City Code: 499:0

Section 499 Regulating Charitable Gambling
Section 499:00. Purpose and Intent. This article is enacted for the following purposes: to promote the health, safety and general welfare of the inhabitants of the City by closely regulating the conduct of lawful gambling.

Section 499:05. Gambling a Privilege. The City Council finds that lawful gambling is a nuisance prone activity and as such, is subject to restrictive regulation. The Council further finds and declares that the ability to conduct lawful gambling and participate in lawful gambling is a privilege rather than a right.

Section 499:10. Lawful Gambling.

Subd. 1. Adoption by reference. Minnesota Statutes Chapter 349 relating to charitable gambling and MCAR 7860, the administrative rules adopted pursuant thereto, are adopted by reference.

Subd. 2. Board. "Board" is the State Gambling Control Board.

Subd. 3. Charitable gambling licenses are issued by the State Gambling Control Board. There are four classes of organization licenses:

(1) Class A authorizes all forms of lawful gambling;
(2) Class B authorizes all forms of lawful gambling except bingo;
(3) Class C authorizes bingo only or bingo and pull-tabs if the gross receipts for any combination of bingo and pull-tabs does not exceed $50,000.00 per year.
(4) Class D authorizes raffles only; eff. 6/20/00

Section 499:15. General.

Subd. 1. The provisions of this Code are additional restrictions placed on gambling by the City. If this ordinance conflicts with any of the laws or regulations referred to in Subd. 1 of Section 3, the more stringent shall apply.

Section 499:20. Gambling Prohibited Unless City Permit Obtained. No person, except an organization which is licensed by the State or has a valid exemption permit from the State, and which also has a permit or approval from the City, shall conduct lawful gambling within the City. Such City permits shall be obtained each time an exemption permit is sought from the Board. All permits required by this Section or State Statutes shall be prominently displayed during the permit year at the premises licensed to conduct gambling.

Section 499:25. Filing of Records and Reports, Access to Records and Inspections.

Subd. 1. Every organization permitted to conduct lawful gambling in the City shall quarterly file with the City the following reports:

(i) The G-1 Monthly Tax Returns and all Required Schedules (Minnesota Department of Revenue); or
(ii) Schedule CD-LG 1010 (Gambling Control Board); eff. 6/20/00

These reports are due thirty (30) days after the quarter ends.

Subd. 2. Unless the information is shown in the documents filed under the preceding subdivision, every organization not exempt from State licensing shall file an additional report with the City proving compliance with the Trade Area spending requirement imposed by this Section. Such report shall be submitted annually on or before June 30th. eff. 6/20/00

Subd. 3. A copy of any lease agreement between a nonprofit organization and an on-sale licensee shall be filed with the City Administrator with the premises permit application. The information submitted to the City shall contain a copy of the signed lease and a sketch showing the leased area; provided, however, with respect to organizations owning their own building, a lease and sketch are not required. eff. 6/20/00

Subd. 4. All licensed or permitted gambling operations are deemed to have consented to inspection of the licensed or permitted premises by the City.

Subd. 5. Authorized employees or agents of the City may inspect, at any reasonable time without notice or search warrant, all records, including gambling accounts and other bank records required by the Board to be maintained and preserved.

Section 499:30. Premises Permits.

Subd. 1. An organization shall make application for a premises permit on a form prescribed by the Board. eff. 6/20/00

Subd. 2. Upon receipt of the pending application for a premises permit, the City Council shall, within the time allowed by Minnesota Statutes Chapter 349 or Board Regulations, adopt a resolution either approving or disapproving the application.

Section 499:35. Premises Permit Limitation.

Subd. 1. Limitation on premises permits. No organization shall hold more than three (3) Class B premises permits at on-sale licensed liquor establishments in the City.

No organization shall hold both a Class A premises permit and a Class B premises permit in the City.

A licensed bingo hall may have more than one organization holding a Class A or Class C premises permit at the bingo hall provided at least one of the organizations is a "local organization" (as defined by Section 10, subd. 3).

Subd. 2. On-sale liquor license establishment. Except for a Class D permit, no more than one (1) lawful gambling premises permit shall be approved for an on-sale licensed liquor establishment in the City. If an on-sale liquor establishment is already the subject of an existing Class A or Class B or Class C premises permit, the City will not approve another Class A or Class B or Class C premises permit for the same location; the only other premise permit that may be approved is a Class D permit.

