Memo Temp Gambling Licenses
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To: City Council
From: Jim Genellie
Date: October 15, 1993
Subject: Temporary Gambling Licenses
It appears that the Jaycee's license to conduct lawful gambling will be suspended in
November for 30 days due to a delay in submitting a report to the Gambling Control
Board. The Jaycees are currently talking to various nonprofit organizations about
obtaining a special five day gambling permit from the State. These organizations would
then conduct gambling at one of the Jaycee's sites for a maximum of five days using
Jaycee personnel. The money raised, after expenses, would be retained. by the
nonprofit organization.
. Attached is a copy of M.S. 349.166, Subd. 2 explaining what is required of an
organization which seeks such a license. These licenses can be obtained by any
fraternal, religious, veterans, or other nonprofit organization. Organizations conducting
gambling under this Subdivision can only conduct gambling on five or fewer days in a
calendar year and must abide by M.S. 349,12, Subd. 25 which states the "lawful
purposes" for which money raised by gambling can be spent.
The City is involved ineither approving or denying these licenses. The application for
this special license must be signed by the City. So the City has three alternatives. It
can:
1 _ Sign the application. This will likely mean that the State will approve the license
after a 30 day waiting period.
2 _ Sign the application and waive the 30 day waiting period. This will speedup the
issuance of the license. (The waiver does not have to be done by a Council
resolution.)
3 - Refuse to sign the application. This will prevent the organization from obtaining
the license.
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. Staff would like some guidance from the Council on how these applications should be
handled. It is possible that these applications may be submitted at various times during
the next several weeks. There are several issues that need to be addressed.
1 - Assuming that the nonprofit organization meets the criteria set out in legislative
Policy #4-0, can staff sign the application, thereby giving City approval, without
have the applications being reviewed by the City Council?; or
2 - Does the Council want to review every application? This would delay approval
until November 2. This would require the City to waive the 30 day waiting
period.
3 - Does the Council want to waive any of its criteria in this situation? Nonprofit
organizations seeking these five day licenses are exempt from the State's
criteria regarding the number of years the organization has to have been in
existence or the number of members that the organization has. The City could
similarly decide to waive some of its criteria in order to allow some newer
organizations to conduct gambling under these circumstances.
It should be kept in mind that these licenses will not increase gambling in Hopkins.
Gambling will be taking place at locations where it has already been approved by the
Council. The gambling will be conducted by individuals who are trained to do it. The
. only difference will be which organization gets the proceeds from gambling. Even then,
the rules on how and where the money can be spent will remain the same.
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1093 BINGO, GAMBLING DEVICES, AND VIDEO GAMES OF CHANCE 349.166
An organization that holds a license to conduct lawful gambling under this chapter
may not conduct bingo under this subdivision.
(b) Bingo may be conducted within a nursing home or a senior citizen housing
project or by a senior citizen organization without compliance with sections 349.11 to
349.213 if the prizes for a single bingo game do not exceed $10, total prizes awarded
at a single bingo occasion do not exceed $200, no more than two bingo occasions are
held by the organization or at the facility each week, only members of the organization
or residents of the nursing home or housing project are allowed to play in a bingo game;
no compensation is paid for any persons who conduct the bingo, a manager is
appointed to supervise the bingo, and the manager registers with the board. The gross
receipts from bingo conducted under the limitations of this subdivision are exempt
from taxation under chapter 297 A.
(c) Raffles may be conducted by an organization without complying with sections
349.11 to 349.13 and 349.151 to 349.213 if the value of all raffle prizes awarded by the
organization in a calendar year does not exceed $750.
Subd. 2. Exemptions. (a) Lawful gambling may be conducted by an organization
as defined in section 349.12, subdivision 28~ without' complying with sections 349.151
to 349.16; 349.167; 349.168; 349.18; 349.19; and 349.212 if:
(1) the organization conducts lawful gambling on five or fewer days in a calendar
year;
(2) the organization does not award more than $50,000 in prizes for lawful gam.
bling in a calendar year;
(3) the organization pays a fee of $25 to the board, notifies the board in writing
not less than 30 days before each laWful gambling occasion of the date arid location of
the occasion, or 60 days for an occasion held in the case of a city of the first class, the
types of lawful gambling to be conducted, the prizes to be awarded, and receives an .
exemption identification number;
(4) the organization notifies the local government unit 30 days before the lawful
. gambling occasion, or 60 days for an occasion held in a. city of the first class;
(5) the organization purchases all gambling equipment and supplies from a
licerised distributor; and
(6) the organization reports to the board, on a single.page form prescribed by the
board, within 30 days of each gambling occasion, the gross receipts, prizes, expenses,
expenditures of net profits from the occasion, and the identification of the licensed dis.
tributor from whom all gambling equipment was purchased.
