Minnesota 2023-2024 Regular Session

Minnesota House Bill HF285 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to taxation; lawful gambling; repealing the taxes imposed on all lawful
3	3	1.3 gambling receipts; making related technical changes; amending Minnesota Statutes
4	4	1.4 2022, sections 270C.56, subdivision 1; 297A.68, subdivision 3a; 299L.03,
5	5	1.5 subdivision 1; 299L.07, subdivision 8; 349.12, subdivision 25; 349.151, subdivision
6	6	1.6 4; 349.162, subdivision 2; 349.163, subdivision 5; 349.1641; 349.19, subdivision
7	7	1.7 5; 349.2125, subdivisions 1, 3; 349.2127, subdivisions 1, 2, 4; 349.213, subdivision
8	8	1.8 1; 349.22, subdivision 2; repealing Minnesota Statutes 2022, sections 13.4967,
9	9	1.9 subdivision 6; 297E.01; 297E.02, subdivisions 1, 2, 2a, 3, 6, 6a, 7, 8, 9, 10, 11;
10	10	1.10 297E.03; 297E.031; 297E.04; 297E.05; 297E.06; 297E.07; 297E.10; 297E.11;
11	11	1.11 297E.12, subdivisions 1, 2, 4, 5, 6, 7, 8, 9; 297E.13; 297E.14; 297E.16, subdivisions
12	12	1.12 1, 2; 297E.17; 349.16, subdivision 11; Minnesota Rules, parts 8122.0100;
13	13	1.13 8122.0150; 8122.0200; 8122.0250; 8122.0300; 8122.0350; 8122.0400; 8122.0450;
14	14	1.14 8122.0500; 8122.0510; 8122.0550; 8122.0650.
15	15	1.15BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
16	16	1.16 Section 1. Minnesota Statutes 2022, section 270C.56, subdivision 1, is amended to read:
17	17	1.17 Subdivision 1.Liability imposed.A person who, either singly or jointly with others,
18	18	1.18has the control of, supervision of, or responsibility for filing returns or reports, paying taxes,
19	19	1.19or collecting or withholding and remitting taxes and who fails to do so, or a person who is
20	20	1.20liable under any other law, is liable for the payment of taxes arising under chapters 295,
21	21	1.21296A, 297A, 297F, and 297G, or sections section 290.92 and 297E.02, and the applicable
22	22	1.22penalties and interest on those taxes.
23	23	1.23 EFFECTIVE DATE.This section is effective July 1, 2023.
24	24	1.24 Sec. 2. Minnesota Statutes 2022, section 297A.68, subdivision 3a, is amended to read:
25	25	1.25 Subd. 3a.Coin-operated entertainment and amusement devices.Coin-operated
26	26	1.26entertainment and amusement devices including, but not limited to, fortune-telling machines,
27	27	1Sec. 2.
28	28	REVISOR EAP/CH 23-0140001/06/23
29	29	State of Minnesota
30	30	This Document can be made available
31	31	in alternative formats upon request
32	32	HOUSE OF REPRESENTATIVES
33	33	H. F. No. 285
34	34	NINETY-THIRD SESSION
35	35	Authored by Robbins01/11/2023
36	36	The bill was read for the first time and referred to the Committee on Taxes 2.1cranes, foosball and pool tables, video and pinball games, batting cages, rides, photo or
37	37	2.2video booths, and jukeboxes are exempt when purchased by retailers selling admission to
38	38	2.3places of amusement and making available amusement devices as provided in section
39	39	2.4297A.61, subdivision 3, paragraph (g), clause (1). Coin-operated entertainment and
40	40	2.5amusement devices do not include vending machines, lottery devices, or gaming devices
41	41	2.6as described in chapters 297E and chapter 349.
42	42	2.7 EFFECTIVE DATE.This section is effective July 1, 2023.
43	43	2.8 Sec. 5. Minnesota Statutes 2022, section 299L.03, subdivision 1, is amended to read:
44	44	2.9 Subdivision 1.Inspections; access.In conducting any inspection authorized under this
45	45	2.10chapter or chapter 240, 349, or 349A, the division employees have free and open access to
46	46	2.11all parts of the regulated business premises, and may conduct the inspection at any reasonable
47	47	2.12time without notice and without a search warrant. For purposes of this subdivision, "regulated
48	48	2.13business premises" means premises where:
49	49	2.14 (1) lawful gambling is conducted by an organization licensed under chapter 349 or by
50	50	2.15an organization exempt from licensing under section 349.166;
51	51	2.16 (2) gambling equipment is manufactured, sold, distributed, or serviced by a manufacturer
52	52	2.17or distributor licensed under chapter 349;
53	53	2.18 (3) records required to be maintained under chapter 240, 297E, 349, or 349A are prepared
54	54	2.19or retained;
55	55	2.20 (4) lottery tickets are sold by a lottery retailer under chapter 349A;
56	56	2.21 (5) races are conducted by a person licensed under chapter 240; or
57	57	2.22 (6) gambling devices are manufactured, distributed, or tested, including places of storage
58	58	2.23under section 299L.07.
59	59	2.24 EFFECTIVE DATE.This section is effective July 1, 2023.
60	60	2.25 Sec. 6. Minnesota Statutes 2022, section 299L.07, subdivision 8, is amended to read:
61	61	2.26 Subd. 8.License actions.(a) The commissioner may not issue or renew a license under
62	62	2.27this chapter, and shall revoke a license under this chapter, if the applicant or licensee, or a
63	63	2.28director, officer, partner, governor, person in a supervisory or management position of the
64	64	2.29applicant or licensee, an employee eligible to make sales on behalf of the applicant or
65	65	2.30licensee, or direct or indirect holder of more than a five percent financial interest in the
66	66	2.31applicant or licensee:
67	67	2Sec. 6.
68	68	REVISOR EAP/CH 23-0140001/06/23 3.1 (1) has ever been convicted of a felony, or of a crime involving gambling;
69	69	3.2 (2) has ever been convicted of (i) assault, (ii) a criminal violation involving the use of
70	70	3.3a firearm, or (iii) making terroristic threats;
71	71	3.4 (3) is or has ever connected with or engaged in an illegal business;
72	72	3.5 (4) owes $500 or more in delinquent taxes as defined in section 270C.72;
73	73	3.6 (5) had a sales and use tax permit revoked by the commissioner of revenue within the
74	74	3.7past two years;
75	75	3.8 (6) after demand, has not filed tax returns required by the commissioner of revenue; or
76	76	3.9 (7) had a license or permit revoked or denied by another jurisdiction for a violation of
77	77	3.10law or rule relating to gambling.
78	78	3.11 The commissioner may deny or refuse to renew a license under this chapter, and may
79	79	3.12revoke a license under this chapter, if any of the conditions in this subdivision is applicable
80	80	3.13to an affiliate of or a direct or indirect holder of more than a five percent financial interest
81	81	3.14in the applicant or licensee.
82	82	3.15 (b) The commissioner may by order deny, suspend, revoke, refuse to renew a license or
83	83	3.16premises permit, or censure a licensee or applicant, if the commissioner finds that the order
84	84	3.17is in the public interest and that the applicant or licensee, or a director, officer, partner,
85	85	3.18person in a supervisory or management position of the applicant or licensee, or an employee
86	86	3.19eligible to make sales on behalf of the applicant or licensee:
87	87	3.20 (1) has violated or failed to comply with any provision of this chapter, chapter 297E, or
88	88	3.21chapter 349, or any rule adopted or order issued thereunder;
89	89	3.22 (2) has filed an application for a license that is incomplete in any material respect, or
90	90	3.23contains a statement that, in light of the circumstances under which it was made, is false,
91	91	3.24misleading, fraudulent, or a misrepresentation;
92	92	3.25 (3) has made a false statement in a document or report required to be submitted to the
93	93	3.26director, the commissioner, or the commissioner of revenue, or has made a false statement
94	94	3.27in a statement made to the director or commissioner;
95	95	3.28 (4) has been convicted of a crime in another jurisdiction that would be a felony if
96	96	3.29committed in Minnesota;
97	97	3.30 (5) is permanently or temporarily enjoined by any gambling regulatory agency from
98	98	3.31engaging in or continuing any conduct or practice involving any aspect of gambling;
99	99	3Sec. 6.
100	100	REVISOR EAP/CH 23-0140001/06/23 4.1 (6) has had a gambling-related license revoked or suspended, or has paid or been required
101	101	4.2to pay a monetary penalty of $2,500 or more, by a gambling regulator in another state or
102	102	4.3jurisdiction, or has violated or failed to comply with an order of such a regulator that imposed
103	103	4.4those actions;
104	104	4.5 (7) has been the subject of any of the following actions by the director or commissioner:
105	105	4.6(i) had a license under this chapter denied, suspended or revoked, (ii) been censured,
106	106	4.7reprimanded, has paid or been required to pay a monetary penalty or fine, or (iii) has been
107	107	4.8the subject of any other discipline by the director;
108	108	4.9 (8) has engaged in conduct that is contrary to the public health, welfare, or safety, or to
109	109	4.10the integrity of gambling; or
110	110	4.11 (9) based on the licensee's past activities or criminal record, poses a threat to the public
111	111	4.12interest or to the effective regulation and control of gambling, or creates or enhances the
112	112	4.13danger of unsuitable, unfair, or illegal practices, methods, and activities in the conduct of
113	113	4.14gambling or the carrying on of the business and financial arrangements incidental to the
114	114	4.15conduct of gambling.
115	115	4.16 EFFECTIVE DATE.This section is effective July 1, 2023.
116	116	4.17 Sec. 7. Minnesota Statutes 2022, section 349.12, subdivision 25, is amended to read:
117	117	4.18 Subd. 25.Lawful purpose.(a) "Lawful purpose" means one or more of the following:
118	118	4.19 (1) any expenditure by or contribution to a 501(c)(3) or festival organization, as defined
119	119	4.20in subdivision 15c, provided that the organization and expenditure or contribution are in
120	120	4.21conformity with standards prescribed by the board under section 349.154, which standards
121	121	4.22must apply to both types of organizations in the same manner and to the same extent;
122	122	4.23 (2) a contribution to or expenditure for goods and services for an individual or family
123	123	4.24suffering from poverty, homelessness, or disability, which is used to relieve the effects of
124	124	4.25that suffering;
125	125	4.26 (3) a contribution to a program recognized by the Minnesota Department of Human
126	126	4.27Services for the education, prevention, or treatment of problem gambling;
127	127	4.28 (4) a contribution to or expenditure on a public or private nonprofit educational institution
128	128	4.29registered with or accredited by this state or any other state;
129	129	4.30 (5) a contribution to an individual, public or private nonprofit educational institution
130	130	4.31registered with or accredited by this state or any other state, or to a scholarship fund of a
131	131	4.32nonprofit organization whose primary mission is to award scholarships, for defraying the
132	132	4Sec. 7.
133	133	REVISOR EAP/CH 23-0140001/06/23 5.1cost of education to individuals where the funds are awarded through an open and fair
134	134	5.2selection process;
135	135	5.3 (6) activities by an organization or a government entity which recognize military service
136	136	5.4to the United States, the state of Minnesota, or a community, subject to rules of the board,
137	137	5.5provided that the rules must not include mileage reimbursements in the computation of the
138	138	5.6per diem reimbursement limit and must impose no aggregate annual limit on the amount of
139	139	5.7reasonable and necessary expenditures made to support:
140	140	5.8 (i) members of a military marching or color guard unit for activities conducted within
141	141	5.9the state;
142	142	5.10 (ii) members of an organization solely for services performed by the members at funeral
143	143	5.11services;
144	144	5.12 (iii) members of military marching, color guard, or honor guard units may be reimbursed
145	145	5.13for participating in color guard, honor guard, or marching unit events within the state or
146	146	5.14states contiguous to Minnesota at a per participant rate of up to $50 per diem; or
147	147	5.15 (iv) active military personnel and their immediate family members in need of support
148	148	5.16services;
149	149	5.17 (7) recreational, community, and athletic facilities and activities, intended primarily for
150	150	5.18persons under age 21, provided that such facilities and activities do not discriminate on the
151	151	5.19basis of gender and the organization complies with section 349.154, subdivision 3a;
152	152	5.20 (8) payment of local taxes authorized under this chapter, taxes imposed by the United
153	153	5.21States on receipts from lawful gambling, the taxes imposed by section 297E.02, subdivisions
154	154	5.221, 5, and 6, and the tax imposed on unrelated business income by section 290.05, subdivision
155	155	5.233;
156	156	5.24 (9) payment of real estate taxes and assessments on permitted gambling premises owned
157	157	5.25by the licensed organization paying the taxes, or wholly leased by a licensed veterans
158	158	5.26organization under a national charter recognized under section 501(c)(19) of the Internal
159	159	5.27Revenue Code;
160	160	5.28 (10) a contribution to the United States, this state or any of its political subdivisions, or
161	161	5.29any agency or instrumentality thereof other than a direct contribution to a law enforcement
162	162	5.30or prosecutorial agency;
163	163	5.31 (11) a contribution to or expenditure by a nonprofit organization which is a church or
164	164	5.32body of communicants gathered in common membership for mutual support and edification
165	165	5.33in piety, worship, or religious observances;
166	166	5Sec. 7.
167	167	REVISOR EAP/CH 23-0140001/06/23 6.1 (12) an expenditure for citizen monitoring of surface water quality by individuals or
168	168	6.2nongovernmental organizations that is consistent with section 115.06, subdivision 4, and
169	169	6.3Minnesota Pollution Control Agency guidance on monitoring procedures, quality assurance
170	170	6.4protocols, and data management, provided that the resulting data is submitted to the
171	171	6.5Minnesota Pollution Control Agency for review and inclusion in the state water quality
172	172	6.6database;
173	173	6.7 (13) a contribution to or expenditure on projects or activities approved by the
174	174	6.8commissioner of natural resources for:
175	175	6.9 (i) wildlife management projects that benefit the public at large;
176	176	6.10 (ii) grant-in-aid trail maintenance and grooming established under sections 84.83 and
177	177	6.1184.927, and other trails open to public use, including purchase or lease of equipment for
178	178	6.12this purpose; and
179	179	6.13 (iii) supplies and materials for safety training and educational programs coordinated by
180	180	6.14the Department of Natural Resources, including the Enforcement Division;
181	181	6.15 (14) conducting nutritional programs, food shelves, and congregate dining programs
182	182	6.16primarily for persons who are age 62 or older or disabled;
183	183	6.17 (15) a contribution to a community arts organization, or an expenditure to sponsor arts
184	184	6.18programs in the community, including but not limited to visual, literary, performing, or
185	185	6.19musical arts;
186	186	6.20 (16) an expenditure by a licensed fraternal organization or a licensed veterans organization
187	187	6.21for payment of water, fuel for heating, electricity, and sewer costs for:
188	188	6.22 (i) up to 100 percent for a building wholly owned or wholly leased by and used as the
189	189	6.23primary headquarters of the licensed veteran or fraternal organization; or
190	190	6.24 (ii) a proportional amount subject to approval by the director and based on the portion
191	191	6.25of a building used as the primary headquarters of the licensed veteran or fraternal
192	192	6.26organization;
193	193	6.27 (17) expenditure by a licensed veterans organization of up to $5,000 in a calendar year
194	194	6.28in net costs to the organization for meals and other membership events, limited to members
195	195	6.29and spouses, held in recognition of military service. No more than $5,000 can be expended
196	196	6.30in total per calendar year under this clause by all licensed veterans organizations sharing
197	197	6.31the same veterans post home;
198	198	6Sec. 7.
199	199	REVISOR EAP/CH 23-0140001/06/23 7.1 (18) payment of fees authorized under this chapter imposed by the state of Minnesota
200	200	7.2to conduct lawful gambling in Minnesota;
201	201	7.3 (19) a contribution or expenditure to honor an individual's humanitarian service as
202	202	7.4demonstrated through philanthropy or volunteerism to the United States, this state, or local
203	203	7.5community;
204	204	7.6 (20) a contribution by a licensed organization to another licensed organization with prior
205	205	7.7board approval, with the contribution designated to be used for one or more of the following
206	206	7.8lawful purposes under this section: clauses (1) to (7), (11) to (15), (19), and (25);
207	207	7.9 (21) an expenditure that is a contribution to a parent organization, if the parent
208	208	7.10organization: (i) has not provided to the contributing organization within one year of the
209	209	7.11contribution any money, grants, property, or other thing of value, and (ii) has received prior
210	210	7.12board approval for the contribution that will be used for a program that meets one or more
211	211	7.13of the lawful purposes under subdivision 7a;
212	212	7.14 (22) an expenditure for the repair, maintenance, or improvement of real property and
213	213	7.15capital assets owned by an organization, or for the replacement of a capital asset that can
214	214	7.16no longer be repaired, with a fiscal year limit of five percent of gross profits from the
215	215	7.17previous fiscal year, with no carryforward of unused allowances. The fiscal year is July 1
216	216	7.18through June 30. Total expenditures for the fiscal year may not exceed the limit unless the
217	217	7.19board has specifically approved the expenditures that exceed the limit due to extenuating
218	218	7.20circumstances beyond the organization's control. An expansion of a building or bar-related
219	219	7.21expenditures are not allowed under this provision.
