As you are all aware, electronic gaming rules have been changed by our state representatives. Why they did this is unexplainable and will eventually hurt our American Legion programs and post operations. A summary of the changes follows;
SUMMARY OF 2023 LAWFUL GAMBLING STATUTE CHANGES COMBINED NET RECEIPTS TAX RATE REDUCED
EFFECTIVE DATE: This section is effective for games reported as played after June 30, 2023.
GCB SUMMARY: Paper pull-tab, electronic pull-tab, linking bingo, tipboard (excluding sports tipboards), and paddlewheel net receipts reported on a licensed organization’s G1 Lawful Gambling Monthly Tax Return will be taxed according to the rates shown below.
STATUTE: Minnesota Statute 297E.02, subdivision 6.
If the combined net receipts for the fiscal year are: The tax is:
Not over $87,500 eight percent (currently 9%)
Over $87,500, but not over $122,500 $7,000 plus 17 percent of the amount over $87,500, but not over $122,500 (currently 18%)
Over $122,500, but not over $157,500 $12,950 plus 25 percent of the amount over $122,500, but not over $157,500 (currently 27%)
Over $157,500 $21,700 plus 33.5 percent of the amount over $157,500 (currently 36%) ELECTRONIC PULL-
TABS EXCLUDED FROM ORGANIZATION ANNUAL CPA AUDIT. ELECTRONIC PULL-TAB MANUFACTURERS REQUIRED TO HAVE ANNUAL AUDIT.
EFFECTIVE DATE: This section is effective for audits conducted after June 30, 2024.
GCB SUMMARY: Electronic pull-tab manufacturers are required to have an annual audit. If an organization sells electronic pull-tabs produced by a manufacturer that has complied with the audit requirement, an organization may deduct its electronic pull-tab gross receipts from its total lawful gambling gross receipts when determining whether it meets the $750,000 threshold for the organization annual audit requirement.
STATUTE: Minnesota Statute 297E.06, subdivision 4
Annual audit, certified inventory, and cash count. An organization licensed under chapter 349 with gross receipts from lawful gambling of more than $750,000 in any year must have an annual financial audit of its lawful gambling activities and funds for that year. For the purposes of this subdivision, “gross receipts” does not include a licensed 2 organization’s receipts from electronic pull-tabs regulated under chapter 349 provided the electronic pull-tab manufacturer has completed an annual system and organization controls audit, containing standards that must incorporate and be consistent with standards prescribed by the American Institute of Certified Public Accountants.
STATUTE: Minnesota Statute 349.163, subdivision 12
Electronic pull-tab manufacturer audit required. A manufacturer of electronic pull-tabs licensed under this section must complete and submit an annual system and organization controls audit. The standards of the audit must incorporate and be consistent with standards prescribed by the American Institute of Certified Public Accountants. Audits conducted under this subdivision must be performed by an independent accountant firm licensed in accordance with chapter 326A.
PURPOSE OF LAWFUL GAMBLING STATUTES CLARIFIED
EFFECTIVE DATE: This section is effective for games approved after August 1, 2023.
GCB SUMMARY: Statute language was added to emphasize that the Gambling Control Board may only authorize the games or game features discussed in Minnesota Statutes 349.11 to 349.22. New games or game features that are not mentioned in that portion of the statutes may not be approved.
STATUTE: Minnesota Statute 349.11
Purpose. The purpose of sections 349.11 to 349.22 is to regulate lawful gambling, to ensure integrity of operations, to provide for the use of net profits only for lawful purposes, and to authorize only those games or game features discussed in this chapter.
“MIMIC A SLOT MACHINE” CLARIFICATION ADDED TO ELECTRONIC BINGO DEVICE AND ELECTRONIC PULL-TAB GAME RESTRICTIONS
EFFECTIVE DATE: This section is effective for games approved after August 1, 2023.
GCB SUMMARY: After August 1, 2023, the Gambling Control Board may not approve an electronic bingo device or an electronic pull-tab game that contains spinning reels or other representations that mimic a video slot machine. New language defines “free plays, bonus games, screens, or game features that are triggered after the initial symbols are revealed that display the results of the game” as representations that mimic a slot machine.
STATUTE: Minnesota Statute 349.12, subdivision 12a(9)
Electronic bingo device. “Electronic bingo device” means a handheld and portable electronic device that contains no spinning reels or other representations that mimic a video slot machine, including but not limited to free plays, bonus games, screens, or game features that are triggered after the initial symbols are revealed that display the results of the game.
STATUTE: Minnesota Statute 349.12, subdivision 12c(a)(9) Electronic pull-tab game. (a) “Electronic pull-tab game” means a pull-tab game containing: (9) no spinning reels or other representations that mimic a video slot machine., including but not limited to free plays, bonus games, screens, or game features that are triggered after the initial symbols are revealed that display the results of the game;
PLAYERS MUST INDIVIDUALLY ACTIVATE EACH INDIVIDUAL ROW OR COLUMN OF SYMBOLS ON AN ELECTRONIC PULL-TAB TICKET
EFFECTIVE DATE: This section is effective for games approved after August 1, 2023.
