SF5192

Purpose

This bill would give Minnesota cities, townships, and counties more authority to regulate lawful gambling within their jurisdictions. It adds local tools to oversee, restrict, or even prohibit gambling activities, imposes local fees and taxes, requires local approvals for new gambling premises, and creates new reporting requirements.

Main Provisions

• Local investigation fee

  • Local units (cities, townships, counties) could charge an annual investigation fee on organizations applying for an initial premises permit or operating lawful gambling at a site within their jurisdiction.
  • Fee limits:
  • Cities of the first class: up to 500
  • Cities of the second class: up to 250
  • All other cities and townships: up to 100
  • Counties: up to 375

• Local authority to regulate and restrict gambling

  • Local governments may adopt more stringent rules than state law, including prohibiting lawful gambling within their jurisdiction.
  • They may require a permit for gambling activities exempt from state licensing (with a permit fee not to exceed 100).
  • Local rules cannot require a license or license fee for certain roles (organizations, managers, employees, distributors, or linked bingo game providers licensed/registered with the state board).

• Net profits and expenditures

  • Local governments cannot require organizations to spend more than 10% per year of net profits derived from lawful gambling.
  • Net profits are defined as gross profits minus allowable expenses and taxes on lawful gambling.
  • A separate provision allows for contributions to be made to funds for charitable causes or public safety, but such contributions are not considered expenditures or taxes.
  • If a local government requires charitable contributions, it must follow reporting and acknowledgement requirements.

• Charitable contributions and reporting

  • If a local unit requires or accepts charitable contributions, it must file annual reports (by March 15) detailing revenues, interest earned, and expenditures.
  • Home rule or statutory cities/counties must acknowledge charitable contributions publicly.

• Expenditures within a local trade area

  • Local ordinances may require some or all expenditures from lawful gambling profits to be used for purposes within the city/township’s or county’s trade area.
  • The trade area must be defined and include contiguous cities/townships.
  • The ordinance must specify the percentage of expenditures to be used within the trade area.

• Equality of regulation

  • Any more stringent regulation or prohibition adopted by a subdivision must apply equally to all forms of lawful gambling within that jurisdiction, with one exception: paddlewheels may be prohibited.

• Local approval for new premises

  • The board may not issue an initial premises permit without the local government’s approval.
  • Approval must come from the city council, township board, or county board that oversees the premises, via a resolution adopted within 90 days of the application.

• Local gambling tax

  • Cities, townships, or counties with licensed gambling organizations may impose a local gambling tax if needed to cover regulatory costs.
  • Tax rate: up to 3% of gross receipts from all lawful gambling minus prizes paid.
  • Funds from the tax may only be used to regulate lawful gambling and must not be diverted to other uses.
  • Tax is in lieu of other local taxes and local investigation fees for lawful gambling.
  • Annual reporting (by March 15) to the state board on revenue and how the funds were used.

• Records and transparency

  • All documents related to inspections, fines, penalties, or other regulatory actions must be shared with the state board within 30 days of filing.

Significant Changes to Existing Law

• Expanded local control: Cities, townships, and counties gain explicit authority to regulate, restrict, or prohibit lawful gambling beyond the state framework.
• New revenue tools for locals: Introduction of local investigation fees and a local gambling tax (up to 3% of net gambling receipts).
• Permit and approval requirements: Local approval is required before new premises permits can be issued.
• Financial governance: Rules around how much of net profits must be spent locally, and where those funds can go (charitable causes or public safety services) with mandatory reporting.
• Trade area expenditures: Ability for local governments to require a portion of gambling profits to be spent within a defined local trade area.
• Consistency requirement: Any tighter rules must apply to all forms of lawful gambling in the jurisdiction (except paddlewheel prohibitions).

Who Is Affected

• Local governments (cities, townships, counties): gain new tools to regulate, tax, and oversee gambling activities.
• Gambling organizations: subject to new permits, local approvals, potential new fees, local tax requirements, and spending rules.
• The state board: maintains oversight and must receive annual reports and documentation from local units.

Relevant Terms - lawful gambling - premises permit - local investigation fee - net profits - allowable expenses - taxes on lawful gambling - charitable contributions - public safety (police, fire, emergency services) - trade area - expenditures - local gambling tax - local regulation - paddlewheels - board (state regulatory board) - city council, township board, county board - approval/resolution - March 15 reporting deadline - initial premises permit - regulatory compliance and reporting requirements