(b) If the organization fails to file a timeiy report as required by paragraph (a),
clause (3) or (6), a $250 penalty is imposed on the organization. Failure to file a timely.
report does not disqualify the organization as exempt under this paragraph if a report
is later filed and the penalty paid.
(c) Merchandise prizes must be valued at their fair market value. '
(d) Unused pull-tab and tipboard deals must be returned to the distributor within
seven working days after the end of the lawful gambling occasion. The distributor must
accept and pay a refund for all returns of unopened and undamaged deals returned
under this paragraph. .
(e) An organization that is exempt from taxation on purchases of pull-tabs and tip-
boards under section 349.212, subdivision 4, paragraph (c), mustreturn to the distribu-
tor any tipboard or pull-tab deal no part of which is used at' the lawful gambling
occasion for which it was purchased by the organization.
Subd. 3. Raflles; certain organizations. Sections 349.21 and 349.211, subdivision
3, and the membership requirements of sections 349.14 and 349.20 do not apply to raf-
fles conducted by an organization that directly or under contract to the state or a politi-
cal subdivision delivers health or social services and that is a 501(c)(3) organization if
the prizes awarded in the raffles are real or personal property donated by an individual,
firm, or other organization. The person who accounts for the gross receipts, expenses,
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1078 1079 BINGO. GAMBUNG DEVICES. AND VIDEO GAMES OF CHANCE 349.12
las been a (1)' gross sales of bingo cards and sheets before reduction for prizes, .expenses,
l_trol- shortages, free plays, or any other charges or offsets;
(2) the ideal gross of pull-tab and tipboard deals or games less the value of unsold
: t oard and defective tickets and before reduction for prizes, expenses, shortages, free plays, '.
or any other charges or offsets;
se directly (3) gross sales of rame tickets and paddle tickets before reduction for prizes,
expenses, shortages, free plays, or any other charges or offsets;
1 for which (4) admission, commission, cover, or other charges imposed on participants in
:h each row lawful gamblirig activity as a condition for or cost of participation; and
~es with the (5) interest, dividends, annuities, profit from transactions, or other income
s which are derived from the accumulation or use of gambling proceeds.
are not pre-
completing Gross receipts does not include proceeds from rental under section 349.164 or
cement of a 349.18, subdivision 3, for duly licensed bingo hall lessors.
:al, horizon- Subd. 22. Ideal gross. "Ideal gross" means the total amount of receipts that would
be received if every individual ticket in the pull-tab or tipboard deal was sold at its face
;h a series of value. In the calculation of ideal gross and prizes, a free play ticket shall be valued at
face value.
Subd. 23. Ideal net. "Ideal net" means the pull-tab or tipboard deal's ideal gross,
sonal, except as defined under subdivision 19, less the total predetermined prize amounts available
to be paid out. When the prize is not entirely a monetary one. the ideal net is 50 percent.
go cards pur- of the ideal gross.
the recorded Subd. 24. "Lawful gambling" is the operatiort, conduct or sale of bingo,. rames,
paddlewheels, tipboards, and pull-tabs.
~::/,~; consist- Subd. 25. (a) "Lawful purpose" means one or more of the following:
(1) any expenditure by or contribution to a 501(c)(3) organization, provided that
) board. " the organization and expenditure or contribution are in conformity with standards pre-
: equipmen~ ",:t','. " scribed by the board under section 349.154;
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" j.~-' (2) a contribution to an individual or family suffering from poverty, homelessness,
-~ii_lpt activ~-:-. ./!~::,
.... or physical or mental disability, which is used to relieve the effects of that poverty,
. , homelessness, or disability;
on the ticket. - ,j':~.".. (3) a contribution to an individual for treatment for delayed posttraumatic stress
',\:^./~:~ <' syndrome or a contribution to a recognized program for the treatment of compulsive
-.1~.~. 1, 1989, gambling on behalf of an individual who is a compulsive gambler;
-..1 from July (4) a contribution to or expenditure on a public or private nonprofit educational
institution registered with or accredited by this state or any other state;
.~ ,',. ',. (5) a contribution to a scholarship fund for defraying the cost of education to indi-
organization'
, of the Inter- viduals where the funds are awarded through an open and fair selection process;
(6) activities by an organization or a government entity which recognize humani-
. affixed, that tarianor military service to the United States, the state of Minnesota, or a community,
is associated subject to rules of the board;
." (7) recreational~ community, and athletic facilities and activities intended primar-
:.~.fasa free ily for persons under age 21, provided that such facilities and activities do not discrimi-
nate on the basis of gender; as evidenced by (i) provision of equipment and supplies,
u::-::-' cards or. (ii) scheduling of activities, including games and practice times, (Hi) supply and assign-
~;!~, and t~~~ ment of coaches or other adult supervisors, (iv) provision and availability of support
facilities, and (v) whether the opportunity to participate reflects each gender's demon-
to an organi- strated interest in the activity, provided that nothing in this clause prohibits a contribu-
. tion to or expenditure on an educational institution or other entity that is excepted
arid has been from the prohibition against discrimination based on sex contained in the Higher Edu-
~~1 it. cation Act Amendments of 1976, United States Code, title 20, section 1681; .