Subd. 3. Priority in approval process. It is anticipated that there may be more than one organization applying for a Class A or Class B or Class C premises permit at a single on-sale liquor establishment. Therefore, the following criteria, in the order listed, prioritizes and determines the approval for the one available premises permit:

First, renewal applications will be preferred; an organization renewing its Class A or Class B or Class C premises permit at the on-sale liquor establishment will be preferred over an organization that does not already have its premises permit at the on-sale liquor establishment.

Second, if there are two or more applications and if a renewal application is not involved, then a "local organization" will be preferred over an organization that does not meet the definition of a "local organization." Because of the nuisance prone nature of gambling compared to other licensing or permitting activities within the City of Owatonna, the City prefers that the organization have a local connection so as to facilitate investigation of applicants and the investigation and arrest of any violators. In situations where a renewal permit is not involved and where two or more organizations seek to have a Class A or Class B or Class C premises permit at the same on-sale liquor establishment, the organiza-tion that meets the definition of a local organization will be preferred over an organization that does not meet the definition. For purposes of this Section, a local organization is an organization defined by Minnesota Statute Section 349.12, Subd. 28 that also meets all the following criteria:

(a) The organization has at least fifteen (15) members that are current residents of the City of Owatonna; and

(b) The physical site for the organization's head-quarters or the registered office of the organi-zation is located within the City of Owatonna and has been located within the City of Owatonna for at least two (2) years immediately preceding application for a license; or

(c) The organization owns real property within the City of Owatonna and the lawful gambling is conducted on the property owned by the organization within the City; or

(d) The physical site where the organization regularly holds its meetings and conducts its activities, other than lawful gambling and fundraising, is within the City of Owatonna and has been located within the City of Owatonna for at least two (2) years immediately preceding application for a license.

Third, if no renewal is involved and if two or more non-local organizations seek approval, the City Council will approve the organization that applied first.

Section 499:40. Lease.

Subd. 1. Lawful gambling at on-sale establishments. Lawful gambling at on-sale liquor or club license establishments shall be conducted in compliance with the following regulations:

(a) Only Class B and Class D gambling licenses, as defined in Minnesota Statutes Section 349.16 may be issued, except where the licensed gambling organization also holds the liquor or club license for the premises, in which case, any class of gambling license may be issued;

(b) On-sale establishments shall be limited to one licensed gambling organization at any one time in the licensed premises and any rooms adjoining the premises under the same management. No lease shall be made with one organization while another lease is in effect for the same on-sale establishment;

(c) Every agreement between a nonprofit organization and an on-sale premises for gambling shall be in the form of a written lease. The written lease shall be the complete agreement between the parties, and there shall be no unwritten terms or conditions. The lease specifically provides that the lessee shall operate only after issuance of a premises permit and shall be subject to the terms of this ordinance;

(d) A lease agreement between a nonprofit organization and an on-sale establishment shall not provide for rental payments based on a percentage of receipts or profits from lawful gambling. The maximum rental fee shall be One Thousand Dollars ($1,000.00) per month;

(e) Except for mechanical dispensing devices, all gambling shall be conducted from a booth, or other area properly segregat-ed from the rest of the licensed premises, except that raffle tickets, paddlewheel tickets and tipboards that offer only merchandise prizes may be sold within the permitted premises. The physical layout of this area set aside for gambling shall be subject to the approval of the fire chief;

(f) The gambling booth shall be constructed and maintained by the organization licensed to conduct gambling, and shall be under the exclusive control of that organization. The organization licensed to conduct gambling shall prominently display its name at its gambling booth and shall indicate that all profits from gambling are for the benefit of the organization;

(g) Except as stated in clause (i), the organization licensed to conduct gambling shall have exclusive control over all gambling devices, gambling money, and gambling records. eff. 6/20/00

(h) At a site where the leased premises consists of an area on or behind a bar at which alcoholic beverages are sold and employees of the lessor are employed by the organization as pull-tab sellers at the site, pull-tabs and tipboard tickets may be sold and redeemed by those employees at any place on or behind the bar, but the tipboards and receptacles for pull-tabs and cash drawers for lawful gambling receipts must be maintained only within the leased premises. Employees of a lessor may not participate in lawful gam-bling on the licensed premises.