GCB SUMMARY: After August 1, 2023, the Gambling Control Board may not approve an electronic pull-tab device or an electronic pull-tab game that does not require the player to individually activate each row or column of symbols on an electronic pull-tab ticket. Currently, on many electronic pull-tab games, all of the symbols on the ticket are revealed with a single player activation (a single touch of a button on the screen).
STATUTE: Minnesota Statute 349.12, subdivision 12b(a)(3)
Electronic pull-tab device. “Electronic pull-tab device” means a handheld and portable electronic device that requires that a player must individually activate or individually open each electronic pull-tab ticket and each individual line, row, or column of each electronic pull-tab ticket;
STATUTE: Minnesota Statute 349.12, subdivision 12b(b) An electronic pull-tab device must not include representations that mimic the display or user interface of a video slot machine by requiring a player to manually activate the reveal or result of each single row of symbols with a separate and distinct action for each electronic pull-tab ticket.
STATUTE: Minnesota Statute 349.12, subdivision 12c(a)(10) and 12c(a)(11) Electronic pull-tab game. “Electronic pull-tab game” means a pull-tab game containing a mechanism requiring a player to manually activate each electronic pull-tab ticket to be opened; and a mechanism requiring a player to manually activate the reveal of each single row of symbols with a separate and distinct action.
STATUTE: Minnesota Statute 349.12, subdivision 25e
Manually activate. For purposes of this section, “manually activate” means that a person must either touch an icon on the electronic pull-tab device screen or press a button located elsewhere on the electronic pull-tab device, or, exclusively for purposes of accommodating use by a player who is visually impaired, perform some other action that initiates activity on an electronic pull-tab device.
A BOARD-APPROVED TESTING LABORATORY MUST CERTIFY EACH ELECTRONIC PULLTAB GAME AS MEETING REQUIREMENTS OF STATUTE AND RULE
EFFECTIVE DATE: This section is effective for games approved after August 1, 2023.
GCB SUMMARY: After August 1, 2023, the Gambling Control Board may not approve an electronic pull-tab game unless a board-approved testing lab has certified that the game and device meet all standards and requirements.
STATUTE: Minnesota Statute 349.12, subdivision 12c(b) Each electronic pull-tab game shall include a certification from a board-approved testing laboratory that the game and device meets the standards and requirements established in Minnesota Statutes and Minnesota Rules and is in conformance with game procedures provided by the manufacturer.
GAMBLING CONTROL BOARD IS AUTHORIZED TO REMOVE NON-COMPLIANT ELECTRONIC PULL-TAB DEVICES FROM DISTRIBUTOR’S AND ORGANIZATION’S INVENTORY
EFFECTIVE DATE: This section is effective July 1, 2024.
GCB SUMMARY: Between the dates of July 1, 2024 and December 31, 2024, if an organization or distributor is in possession of a non-compliant electronic pull-tab device or an electronic pulltab device that contains non-compliant electronic pull-tab games, the Gambling Control Board may remove those devices from the organization’s or distributor’s inventory. The Gambling Control Board is required to remove non-compliant games from organization and distributor inventories by December 31, 2024.
STATUTE: Minnesota Statute 349.151, subdivision 4d(f) The board, or the director if authorized by the board, may remove any electronic pulltab device that does not conform to the requirements of section 349.12, subdivision 12b, and any electronic pull-tab device containing games that do not conform to the 5 requirements of section 349.12, subdivision 12c, from the inventories of distributors and organizations.
STATUTE: Section 15 of House File 1938 Fourth Engrossment Gambling Control Board must remove games not meeting the requirements of this article from the inventories of licensed distributors and licensed organizations by December 31, 2024.
A DISTRIBUTOR MAY NOT CHARGE AN ORGANIZATION MORE THAN 25% OF GROSS PROFITS (NET RECEIPTS) FOR ELECTRONIC PULL-TAB GAMES. A DISTRIBUTOR MAY REQUEST A HEARING BEFORE THE GAMBLING CONTROL BOARD TO EXCEED 25%.
EFFECTIVE DATE: The 25% cap is effective July 1, 2024. The statute itself is effective upon enactment.
GCB SUMMARY: After June 30, 2024, a licensed distributor may not charge an organization more than 25% of the net receipts derived from the electronic pull-tab provided to the organization. A distributor may seek Gambling Control Board approval to exceed 25% by requesting a hearing before the board.
STATUTE: Minnesota Statute 349.163, subdivision 11(a) and 11(b) (a) Beginning July 1, 2024, a licensed distributor may not charge a licensed organization more than 25 percent of gross profits derived from electronic pull-tab games supplied by the licensed distributor. (b) A licensed distributor may request a hearing before the board to seek to impose a fee in excess of the limitations established in paragraph (a). Unless otherwise agreed between the licensee and the board, the licensee must submit its request no later than 20 days prior to a scheduled board meeting. The board must grant or deny the licensee’s request within 20 days after the hearing is held.