220	220	7.22 (i) The expenditure must be related to the portion of the real property or capital asset
221	221	7.23that must be made available for use free of any charge to other nonprofit organizations,
222	222	7.24community groups, or service groups, and is used for the organization's primary mission or
223	223	7.25headquarters.
224	224	7.26 (ii) An expenditure may be made to bring an existing building that the organization owns
225	225	7.27into compliance with the Americans with Disabilities Act.
226	226	7.28 (iii) An organization may apply the amount that is allowed under item (ii) to the erection
227	227	7.29or acquisition of a replacement building that is in compliance with the Americans with
228	228	7.30Disabilities Act if the board has specifically approved the amount. The cost of the erection
229	229	7.31or acquisition of a replacement building may not be made from gambling proceeds, except
230	230	7.32for the portion allowed under this item;
231	231	7Sec. 7.
232	232	REVISOR EAP/CH 23-0140001/06/23 8.1 (23) an expenditure for the acquisition or improvement of a capital asset with a cost
233	233	8.2greater than $2,000, excluding real property, that will be used exclusively for lawful purposes
234	234	8.3under this section if the board has specifically approved the amount;
235	235	8.4 (24) an expenditure for the acquisition, erection, improvement, or expansion of real
236	236	8.5property, if the board has first specifically authorized the expenditure after finding that the
237	237	8.6real property will be used exclusively for lawful purpose under this section;
238	238	8.7 (25) an expenditure, including a mortgage payment or other debt service payment, for
239	239	8.8the erection or acquisition of a comparable building to replace an organization-owned
240	240	8.9building that was destroyed or made uninhabitable by fire or catastrophe or to replace an
241	241	8.10organization-owned building that was taken or sold under an eminent domain proceeding.
242	242	8.11The expenditure may be only for that part of the replacement cost not reimbursed by
243	243	8.12insurance for the fire or catastrophe or compensation not received from a governmental unit
244	244	8.13under the eminent domain proceeding, if the board has first specifically authorized the
245	245	8.14expenditure; or
246	246	8.15 (26) a contribution to a 501(c)(19) organization that does not have an organization license
247	247	8.16under section 349.16 and is not affiliated with the contributing organization, and whose
248	248	8.17owned or leased property is not a permitted premises under section 349.165. The 501(c)(19)
249	249	8.18organization may only use the contribution for lawful purposes under this subdivision or
250	250	8.19for the organization's primary mission. The 501(c)(19) organization may not use the
251	251	8.20contribution for expansion of a building or for bar-related expenditures. A contribution may
252	252	8.21not be made to a statewide organization representing a consortia of 501(c)(19) organizations.
253	253	8.22 (b) Expenditures authorized by the board under paragraph (a), clauses (24) and (25),
254	254	8.23must be 51 percent completed within two years of the date of board approval; otherwise the
255	255	8.24organization must reapply to the board for approval of the project. "Fifty-one percent
256	256	8.25completed" means that the work completed must represent at least 51 percent of the value
257	257	8.26of the project as documented by the contractor or vendor.
258	258	8.27 (c) Notwithstanding paragraph (a), "lawful purpose" does not include:
259	259	8.28 (1) any expenditure made or incurred for the purpose of influencing the nomination or
260	260	8.29election of a candidate for public office or for the purpose of promoting or defeating a ballot
261	261	8.30question;
262	262	8.31 (2) any activity intended to influence an election or a governmental decision-making
263	263	8.32process;
264	264	8Sec. 7.
265	265	REVISOR EAP/CH 23-0140001/06/23 9.1 (3) a contribution to a statutory or home rule charter city, county, or town by a licensed
266	266	9.2organization with the knowledge that the governmental unit intends to use the contribution
267	267	9.3for a pension or retirement fund; or
268	268	9.4 (4) a contribution to a 501(c)(3) organization or other entity with the intent or effect of
269	269	9.5not complying with lawful purpose restrictions or requirements.
270	270	9.6 EFFECTIVE DATE.This section is effective July 1, 2023.
271	271	9.7 Sec. 8. Minnesota Statutes 2022, section 349.151, subdivision 4, is amended to read:
272	272	9.8 Subd. 4.Powers and duties.(a) The board has the following powers and duties:
273	273	9.9 (1) to regulate lawful gambling to ensure it is conducted in the public interest;
274	274	9.10 (2) to issue licenses to organizations and gambling managers, and to issue licenses and
275	275	9.11renewals to distributors, distributor salespersons, manufacturers, and linked bingo game
276	276	9.12providers;
277	277	9.13 (3) to collect and deposit fees due under this chapter;
278	278	9.14 (4) to receive reports required by this chapter and inspect all premises, records, books,
279	279	9.15and other documents of organizations, distributors, manufacturers, and linked bingo game
280	280	9.16providers to insure compliance with all applicable laws and rules;
281	281	9.17 (5) to make rules authorized by this chapter;
282	282	9.18 (6) to register gambling equipment and issue registration stamps;
283	283	9.19 (7) to provide by rule for the mandatory posting by organizations conducting lawful
284	284	9.20gambling of rules of play and the odds and/or house percentage on each form of lawful
285	285	9.21gambling;
286	286	9.22 (8) to report annually to the governor and legislature on its activities and on recommended
287	287	9.23changes in the laws governing gambling;
288	288	9.24 (9) to report annually to the governor and legislature a financial summary for each
289	289	9.25licensed organization identifying the gross receipts, prizes paid, allowable expenses, lawful
290	290	9.26purpose expenditures including charitable contributions and all taxes and fees as per section
291	291	9.27349.12, subdivision 25, paragraph (a), clauses (8) and (18), and the percentage of annual
292	292	9.28gross profit used for lawful purposes;
293	293	9.29 (10) to impose civil penalties of not more than $1,000 per violation on organizations,
294	294	9.30distributors, distributor salespersons, manufacturers, linked bingo game providers, and
295	295	9Sec. 8.
296	296	REVISOR EAP/CH 23-0140001/06/23 10.1gambling managers for violating or failing to comply with any provision of this chapter,
297	297	10.2chapter 297E, or any rule or order of the board;
298	298	10.3 (11) to issue premises permits to organizations licensed to conduct lawful gambling;
299	299	10.4 (12) to delegate to the director the authority to issue or deny license and premises permit
300	300	10.5applications and renewals under criteria established by the board;
301	301	10.6 (13) to delegate to the director the authority to approve or deny fund loss requests,
302	302	10.7contribution of gambling funds to another licensed organization, and property expenditure
303	303	10.8requests under criteria established by the board;
304	304	10.9 (14) to suspend or revoke licenses and premises permits of organizations, distributors,
305	305	10.10distributor salespersons, manufacturers, linked bingo game providers, or gambling managers
306	306	10.11as provided in this chapter;
307	307	10.12 (15) to approve or deny requests from licensees for:
308	308	10.13 (i) waivers from fee requirements as provided in section 349.16, subdivision 6; and
309	309	10.14 (ii) variances from Gambling Control Board rules under section 14.055; and
310	310	10.15 (16) to register employees of organizations licensed to conduct lawful gambling;
311	311	10.16 (17) to require fingerprints from persons determined by board rule to be subject to
312	312	10.17fingerprinting;
313	313	10.18 (18) to delegate to a compliance review group of the board the authority to investigate
314	314	10.19alleged violations, issue consent orders, and initiate contested cases on behalf of the board;
315	315	10.20 (19) to order organizations, distributors, distributor salespersons, manufacturers, linked
316	316	10.21bingo game providers, and gambling managers to take corrective actions; and
317	317	10.22 (20) to take all necessary steps to ensure the integrity of and public confidence in lawful
318	318	10.23gambling.
319	319	10.24 (b) The board, or director if authorized to act on behalf of the board, may by citation
320	320	10.25assess any organization, distributor, distributor salesperson, manufacturer, linked bingo
321	321	10.26game provider, or gambling manager a civil penalty of not more than $1,000 per violation
322	322	10.27for a failure to comply with any provision of this chapter, chapter 297E, or any rule adopted
323	323	10.28or order issued by the board. Any organization, distributor, distributor salesperson, gambling
324	324	10.29manager, linked bingo game provider, or manufacturer assessed a civil penalty under this
325	325	10.30paragraph may request a hearing before the board. Appeals of citations imposing a civil
326	326	10.31penalty are not subject to the provisions of the Administrative Procedure Act.
327	327	10Sec. 8.
328	328	REVISOR EAP/CH 23-0140001/06/23 11.1 (c) All penalties received by the board must be deposited in the general fund.
329	329	11.2 (d) All fees imposed by the board under sections 349.16 to 349.167 must be deposited
330	330	11.3in the state treasury and credited to a lawful gambling regulation account in the special
331	331	11.4revenue fund. Receipts in this account are available for the operations of the board up to
332	332	11.5the amount authorized in biennial appropriations from the legislature.
333	333	11.6 EFFECTIVE DATE.This section is effective July 1, 2023.
334	334	11.7 Sec. 9. Minnesota Statutes 2022, section 349.162, subdivision 2, is amended to read:
335	335	11.8 Subd. 2.Records required.(a) A distributor must maintain a record of all gambling
336	336	11.9equipment which it sells to organizations as required by section 297E.05, subdivision 2,
337	337	11.10and provide copies of the record to the board upon demand. Employees of the board and
338	338	11.11the Division of Alcohol and Gambling Enforcement may inspect the business premises,
339	339	11.12books, records, and other documents of a distributor at any reasonable time without notice
340	340	11.13and without a search warrant.
341	341	11.14 (b) The sales record must include:
342	342	11.15 (1) the identity of the person from whom the distributor purchased the product;
343	343	11.16 (2) the registration number of the product;
344	344	11.17 (3) the name, address, and license or exempt permit number of the organization or person
345	345	11.18to which the sale was made;
346	346	11.19 (4) the date of the sale;
347	347	11.20 (5) the name of the person who ordered the product;
348	348	11.21 (6) the name of the person who received the product;
349	349	11.22 (7) the type of product;
350	350	11.23 (8) the serial number of the product;
351	351	11.24 (9) the name, form number, or other identifying information for each game; and
352	352	11.25 (10) in the case of bingo hard cards or sheets sold on and after January 1, 1991, the
353	353	11.26individual number of each card or sheet.
354	354	11.27 (c) The board may require that a distributor submit the monthly report and invoices
355	355	11.28required in this subdivision via magnetic media or electronic data transfer.
356	356	11.29 EFFECTIVE DATE.This section is effective July 1, 2023.
357	357	11Sec. 9.
358	358	REVISOR EAP/CH 23-0140001/06/23 12.1 Sec. 10. Minnesota Statutes 2022, section 349.163, subdivision 5, is amended to read:
359	359	12.2 Subd. 5.Paper pull-tab and tipboard flares.(a) A manufacturer may not ship or cause
360	360	12.3to be shipped into this state or sell for use or resale in this state any deal of paper pull-tabs
361	361	12.4or tipboards that does not have its own individual flare as required for that deal by this
362	362	12.5subdivision and rule of the board. A person other than a manufacturer may not manufacture,
363	363	12.6alter, modify, or otherwise change a flare for a deal of paper pull-tabs or tipboards except
364	364	12.7as allowed by this chapter or board rules.
365	365	12.8 (b) The flare of each paper pull-tab and tipboard game must have affixed to or imprinted
366	366	12.9at the bottom a bar code that provides all information required by the commissioner of
367	367	12.10revenue under section 297E.04, subdivision 2 board. The board must require that the bar
368	368	12.11code include the serial number of the game. A manufacturer must also affix to the outside
369	369	12.12of the box containing these games a bar code providing all information prescribed by the
370	370	12.13board. The board may also prescribe additional bar coding requirements.
371	371	12.14 The serial number included in the bar code must be the same as the serial number of the
372	372	12.15tickets included in the deal. A manufacturer who manufactures a deal of paper pull-tabs
373	373	12.16must affix to the outside of the box containing that game the same bar code that is affixed
374	374	12.17to or imprinted at the bottom of a flare for that deal.
375	375	12.18 (c) No person may alter the bar code that appears on the outside of a box containing a
376	376	12.19deal of paper pull-tabs and tipboards. Possession of a box containing a deal of paper pull-tabs
377	377	12.20and tipboards that has a bar code different from the bar code of the deal inside the box is
378	378	12.21prima facie evidence that the possessor has altered the bar code on the box.
379	379	12.22 (d) The flare of each deal of paper pull-tabs and tipboards sold by a manufacturer for
380	380	12.23use or resale in Minnesota must have imprinted on it a symbol that is at least one inch high
381	381	12.24and one inch wide consisting of an outline of the geographic boundaries of Minnesota with
382	382	12.25the letters "MN" inside the outline. The flare must be placed inside the wrapping of the deal
383	383	12.26which the flare describes.
384	384	12.27 (e) Each paper pull-tab and tipboard flare must bear the following statement printed in
385	385	12.28letters large enough to be clearly legible:
386	386	12.29 "Pull-tab (or tipboard) purchasers -- This pull-tab (or tipboard) game is not legal in
387	387	12.30Minnesota unless:
388	388	12.31 -- an outline of Minnesota with letters "MN" inside it is imprinted on this sheet, and
389	389	12.32 -- the serial number imprinted on the bar code at the bottom of this sheet is the same as
390	390	12.33the serial number on the pull-tab (or tipboard) ticket you have purchased."
391	391	12Sec. 10.
392	392	REVISOR EAP/CH 23-0140001/06/23 13.1 (f) The flare of each paper pull-tab and tipboard game must have the serial number of
393	393	13.2the game imprinted on the bar code at the bottom of the flare in numerals at least one-half
394	394	13.3inch high.
395	395	13.4 EFFECTIVE DATE.This section is effective July 1, 2023.
396	396	13.5 Sec. 11. Minnesota Statutes 2022, section 349.1641, is amended to read:
397	397	13.6 349.1641 LICENSES; SUMMARY SUSPENSION.
398	398	13.7 (a) The board may (1) summarily suspend the license of an organization that is more
399	399	13.8than 45 days late in filing a monthly report required to be submitted to the board under this
400	400	13.9chapter or board rule or a tax return or in paying a tax required under chapter 297E and may
401	401	13.10keep the suspension in effect until all required returns are filed and required taxes are paid;
402	402	13.11(2) summarily suspend for not more than 90 days any license issued by the board or director
403	403	13.12for what the board determines are actions detrimental to the integrity of lawful gambling
404	404	13.13in Minnesota; (3) summarily suspend the license of a gambling manager who has failed to
405	405	13.14receive the training required under section 349.167, subdivision 4, clause (2), and may keep
406	406	13.15the suspension in effect until the gambling manager passes an examination prepared and
407	407	13.16administered by the board. The examination does not qualify as continuing education credit
408	408	13.17for the next calendar year; and (4) summarily suspend the license of an organization that
409	409	13.18fails to pay the fees required under section 349.16, 349.165, or 349.167, and may keep the
410	410	13.19suspension in effect until all required fees are paid.
411	411	13.20 (b) The board must notify the licensee at least 14 days before suspending the license
412	412	13.21under this section. If a license is summarily suspended under this section, a contested case
413	413	13.22hearing on the merits must be held within 20 days of the issuance of the order of suspension,
414	414	13.23unless the parties agree to a later hearing date. The administrative law judge's report must
415	415	13.24be issued within 20 days after the close of the hearing record. In all cases involving summary
416	416	13.25suspension, the board must issue its final decision within 30 days after receipt of the report
417	417	13.26of the administrative law judge and subsequent exceptions and argument under section
418	418	13.2714.61. When an organization's license is suspended under this section, the board shall within
419	419	13.28three days notify all municipalities in which the organization's gambling premises are located
420	420	13.29and all licensed distributors in the state.
421	421	13.30 EFFECTIVE DATE.This section is effective July 1, 2023.
422	422	13Sec. 11.
423	423	REVISOR EAP/CH 23-0140001/06/23 14.1 Sec. 12. Minnesota Statutes 2022, section 349.19, subdivision 5, is amended to read:
424	424	14.2 Subd. 5.Reports.(a) A licensed organization must report monthly to the board in an
425	425	14.3electronic format prescribed by the board and to its membership on its gross receipts,
426	426	14.4expenses, profits, and expenditure of profits from lawful gambling for each permitted
427	427	14.5premises. The organization must account for and report on each form of lawful gambling
428	428	14.6conducted. The organization must include a reconciliation of the organization's profit
429	429	14.7carryover with its cash balance on hand. All gambling fund expenditures must be reported
430	430	14.8to the board on a cash basis.
