money available,
5. No limits on number of sites.
6. If required, we could provide copies of our monthly tax reports.
7. This rule is not necessary for the reason stated.
Paula Cayemberg
G bung Manager
~~~~~~
Dear Mayor Redepenning and City Council Members ;
I would like to express my feelings regarding the proposed changes in the cities
policy on charitable gambling .
If the City Council wishes to direct where expenditures of charitable gambling
funds are made, by adopting a trade area , I think that is a wonderful idea .The money
is raised to help worthwhile projects in our area after all . If the City Council were to
adopt a trade area and require a percentage of the net profit ,say 75% , be spent in
that area t believe that the intent of the policy would be well served .
On the question of whether the City Council should limit Bingo I think that a
distinction between Bar Bingo and High Stakes Bingo should be made .The State of
Minnesota has a different set of rules ,and restrictions for both . I believe that
restricting Bingo of any kind to sites owned by the charity operating Bingo to be
discriminatory .Certainly restricting charities with a class a license from conducting
any other gambling at another location can not be right .The city council has approved
High Stakes Bingo for the Jaycees in 1990 at Lindee's , 1991 at Boston Garden ,and
Bar Bingo in 1997, 1998, and 1999 at Lindee's . It would not be fair and equitable to
deny other charities and businesses in Hopkins the same .The State of Minnesota
Charitable Gambling Board already restricts the number of bingo sessions that can be
held in one week.
Item number 5 ,Limiting the number of sites where an organization can conduct
gambling ,would be the most unfair of all. The moratorium has prevented charities from
being able to apply for premise permits and adopting the wording in item 5 would deny
Yhem an opportunity to do so. The Jaycees and Raspberry Festival have been allowed
to operate multiple locations for years .Grand fathering them in and denying any others
the opportunity would be a travesty.
Thank you for your consideration of my concerns . I am looking forward to the
discussion on the ninth of December.
Sincerely,
~~
Bob Lindee
Lindee's Saloon & Eatery
Hopkins United Methodist Church
717 Highway 7> Hopkins, MN 55305 -Phone: (612) 938-8300
Rev. Jeff Childs
Rev. Barbara Lindgren
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POLICY 4-A
LAWFUL GAMBLING
1. PURPOSE
1.01 The purpose of this policy is to establish rules and procedures for lawful gambling in
the City of Hopkins.
2. REGULATIONS
2.01 Except as otherwise enumerated herein, the provisions of Minnesota Statute Chapter
349 relating to the definition of terms, licensing and restrictions of gambling aze
adopted and made a part of the statement of policy promulgated by the City of Hopkins
as if set out in full
2.02 An applicant for a license shall be a registered Minnesota nonprofit corporation or an
organization which is designated as exempt from the payment of income taxes by the
Internal Revenue Code and whose principal location or office is within the City of
Hopkins.
2.03 The organization defined in Section 2.02 must be engaged in its activities for the benefit
of the community within the City of Hopkins for at least five years on a perpetual,
continuous, uninterrupted basis and have at least 30 active members.
2.04 Gambling allowed by the city shall be carried on only within premises owned, occupied
or leased by the organization except such activities permissible under M.S. 349.166.
2.05 More than one organization, as defined in Section 2.02, may conduct gambling within a
single owned, occupied or leased premise. More than one organization may jointly
conduct a lawful gambling game at one location. However, two or more organizations
shall not separately conduct the same game at the same time at one location.
2.06 The operation of gambling devices and the conduct of bingo and raffles licensed or
approved pursuant to the authority granted to the City of Hopkins shall be carried on
under the supervision of a gambling manager designated by the organization. The
gambling manager shall be responsible for the operation of the gambling activity and
the receipts and profits generated from the operation.
2.07 The gambling manager shall be an active member of the organization issued the license
and shall qualify under state law.
Legislative Policy Manual -- Chapter 4-A 1
2.08 Participants in raffles, paddlewheels, pull tabs and tip boards shall be restricted to
individuals who have attained the legal drinking age. This restriction only applies to
premises where liquor, wine, beer or 3.2 beer is served. Where intoxicating beverages
are not served the age shall be eighteen.
2.09 Organizations wishing to renew a gambling license must provide the City with a
_ financial audit of its lawful gambling activities and funds for the previous two years.
The audit(s) must be performed by an independent accountant licensed by the state of
Minnesota.
In addition, such organizations must provide the City with information on all
expenditures of lawful gambling funds during the previous two years. Such information
must include at a minimum the name of the recipient, the amount of the expenditure or
contribution, and a brief description of how the expenditure or contribution meets the
definition of "lawful purposes" as defined in M.S. 349.12.
2.10 A fee of $100.00 shall be charged to all licensed organizations submitting a Premises
Permit Renewal Application for approval by the City.
Established 11/19/85 by Resolution 85-3218
Revised 4/19/94
City of Hopkins
Legislative Policy Manual -- Chapter 4-A 2
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO. 97-107
WHEREAS, the City of Hopkins has an existing policy regarding Lawful Gambling; and
WHEREAS, the Hopkins City Council believes that it is prudent to review its policy dealing
with Lawful Gambling to determine whether any revision is necessary; and
WHEREAS, there is a need to restrict permits for Lawful Gambling until a study has been
completed and any modifications to the City's policy have been adopted;
NOW THEREFORE BE IT RESOLVED, that the City Council of the City of Hopkins hereby
declares that it will not consider any application for a premises permit to conduct
Lawful Gambling until the City policy on Lawful Gambling has been revised and
adopted. The moratorium period will begin on November 6, 1997 and expire on
January 1, 1998 or upon the adoption the revised gambling policy whichever occurs
first. This moratorium will not effect any applications that are currently before the
City Council
Adopted by the City Council of the City of Hopkins this twenty-first day of October 1997.
~~~ \ C\~R
Charles D. Redepennin , Mayo1-
ATTE~T:
erry O aier, City C erk