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CR 93-158 Amend Legislative Policy 4-D " "" -"',~- . .~ September 30, 1993 .. Council Report 93-158 . AMEND LEGISLATIVE POLICY #4-D LAWFUL GAMBLING Proposed Action Staff recommends that the Council approve the following motion: Move that the Hopkins City Council adopt Resolution #93-107, amending Legislative Policy #4~D and establish a $100 investigative fee for gambling license renewals. Adoption oftms motion will amend the City's Lawful Gambling policy to require additional information from licensed organizations prior to renewing a gambling license. It will also require licensed organizations to pay a fee of $100 to the City when they seek to renew their gambling license. Overview In 1987, the City established a policy for regulating lawful, or charitable, gambling in Hopkins. Staff is recommending that this policy be amended by requesting additional information of licensed organizations who seek to renew their gambling licenses. Specifically staff is recommending that these organizations be required to provide the City with: . 1. an audit of the previous two years of gambling activities; and 2. information on all expenditures of lawful gambling funds during the previous two years. Staffis also recommending that the Council establish a $100.00 fee for license renewals. This fee would help defray the cost of processing the license renewals. Primary Issues to Consider . Who regulates lawful gambling? . Can the City require licensed organizations to submit this material? . Will these requirements impose an undue burden on licensed organizations? Supportine Information . Resolution #93-107 . Legislative Policy #4-D . Memorandum concerning regulation of Lawful Gambling . A. Genellie Istant City Manager - .. >;,"'~ .. "'" " . . Council Report#93-158 Page 2 . ' Analvsis of Issues . Who regulates lawful gambling? Charitable gambling in Minnesota is controlled by the Minnesota Gambling Control Board. The Board requires a variety of information from licensed organizations. It conducts investigations of licensed organizations when it feels that such investigations are warranted. The Board issues licenses to charitable organizations. The term of the license is two years. Licenses may be renewed. The Gambling Control Board shall not renew a license unless it determines that the organization is compliance with all laws and rules covering lawful gambling and is not delinquent in filing tax returns or paying taxes. The Board can rescind a license if it finds that an organization has not conducted its gambling activities according to state law. A licensed organization may not conduct lawful gambling at any site unless it has first obtained from the Board a premises permit for the site, or in the case of bingo, a bingo hall license. The Gambling Control Board in turn may not issue or renew a premises permit or bingo hall license unless the licensed organization submits a resolution from the City Council approving the premises permit or bingo hall license. The City does not have the resources or manpower to conducts its own audits of gambling activities. . Can the City require licensed organizations to submit this material? . Minnesota Statute 349.213, Subdivision 1 states that "A home rule city has the authority to adopt more stringent regulation of lawful gambling within its jurisdiction". Staff interprets this as allowing the City to require whatever reasonable documentation it wants from organizations seeking to have a new license issued or a current license renewed by the state gambling control board. . Will these requirements impose an undue burden on licensed organizations? Licensed organizations are required to prepare an audit for the gambling control board according to M.S. 349.19, Subd. 9 and submit monthly reports on expenditures according to M.S. 349.154, Subd. 2. Copies of these reports will satisfy the City's requirements. Since licenses are now good for two years, the $100 fee would only have to be paid every other year. Alternatives: 1. Approve Resolution #93-107 amending Legislative Policy #4-D and establish a fee of $100 for license renewals. This would require licensed organizations to provide the City with additional information when seeking City approvals of license renewals. It would also institute a $100.00 investigative fee. 2. Approve Resolution #93-107 amending Legislative Policy #4-D but choose to not charge any fees for license renewals. This would require licensed organizations to provide the City with additional information when seeking City approvals of license renewals. 3. Do not approve Resolution #93-107. This would keep Legislative Policy #4-D unchanged. . 4. Request staff to make different or additional changes to Legislative Policy #4-0. Staff recommends Alternative # 1. -. ..- , -. . . CITY OF HOPKINS Hennepin County, Minnesota RESOLUTION NO. 93.107 WHEREAS, the City Council of the City of Hopkins has approved a document entitled the Legislative Policy Manual to provide uniform guidelines on City policies so that actions taken are consistent and fair; and WHEREAS, revisions to this manual may be implemented by resolution of the City Council; and WHEREAS, Chapter 4, Policy #4~D of the Legislative Policy Manual details the procedure for the regulation of lawful gambling; and WHEREAS, the Hopkins City Council determines that this policy needs to be amended in order to provide additional information to the City Council when approving gambling ( license renewals; . NOW THEREFORE BE IT RESOLVED, that the City Council of the City of Hopkins , hereby adopts the following language as Section 2.09 of Legislative Policy #4-D: Oraanizations wishino to renew a oamblino license must provide the City with a financial audit of its lawful oamblino 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 oroanizations must provide the City with information on all expenditures of lawful oamblino 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. Adopted by the City Council of the City of Hopkins this 5th day of October, 1993. By Charles D. Redepenning, Mayor ATTEST: . James A. Genel/iej City Clerk -, .. -:-Jo POLICY #4-D IDRAFTI . LAWFUL GAMBLING 1. PURPOSE 1,01 The purpose of this policy is to establish a gambling policy 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 restridionsof gambling are 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 fraternal, religious, veterans or other non-profit organization engaged in a lawful purpose defined in M;S. 349.12, Subd. 11 and whose principal location or office is within the City of Hopkins. . 