431	431	14.9 (b) The organization must report monthly to the commissioner of revenue as required
432	432	14.10under section 297E.06.
433	433	14.11 EFFECTIVE DATE.This section is effective July 1, 2023.
434	434	14.12Sec. 13. Minnesota Statutes 2022, section 349.2125, subdivision 1, is amended to read:
435	435	14.13 Subdivision 1.Contraband defined.The following are contraband:
436	436	14.14 (1) all pull-tab or tipboard deals, paddle ticket cards, or raffle boards not bar coded in
437	437	14.15accordance with this chapter or chapter 297E;
438	438	14.16 (2) all pull-tab or tipboard deals or raffle boards in the possession of any unlicensed
439	439	14.17person, firm, or organization;
440	440	14.18 (3) any container used for the storage and display of any contraband pull-tab or tipboard
441	441	14.19deals or raffle boards as defined in clauses (1) and (2);
442	442	14.20 (4) all currency, checks, and other things of value used for pull-tab, tipboard, or raffle
443	443	14.21board transactions not expressly permitted under this chapter, and any cash drawer, cash
444	444	14.22register, or any other container used for illegal pull-tab, tipboard, or raffle board transactions
445	445	14.23including its contents;
446	446	14.24 (5) any device including, but not limited to, motor vehicles, trailers, snowmobiles,
447	447	14.25airplanes, and boats used, with the knowledge of the owner or of a person operating with
448	448	14.26the consent of the owner, for the storage or transportation of more than five pull-tab or
449	449	14.27tipboard deals or raffle boards that are contraband under this subdivision. When pull-tabs,
450	450	14.28tipboards, or raffle boards are being transported in the course of interstate commerce between
451	451	14.29locations outside this state, the pull-tab and tipboard deals or raffle boards are not contraband,
452	452	14.30notwithstanding the provisions of clauses (1) and (12);
453	453	14.31 (6) any unaffixed registration stamps except as provided in section 349.162, subdivision
454	454	14.324;
455	455	14Sec. 13.
456	456	REVISOR EAP/CH 23-0140001/06/23 15.1 (7) any prize used or offered in a game utilizing contraband as defined in this subdivision;
457	457	15.2 (8) any altered, modified, or counterfeit pull-tab or tipboard ticket or raffle board;
458	458	15.3 (9) any unregistered gambling equipment except as permitted by this chapter;
459	459	15.4 (10) any gambling equipment kept in violation of section 349.18;
460	460	15.5 (11) any gambling equipment not in conformity with law or board rule;
461	461	15.6 (12) any pull-tab or tipboard deal or raffle board in the possession of a person other than
462	462	15.7a licensed distributor or licensed manufacturer for which the person, upon demand of a
463	463	15.8licensed peace officer or authorized agent of the commissioner of revenue or director of
464	464	15.9alcohol and gambling enforcement, does not immediately produce for inspection the invoice
465	465	15.10or a true and correct copy of the invoice for the acquisition of the deal or board from a
466	466	15.11licensed distributor; and
467	467	15.12 (13) any pull-tab or tipboard deals or raffle boards or portions of deals or boards on
468	468	15.13which the tax imposed under chapter 297E has not been paid; and
469	469	15.14 (14) (13) any device prohibited by section 609.76, subdivisions 4 to 6.
470	470	15.15 EFFECTIVE DATE.This section is effective July 1, 2023.
471	471	15.16Sec. 14. Minnesota Statutes 2022, section 349.2125, subdivision 3, is amended to read:
472	472	15.17 Subd. 3.Inventory; judicial determination; appeal; disposition of seized
473	473	15.18property.Within ten days after the seizure of any alleged contraband, the person making
474	474	15.19the seizure shall make available an inventory of the property seized to the person from
475	475	15.20whom the property was seized, if known, and file a copy with the commissioner of revenue
476	476	15.21or the director of alcohol and gambling enforcement. Within ten days after the date of service
477	477	15.22of the inventory, the person from whom the property was seized or any person claiming an
478	478	15.23interest in the property may file with the seizing authority a demand for judicial determination
479	479	15.24of whether the property was lawfully subject to seizure and forfeiture. Within 60 days after
480	480	15.25the date of filing of the demand, the seizing authority must bring an action in the district
481	481	15.26court of the county where seizure was made to determine the issue of forfeiture. The action
482	482	15.27must be brought in the name of the state and be prosecuted by the county attorney or by the
483	483	15.28attorney general. The court shall hear the action without a jury and determine the issues of
484	484	15.29fact and laws involved. When a judgment of forfeiture is entered, the seizing authority may,
485	485	15.30unless the judgment is stayed pending an appeal, either (1) cause the forfeited property to
486	486	15.31be destroyed; or (2) cause it to be sold at a public auction as provided by law.
487	487	15Sec. 14.
488	488	REVISOR EAP/CH 23-0140001/06/23 16.1 If demand for judicial determination is made and no action is commenced by the seizing
489	489	16.2authority as provided in this subdivision, the property must be released by the seizing
490	490	16.3authority and delivered to the person entitled to it. If no demand is made, the property seized
491	491	16.4is considered forfeited to the seizing authority by operation of law and may be disposed of
492	492	16.5by the seizing authority as provided where there has been a judgment of forfeiture. When
493	493	16.6the seizing authority is satisfied that a person from whom property is seized was acting in
494	494	16.7good faith and without intent to evade a tax imposed by chapter 297E, the seizing authority
495	495	16.8shall release the property seized without further legal proceedings.
496	496	16.9 EFFECTIVE DATE.This section is effective July 1, 2023.
497	497	16.10Sec. 15. Minnesota Statutes 2022, section 349.2127, subdivision 1, is amended to read:
498	498	16.11 Subdivision 1.Counterfeiting.A person is guilty of a felony who, with intent to defraud
499	499	16.12the state, makes, alters, forges, or counterfeits any license or stamp provided for in this
500	500	16.13chapter, or has in possession any forged, spurious, or altered stamps, with the intent, or with
501	501	16.14the result of, depriving the state of the tax imposed by chapter 297E.
502	502	16.15 EFFECTIVE DATE.This section is effective July 1, 2023.
503	503	16.16Sec. 16. Minnesota Statutes 2022, section 349.2127, subdivision 2, is amended to read:
504	504	16.17 Subd. 2.Prohibition against possession.(a) A person is guilty of a crime who sells,
505	505	16.18offers for sale, or possesses a pull-tab or tipboard deal, paddle ticket cards, or raffle board
506	506	16.19not stamped or bar coded in accordance with the provisions of this chapter or chapter 297E.
507	507	16.20A violation of this paragraph is a gross misdemeanor if it involves ten or fewer pull-tab or
508	508	16.21tipboard deals or raffle boards. A violation of this paragraph is a felony if it involves more
509	509	16.22than ten pull-tab or tipboard deals or raffle boards, or a combination of more than ten deals
510	510	16.23of pull-tabs and tipboards or raffle boards.
511	511	16.24 (b) A person, other than a licensed manufacturer, a licensed distributor, or an organization
512	512	16.25licensed or exempt or excluded from licensing under this chapter, is guilty of a crime who
513	513	16.26sells, offers to sell, or possesses gambling equipment. A violation of this paragraph is a
514	514	16.27gross misdemeanor if it involves ten or fewer pull-tab or tipboard deals or raffle boards. A
515	515	16.28violation of this paragraph is a felony if it involves more than ten pull-tab or tipboard deals
516	516	16.29or raffle boards, or a combination of more than ten deals of pull-tabs and tipboards or raffle
517	517	16.30boards.
518	518	16.31 (c) A person is guilty of a crime who alters, modifies, or counterfeits pull-tabs, tipboards,
519	519	16.32tipboard tickets, or raffle boards or possesses altered, modified, or counterfeit pull-tabs,
520	520	16Sec. 16.
521	521	REVISOR EAP/CH 23-0140001/06/23 17.1tipboards, tipboard tickets, or raffle boards. A violation of this paragraph is a gross
522	522	17.2misdemeanor if the total face value for all such pull-tabs, tipboards, tipboard tickets or raffle
523	523	17.3boards does not exceed $200. A violation of this paragraph is a felony if the total face value
524	524	17.4exceeds $200. For purposes of this paragraph, the face value of all pull-tabs, tipboards, and
525	525	17.5tipboard tickets or raffle boards altered, modified, or counterfeited within a six-month period
526	526	17.6may be aggregated and the defendant charged accordingly.
527	527	17.7 (d) A person, other than a licensed distributor or licensed manufacturer, is guilty of a
528	528	17.8crime who possesses a pull-tab or tipboard deal or raffle board for which the person, upon
529	529	17.9demand of a licensed peace officer or authorized agent of the commissioner of revenue or
530	530	17.10director of alcohol and gambling enforcement, does not immediately produce for inspection
531	531	17.11the invoice or a true and correct copy of the invoice for the acquisition of the deal or board
532	532	17.12from a licensed distributor. A violation of this paragraph is a gross misdemeanor if it involves
533	533	17.13ten or fewer pull-tab or tipboard deals or raffle boards. A violation of this paragraph is a
534	534	17.14felony if it involves more than ten pull-tab or tipboard deals or raffle boards, or a combination
535	535	17.15of more than ten deals of pull-tabs and tipboards or raffle boards. This paragraph does not
536	536	17.16apply to pull-tab and tipboard deals or raffle boards being transported in interstate commerce
537	537	17.17between locations outside this state.
538	538	17.18 EFFECTIVE DATE.This section is effective July 1, 2023.
539	539	17.19Sec. 17. Minnesota Statutes 2022, section 349.2127, subdivision 4, is amended to read:
540	540	17.20 Subd. 4.Transporting unstamped deals.A person is guilty of a gross misdemeanor
541	541	17.21who transports into, causes to be transported into, receives, carries, moves from place to
542	542	17.22place, or causes to be moved from place to place in this state, any paddle ticket cards, deals
543	543	17.23of pull-tabs or tipboards, or raffle boards not stamped or bar coded in accordance with this
544	544	17.24chapter or chapter 297E except in the course of interstate commerce between locations
545	545	17.25outside this state. A person is guilty of a felony who violates this subdivision with respect
546	546	17.26to more than ten pull-tab or tipboard deals or raffle boards, or a combination of more than
547	547	17.27ten deals of pull-tabs and tipboards.
548	548	17.28 EFFECTIVE DATE.This section is effective July 1, 2023.
549	549	17.29Sec. 18. Minnesota Statutes 2022, section 349.213, subdivision 1, is amended to read:
550	550	17.30 Subdivision 1.Local regulation.(a) A statutory or home rule city or county has the
551	551	17.31authority to adopt more stringent regulation of lawful gambling within its jurisdiction,
552	552	17.32including the prohibition of lawful gambling.
553	553	17Sec. 18.
554	554	REVISOR EAP/CH 23-0140001/06/23 18.1 (b) A statutory or home rule city or county may require a permit for the conduct of
555	555	18.2gambling exempt from licensing under section 349.166. The fee for a permit issued under
556	556	18.3section 349.166 may not exceed $100.
557	557	18.4 (c) The authority granted by this subdivision does not include the authority to require a
558	558	18.5license or fee for a license or permit to conduct gambling by organizations, gambling
559	559	18.6managers, gambling employees, or sales by distributors or linked bingo game providers
560	560	18.7licensed by or registered with the board.
561	561	18.8 (d) The authority granted by this subdivision does not include the authority to require
562	562	18.9an organization to make specific expenditures of more than ten percent per year from its
563	563	18.10net profits derived from lawful gambling.
564	564	18.11 (e) For the purposes of this subdivision, net profits are gross profits less amounts
565	565	18.12expended for allowable expenses and paid in taxes assessed on lawful gambling.
566	566	18.13 (f) A statutory or home rule charter city or a county may not require an organization
567	567	18.14conducting lawful gambling within its jurisdiction to make an expenditure to the city or
568	568	18.15county as a condition to operate within that city or county, except:
569	569	18.16 (1) as authorized under section 349.16, subdivision 8, or 297E.02; or
570	570	18.17 (2) by an ordinance requirement that such organizations must contribute ten percent per
571	571	18.18year of their net profits derived from lawful gambling conducted at premises within the
572	572	18.19city's or county's jurisdiction to a fund administered and regulated by the responsible local
573	573	18.20unit of government without cost to such fund. The funds must be disbursed by the local unit
574	574	18.21of government for (i) charitable contributions as defined in section 349.12, subdivision 7a,
575	575	18.22or (ii) police, fire, and other emergency or public safety-related services, equipment, and
576	576	18.23training, excluding pension obligations. A contribution made by an organization is not
577	577	18.24considered an expenditure to the city or county nor a tax under section 297E.02, and is valid
578	578	18.25and lawful. A city or county receiving and making expenditures authorized under this clause
579	579	18.26must by March 15 of each year file a report with the board, on a form the board prescribes,
580	580	18.27that lists all such revenues collected, interest received on fund balances, and expenditures
581	581	18.28for the previous calendar year. A home rule or statutory city or county making charitable
582	582	18.29contributions authorized under this clause must acknowledge financial contributions of
583	583	18.30organizations conducting lawful gambling to the community and to the recipients of the
584	584	18.31funds. This may occur in communications about the funds as well as in the distribution of
585	585	18.32funds.
586	586	18.33 (g) A statutory or home rule city or county may by ordinance require that a licensed
587	587	18.34organization conducting lawful gambling within its jurisdiction expend all or a portion of
588	588	18Sec. 18.
589	589	REVISOR EAP/CH 23-0140001/06/23 19.1its expenditures for lawful purposes on lawful purposes conducted or located within the
590	590	19.2city's or county's trade area. Such an ordinance must be limited to lawful purpose expenditures
591	591	19.3of gross profits derived from lawful gambling conducted at premises within the city's or
592	592	19.4county's jurisdiction, must define the city's or county's trade area, and must specify the
593	593	19.5percentage of lawful purpose expenditures which must be expended within the trade area.
594	594	19.6A trade area defined by a city under this subdivision must include each city and township
595	595	19.7contiguous to the defining city.
596	596	19.8 (h) A more stringent regulation or prohibition of lawful gambling adopted by a political
597	597	19.9subdivision under this subdivision must apply equally to all forms of lawful gambling within
598	598	19.10the jurisdiction of the political subdivision, except a political subdivision may prohibit the
599	599	19.11use of paddlewheels.
600	600	19.12 EFFECTIVE DATE.This section is effective July 1, 2023.
601	601	19.13Sec. 19. Minnesota Statutes 2022, section 349.22, subdivision 2, is amended to read:
602	602	19.14 Subd. 2.Other action.This section does not preclude civil or criminal actions under
603	603	19.15other applicable law or preclude any agency of government from investigating or prosecuting
604	604	19.16violations of the provisions of sections 349.11 to 349.213, and chapter 297E. County
605	605	19.17attorneys and the attorney general have joint responsibility for prosecuting violations of
606	606	19.18sections 349.11 to 349.213, and chapter 297E, and the attorney general may prosecute any
607	607	19.19violation of those sections. If the county attorney fails to initiate the prosecution within 30
608	608	19.20days, the attorney general may initiate prosecution.
609	609	19.21 EFFECTIVE DATE.This section is effective July 1, 2023.
610	610	19.22Sec. 20. REPEALER.
611	611	19.23 Minnesota Statutes 2022, sections 13.4967, subdivision 6; 297E.01; 297E.02, subdivisions
612	612	19.241, 2, 2a, 3, 6, 6a, 7, 8, 9, 10, and 11; 297E.03; 297E.031; 297E.04; 297E.05; 297E.06;
613	613	19.25297E.07; 297E.10; 297E.11; 297E.12, subdivisions 1, 2, 4, 5, 6, 7, 8, and 9; 297E.13;
614	614	19.26297E.14; 297E.16, subdivisions 1 and 2; 297E.17; and 349.16, subdivision 11, and Minnesota
615	615	19.27Rules, parts 8122.0100; 8122.0150; 8122.0200; 8122.0250; 8122.0300; 8122.0350;
616	616	19.288122.0400; 8122.0450; 8122.0500; 8122.0510; 8122.0550; and 8122.0650, are repealed.
617	617	19.29 EFFECTIVE DATE.This section is effective July 1, 2023.
618	618	19Sec. 20.
619	619	REVISOR EAP/CH 23-0140001/06/23 13.4967 OTHER TAX DATA CODED ELSEWHERE.
620	620	Subd. 6.Gambling taxes.(a) Administration of taxes. Records concerning administration of
621	621	gambling taxes are classified under section 297E.02, subdivision 9.
