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Minnesota Legislature

Ratings charitable gaming outlays (new law)

Published (5/29/2009)
By Lee Ann Schutz
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Organizations receiving charitable gambling receipts are suffering their own economic downturn.

Some changes to statute would help keep the “struggling organizations afloat,” said Rep. Joe Atkins (DFL-Inver Grove Heights), who sponsors a new law with Sen. Tony Lourey (DFL-Kerrick).

The law makes technical changes to statutes regarding licensing and auditing requirements. It also establishes a star-rating system, “so that people can compare how much money is actually given to charitable organizations through the pull tabs they are purchasing,” Atkins said.

Beginning July 1, 2009, when most of the law takes effect, the Minnesota Gambling Control Board will conduct a 12-month review of licensed organizations, rating them based on the percentage of lawful expenditures as compared to gross profits.

An organization that expends at least 50 percent of gross profits on charitable purposes will receive the highest rating — five stars. An organization that fails to expend at least 30 percent of annual gross profits on charitable purposes is automatically on probation for one year. The organization must increase its rating to a minimum of 30 percent or be subject to sanctions by the board. If an organization fails to meet the minimum standard after a one-year probation, the board may suspend the organization’s license or impose a civil penalty of up to $10,000.

Under the law, the list of allowable expenditures for charitable gambling receipts is expanded to include:

• monitoring of surface water quality by individuals or a nongovernmental organization, under Pollution Control Agency guidance and procedures; and

• construction or acquisition of a replacement licensed organization’s building that is in compliance with the Americans with Disabilities Act if the board has specifically approved the amount. This provision could extend to an organization-owned building taken or sold under an eminent domain proceeding.

The law also calls for a licensed charitable organization to pay a monthly regulatory fee of 0.1 percent of its gross monthly gambling receipts. These fees will be deposited into the state’s lawful gambling regulation account. Failure to pay the monthly regulatory fees in a timely manner may result in disciplinary action by the board.

Licensed organizations will be given more leeway to conduct lawful gambling at events off-premise. If approved by the board, an organization could hold lawful gaming at up to four events per year in connection with a county fair, state fair, church festival or civic celebration, not to exceed three days per event.

HF1511/SF1284*/CH124

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