; ;c.j from law- (8) payment of local taxes authorized. under this chapter, taxes imposed by the
prizes. '. .';: United States on receipts from lawful gambling, and the tax imposed by section
.: from lawful 349.212, subdivisions 1 and 4, and the tax imposed on unrelated business income by \
,..'::rt section 290.05, subdivision 3;
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349.12 BINGO, GAMBLING DEVICES, AND VIDEO GAMES OF CHANCE 1080
1081
. (9) payment of real estate taxes and assessments on licensed gambling premises who conver
wholly owned by the licensed organization paying the taxes, not to exceed: or assembl~
(i) the amount which an organization may expend under board rule on rent for ,
A person or
premises used for bingo; or .,' available, ti
(ii) $15,000 per year for premises used for other forms of lawful gambling; "-'..
Subd.
(l0) a contribution to the United States, this state or any of its political subdivi- expended f(
sions, or any agency or instrumentality thereof other than a direct contribution to a law Subd.
enforcement or prosecutorial agency; or other no
(11) a contribution to or expenditure by a nonprofit organization, church, or body Subd. .
of communicants gathered in common membership for mutual support and edification or more nu
in piety, worship, or religious observances; or "
indicate wi
(12) payment of one-half of the reasonable costs of an audit required in section Subd.
349.19, subdivision 9. ration, trus
(b) Notwithstanding paragraph (a), "lawful purpose" does not include: Subd.
(1) any expenditure made or incurred for the purpose of influencing the nomina- cumulative
tion or election of a candidate for public office or for the purpose of promoting or Subd.
defeating a ballot question; chase nece~
(2) any activity intended to influence an election or a governmental decision- given is a r
making process; Subd.
(3) the erection, acquisition, improvement, expansion, repair, or maintenance of covered to
rcal property or capital assets owned or leased by an organization, except as provided tickets or c
in clause (6), unless the board has first specifically authorized the expenditures after a ticket sol
finding that (i) the real property or capital assets will be used exclusively for one or more Subd.
of the purposes in paragraph (a); (ii) with respect to expenditures for repair or mainte- at a prize v
nance only, that 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 that no and date p
rental fee is charged for the use; (iii) with respect to expenditures, including a mortgage Subd.
payment or other debt service payment, for erection or acquisition only, that the erec- or columm
e tion or acquisition is necessary to replace with a comparable building, a building owned bol, which
by the organization and destroyed or made uninhabitable by fire or natural disaster, Histm
provided that the expenditure may be only for that part of the replacement cost not c 327 s 2-5;
reimbursed by insurance; or (iv) with respect to expenditures, including a mortgage lSp1989 c
payment or other debt service payment, for erection or acquisition only, that the erec- 1991 c 33t
tion or acquisition is necessary to replace with a comparable building a building owned
by the organization that was acquired from the organization by eminent domain or sold 34~U3 L
by the organization to a purchaser that the organization reasonably believed would oth- Lawfu
ervvise have acquired the building by eminent domain, provided that the expenditure to 609.76
may be only for that part of the replacement cost that exceeds the compensation
received by the organization for the building being replaced; Histm
(4) an expenditure by an organization which is a contribution to a parent organiza- 349.14
tion, foundation, or affiliate of the contributing organization, if the parent organization,
foundation, or affiliate has provided to the contributing organization within one year 349.15 U
of the contribution any money, grants, property, or other thing of value; Gross
(5) a contribution by a licensed organization to another licensed organization allowable l
unless the board has specifically authorized the contribution. The board must authorize Provided ;
such a contribution when requested to do so by the contributing organization unless section 34
it makes an affirmative finding that the contribution will not be used by the recipient profit fron
organization for one or more of the purposes in paragraph (a); or related to
(6) the erection, acquisition, improvement, or expansion of real property or capi- Risto!
tal assets which will be used for one or more of the purposes in paragraph (a), clause
(7), unless the organization making the expenditures notifies the board at least 15 days 16; 1987 c
before making the expenditure. c 590 art,
Subd. 26. Mam.nfacturer. "Manufacturer" means a person or entity who assembles I
3419.151 I
from raw materials or subparts a completed piece of gambling equipment, and who sells Subd:
or furnishes the equipment for resale or for use in the state. The term includes a person ers and dl
e