622	622	(b) Sports bookmaking tax. Disclosure of facts contained in a sports bookmaking tax return
623	623	is prohibited by section 297E.03, subdivision 8.
624	624	297E.01 DEFINITIONS.
625	625	Subdivision 1.Scope.Unless otherwise defined in this chapter, or unless the context clearly
626	626	indicates otherwise, the terms used in this chapter have the meaning given them in chapter 349.
627	627	The definitions in this section are for tax administration purposes and apply to this chapter.
628	628	Subd. 2.Bingo.For purposes of this chapter "bingo" means the game of bingo as defined in
629	629	section 349.12, subdivision 4, and as conducted under chapter 349, and any other game that is
630	630	substantially the same as or similar to that game, including but not limited to a game where:
631	631	(1) players pay compensation for a game sheet, card, or paper that has spaces arranged on it in
632	632	columns and rows containing printed numbers or figures, or that has spaces in which players are
633	633	allowed to place their own numbers or figures, or for an electronic, mechanical, or other facsimile
634	634	of such sheets, cards, or paper;
635	635	(2) numbers or figures are randomly selected for comparison with the numbers or figures on
636	636	each game sheet, card, paper, or facsimile;
637	637	(3) game winners are those who have a game sheet, card, paper, or facsimile with some or all
638	638	of the randomly selected numbers or figures displayed thereon, in the same pattern or arrangement
639	639	that has been previously designated or understood to be a winning pattern or arrangement for the
640	640	game; and
641	641	(4) game winners receive or are eligible to receive a prize such as money, property, or other
642	642	reward or benefit.
643	643	Subd. 3.Commissioner."Commissioner" means the commissioner of revenue or a person to
644	644	whom the commissioner has delegated functions.
645	645	Subd. 4.Contraband.For purposes of this chapter, "contraband" means all of the items listed
646	646	in section 349.2125, and all pull-tab or tipboard deals or portions of deals on which the tax imposed
647	647	under section 297E.02 has not been paid.
648	648	Subd. 5.Distributor."Distributor" means a distributor as defined in section 349.12, subdivision
649	649	11, or a person or linked bingo game provider who markets, sells, or provides gambling product to
650	650	a person or entity for resale or use at the retail level.
651	651	Subd. 6.Fiscal year."Fiscal year" means the period from July 1 to June 30.
652	652	Subd. 7.Gambling product."Gambling product" means bingo hard cards, bingo paper sheets,
653	653	linked bingo paper sheets, or electronic linked bingo games; pull-tabs; electronic pull-tab games;
654	654	tipboards; paddle tickets and paddle ticket cards; raffle tickets; or any other ticket, card, board,
655	655	placard, device, or token that represents a chance, for which consideration is paid, to win a prize.
656	656	Subd. 8.Gross receipts."Gross receipts" means all receipts derived from lawful gambling
657	657	activity including, but not limited to, the following items:
658	658	(1) gross sales of bingo hard cards, paper sheets, linked bingo paper sheets, and electronic linked
659	659	bingo games before reduction for prizes, expenses, shortages, free plays, or any other charges or
660	660	offsets;
661	661	(2) the ideal gross of pull-tab, electronic pull-tab games, and tipboard deals or games less the
662	662	value of unsold and defective tickets and before reduction for prizes, expenses, shortages, free
663	663	plays, or any other charges or offsets;
664	664	(3) gross sales of raffle tickets and paddle tickets before reduction for prizes, expenses, shortages,
665	665	free plays, or any other charges or offsets;
666	666	(4) admission, commission, cover, or other charges imposed on participants in lawful gambling
667	667	activity as a condition for or cost of participation; and
668	668	(5) interest, dividends, annuities, profit from transactions, or other income derived from the
669	669	accumulation or use of gambling proceeds.
670	670	1R
671	671	APPENDIX
672	672	Repealed Minnesota Statutes: 23-01400 Gross receipts does not include rental proceeds from premises owned by an organization and
673	673	leased to one or more other organizations for the purposes of conducting lawful gambling.
674	674	Subd. 9.Ideal gross."Ideal gross" means the total amount of receipts that would be received
675	675	if every individual ticket in the pull-tab, electronic pull-tab games or tipboard deal, paddlewheel
676	676	game, and raffle ticket was sold at its face value. In the calculation of ideal gross and prizes, a free
677	677	play ticket pull-tab or electronic pull-tab shall be valued at face value. Ideal gross also means the
678	678	total amount of receipts that would be received if every bingo paper sheet, linked bingo paper sheet,
679	679	and electronic linked bingo games were sold at face value.
680	680	Subd. 9a.Linked bingo game."Linked bingo game" means a bingo game played at two or
681	681	more locations where licensed organizations are authorized to conduct bingo, when there is a
682	682	common prize pool and a common selection of numbers or symbols conducted at one location, and
683	683	when the results of the selection are transmitted to all participating locations by satellite, telephone,
684	684	or other means by a linked bingo game provider.
685	685	Subd. 9b.Linked bingo game provider."Linked bingo game provider" means any person who
686	686	provides the means to link bingo prizes in a linked bingo game, who provides linked bingo paper
687	687	sheets to the participating organizations, who provides linked bingo prize management, and who
688	688	provides the linked bingo game system.
689	689	Subd. 10.Manufacturer."Manufacturer" means a manufacturer as defined in section 349.12,
690	690	subdivision 26, or a person or entity who:
691	691	(1) assembles from raw materials, or from subparts or other components, a completed item of
692	692	gambling product for resale, use, or receipt in Minnesota; or
693	693	(2) sells, furnishes, ships, or imports completed gambling product from outside Minnesota for
694	694	resale, use, receipt, or storage in Minnesota; or
695	695	(3) being within the state, assembles, produces, or otherwise creates gambling products.
696	696	Subd. 11.Prize."Prize" means a thing of value, other than a free play, offered or awarded to
697	697	the winner of a gambling game.
698	698	Subd. 12.Pull-tab."Pull-tab" is a pull-tab as defined in section 349.12, subdivision 32, or any
699	699	other gambling ticket or device that is substantially the same as or similar to such a pull-tab, including
700	700	but not limited to, a ticket or card that:
701	701	(1) has one or more concealed numbers, figures, or symbols, or combination thereof, printed
702	702	on it;
703	703	(2) may be used in games where the player knows in advance, or can determine in advance,
704	704	what the predesignated winning numbers, figures, symbols, or combinations are; and
705	705	(3) may be played by revealing the concealed ticket information and comparing that information
706	706	with the predesignated winning numbers, figures, symbols, or combinations in order to determine
707	707	a winner.
708	708	Subd. 13.Raffle."Raffle" means a raffle as defined in section 349.12, subdivision 33, and any
709	709	other game that is played in a manner substantially similar to the play of such a raffle, including
710	710	but not limited to raffles in which compensation is paid for the chance to win a thing of value, the
711	711	chance is evidenced by a ticket, card, token, or equivalent item, and the winner is selected by random
712	712	drawing.
713	713	Subd. 14.Retail level."Retail level" means an activity where gambling product is sold to players
714	714	or participants in gambling games and where the players or participants give consideration for a
715	715	chance to win a prize.
716	716	Subd. 15.Taxpayer."Taxpayer" means a person subject to or liable for a tax imposed by this
717	717	chapter, a person required to file reports or returns with the commissioner under this chapter, a
718	718	person required to keep or retain records under this chapter, or a person required by this chapter to
719	719	obtain or hold a permit.
720	720	Subd. 16.Ticket."Ticket" means a valid token, card, or other tangible voucher, other than
721	721	bingo cards, sheets, or paper, that grants the holder a chance or chances to participate in a game of
722	722	gambling.
723	723	2R
724	724	APPENDIX
725	725	Repealed Minnesota Statutes: 23-01400 Subd. 17.Tipboard."Tipboard" means a tipboard as defined in section 349.12, subdivision
726	726	34, and any game that is substantially the same as or similar to the game of tipboards authorized
727	727	under chapter 349, including but not limited to any of the following games:
728	728	(1) a game that consists of one or more boards, placards, or other devices in which (i) the board,
729	729	placard, or other device has been marked off into a grid or columns in which each section represents
730	730	a chance to win a prize, (ii) participants pay a consideration to select a section or sections, (iii) all
731	731	or some of the winning numbers, figures, symbols, or other winning criteria for the game are
732	732	concealed or otherwise not known by the player at the time the player obtains a chance in the game,
733	733	and (iv) the numbers, figures, symbols, or other criteria for winning the game are later revealed for
734	734	comparison with the information on the board, placard, or other device in order to determine a
735	735	winner;
736	736	(2) a game that consists of one or more boards, placards, or other devices that (i) have tickets
737	737	attached to or otherwise associated with them, and that have one or more concealed numbers,
738	738	figures, or combination thereof on the tickets; (ii) participants pay a consideration to obtain the
739	739	tickets, (iii) all or some of the winning numbers, figures, symbols, or other winning criteria for the
740	740	game are concealed or otherwise not known by the player at the time the player obtains a chance
741	741	in the game, and (iv) the numbers, figures, symbols, or other criteria for winning the game are later
742	742	revealed for comparison with the information on the game tickets in order to determine a winner;
743	743	or
744	744	(3) a game that consists of a deal or set of tickets that (i) have one or more concealed numbers,
745	745	figures, or symbols, or combination thereof, on the tickets, (ii) participants pay a consideration to
746	746	obtain the tickets, (iii) all or some of the winning numbers, figures, symbols, or combination thereof,
747	747	are concealed or otherwise not known to the player at the time the player obtains the ticket, and
748	748	(iv) the tickets are used in games where the numbers, figures, symbols, or other winning criteria
749	749	are later revealed for comparison with the information on the game tickets in order to determine a
750	750	winner.
751	751	"Tipboards" includes any game otherwise described in this subdivision in which the winning
752	752	chances are determined in whole or in part by the outcome of one or more sporting events. "Tipboard"
753	753	does not include boards, placards, tickets, or other devices lawfully used in connection with the
754	754	operation of the State Lottery under chapter 349A or the lawful conduct of pari-mutuel betting on
755	755	horse racing under chapter 240.
756	756	Subd. 17a.Business day."Business day" means Monday through Friday, excluding any holidays
757	757	as defined in section 645.44.
758	758	Subd. 18.Other words.Unless specifically defined in this chapter, or unless the context clearly
759	759	indicates otherwise, the words used in this chapter have the meanings given them in chapter 349.
760	760	297E.02 TAX IMPOSED.
761	761	Subdivision 1.Imposition.A tax is imposed on all lawful gambling other than (1) paper or
762	762	electronic pull-tab deals or games; (2) tipboard deals or games; (3) electronic linked bingo; and (4)
763	763	items listed in section 297E.01, subdivision 8, clauses (4) and (5), at the rate of 8.5 percent on the
764	764	gross receipts as defined in section 297E.01, subdivision 8, less prizes actually paid. The tax imposed
765	765	by this subdivision is in lieu of the tax imposed by section 297A.62 and all local taxes and license
766	766	fees except a fee authorized under section 349.16, subdivision 8, or a tax authorized under section
767	767	349.213, subdivision 3.
768	768	The tax imposed under this subdivision is payable by the organization or party conducting,
769	769	directly or indirectly, the gambling.
770	770	Subd. 2.Tax-exempt gambling.An organization's receipts from lawful gambling that are
771	771	excluded or exempt from licensing under section 349.166, are not subject to the tax imposed by
772	772	this section or section 297A.62. This exclusion from tax is only valid if at the time of the event
773	773	giving rise to the tax the organization either has an exclusion under section 349.166, subdivision
774	774	1, or has applied for and received a valid exemption from the lawful gambling control board.
775	775	Subd. 2a.Tax credit for certain raffles.An organization may claim a credit equal to the tax
776	776	reported under subdivision 1 resulting from a raffle the net proceeds of which have been used
777	777	exclusively for the purposes of section 349.12, subdivision 25, paragraph (a), clause (2). The
778	778	organization claiming the credit must do so on the monthly gambling tax return on which the raffle
779	779	activity is reported under subdivision 1.
780	780	3R
781	781	APPENDIX
782	782	Repealed Minnesota Statutes: 23-01400 Subd. 3.Collection; disposition.(a) Taxes imposed by this section are due and payable to the
783	783	commissioner when the gambling tax return is required to be filed. Distributors must file their
784	784	monthly sales figures with the commissioner on a form prescribed by the commissioner. Returns
785	785	covering the taxes imposed under this section must be filed with the commissioner on or before the
786	786	20th day of the month following the close of the previous calendar month. The commissioner shall
787	787	prescribe the content, format, and manner of returns or other documents pursuant to section 270C.30.
788	788	The proceeds, along with the revenue received from all license fees and other fees under sections
789	789	349.11 to 349.191, 349.211, and 349.213, must be paid to the commissioner of management and
790	790	budget for deposit in the general fund.
791	791	(b) The sales tax imposed by chapter 297A on the sale of pull-tabs and tipboards by the distributor
792	792	is imposed on the retail sales price. The retail sale of pull-tabs or tipboards by the organization is
793	793	exempt from taxes imposed by chapter 297A and is exempt from all local taxes and license fees
794	794	except a fee authorized under section 349.16, subdivision 8.
795	795	(c) One-half of one percent of the revenue deposited in the general fund under paragraph (a),
796	796	is appropriated to the commissioner of human services for the compulsive gambling treatment
797	797	program established under section 245.98. One-half of one percent of the revenue deposited in the
798	798	general fund under paragraph (a), is appropriated to the commissioner of human services for a grant
799	799	to the state affiliate recognized by the National Council on Problem Gambling to increase public
800	800	awareness of problem gambling, education and training for individuals and organizations providing
801	801	effective treatment services to problem gamblers and their families, and research relating to problem
802	802	gambling. Money appropriated by this paragraph must supplement and must not replace existing
803	803	state funding for these programs.
804	804	(d) The commissioner of human services must provide to the state affiliate recognized by the
805	805	National Council on Problem Gambling a monthly statement of the amounts deposited under
806	806	paragraph (c). Beginning January 1, 2022, the commissioner of human services must provide to
807	807	the chairs and ranking minority members of the legislative committees with jurisdiction over
808	808	treatment for problem gambling and to the state affiliate recognized by the National Council on
809	809	Problem Gambling an annual reconciliation of the amounts deposited under paragraph (c). The
810	810	annual reconciliation under this paragraph must include the amount allocated to the commissioner
811	811	of human services for the compulsive gambling treatment program established under section 245.98,
812	812	and the amount allocated to the state affiliate recognized by the National Council on Problem
813	813	Gambling.
814	814	Subd. 6.Combined net receipts tax.(a) In addition to the taxes imposed under subdivision 1,
815	815	a tax is imposed on the combined net receipts of the organization. As used in this section, "combined
816	816	net receipts" is the sum of the organization's gross receipts from lawful gambling less gross receipts
817	817	directly derived from the conduct of paper bingo, raffles, and paddlewheels, as defined in section
818	818	297E.01, subdivision 8, and less the net prizes actually paid, other than prizes actually paid for
819	819	paper bingo, raffles, and paddlewheels, for the fiscal year. The combined net receipts of an
820	820	organization are subject to a tax computed according to the following schedule:
821	821	The tax is:If the combined net receipts
822	822	for the fiscal year are:
823	823	nine percentNot over $87,500
824	824	$7,875 plus 18 percent of the amount over
825	825	$87,500, but not over $122,500
826	826	Over $87,500, but not over
827	827	$122,500
828	828	$14,175 plus 27 percent of the amount
829	829	over $122,500, but not over $157,500
830	830	Over $122,500, but not over
831	831	$157,500
832	832	$23,625 plus 36 percent of the amount
833	833	over $157,500
834	834	Over $157,500
835	835	(b) Gross receipts derived from sports-themed tipboards are exempt from taxation under this
836	836	section. For purposes of this paragraph, a sports-themed tipboard means a sports-themed tipboard
837	837	as defined in section 349.12, subdivision 34, under which the winning numbers are determined by
838	838	the numerical outcome of a professional sporting event.
839	839	Subd. 6a.Unaccounted games.If a licensed distributor cannot account for a pull-tab game, an
840	840	electronic pull-tab game, a tipboard deal, a raffle board, paddletickets, an electronic linked bingo
841	841	game, bingo paper sheets, or linked bingo paper sheets, the distributor must report the sheets, games,
842	842	4R
843	843	APPENDIX
844	844	Repealed Minnesota Statutes: 23-01400 or boards to the commissioner as lost and remit a tax of six percent on the ideal gross of the sheets,
845	845	games, or boards.
