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The bill allows “gaming machines” at racetracks under the control of the State Lottery, with in-lieu tax revenue dedicated to a jobs and business development fund.
Article 1
Racino
Section 1 [Lottery gaming machines; in-lieu tax] exempts adjusted gross revenue from gaming machines from sales tax, and establishes an in-lieu tax to be paid into the Minnesota future fund. The in-lieu tax is calculated as follows:
25 percent for the first $125 million of adjusted gross revenue;
30 percent of adjusted gross revenue between $125 million and $200 million; and
40 percent of adjusted gross revenue over $200 million.
Section 2 [Exclusions] makes it legal for the State Lottery to possess “gambling devices.”
Section 3 [Restrictions] makes it legal for a manufacturer to sell, lease, or rent a gambling device to the State Lottery.
Section 4 [Gambling prohibited] makes it legal for “gambling devices” to be operated on the premises of a licensed racetrack.
Section 5 [Adjusted gross gaming machine revenue] defines “adjusted gross gaming machine revenue” as all money received less prizes paid.
Section 6 [Gaming machine] defines “gaming machine” to mean “any machine in which a coin token or other currency is deposited to play a game that uses a video display and microprocessors.” This is a new term, not previously used in lottery or gambling statutes. This definition does not require that the machine be used for gambling or for games of chance.
Section 7 [Gaming machine game] defines “gaming machine game” to mean a game operated by a gaming machine as authorized by the Lottery director.
Section 8 [Gaming machine play] defines “gaming machine play” as an electronic record that proves participation in a game.
Section 9 [Lottery procurement contract] extends the definition of “lottery procurement contract” to include contracts to provide and maintain gaming machines, and to provide computer hardware and software for monitoring gaming machine plays.
Section 10 [Lottery operations] exempts location contract payments to racetracks from limits on operations expenses.
Section 11 [Restrictions] allows the lottery director to install or operate a currency-operated lottery device.
Section 12 [Gaming machines]
Subdivision 1 [Location contract], paragraph (a), authorizes the lottery director to enter into contracts for locations for gaming machines. Allows the lottery director to contract with holders of class A racing licenses to provide gaming machines at racetracks, provided that the racetrack hosted 75 days of live racing in the previous year or were approved to host 75 days of live racing during the present year.
Paragraph (b) sets tiered compensation to the racetrack based on a percentage of annual adjusted gross gaming machine revenue.
Paragraph (c) sets the amount that a racetrack must pay to the city and county where the track is located from gaming machine revenue.
Subdivision 2 [Operation], paragraph (a), provides that gaming machines at racetracks must be operated and controlled by the lottery director.
Paragraph (b) delineates the responsibilities of the lottery director and the holder of the location contracts.
Paragraph (c) requires that gaming machines be maintained by the lottery or its vendor.
Paragraph (d) requires a central communication system, located at the lottery office, that monitors activities on gaming machines.
Paragraph (e) requires the lottery director to supervise the security arrangements for gaming machines.
Paragraph (f) requires that advertising and promotional material produced by the racetrack relating to the gaming machines be approved by the director.
Paragraph (g) allows the lottery director to implement controls for gaming machines.
Subdivision 3 [Specifications] sets forth requirements related to auditing gaming machines.
Subdivision 4 [Games] directs the lottery director to specify games that may be placed on a gaming machine. Gaming machines may conduct pari-mutuel wagering and display horse races.
Subdivision 5 [Examination of machines] requires that the lottery director examine prototypes of gaming machines and requires that the cost of examination be paid by the manufacturer of the machines.
Subdivision 6 [Testing of machines] permits the lottery director to require working models of gaming machines to be transported to the director for examination and analysis, at the manufacturer's expense.
Subdivision 7 [Prizes] requires players to be bound by game rules, claim procedures, and validation tests. Sets 18-year age limit for claiming prize. Exempts gaming machine prizes from being withheld to cover delinquent taxes.
Subdivision 8 [Prohibitions] sets 18-year age limit for playing a game on a gaming machine. Precludes the lottery director, lottery employees, and specified family members from playing a game on a gaming machine or receiving a prize.
Subdivision 9 [Compulsive gambling notice] directs the posting of the telephone number of the state-sponsored compulsive gambling program and the establishment of a responsible gambling plan with annual reporting to the Legislature.
Subdivision 10 [Local licenses] precludes political subdivisions from requiring a license to operate a gaming machine; restricting or regulating the placement of gaming machines; or imposing a tax on the business of operating gaming machines.
Section 13 [Recovery of lost money] adds “purchase of gaming plays” to the list of gambling losses not eligible for a lawsuit for recovery.
Section 14 [Commitments for gambling debt void] adds “other wagering” authorized under the lottery statute to the list of activities that are not precluded from being used as consideration in a contract.
Section 15 [What are not bets] adds play on a gaming machine to the list of activities that are not “bets” and, therefore, are not misdemeanors.
Section 16 [State lottery] adds “manufacture, possession, sale, or operation of a gaming machine” to the list of activities that are not misdemeanors.
Section 17 [Severability; savings] declares that if any provision of this act is invalid, all other provisions remain valid.
Section 18 [Effective date] is the day following enactment.
Article 2
Economic Development Fund
Section 1 [Minnesota future fund] creates the “Minnesota future fund” as a special account with the state treasury, consisting of money deposited from the operation of gaming machines. Allocates the money in this fund to specified programs, businesses, investments, and grants.
Section 2 [Industry improvement fund] requires location contract holders to contribute to a horse racing industry fund. This fund will be paid to a purse fund for each breed and to a breeder's fund.
Section 3 [Repealer] repeals the following limitations on card clubs:
(a) Maximum number of tables (currently 50)
(b) Maximum wager (currently $60)
(c) Single wager games (currently $300)
Section 4 [Effective date] is the day following enactment.
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