2.03 The 'organization defined in Section 2.02 must be engaged actively in pursuit of the lawful purpose defined in said Subdivision 11 for the benefit of the community within the City of . Hopkins for at least five years on a perpetual, continuous, uninterrupted basis and hav~ 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. 349.214. 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 seperately conduct the same game at the same time at one location. 2.06 The operation of gambling devices and the conduct of bingo and raffies 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. 2.08 Participants in raffies, 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 recepient. the amount of the expenditure or contribution. and a brief description of how the expenditure Of contribution meets the definition of "lawful purposes" as defined in M,S. 349.12. Established 8/18/87 Revised 10/5/93 City of Hopkins . . \- .\; -:;; . -, . LAWFUL GAMBLING REGULATION Charitable gambling in Minnesota is controlled by the Gambling Control Board. (Minnesota Statute 349) Licenses authorizing organizations to conduct lawful gambling may be issued by the Board to organizations meeting the following qualifications: 1 - The organization must have been in existence for the most recent three years preceding the license application as a registered Minnesota non-profit corporation. (Hopkins requires five years) 2 - The organization at the time of licensing must have at least 15 active members. (Hopkins requires 30 members) 3 - The organization must not be in existence solely for the purpose of conducting gambling. 4 - The organization must not have as an officer of the governing body any person who, within the 5 years before the issuance of the license, has been convicted in a Federal or State court of a felony or a gross misdemeanor or who has ever been convicted of a crime involving gambling or who has had a license issued by the Board or Director revoked for violation of the law or Board rule. . 5- The organization has identified in its license application the lawful purposes on which it proposes to expend net profits from lawful gambling. (M.S. 349.12, Subd, 25 defines "lawful purpose") 6 - The organization has identified on its license application a gambling manager and certified that the manager is qualified. The term of the license is two years. Licenses may be renewed. The Gambling Control Board shall not renew a license unless it determines' that the organization ,is compliance with all laws and rules covering lawful gambling and is not delinquent in filing tax returns or paying taxes. A licensed organization may not conduct lawful gambling at any site unless it has first obtained from the Board a premises permit for the site, or in the case of bingo, a bingo hall license. The Gambling Control Board in turn may not issue or renew a premises permit or bingo hall license unless the licensed organization submits a resolution from the City Council approving the premises permit or bingo hall license. A resolution must have been adopted within 60 days of the date of application for the new or renewed permit or license. . --.... - ~- ,-,- . . N " " . . CONTROL OF THE DISTRIBUTION OF GAMBLING PROCEEDS BY A CITY COUNCIL 1 - The City Council may institute a local gambling tax, The tax may be imposed only if the amount to be received by the City is necessary to cover the cost incurred by the City to regulate lawful gambling, The tax imposed may not exceed 3% of the gross receipts of a licensed organization from all lawful gambling. less prizes actually paid out by the organization. A city may not use this money for any purpose other than for the purpose of regulating lawful gambling. A tax imposed is in lieu of all other local taxes and local investigation fees on lawful gambling. 2 - The City can require that licensed organizations contribute 10% of their net profits derived from lawful gambling to a fund, administered and regulated by the City, for disbursement by the City for any lawful purpose. 3 - The City may, by ordinance, require that a licensed organization, conducting lawful gambling within its jurisdiction, expend all or a portion of its expenditures for lawful purposes within the city's "trade area". Such an ordinance must define the city's trade area and must specify the percentage of lawful purpose expenditures which must be expended within the trade area, A trade area must include each city contiguous to the defining city. . LOCAL REGULATION 1- The city has the authority to adopt more stringent regulation of lawful gambling within its jurisdiction, including the prohibition of lawful gambling. 2 - The city may not require an organization to make specific expenditures of more than 10% of its net profits derived from lawful gambling. (See #2 above) 3 - The city may not require an organization conducting lawful gambling within its jurisdiction to make an expenditure to the city as a condition to operate within that city, 4 - A more stringent regulation or prohibition of lawful gambling adopted by a city must apply equally to all forms of lawful gambling within a jurisdiction of the political subdivision. . ii .",. , " , ~., . WHAT COULD THE CITY DO DIFFERENTLY? 1 - The City could prohibit gambling entirely. This would have an adverse impact on the Raspberry Festival, a number of local organizations which have come to depend on contributions from the Jaycees and the Raspberry Festival, and the City which has also received donations. 2 - The City could impose the 10% requirement and set up a fund to disburse gambling proceeds, This would put the City into the business of deciding who receives up to 10% of the gambling proceeds in Hopkins. 3 - The City could designate a "trade area" and require all or a portion of gambling proceeds to be spent in the City's "trade area". The City currently accomplishes something similar to this by limiting gambling to Hopkins' based organizations. I . - .' ,-,