846	846	Subd. 7.Untaxed gambling product.(a) In addition to penalties or criminal sanctions imposed
847	847	by this chapter, a person, organization, or business entity possessing or selling a pull-tab, electronic
848	848	pull-tab game, raffle board, or tipboard upon which the tax imposed by this chapter has not been
849	849	paid is liable for a tax of six percent of the ideal gross of each pull-tab, electronic pull-tab game,
850	850	raffle board, or tipboard. The tax on a partial deal must be assessed as if it were a full deal.
851	851	(b) In addition to penalties and criminal sanctions imposed by this chapter, a person (1) not
852	852	licensed by the board who conducts bingo, linked bingo, electronic linked bingo, raffles, or
853	853	paddlewheel games, or (2) who conducts gambling prohibited under sections 609.75 to 609.763,
854	854	other than activities subject to tax under section 297E.03, is liable for a tax of six percent of the
855	855	gross receipts from that activity.
856	856	(c) The tax may be assessed by the commissioner. An assessment must be considered a jeopardy
857	857	assessment or jeopardy collection as provided in section 270C.36. The commissioner shall assess
858	858	the tax based on personal knowledge or information available to the commissioner. The commissioner
859	859	shall mail to the taxpayer at the taxpayer's last known address, or serve in person, a written notice
860	860	of the amount of tax, demand its immediate payment, and, if payment is not immediately made,
861	861	collect the tax by any method described in chapter 270C, except that the commissioner need not
862	862	await the expiration of the times specified in chapter 270C. The tax assessed by the commissioner
863	863	is presumed to be valid and correctly determined and assessed. The burden is upon the taxpayer to
864	864	show its incorrectness or invalidity. The tax imposed under this subdivision does not apply to
865	865	gambling that is exempt from taxation under subdivision 2.
866	866	(d) A person, organization, or business entity conducting gambling activity under this subdivision
867	867	must file monthly tax returns with the commissioner, in the form required by the commissioner.
868	868	The returns must be filed on or before the 20th day of the month following the month in which the
869	869	gambling activity occurred. The tax imposed by this section is due and payable at the time when
870	870	the returns are required to be filed.
871	871	(e) Notwithstanding any law to the contrary, neither the commissioner nor a public employee
872	872	may reveal facts contained in a tax return filed with the commissioner of revenue as required by
873	873	this subdivision, nor can any information contained in the report or return be used against the tax
874	874	obligor in any criminal proceeding, unless independently obtained, except in connection with a
875	875	proceeding involving taxes due under this section, or as provided in section 270C.055, subdivision
876	876	1. However, this paragraph does not prohibit the commissioner from publishing statistics that do
877	877	not disclose the identity of tax obligors or the contents of particular returns or reports. Any person
878	878	violating this paragraph is guilty of a gross misdemeanor.
879	879	Subd. 8.Personal debt.The tax imposed by this section, and interest and penalties imposed
880	880	with respect to it, are a personal debt of the person required to file a return from the time the liability
881	881	for it arises, irrespective of when the time for payment of the liability occurs. The debt must, in the
882	882	case of the executor or administrator of the estate of a decedent and in the case of a fiduciary, be
883	883	that of the person in the person's official or fiduciary capacity only unless the person has voluntarily
884	884	distributed the assets held in that capacity without reserving sufficient assets to pay the tax, interest,
885	885	and penalties, in which event the person is personally liable for any deficiency.
886	886	Subd. 9.Public information.All records concerning the administration of the taxes under this
887	887	chapter are classified as public information.
888	888	Subd. 10.Refunds; appropriation.A person who has, under this chapter, paid to the
889	889	commissioner an amount of tax for a period in excess of the amount legally due for that period,
890	890	may file with the commissioner a claim for a refund of the excess. The amount necessary to pay
891	891	the refunds under this subdivision is appropriated from the general fund to the commissioner.
892	892	Subd. 11. Defective gambling products.If a defective deal registered with the board or bar
893	893	coded in accordance with this chapter and chapter 349 is returned to the manufacturer, the distributor
894	894	shall submit to the commissioner of revenue certification from the manufacturer that the deal was
895	895	returned and in what respect it was defective. The certification must be on a form prescribed by the
896	896	commissioner and must contain additional information the commissioner requires.
897	897	The commissioner may require under this subdivision that all defective and returned pull-tabs,
898	898	tipboards, paddle tickets, paper bingo sheets, and linked bingo paper sheets be set aside for inspection
899	899	by the commissioner's employee.
900	900	5R
901	901	APPENDIX
902	902	Repealed Minnesota Statutes: 23-01400 Reductions in previously paid taxes authorized by this subdivision must be made when and in
903	903	the manner prescribed by the commissioner.
904	904	297E.03 SPORTS BOOKMAKING TAX.
905	905	Subdivision 1.Imposition of tax.An excise tax of six percent is imposed on the value of all
906	906	bets received by, recorded by, accepted by, forwarded by, or placed with a person engaged in sports
907	907	bookmaking.
908	908	Subd. 2.Bet defined.For purposes of this section, the term "bet" has the meaning given it in
909	909	section 609.75, subdivision 2.
910	910	Subd. 3.Sports bookmaking defined.For purposes of this section, the term "sports bookmaking"
911	911	has the meaning given it in section 609.75, subdivision 7.
912	912	Subd. 4.Amount of bet.In determining the value or amount of any bet for purposes of this
913	913	section, all charges incident to the placing of the bet must be included.
914	914	Subd. 5.Tax returns.A person engaged in sports bookmaking shall file monthly tax returns
915	915	with the commissioner of revenue, in the form required by the commissioner, of all bookmaking
916	916	activity, and shall include information on all bets recorded, accepted, forwarded, and placed. The
917	917	returns must be filed on or before the 20th day of the month following the month in which the bets
918	918	reported were recorded, accepted, forwarded, or placed. The tax imposed by this section is due and
919	919	payable at the time when the returns are filed.
920	920	Subd. 6.Persons liable for tax.Each person who is engaged in receiving, recording, forwarding,
921	921	or accepting sports bookmaking bets is liable for and shall pay the tax imposed under this section.
922	922	Subd. 7.Jeopardy assessment; jeopardy collection.The tax may be assessed by the
923	923	commissioner of revenue. An assessment made pursuant to this section shall be considered a jeopardy
924	924	assessment or jeopardy collection as provided in section 270C.36. The commissioner shall assess
925	925	the tax based on personal knowledge or information available to the commissioner. The commissioner
926	926	shall mail to the taxpayer at the taxpayer's last known address, or serve in person, a written notice
927	927	of the amount of tax, demand its immediate payment, and, if payment is not immediately made,
928	928	collect the tax by any method described in chapter 270C, except that the commissioner need not
929	929	await the expiration of the times specified in chapter 270C. The tax assessed by the commissioner
930	930	is presumed to be valid and correctly determined and assessed.
931	931	Subd. 8.Disclosure prohibited.(a) Notwithstanding any law to the contrary, neither the
932	932	commissioner nor a public employee may reveal facts contained in a sports bookmaking tax return
933	933	filed with the commissioner of revenue as required by this section, nor can any information contained
934	934	in the report or return be used against the tax obligor in any criminal proceeding, unless independently
935	935	obtained, except in connection with a proceeding involving taxes due under this section, or as
936	936	provided in section 270C.055, subdivision 1.
937	937	(b) Any person violating this section is guilty of a gross misdemeanor.
938	938	(c) This section does not prohibit the commissioner from publishing statistics that do not disclose
939	939	the identity of tax obligors or the contents of particular returns or reports.
940	940	297E.031 GAMBLING TAX PERMIT.
941	941	Subdivision 1.Application and issuance.A distributor who sells gambling products under this
942	942	chapter must file an application with the commissioner, on a form prescribed by the commissioner,
943	943	for a gambling tax permit and identification number. The commissioner, when satisfied that the
944	944	applicant meets all applicable requirements under this chapter and chapter 349, shall issue the
945	945	applicant a permit and number. A permit is not assignable and is valid only for the distributor in
946	946	whose name it is issued.
947	947	Subd. 2.Suspension; revocation.(a) If a distributor fails to comply with this chapter or a rule
948	948	of the commissioner, or if a license issued under chapter 349 is revoked or suspended, the
949	949	commissioner, after giving notice, may for reasonable cause revoke or suspend a permit held by a
950	950	distributor. A notice must be sent to the distributor at least 15 days before the proposed suspension
951	951	or revocation is to take effect. The notice must give the reason for the proposed suspension or
952	952	revocation and must require the distributor to show cause why the proposed action should not be
953	953	taken. The notice may be served personally or by mail.
954	954	(b) The notice must inform the distributor of the right to a contested case hearing. If a request
955	955	in writing is made to the commissioner within 14 days of the date of the notice, the commissioner
956	956	6R
957	957	APPENDIX
958	958	Repealed Minnesota Statutes: 23-01400 shall defer action on the suspension or revocation and shall refer the case to the Office of
959	959	Administrative Hearings for the scheduling of a contested case hearing. The distributor must be
960	960	served with 20 days' notice in writing specifying the time and place of the hearing and the allegations
961	961	against the distributor.
962	962	(c) The commissioner shall issue a final order following receipt of the recommendation of the
963	963	administrative law judge.
964	964	(d) Under section 271.06, subdivision 1, an appeal to the Tax Court may be taken from the
965	965	commissioner's order of revocation or suspension. The commissioner may not issue a new permit
966	966	after revocation except upon application accompanied by reasonable evidence of the intention of
967	967	the applicant to comply with all applicable laws and rules.
968	968	297E.04 MANUFACTURER'S REPORTS AND RECORDS.
969	969	Subdivision 1.Reports of sales.A manufacturer who sells gambling product for use or resale
970	970	in this state, or for receipt by a person or entity in this state, shall file with the commissioner, on a
971	971	form prescribed by the commissioner, a report of gambling product sold to any person in the state,
972	972	including the established governing body of an Indian tribe recognized by the United States
973	973	Department of the Interior. The report must be filed monthly on or before the 20th day of the month
974	974	succeeding the month in which the sale was made. The commissioner shall prescribe the content,
975	975	format, and manner of returns or other documents pursuant to section 270C.30. The commissioner
976	976	may inspect the premises, books, records, and inventory of a manufacturer without notice during
977	977	the normal business hours of the manufacturer. A person violating this section is guilty of a
978	978	misdemeanor.
979	979	Subd. 2.Bar codes.The flare of each pull-tab and tipboard game must be imprinted by the
980	980	manufacturer with a bar code that provides all information prescribed by the commissioner. The
981	981	commissioner must require that the bar code include the serial number of the game. A manufacturer
982	982	must also affix to the outside of the box containing these games a bar code providing all information
983	983	prescribed by the commissioner. The commissioner may also prescribe additional bar coding
984	984	requirements.
985	985	No person may alter the bar code that appears on the outside of a box containing a deal of
986	986	pull-tabs and tipboards. Possession of a box containing a deal of pull-tabs and tipboards that has a
987	987	bar code different from the bar code of the deal inside the box is prima facie evidence that the
988	988	possessor has altered the bar code on the box.
989	989	Subd. 3.Paddle ticket card master flares.Each sealed grouping of 100 or fewer paddle ticket
990	990	cards must have its own individual master flare. The manufacturer of the paddle ticket cards must
991	991	affix to or imprint at the bottom of each master flare a bar code that provides:
992	992	(1) the name of the manufacturer;
993	993	(2) the first paddle ticket card number in the group;
994	994	(3) the number of paddle tickets attached to each paddle ticket card in the group; and
995	995	(4) all other information required by the commissioner.
996	996	297E.05 DISTRIBUTOR REPORTS AND RECORDS.
997	997	Subdivision 1.Business records.A distributor shall keep at each place of business complete
998	998	and accurate records for that place of business, including itemized invoices of gambling product
999	999	held, purchased, manufactured, or brought in or caused to be brought in from without this state,
1000	1000	and of all sales of gambling product. The records must show the names and addresses of purchasers,
1001	1001	the inventory at the close of each period for which a return is required of all gambling product on
1002	1002	hand, and other pertinent papers and documents relating to the purchase, sale, or disposition of
1003	1003	gambling product. Books, records, itemized invoices, and other papers and documents required by
1004	1004	this section must be kept for a period of at least 3-1/2 years after the date of the documents, or the
1005	1005	date of the entries appearing in the records, unless the commissioner of revenue authorizes in writing
1006	1006	their destruction or disposal at an earlier date.
1007	1007	Subd. 2.Sales records.A distributor must maintain a record of all gambling product that it
1008	1008	sells. The record must include:
1009	1009	(1) the identity of the person from whom the distributor purchased the product;
1010	1010	(2) the registration number of the product;
1011	1011	7R
1012	1012	APPENDIX
1013	1013	Repealed Minnesota Statutes: 23-01400 (3) the name, address, and license or exempt permit number of the organization or person to
1014	1014	which the sale was made;
1015	1015	(4) the date of the sale;
1016	1016	(5) the name of the person who ordered the product;
1017	1017	(6) the name of the person who received the product;
1018	1018	(7) the type of product;
1019	1019	(8) the serial number of the product;
1020	1020	(9) the name, form number, or other identifying information for each game; and
1021	1021	(10) in the case of bingo hard cards or sheets sold on and after January 1, 1991, the individual
1022	1022	number of each card or sheet.
1023	1023	Subd. 3.Invoices.A distributor shall give with each sale of gambling product an itemized
1024	1024	invoice showing the distributor's name and address, the purchaser's name and address, the date of
1025	1025	the sale, description of the deals, including the ideal gross from every deal of pull-tabs and every
1026	1026	deal of tipboards.
1027	1027	Subd. 4.Reports.A distributor shall report monthly to the commissioner, on a form the
1028	1028	commissioner prescribes, its sales of each type of gambling product. This report must be filed
1029	1029	monthly on or before the 20th day of the month succeeding the month in which the sale was made.
1030	1030	The commissioner shall prescribe the content, format, and manner of returns or other documents
1031	1031	pursuant to section 270C.30.
1032	1032	Subd. 5.Certified physical inventory.The commissioner may, upon request, require a
1033	1033	distributor to furnish a certified physical inventory of all gambling product in stock. The inventory
1034	1034	must contain the information required by the commissioner.
1035	1035	297E.06 ORGANIZATION REPORTS AND RECORDS.
1036	1036	Subdivision 1.Reports.An organization must file with the commissioner, on a form prescribed
1037	1037	by the commissioner, a report showing all gambling activity conducted by that organization for
1038	1038	each month. Gambling activity includes all gross receipts, prizes, all gambling taxes owed or paid
1039	1039	to the commissioner, all gambling expenses, and all lawful purpose and board-approved expenditures.
1040	1040	The report must be filed with the commissioner on or before the 20th day of the month following
1041	1041	the month in which the gambling activity takes place. The commissioner shall prescribe the content,
1042	1042	format, and manner of returns or other documents pursuant to section 270C.30.
1043	1043	Subd. 1a.Required signatures.The gambling manager and the chief executive officer of the
1044	1044	organization, or their respective designees, and the person who completed the tax return must sign
1045	1045	the tax return. The organization shall inform the commissioner of revenue in writing of the identity
1046	1046	of the designees as soon as practicable in the form and manner prescribed by the commissioner.
1047	1047	Subd. 2.Business records.An organization shall maintain records supporting the gambling
1048	1048	activity reported to the commissioner. Records include, but are not limited to, the following items:
1049	1049	(1) all winning and unsold tickets, cards, or stubs for pull-tab, tipboard, paddlewheel, and raffle
1050	1050	games;
1051	1051	(2) all reports and statements, including checker's records, for each bingo occasion;
1052	1052	(3) all cash journals and ledgers, deposit slips, register tapes, and bank statements supporting
1053	1053	gambling activity receipts;
1054	1054	(4) all invoices that represent purchases of gambling product;
1055	1055	(5) all canceled checks or copies of substitute checks as defined in Public Law 108-100, section
1056	1056	3, check recorders, journals and ledgers, vouchers, invoices, bank statements, and other documents
1057	1057	supporting gambling activity expenditures; and
1058	1058	(6) all organizational meeting minutes.
1059	1059	All records required to be kept by this section must be preserved by the organization for at least
1060	1060	3-1/2 years and may be inspected by the commissioner of revenue at any reasonable time without
1061	1061	notice or a search warrant.
1062	1062	8R
1063	1063	APPENDIX
1064	1064	Repealed Minnesota Statutes: 23-01400 Subd. 3.Accounts.All gambling activity transactions must be segregated from all other revenues
1065	1065	and expenditures made by the conducting organization.
1066	1066	Subd. 4.Annual audit, certified inventory, and cash count.(a) An organization licensed
1067	1067	under chapter 349 with gross receipts from lawful gambling of more than $750,000 in any year
1068	1068	must have an annual financial audit of its lawful gambling activities and funds for that year.
