HF169

Purpose

• The bill changes how Minnesota taxes lawful gambling. It would replace the current tax system with a single flat tax on gross receipts from most lawful gambling and repeal the combined net receipts tax.

Main Provisions

• Tax imposition
  • A tax at 8.5% of gross receipts (gross receipts minus prizes actually paid) is imposed on all lawful gambling, with specific exceptions.
  • The tax base is defined as gross receipts as defined in 297E.01 subdivision 8, minus prizes actually paid.
  • This tax applies to gambling operations conducted directly or indirectly by the organization or party running the gambling.
• In lieu of other taxes
  • The new tax would be in lieu of the tax under section 297A.62 and all local taxes and license fees, with exceptions: a fee under section 349.16 subdivision 8 or a tax under section 349.213 subdivision 3 may still apply.
• Exempted categories
  • The tax would not apply to:
  • paper or electronic pulltab deals or games
  • tipboard deals or games
  • electronic linked bingo
  • items listed in section 297E.01 subdivision 8 clauses 4 and 5
• Repeals
  • Repeals Minnesota Statutes 2024 section 297E.02 subdivision 6 (the combined net receipts tax).

Significant Changes to Existing Law

• Shifts from a combined net receipts tax to a single flat gross receipts tax across most lawful gambling activities.
• Centralizes tax collection at the state level by preempting local taxes and license fees (with specified exceptions).
• Specified operators (the organizations or parties conducting the gambling) are responsible for paying the tax.

Summary of Effects

• Tax burden moves from a previous mixed structure (including local taxes) to a uniform 8.5% tax on gross receipts for most gambling activities.
• Some gambling formats remain exempt from this tax, while others continue to be subject to different fees or taxes under existing law.

Relevant Terms - lawful gambling - gross receipts - prizes actually paid - flat rate tax - 8.5% (eight and a half percent) - combined net receipts tax - 297E.02 - 297A.62 - 349.16 subdivision 8 - 349.213 subdivision 3 - organization or party conducting gambling - paper pulltab - electronic pulltab - tipboard - electronic linked bingo - 297E.01 subdivision 8 - clauses 4 and 5 (of 297E.01 subdivision 8)