(i) Neither the owner of the on-sale establishment nor their employees shall have access to the interior of mechanical dispensing devices. They are only permitted to redeem winning tickets and record such winners as required by law and rule;

(j) Payments for redemption of winning pull tab tickets dispensed by mechanical dispensing devices shall be made from funds provided by the on-sale establishment, the on-sale establishment shall be reimbursed by the lawful gambling organization for winning tickets redeemed by the on-sale establishment, reimbursements shall be made as provided in the lease agreement;

(k) No gambling funds shall be commingled with funds of the on-sale establishment;

(l) No food, drink, or entertainment discounts or other promo-tions shall be offered in conjunction with the sale of gambling devices or chances;

(m) The on-sale establishment shall allow the organization to conduct gambling at any time during its lawful business hours, and shall prohibit gambling at any time other than its lawful business hours;

(n) The on-sale licensee shall make no agreements with any gambling equipment distributor or manufacturer requiring the use of his or her gambling equipment or any other equipment or vending machines in the establishment. The on-sale licensee shall not receive from any gambling equipment distributor or manufacturer any money, gift, or other thing of value;

(o) Clauses (e), (f), (g), (h), (i), and (j) of this subdivision shall not apply when the licensed gambling organization is also the holder of the on-sale license for the establishment where the gambling is conducted; eff. 6/20/00

(p) No employee or agent of the licensed organization or any employee or agent of the on-sale establishment shall engage in lawful gambling at the establishment where they are employed.

NOTE: The original subsections (d) and (j) of Section 499:40, Subd. 1, were deleted by Ordinance No. 1235, adopted by Council 6/20/00, and the remaining subsections were renumbered.

Section 499:45. Investigation and Permit Fees.

Subd. 1. All organizations which are exempt from state licensing requirements and are applying for a permit to conduct gambling in the City shall not be required to pay a permit fee to the City.

Subd. 2. Any organization applying for or renewing a premises permit or bingo hall license shall not be required to pay an investigation fee to the City.

Section 499:50. City's Trade Area. For purposes of this ordinance, "City's trade area" means and includes all that area within the boundaries of Steele County.

Section 499:55. Contributions.

Subd. 1. All state licensed organizations conducting lawful gambling within the City shall expend or contribute eighty percent (80%) of their net profits on lawful purposes within the City's Trade Area. This section is limited to lawful purpose expenditures of net profits derived from lawful gambling conducted at premises within the City. Real estate taxes and assessments paid pursuant to Minnesota Statute Section 349.12, Subd. 25(a) on real property located in the City shall be considered a lawful purpose expenditure in the Trade Area. eff. 6/20/00

Subd. 2. A lawful purpose within the City's trade area means and includes an entity located outside the City's trade are which benefits residents within the City's trade area.

Section 499:60. Fine, Penalty, Suspension.

Subd. 1. A premises permit approved by the City or a bingo hall license approved by the City, or a permit issued by the City to an entity exempt from state licensing may be suspended or revoked for violations of City Code, Minnesota Statute Chapter 349, or for failure to meet the qualifications set forth in this ordinance, or Minnesota Statute Chapter 349, or for failure to comply, for any reason, with any provision, guaranty, or claim made in the applicant's original or renewal license application to either the City or the State of Minnesota.

Subd. 2. If any organization violates this Section or if any organization shall fail to make any expenditures in the City's Trade Area as required by Section 14 or fail to provide the City with reports as required by Section 14, such violation or failure shall be grounds for the City to determine that the permit or approval for the organization be suspended, revoked, denied or not renewed.

Subd. 3. Any person violating any provision of this Section is guilty of a misdemeanor and upon conviction thereof shall be punished as defined by State statute.

Section 499:65. Local Gambling Tax. A tax in the sum of $500.00 shall be imposed upon the gross receipts generated within the City by licensed organizations from the conduct of lawful gambling activities. Such tax shall be paid to the City annually on or before June 30th. eff. 6/20/00

Section 499:70. Severability. If any section, paragraph, phrase or provision of this ordinance shall be determined invalid for any reason, such determination of invalidity shall not affect the remaining provisions of this ordinance.

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