1069	1069	(b) The commissioner may require a financial audit of the lawful gambling activities and funds
1070	1070	of an organization licensed under chapter 349, with gross receipts less than $750,000 annually,
1071	1071	when an organization has:
1072	1072	(1) failed to timely file required gambling tax returns;
1073	1073	(2) failed to timely pay the gambling tax or regulatory fee;
1074	1074	(3) filed fraudulent gambling tax returns;
1075	1075	(4) failed to take corrective actions required by the commissioner; or
1076	1076	(5) failed to otherwise comply with this chapter.
1077	1077	(c) Audits under this subdivision must be performed by an independent accountant licensed in
1078	1078	accordance with chapter 326A.
1079	1079	(d) An organization licensed under chapter 349 must perform an annual certified inventory and
1080	1080	cash count at the end of its fiscal year and submit the report to the commissioner within 30 days
1081	1081	after the end of its fiscal year. The report shall be on a form prescribed by the commissioner.
1082	1082	(e) The commissioner of revenue shall prescribe standards for the audits, certified inventory,
1083	1083	and cash count reports required under this subdivision. The standards may vary based on the gross
1084	1084	receipts of the organization. The standards must incorporate and be consistent with standards
1085	1085	prescribed by the American Institute of Certified Public Accountants. A complete, true, and correct
1086	1086	copy of the audits, certified inventory, and cash count report must be filed as prescribed by the
1087	1087	commissioner.
1088	1088	297E.07 INSPECTION RIGHTS.
1089	1089	At any reasonable time, without notice and without a search warrant, the commissioner may
1090	1090	enter a place of business of a manufacturer, distributor, organization, or linked bingo game provider;
1091	1091	any site from which pull-tabs or tipboards or other gambling equipment or gambling product are
1092	1092	being manufactured, stored, or sold; or any site at which lawful gambling is being conducted, and
1093	1093	inspect the premises, books, records, and other documents required to be kept under this chapter
1094	1094	to determine whether or not this chapter is being fully complied with. If the commissioner is denied
1095	1095	free access to or is hindered or interfered with in making an inspection of the place of business,
1096	1096	books, or records, the permit of the distributor may be revoked by the commissioner, and the license
1097	1097	of the manufacturer, the distributor, the organization, or linked bingo game provider may be revoked
1098	1098	by the board.
1099	1099	297E.10 EXTENSIONS FOR FILING RETURNS AND PAYING TAXES.
1100	1100	If, in the commissioner's judgment, good cause exists, the commissioner may extend the time
1101	1101	for filing tax returns, paying taxes, or both, for not more than six months.
1102	1102	297E.11 LIMITATIONS ON TIME FOR ASSESSMENT OF TAX.
1103	1103	Subdivision 1.General rule.Except as otherwise provided in this chapter, the amount of taxes
1104	1104	assessable must be assessed within 3-1/2 years after the return is filed, whether or not the return is
1105	1105	filed on or after the date prescribed. A return must not be treated as filed until it is in processible
1106	1106	form. A return is in processible form if it is filed on a permitted form and contains sufficient data
1107	1107	to identify the taxpayer and permit the mathematical verification of the tax liability shown on the
1108	1108	return. For purposes of this section, a tax return filed before the last day prescribed by law for filing
1109	1109	is considered to be filed on the last day.
1110	1110	Subd. 2.False or fraudulent return.Notwithstanding subdivision 1, the tax may be assessed
1111	1111	at any time if a false or fraudulent return is filed or if a taxpayer fails to file a return.
1112	1112	Subd. 3.Omission in excess of 25 percent.Additional taxes may be assessed within 6-1/2
1113	1113	years after the due date of the return or the date the return was filed, whichever is later, if the
1114	1114	taxpayer omits from a tax return taxes in excess of 25 percent of the taxes reported in the return.
1115	1115	9R
1116	1116	APPENDIX
1117	1117	Repealed Minnesota Statutes: 23-01400 Subd. 4.Time limit for refunds.Unless otherwise provided in this chapter, a claim for a refund
1118	1118	of an overpayment of tax must be filed within the period prescribed in section 289A.40, subdivision
1119	1119	1. Interest on refunds must be computed at the rate specified in section 270C.405 from the date of
1120	1120	payment to the date the refund is paid or credited. For purposes of this subdivision, the date of
1121	1121	payment is the later of the date the tax was finally due or was paid.
1122	1122	Subd. 5.Bankruptcy; suspension of time.The time during which a tax must be assessed or
1123	1123	collection proceedings begun is suspended during the period from the date of a filing of a petition
1124	1124	in bankruptcy until 30 days after either:
1125	1125	(1) notice to the commissioner that the bankruptcy proceedings have been closed or dismissed;
1126	1126	or
1127	1127	(2) the automatic stay has been ended or has expired, whichever occurs first.
1128	1128	The suspension of the statute of limitations under this subdivision applies to the person the
1129	1129	petition in bankruptcy is filed against, and all other persons who may also be wholly or partially
1130	1130	liable for the tax.
1131	1131	Subd. 6.Extension agreement.If before the expiration of time prescribed in subdivisions 1
1132	1132	and 4 for the assessment of tax or the filing of a claim for refund, both the commissioner and the
1133	1133	taxpayer have consented in writing to the assessment or filing of a claim for refund after that time,
1134	1134	the tax may be assessed or the claim for refund filed at any time before the expiration of the
1135	1135	agreed-upon period. The period may be extended by later agreements in writing before the expiration
1136	1136	of the period previously agreed upon.
1137	1137	297E.12 CIVIL PENALTIES.
1138	1138	Subdivision 1.Penalty for failure to pay tax.If a tax is not paid within the time specified for
1139	1139	payment, a penalty is added to the amount required to be shown as tax. The penalty is five percent
1140	1140	of the unpaid tax if the failure is for not more than 30 days, with an additional penalty of five percent
1141	1141	of the amount of tax remaining unpaid during each additional 30 days or fraction of 30 days during
1142	1142	which the failure continues, not exceeding 15 percent in the aggregate.
1143	1143	If the taxpayer has not filed a return, for purposes of this subdivision the time specified for
1144	1144	payment is the final date a return should have been filed.
1145	1145	Subd. 2.Penalty for failure to make and file return.If a taxpayer fails to make and file a
1146	1146	return within the time prescribed or an extension, a penalty is added to the tax. The penalty is five
1147	1147	percent of the amount of tax not paid on or before the date prescribed for payment of the tax.
1148	1148	Subd. 4.Penalty for intentional disregard of law or rules.If part of an additional assessment
1149	1149	is due to negligence or intentional disregard of the provisions of this chapter or rules of the
1150	1150	commissioner of revenue (but without intent to defraud), there is added to the tax an amount equal
1151	1151	to ten percent of the additional assessment.
1152	1152	Subd. 5.Penalty for false or fraudulent return; evasion.If a person files a false or fraudulent
1153	1153	return, or attempts in any manner to evade or defeat a tax or payment of tax, there is imposed on
1154	1154	the person a penalty equal to 50 percent of the tax found due for the period to which the return
1155	1155	related, less amounts paid by the person on the basis of the false or fraudulent return.
1156	1156	Subd. 6.Penalty for repeated failures to file returns or pay taxes.If there is a pattern by a
1157	1157	person of repeated failures to timely file returns or timely pay taxes, and written notice is given that
1158	1158	a penalty will be imposed if such failures continue, a penalty of 25 percent of the amount of tax not
1159	1159	timely paid as a result of each such subsequent failure is added to the tax. The penalty can be abated
1160	1160	under the abatement authority in section 270C.34.
1161	1161	Subd. 7.Penalty for sales after revocation, suspension, or expiration.A distributor who
1162	1162	engages in, or whose representative engages in, the offering for sale, sale, transport, delivery, or
1163	1163	furnishing of gambling equipment to a person, firm, or organization, after the distributor's license
1164	1164	or permit has been revoked or suspended, or has expired, and until such license or permit has been
1165	1165	reinstated or renewed, is liable for a penalty of $1,000 for each day the distributor continues to
1166	1166	engage in the activity. This subdivision does not apply to the transport of gambling equipment for
1167	1167	the purpose of returning the equipment to a licensed manufacturer.
1168	1168	Subd. 8.Payment of penalties.The penalties imposed by this section must be collected and
1169	1169	paid in the same manner as taxes.
1170	1170	10R
1171	1171	APPENDIX
1172	1172	Repealed Minnesota Statutes: 23-01400 Subd. 9.Penalties are additional.The civil penalties imposed by this section are in addition
1173	1173	to the criminal penalties imposed by this chapter.
1174	1174	297E.13 TAX-RELATED CRIMINAL PENALTIES.
1175	1175	Subdivision 1.Penalty for failure to file or pay.(a) A person required to file a return, report,
1176	1176	or other document with the commissioner, who knowingly fails to file it when required, is guilty
1177	1177	of a gross misdemeanor. A person required to file a return, report, or other document who willfully
1178	1178	attempts to evade or defeat a tax by failing to file it when required is guilty of a felony.
1179	1179	(b) A person required to pay or to collect and remit a tax, who knowingly fails to do so when
1180	1180	required, is guilty of a gross misdemeanor. A person required to pay or to collect and remit a tax,
1181	1181	who willfully attempts to evade or defeat a tax law by failing to do so when required is guilty of a
1182	1182	felony.
1183	1183	Subd. 2.False or fraudulent returns; penalties.(a) A person required to file a return, report,
1184	1184	or other document with the commissioner, who delivers to the commissioner a return, report, or
1185	1185	other document known by the person to be fraudulent or false concerning a material matter is guilty
1186	1186	of a felony.
1187	1187	(b) A person who knowingly aids or assists in, or advises in the preparation or presentation of
1188	1188	a return, report, or other document that is fraudulent or false concerning a material matter, whether
1189	1189	or not the falsity or fraud committed is with the knowledge or consent of the person authorized or
1190	1190	required to present the return, report, or other document, is guilty of a felony.
1191	1191	Subd. 3.False information.A person is guilty of a felony if the person:
1192	1192	(1) is required by section 297E.05 to keep records or to make returns, and falsifies or fails to
1193	1193	keep the records or falsifies or fails to make the returns; or
1194	1194	(2) knowingly submits materially false information in any report, document, or other
1195	1195	communication submitted to the commissioner in connection with lawful gambling or with this
1196	1196	chapter.
1197	1197	Subd. 4.Sales without permit; violations.(a) A person who engages in the business of selling
1198	1198	gambling product in Minnesota without the licenses or permits required under this chapter or chapter
1199	1199	349, or an officer of a corporation who so engages in the sales, is guilty of a gross misdemeanor.
1200	1200	(b) A person selling gambling product in Minnesota after revocation of a license or permit under
1201	1201	this chapter or chapter 349, when the commissioner or the board has not issued a new license or
1202	1202	permit, is guilty of a felony.
1203	1203	Subd. 5.Untaxed gambling equipment.It is a gross misdemeanor for a person to possess
1204	1204	gambling equipment for resale in this state that has not been stamped or bar-coded in accordance
1205	1205	with this chapter and chapter 349 and upon which the taxes imposed by chapter 297A or section
1206	1206	297E.02 have not been paid. The director of alcohol and gambling enforcement or the commissioner
1207	1207	or the designated inspectors and employees of the director or commissioner may seize in the name
1208	1208	of the state of Minnesota any unregistered or untaxed gambling equipment.
1209	1209	Subd. 6.Criminal penalties.(a) Criminal penalties imposed by this section are in addition to
1210	1210	civil penalties imposed by this chapter.
1211	1211	(b) A person who violates a provision of this chapter for which another penalty is not provided
1212	1212	is guilty of a misdemeanor.
1213	1213	(c) A person who violates a provision of this chapter for which another penalty is not provided
1214	1214	is guilty of a gross misdemeanor if the violation occurs within five years after a previous conviction
1215	1215	under a provision of this chapter.
1216	1216	(d) A person who in any manner violates a provision of this chapter to evade a tax imposed by
1217	1217	this chapter, or who aids and abets the evasion of a tax, or hinders or interferes with a seizing
1218	1218	authority when a seizure is made as provided by section 297E.16 is guilty of a gross misdemeanor.
1219	1219	(e) This section does not preclude civil or criminal action under other applicable law or preclude
1220	1220	any agency of government from investigating or prosecuting violations of this chapter or chapter
1221	1221	349. County attorneys have primary responsibility for prosecuting violations of this chapter, but
1222	1222	the attorney general may prosecute a violation of this chapter.
1223	1223	Subd. 7.Statute of limitations.Notwithstanding section 628.26, or other provision of the
1224	1224	criminal laws of this state, an indictment may be found and filed, or a complaint filed, upon a
1225	1225	11R
1226	1226	APPENDIX
1227	1227	Repealed Minnesota Statutes: 23-01400 criminal offense named in this section, in the proper court within six years after the offense is
1228	1228	committed.
1229	1229	297E.14 INTEREST.
1230	1230	Subdivision 1.Interest rate.If an interest assessment is required under this section, interest is
1231	1231	computed at the rate specified in section 270C.40.
1232	1232	Subd. 2.Late payment.If a tax is not paid within the time specified by law for payment, the
1233	1233	unpaid tax bears interest from the date the tax should have been paid until the date the tax is paid.
1234	1234	Subd. 3.Extensions.If an extension of time for payment has been granted, interest must be
1235	1235	paid from the date the payment should have been made if no extension had been granted, until the
1236	1236	date the tax is paid.
1237	1237	Subd. 4.Additional assessments.If a taxpayer is liable for additional taxes because of a
1238	1238	redetermination by the commissioner, or for any other reason, the additional taxes bear interest
1239	1239	from the time the tax should have been paid, without regard to any extension allowed, until the date
1240	1240	the tax is paid.
1241	1241	Subd. 5.Erroneous refunds.In the case of an erroneous refund, interest accrues from the date
1242	1242	the refund was paid unless the erroneous refund results from a mistake of the commissioner, then
1243	1243	no interest or penalty is imposed unless the deficiency assessment is not satisfied within 60 days
1244	1244	of the order.
1245	1245	Subd. 6.Interest on judgments.Notwithstanding section 549.09, if judgment is entered in
1246	1246	favor of the commissioner with regard to any tax, the judgment bears interest at the rate specified
1247	1247	in section 270C.40 from the date the judgment is entered until the date of payment.
1248	1248	Subd. 7.Interest on penalties.(a) A penalty imposed under section 297E.12, subdivision 1,
1249	1249	2, 3, 4, or 5, bears interest from the date provided in section 270C.40, subdivision 3, to the date of
1250	1250	payment of the penalty.
1251	1251	(b) A penalty not included in paragraph (a) bears interest only if it is not paid within ten days
1252	1252	from the date of notice. In that case interest is imposed from the date of notice to the date of payment.
1253	1253	297E.16 CONTRABAND.
1254	1254	Subdivision 1.Seizure.Contraband may be seized by the commissioner or by any sheriff or
1255	1255	other police officer, hereinafter referred to as the "seizing authority," with or without process, and
1256	1256	is subject to forfeiture as provided in subdivision 2.
1257	1257	Subd. 2.Inventory; judicial determination; appeal; disposition of seized property.(a)
1258	1258	Within ten days after the seizure of alleged contraband described in section 349.2125, subdivision
1259	1259	1, the person making the seizure shall serve by certified mail an inventory of the property seized
1260	1260	on the person from whom the property was seized, if known, and on any person known or believed
1261	1261	to have any right, title, interest, or lien in the property, at the last known address, and file a copy
1262	1262	with the commissioner or the director of alcohol and gambling enforcement. The notice must include
1263	1263	an explanation of the right to demand a judicial forfeiture determination.
1264	1264	(b) Within 60 days after the date of service of the inventory, which is the date of mailing, the
1265	1265	person from whom the property was seized or any person claiming an interest in the property may
1266	1266	file a demand for judicial determination of whether the property was lawfully subject to seizure
1267	1267	and forfeiture. The demand must be in the form of a civil complaint and must be filed with the court
1268	1268	administrator in the county in which the seizure occurred, together with proof of service of a copy
1269	1269	of the complaint on the commissioner of revenue or the director of alcohol and gambling
1270	1270	enforcement, and the standard filing fee for civil actions unless the petitioner has the right to sue
1271	1271	in forma pauperis under section 563.01. If the value of the seized property is $15,000 or less, the
1272	1272	claimant may file an action in conciliation court for recovery of the property. If the value of the
1273	1273	seized property is less than $500, the claimant does not have to pay the conciliation court filing fee.
1274	1274	(c) The complaint must be captioned in the name of the claimant as plaintiff and the seized
1275	1275	property as defendant, and must state with specificity the grounds on which the claimant alleges
1276	1276	the property was improperly seized and the plaintiff's interest in the property seized. No responsive
1277	1277	pleading is required of the commissioner or director, and no court fees may be charged for the
1278	1278	commissioner's or director's appearance in the matter. The proceedings are governed by the Rules
1279	1279	of Civil Procedure. Notwithstanding any law to the contrary, an action for the return of property
1280	1280	seized under this section may not be maintained by or on behalf of any person who has been served
1281	1281	12R
1282	1282	APPENDIX
1283	1283	Repealed Minnesota Statutes: 23-01400 with an inventory unless the person has complied with this subdivision. The court shall hear the
1284	1284	action without a jury and determine the issues of fact and law involved.
1285	1285	(d) If a judgment of forfeiture is entered, the seizing authority may, unless the judgment is
1286	1286	stayed pending an appeal, either (1) cause the forfeited property, other than a vehicle, to be destroyed;
1287	1287	or (2) cause it to be sold at a public auction as provided by law. The person making a sale, after
1288	1288	deducting the expense of keeping the property, the fee for seizure, and the costs of the sale, shall
1289	1289	pay all liens according to their priority, which are established as being bona fide and as existing
1290	1290	without the lienor having any notice or knowledge that the property was being used or was intended
1291	1291	to be used for or in connection with the violation. The balance of the proceeds must be paid 70
1292	1292	percent to the seizing authority for deposit as a supplement to its operating fund or similar fund for
1293	1293	official use, and 20 percent to the county attorney or other prosecuting agency that handled the
1294	1294	court proceeding, if there is one, for deposit as a supplement to its operating fund or similar fund
1295	1295	for prosecutorial purposes. The remaining ten percent of the proceeds must be forwarded within
1296	1296	60 days after resolution of the forfeiture to the Department of Human Services to fund programs
1297	1297	for the treatment of compulsive gamblers. If there is no prosecuting authority involved in the
1298	1298	forfeiture, the 20 percent of the proceeds otherwise designated for the prosecuting authority must
1299	1299	be deposited into the general fund.
1300	1300	(e) If no demand for judicial determination is made, the property seized is considered forfeited
1301	1301	to the seizing authority by operation of law and may be disposed of by the seizing authority as
1302	1302	provided where there has been a judgment of forfeiture.
1303	1303	297E.17 DISTRIBUTOR'S BOND.
1304	1304	On finding it necessary to ensure compliance with this chapter, the commissioner may require
1305	1305	that a distributor deposit with the commissioner security in the form and amount determined by the
1306	1306	commissioner, but not more than the lesser of (1) twice the estimated average monthly tax liability
1307	1307	for the previous 12 months, or (2) $10,000.
1308	1308	In lieu of security, the commissioner may require a distributor to file a bond issued by a surety
1309	1309	company authorized to transact business in this state and approved by the commissioner of commerce
1310	1310	as to solvency and responsibility.
1311	1311	The commissioner may make claim against this security or bond for all taxes, penalties, and
1312	1312	interest owed by the distributor.
1313	1313	349.16 ORGANIZATION LICENSES.
1314	1314	Subd. 11.Agreement to pay taxes.An organization which is recognized by federal law,
1315	1315	regulation, or other ruling as a quasi-governmental organization that would otherwise be exempt
1316	1316	from one or more taxes under chapter 297E must agree to pay all taxes under chapter 297E on
1317	1317	lawful gambling conducted by the organization as a condition of receiving a license or premises
1318	1318	permit.
1319	1319	13R
1320	1320	APPENDIX
1321	1321	Repealed Minnesota Statutes: 23-01400 8122.0100SCOPE; PURPOSE.
1322	1322	Minnesota Statutes, section 297E.06, subdivision 4, mandates that the commissioner
1323	1323	of revenue prescribe standards for the annual audit of certain organizations licensed to
1324	1324	conduct lawful gambling in Minnesota. The purpose of this chapter is to set minimum
1325	1325	standards for these annual audits.
1326	1326	8122.0150DEFINITIONS.
1327	1327	Subpart 1.Scope.The terms used in this chapter are defined in Minnesota Statutes,
1328	1328	chapter 297E, unless separately defined under this part.
1329	1329	Subp. 2.Accrual basis."Accrual basis" means the method of accounting in which
1330	1330	revenue is recognized in the period earned and expense is recognized in the period incurred.
1331	1331	Subp. 3.Audit."Audit" means the examination of accounting records with the
1332	1332	expression of an opinion on whether the financial statements of the organization present
1333	1333	fairly, in all material respects, the financial position, results of operations, and its cash flows,
1334	1334	in conformity with the regulatory basis of accounting.
1335	1335	Subp. 4.Certified public accountant; CPA."Certified public accountant" or "CPA"
1336	1336	means a person who is licensed as a certified public accountant in accordance with Minnesota
1337	1337	Statutes, chapter 326A.
1338	1338	Subp. 5.Cash basis."Cash basis" means the method of accounting in which revenues
1339	1339	are recognized when actually received and expenses are recognized when actually disbursed.
1340	1340	Subp. 6.Ending inventory."Ending inventory" means the cost of unopened pull-tab
1341	1341	and tipboard deals, paddletickets, unused bingo paper or sheets, and the cost of pull-tab,
1342	1342	tipboard, and paddleticket games in play on the last day of the month. Sales tax is excluded
1343	1343	from ending inventory.
1344	1344	Subp. 7.[Repealed, L 2010 c 191 s 14]
1345	1345	Subp. 8.Material weakness."Material weakness" means a reportable condition in
1346	1346	which the design or operation of the specific internal control structure elements do not
1347	1347	reduce to a relatively low level the risk that material errors or irregularities could occur and
1348	1348	not be detected within a timely period by employees in the normal course of performing
1349	1349	their assigned functions.
1350	1350	Subp. 9.Regulatory basis."Regulatory basis" means a method of accounting other
1351	1351	than generally accepted accounting principles. All receipts, allowable expenses, and lawful
1352	1352	purpose expenditures are determined using the cash basis method of accounting with the
1353	1353	exception of the cost of the games and taxes imposed under Minnesota Statutes, section
1354	1354	297E.02, subdivisions 1 and 6 (8.5 percent gross receipts tax and combined net receipts
1355	1355	tax), which are recognized on the accrual basis method of accounting.
1356	1356	Subp. 10.Reportable condition."Reportable condition" means significant deficiencies
1357	1357	in the design or operation of the internal control structure which could adversely affect the
1358	1358	organization's ability to record, process, summarize, and report financial data consistent
1359	1359	with the assertions of management in the financial statements.
1360	1360	Subp. 11.[Repealed, 45 SR 827]
1361	1361	Subp. 12.Year."Year," when used in defining an audit period, means the organization's
1362	1362	fiscal year used for filing federal form 990 or 990-T (Unrelated Business Income Tax).
1363	1363	8122.0200ACCOUNTANTS QUALIFICATIONS.
1364	1364	Subpart 1.License required.An accountant must be an independent certified public
1365	1365	accountant and licensed to practice in Minnesota.
1366	1366	Subp. 2.Standards of independence.The CPA shall maintain objectivity and be free
1367	1367	of the appearance of conflicts of interest when discharging professional responsibilities
1368	1368	14R
1369	1369	APPENDIX
1370	1370	Repealed Minnesota Rules: 23-01400 needed to perform the audit. CPAs shall adhere to the standards of objectivity and
1371	1371	independence as established in the American Institute of Certified Public Accountants
1372	1372	professional standards.
1373	1373	In addition, for purposes of this subpart, an individual CPA who is a member of an
1374	1374	organization, or the accounting firm the individual belongs to, must not perform the
1375	1375	organization's annual audit if one or more of the following occurred during the fiscal year:
1376	1376	A.the CPA was an employee of the organization;
1377	1377	B.the CPA was an officer of the organization, such as treasurer, executive director,
1378	1378	chief executive officer, gambling manager, or president;
1379	1379	C.the CPA served on the board of directors for the organization;
1380	1380	D.the CPA served on a gambling committee or other committee with oversight
1381	1381	or decision-making authority over gambling business transactions, other than in a member's
1382	1382	capacity to approve gambling business transactions presented at monthly membership
1383	1383	meetings as required under Minnesota Statutes, chapter 349; or
1384	1384	E.in connection with the organization general fund, gambling fund, or any other
1385	1385	organization fund, the CPA prepared or reconstructed accounting record source documents,
1386	1386	consummated transactions, had custody over assets, exercised authority, or unduly exercised
1387	1387	authority on behalf of the organization by assuming the role of employee or management.
1388	1388	8122.0250DUE DATE; EXTENSIONS.
1389	1389	The annual audits required are due on or before the last day of the sixth month following
1390	1390	the organization's fiscal year end or on an extended due date.
1391	1391	A written request to file the annual audit after the required due date must be submitted
1392	1392	to the Department of Revenue by the required annual audit due date. The request must be
1393	1393	signed by the organization's chief executive officer, gambling manager, or the independent
1394	1394	accountant performing the audit. The request must include the:
1395	1395	A.organization's name;
1396	1396	B.organization's license number;
1397	1397	C.organization's fiscal year end;
1398	1398	D.reason for the request; and
1399	1399	E.expected completion date.
1400	1400	An automatic 30-day extension will be granted in each fiscal year. Second requests for
1401	1401	an extension or requests for extensions exceeding 30 days will be granted only upon a
1402	1402	showing of reasonable cause. "Reasonable cause" shall mean cases where the reasons for
1403	1403	the filing delay are beyond the control of the organization. Acceptable reasons for granting
1404	1404	an additional extension include, but are not limited to:
1405	1405	(1)delay or failure to file was due to serious illness or death of the accountant
1406	1406	or a key member of the accountant's staff;
1407	1407	(2)delay or failure to file was due to erroneous information given the
1408	1408	organization by a Department of Revenue employee; or
1409	1409	(3)delay or failure to file was caused by the destruction by fire or other
1410	1410	casualty of the organization's place of business or business records.
1411	1411	8122.0300COMMUNICA TION OF ILLEGAL ACTS, MATERIAL ERRORS, AND
1412	1412	IRREGULARITIES.
1413	1413	An organization is responsible to communicate illegal acts, material errors, and
1414	1414	irregularities to the Department of Revenue in writing within ten days of notification from
1415	1415	15R
1416	1416	APPENDIX
1417	1417	Repealed Minnesota Rules: 23-01400 auditors that such acts, errors, or irregularities exist. The organization must include a copy
1418	1418	of all correspondence or notes taken during meetings between the independent auditors and
1419	1419	the licensed organization specifically detailing the illegal acts, material errors, and
1420	1420	irregularities.
1421	1421	8122.0350ACCOUNTING RECORDS.
1422	1422	All licensed organizations are required to maintain records that account for the assets,
1423	1423	liabilities, and fund balance of their lawful gambling operation. These records must also
1424	1424	account for their gambling revenue, prize payouts, allowable expenses, and lawful purpose
1425	1425	expenditures.
1426	1426	If, in the opinion of the independent CPA engaged to conduct the annual financial audit,
1427	1427	the licensed organization has not maintained proper accounting records in a form that can
1428	1428	be audited, the accountant must either:
1429	1429	A.notify the organization in writing of the deficiencies that exist and the corrective
1430	1430	action required, with an estimate of the cost to generate auditable records or the reason the
1431	1431	cost cannot be estimated; or
1432	1432	B.terminate the audit engagement.
1433	1433	8122.0400ACCOUNTANT'S WORKPAPERS AND COMMUNICATIONS; ACCESS
1434	1434	AND RETENTION.
1435	1435	Subpart 1.Workpapers.Workpapers are the records kept by the independent CPA
1436	1436	of the procedures followed, tests performed, information obtained, and conclusions reached
1437	1437	pertinent to the examination and review of the financial statements of a licensed gambling
1438	1438	organization. Workpapers must include, but are not limited to, work programs, analyses,
1439	1439	memoranda, letters of confirmation and representation, management letters, abstracts of
1440	1440	organization documents, and schedules or commentaries prepared or obtained by the
1441	1441	accountant in the course of the audit and that support the accountant's opinion or assurance.
1442	1442	Subp. 2.Communications.Communications are written documentation or notes of
1443	1443	oral contacts between the independent CPA and an organization. The communication with
1444	1444	the organization must include, but is not limited to, matters relating to the auditor's
1445	1445	responsibility, significant accounting policies, the process used in obtaining management
1446	1446	judgments, significant audit adjustments, auditor responsibilities for other information,
1447	1447	auditor disagreements with organization's management, auditor views on auditing and
1448	1448	accounting matters for which other auditors were contacted, major issues discussed with
1449	1449	management prior to retention, and any difficulties encountered while performing the audit.
1450	1450	Subp. 3.Access and retention.Every licensed gambling organization required to file
1451	1451	an audit shall require the accountant, through the licensed gambling organization, to make
1452	1452	available for review by the Department of Revenue the workpapers and communications
1453	1453	with the organization prepared in the conduct of the audit. The licensed gambling organization
1454	1454	shall require that the accountant retain the workpapers for a period of not less than 3-1/2
1455	1455	years after the opinion date of the audit report.
1456	1456	8122.0450TERMINATION OF AUDIT ENGAGEMENT .
1457	1457	If for any reason the audit engagement is terminated by either the licensed organization
1458	1458	or the independent accountant prior to its completion and filing of the annual financial audit
1459	1459	report, the accountant is, within ten days of termination, required to make a written report
1460	1460	to the Department of Revenue detailing the reason or reasons for the termination.
1461	1461	8122.0500LESS THAN A 12-MONTH AUDIT.
1462	1462	An organization whose license is active, discontinued, terminated, or expired at the
1463	1463	organization's fiscal year end, is required to complete and file an audit, if the organization's
1464	1464	gross receipts exceed the thresholds as specified in Minnesota Statutes, section 297E.06.
1465	1465	16R
1466	1466	APPENDIX
1467	1467	Repealed Minnesota Rules: 23-01400 In the year an organization commences gambling activity, the audit required may cover
1468	1468	the operations of the organization for a period of less than 12 months.
1469	1469	In the year an organization's license expires, is discontinued, or terminated, the audit
1470	1470	will be through the organization's fiscal year end, unless the organization's license termination
1471	1471	plan has been approved by the Gambling Control Board prior to the fiscal year end. In this
1472	1472	circumstance, the organization has the option of performing the required audit through the
1473	1473	license termination plan approval date, or another date specified by the organization that is
1474	1474	between the approval date and the last day of the fiscal year.
1475	1475	8122.0510MORE THAN A 12-MONTH AUDIT.
1476	1476	An organization that is terminating gambling activity or changing its year end date in
1477	1477	accordance with Internal Revenue Code, section 442, may, upon specific prior approval
1478	1478	from the Department of Revenue, have an audit prepared for periods longer than 12 months
1479	1479	but no longer than 18 months. The audit will then be due at the end of the sixth month
1480	1480	following the new fiscal year end or the month the organization terminated gambling activity,
1481	1481	whichever applies. The request for an extended audit period must be submitted to the
1482	1482	Department of Revenue in writing on or before the due date of the audit that would be
1483	1483	prepared under the organization's actual fiscal year end.
1484	1484	Example: An organization with a fiscal year end of December 31, 2018, is terminating
1485	1485	gambling activity April 30, 2019. The audit may cover the period January 1, 2018, through
1486	1486	April 30, 2019. The request for the extended audit period must be submitted by June 30,
1487	1487	2019, the due date of a December 31 audit. The extended audit is due October 31, 2019.
1488	1488	8122.0550AUDIT.
1489	1489	Subpart 1.Minimum requirements.The annual financial audits must be prepared
1490	1490	on the regulatory basis of accounting and contain, at a minimum, an opinion, financial
1491	1491	statements, supplemental schedules, a report on internal controls, a response to internal
1492	1492	controls report, and other information as noted.
1493	1493	Subp. 2.Opinion.An audit opinion expressed in accordance with generally accepted
1494	1494	auditing standards regarding the fairness of the presentation of the financial statements must
1495	1495	be properly signed and dated by the CPA firm who performed the audit. The address,
1496	1496	telephone number, and fax number of the accounting firm must be listed. For firms with
1497	1497	more than one office, the address of the office that prepared the financial statements should
1498	1498	be specified.
1499	1499	Subp. 3.Financial statements.The financial statements must be comparative financial
1500	1500	statements showing the current year and previous year's financial information, unless it is
1501	1501	a first year engagement for the accounting firm in which case the preparation of comparative
1502	1502	statements is optional. The statements must be presented in a format prescribed by and
1503	1503	acceptable to the commissioner of revenue. The financial statements required are as follows:
1504	1504	A.The statement of assets, liabilities, and fund balance must include all assets,
1505	1505	liabilities, and the fund balance of the gambling operations as follows, if applicable:
1506	1506	(1)all game starting banks;
1507	1507	(2)all gambling checking accounts;
1508	1508	(3)all savings accounts;
1509	1509	(4)all certificates of deposit and other negotiable instruments;
1510	1510	(5)inventory from paper pull-tabs, tipboards, paddletickets, nonlinked bingo,
1511	1511	raffles, and sports-themed tipboards, in play and unused;
1512	1512	(6)fund losses;
1513	1513	(7)excess cash shortages to be reimbursed;
1514	1514	17R
1515	1515	APPENDIX
1516	1516	Repealed Minnesota Rules: 23-01400 (8)merchandise prize inventory;
1517	1517	(9)other assets specifically identified;
1518	1518	(10)accrued taxes imposed under Minnesota Statutes, section 297E.02,
1519	1519	subdivision 1 (net receipts tax);
1520	1520	(11)accrued taxes imposed under Minnesota Statutes, section 297E.02,
1521	1521	subdivision 6 (combined net receipts tax);
1522	1522	(12)unpaid cost of games, plus sales tax;
1523	1523	(13)loans from all sources;
1524	1524	(14)other liabilities specifically identified; and
1525	1525	(15)fund balance (profit carryover).
1526	1526	B.The statement of revenue and expense must include revenues and expenses
1527	1527	from the gambling operations and include, at a minimum:
1528	1528	(1)gross receipts detailed by game type, such as nonlinked bingo, linked
1529	1529	bingo, paper pull-tabs, electronic pull-tabs, tipboards, paddletickets, raffles, and sports-themed
1530	1530	tipboards, including ideal or actual gross receipts from games found to be missing or
1531	1531	unreported, respectively;
1532	1532	(2)actual prizes paid out detailed by game type including ideal or actual
1533	1533	prizes from games found to be missing or unreported, respectively;
1534	1534	(3)interest income;
1535	1535	(4)gross profit;
1536	1536	(5)allowable expenses;
1537	1537	(6)lawful purpose expenditures detailed by tax imposed under Minnesota
1538	1538	Statutes, section 297E.02, subdivision 1, combined net receipts tax, unrelated business
1539	1539	income tax, federal form 730 and form 11C tax, federal and state income taxes, real estate
1540	1540	taxes, restricted use donations from tax savings, and donations; and
1541	1541	(7)board-approved expenditures.
1542	1542	C.The statement of changes in fund balance must include, at a minimum:
1543	1543	(1)beginning fund balance (profit carryover);
1544	1544	(2)profit or loss for the year;
1545	1545	(3)ending fund balance (profit carryover); and
1546	1546	(4)other adjustments.
1547	1547	D.The annual audit must include notes to the financial statements. The notes to
1548	1548	the financial statements must include, at a minimum:
1549	1549	(1)nature of organization;
1550	1550	(2)basis of presentation of the financial statements;
1551	1551	(3)related party activity;
1552	1552	(4)restrictions on assets;
1553	1553	(5)subsequent events;
1554	1554	(6)uncertainties;
1555	1555	(7)commitments such as mortgages, rent, donations, or all taxes not paid or
1556	1556	not filed, if material;
1557	1557	18R
1558	1558	APPENDIX
1559	1559	Repealed Minnesota Rules: 23-01400 (8)contingent liabilities;
1560	1560	(9)board-approved expenditures;
1561	1561	(10)games tested and results: of the games tested, state:
1562	1562	(a)if the games tested included games with unsold tickets;
1563	1563	(b)if games were tested from all active sites;
1564	1564	(c)the types of games tested, such as paper pull tabs and tipboards; and
1565	1565	(d)the manufacturer ID, part number, and serial number of any games
1566	1566	that could not be located; and
1567	1567	(11)a list of all forms of gambling conducted by the organization which must
1568	1568	be confirmed by the chief executive officer.
1569	1569	Subp. 4.Supplemental schedule; reconciliations; physical inventory.
1570	1570	A.The annual audit must include an allowable expense comparison schedule. The
1571	1571	schedule must include, at a minimum, allowable expenses expended, detailed by type of
1572	1572	expenditure as listed on Form LG100A, which is the total amount of actual allowable
1573	1573	expenses from the revenue and expense statement.
1574	1574	B.The annual audit must include a reconciliation of the gambling operations bank
1575	1575	accounts to the reported profit carryover. The reconciliation must include, at a minimum:
1576	1576	(1)a comparison of the audited fund balance (profit carryover) made to a
1577	1577	confirmed Gambling Control Board fund balance (profit carryover) as of the fiscal year
1578	1578	end;
1579	1579	(2)any difference between the adjusted gambling fund balance and the fund
1580	1580	balance (profit carryover) is a variance; and
1581	1581	(3)any or all of the items that identify the variance if known.
1582	1582	C.The annual audit must include a reconciliation between the number of paper
1583	1583	pull-tab, paddleticket, and tipboard games played to the number of paper pull-tab,
1584	1584	paddleticket, and tipboard games reported on Schedule B2, Lawful Gambling Report of
1585	1585	Barcoded Games, for the fiscal year audited. The schedule must include, at a minimum:
1586	1586	(1)the cost and number of games in beginning inventory;
1587	1587	(2)the cost and number of games purchased during the year audited;
1588	1588	(3)the cost and number of games available during the year audited;
1589	1589	(4)the cost and number of games in ending inventory as of the last day of
1590	1590	the organization's fiscal year end;
1591	1591	(5)the cost and number of games used which is determined by subtracting
1592	1592	the ending inventory from total games available;
1593	1593	(6)the number of games reported on Schedule B2, Lawful Gambling Report
1594	1594	of Barcoded Games; and
1595	1595	(7)a calculation of the difference between the games determined as played
1596	1596	and games reported on Schedule B2, Lawful Gambling Report of Barcoded Games.
1597	1597	D.A physical inventory observation and cash count of all sites and locations must
1598	1598	be taken as part of the annual audit process, regardless of when the audit engagement was
1599	1599	scheduled. A physical inventory must be taken within 30 days of the balance sheet date or
1600	1600	engagement date, whichever is later, unless prior written approval of an alternate date is
1601	1601	obtained from the Department of Revenue. A list of the games in inventory by manufacturer
1602	1602	ID, part number, and serial number must be submitted to the Department of Revenue within
1603	1603	19R
1604	1604	APPENDIX
1605	1605	Repealed Minnesota Rules: 23-01400 30 days of the date the physical inventory was taken. The physical inventory and cash count
1606	1606	must be performed by:
1607	1607	(1)the CPA engaged to conduct the annual audit; or
1608	1608	(2)two members, officers, or employees of the organization, appointed by
1609	1609	the organization's board, who are not involved in the gambling activity of the organization.
1610	1610	These members, officers, or employees must certify to the CPA the correctness of their
1611	1611	physical inventory and cash count.
1612	1612	Subp. 5.Sampling and testing; closed games.Closed games and occasions must be
1613	1613	tested independently by the CPA based upon criteria set by the CPA within professional
1614	1614	standards. The sampling and testing of tipboard, paper pull-tab, paddleticket, nonlinked
1615	1615	bingo, and raffle closed games must meet the following requirements:
1616	1616	A.When a minimum sample size is required, the random or systematic method
1617	1617	of sampling will be used. When a minimum sample is expanded, the expanded portion of
1618	1618	the sample may use random, systematic, or haphazard methods. When a minimum sample
1619	1619	is not required, the sample method may be random, systematic, or haphazard. The following
1620	1620	chart of gross receipts will be used to determine the minimum size of a sample for closed
1621	1621	pull-tab and tipboard games.
1622	1622	Minimum Sample SizeGross Receipts
1623	1623	10 games$999,999to$0
1624	1624	20 games$2,499,999to$1,000,000
1625	1625	30 games$4,999,999to$2,500,000
1626	1626	40 gamesover $5,000,000
1627	1627	There is no minimum sample size requirement for testing paddletickets, nonlinked
1628	1628	bingo, and raffles. Closed games and occasions will be sampled independently by the CPA
1629	1629	using judgment based on professional standards.
1630	1630	B.Closed tipboard and paper pull-tab games selected in the sample will be tested
1631	1631	for the following minimum criteria, and any differences or deficiencies must be noted in
1632	1632	the results of the games tested:
1633	1633	(1)each game specified in the sample was available from closed-deal storage;
1634	1634	(2)the following items as reported on Schedule B2, Lawful Gambling Report
1635	1635	of Barcoded Games, must be compared against test results for the same items, and differences
1636	1636	shown:
1637	1637	(a)ideal gross receipts;
1638	1638	(b)ideal prizes;
1639	1639	(c)total value of unsold tickets;
1640	1640	(d)gross receipts;
1641	1641	(e)total value of prizes paid;
1642	1642	(f)net receipts;
1643	1643	(g)cash in hand;
1644	1644	(h)cash long or short; and
1645	1645	(i)date removed from play;
1646	1646	(3)each deposit ticket meets the gambling receipt deposit requirements in
1647	1647	Minnesota Statutes, section 349.19, subdivision 2;
1648	1648	20R
1649	1649	APPENDIX
1650	1650	Repealed Minnesota Rules: 23-01400 (4)each deposit was recorded at the bank within four business days after the
1651	1651	game was completed;
1652	1652	(5)each prize receipt form was properly completed for prizes awarded of
1653	1653	$100 or more and for last sale prizes of $20 or more;
1654	1654	(6)the dates on the prize receipts fall within the date the game is put into
1655	1655	play and the date the game is removed from play, as listed on the Schedule B2 for that game,
1656	1656	with the exception of sports-themed tipboards whose prize receipts can be completed seven
1657	1657	days after the last frame of the professional sporting event or when all prizes are claimed,
1658	1658	whichever occurs first;
1659	1659	(7)each redeemed prize winning ticket was adequately defaced;
1660	1660	(8)each game flare is easily available from storage; and
1661	1661	(9)the serial number on the flare must be compared to the serial number on
1662	1662	the tickets.
1663	1663	C.The results of closed game sampling and testing must be provided to the
1664	1664	organization upon a request from the organization.
1665	1665	Subp. 6.Report on internal control structure and other matters.
1666	1666	A.A report about internal control structure reportable conditions observed, or
1667	1667	evidenced by testing, during the course of an audit, that could affect the organization's ability
1668	1668	to record, process, summarize, and report financial data must be submitted. The report shall
1669	1669	elevate a condition to that of a material weakness when the magnitude of the condition is
1670	1670	considered material in relation to the financial statements being audited. This report must
1671	1671	include all the elements required by, and the department adopts and incorporates by reference,
1672	1672	AU-C section 265, Communicating Internal Control Related Matters Identified in an Audit
1673	1673	(AICPA, Professional Standards, section 265, 2020). If no reportable conditions or material
1674	1674	weaknesses are detected, a report must be submitted stating that no material weaknesses
1675	1675	were detected. This report is required under subpart 1.
1676	1676	A list of the types of gambling audit reportable condition or material weakness to
1677	1677	include in this report follows in subitems (1) to (12). This list is illustrative, and not
1678	1678	all-inclusive:
1679	1679	(1)absence of appropriate segregation of duties including a detailed
1680	1680	explanation;
1681	1681	(2)inadequate provision for safeguarding of inventory, cash, or other assets;
1682	1682	(3)excessive cash shortages or overages;
1683	1683	(4)material delinquent taxes due to state or federal taxing authorities;
1684	1684	(5)lack of required accounting records maintained;
1685	1685	(6)lack of or inaccurate preparation of bank reconciliations or gambling fund
1686	1686	reconciliations;
1687	1687	(7)material differences between games played and games reported as played;
1688	1688	(8)nonuse or inaccurate use of perpetual or physical inventories for all forms
1689	1689	of gambling engaged in;
1690	1690	(9)lack of specific required identification for tracking and accountability of
1691	1691	deposit tickets;
1692	1692	(10)material underreporting or overreporting of allowable expenses, lawful
1693	1693	purpose expenditures, or board-approved expenditures;
1694	1694	(11)failure to properly account for and report fund losses, form LG250, Fund
1695	1695	Loss Request for Profit Carryover Adjustment; and
1696	1696	21R
1697	1697	APPENDIX
1698	1698	Repealed Minnesota Rules: 23-01400 (12)inattention to and lack of correction to prior year reportable conditions
1699	1699	and material weaknesses.
1700	1700	B.A regulatory checklist questionnaire must be included with the report from
1701	1701	item A, on a form prescribed by the commissioner. Responses to questions on this checklist
1702	1702	must be based on findings and information collected during the course of the audit.
1703	1703	Subp. 7.Organization's response to report on internal control structure.The
1704	1704	licensed organization shall file with the Department of Revenue a response to the reportable
1705	1705	conditions item by item, including any remedial action taken or proposed by the organization.
1706	1706	This response may be submitted with the annual audit or be filed separately within 60 days
1707	1707	after the due date of the annual audit. The response must include the following items:
1708	1708	A.Any profit carryover variance as shown on the reconciliation of profit carryover
1709	1709	supplemental schedule must be identified. All identified variances which require amendments
1710	1710	to tax returns must be amended and submitted to the Department of Revenue along with
1711	1711	supporting documentation. The auditor must, upon agreement with the organization, assist
1712	1712	in preparing an amended return or returns for the organization. The response must indicate
1713	1713	if such amendments have been submitted to the Department of Revenue.
1714	1714	Variances which require adjustments instead of amendments should be adjusted by
1715	1715	sending a letter to the Department of Revenue requesting an adjustment along with supporting
1716	1716	documentation. Requests for an approved adjustment cannot be substituted for filing amended
1717	1717	tax returns that correct the condition that resulted in the variance. If the variance is identified,
1718	1718	an amended tax return or returns must be filed.
1719	1719	Unidentified variances must be investigated by the organization and identified. If after
1720	1720	investigation an organization is unable to resolve the variance, the organization shall contact
1721	1721	the Department of Revenue. The Department of Revenue will then assist the organization
1722	1722	in resolving the variance. Final resolution will be based upon an organization's individual
1723	1723	situation and can include: amended tax returns, an approved adjustment, required
1724	1724	reimbursement from nongambling sources, or a combination of all three.
1725	1725	B.If the comparison of games played to games reported on Schedule B2, Lawful
1726	1726	Gambling Report of Barcoded Games, shows a difference, the organization must respond
1727	1727	to the reportable conditions item by identifying and stating if the game difference was due
1728	1728	to the games being:
1729	1729	(1)missing or lost;
1730	1730	(2)destroyed, with state approval;
1731	1731	(3)played and unreported; or
1732	1732	(4)reported in following month.
1733	1733	C.Specific items as noted on the internal control structure report must be responded
1734	1734	to.
1735	1735	If no response is received from the organization, the organization must submit to the
1736	1736	Department of Revenue a copy of the audit management letter upon request.
1737	1737	Subp. 8.Other.The front page of the annual audit report must contain the following
1738	1738	items:
1739	1739	A.the organization's legal name and licensed name, if different;
1740	1740	B.the organization's license number;
1741	1741	C.the Minnesota ID number; and
1742	1742	D.the federal ID number.
1743	1743	22R
1744	1744	APPENDIX
1745	1745	Repealed Minnesota Rules: 23-01400 8122.0650FAILURE TO FILE OR FAILURE TO MEET REQUIREMENTS.
1746	1746	Subpart 1.Failure to file.If an organization fails to file the required annual audit, the
1747	1747	Department of Revenue will request the delinquent items. If the organization fails to respond
1748	1748	to the request and correct the delinquency, the Gambling Control Board will be informed
1749	1749	and a suspension of the organization's gambling activity will be requested. An organization
1750	1750	may also be ineligible for relicensing until the delinquent reports are submitted. The Gambling
1751	1751	Control Board may also issue fines for noncompliance with the annual audit requirements.
1752	1752	See Minnesota Statutes, sections 349.151, subdivision 4, paragraph (a), clause (9), and
1753	1753	349.155, subdivision 4.
1754	1754	Subp. 2.Failure to meet requirements.If the audit fails to comply with all or part
1755	1755	of the audit requirements, the audit will be deemed deficient and not satisfying the annual
1756	1756	audit requirements. If an organization fails to file the required annual audit or fails to comply
1757	1757	with any part of the requirements for the annual audit, the Department of Revenue will
1758	1758	request the delinquent items. If the organization fails to respond to the request and correct
1759	1759	the delinquency, the Gambling Control Board will be informed and a suspension of the
1760	1760	organization's gambling activity will be requested. An organization may also be ineligible
1761	1761	for relicensing until the delinquent reports are submitted. The Gambling Control Board may
1762	1762	also issue fines for noncompliance with the annual audit requirements. See Minnesota
1763	1763	Statutes, sections 349.151, subdivision 4, paragraph (a), clause (9), and 349.155, subdivision
1764	1764	4.
1765	1765	23R
1766	1766	APPENDIX
1767	1767	Repealed Minnesota Rules: 23-01400