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State of Minnesota • Gambling Control Board <br />April 30, 1997 <br />Joel Hanson, City Administrator <br />City of Little Canada <br />515 Little Canada Rd <br />St. Paul, MN 55117 <br />Dear Mr. Hanson: <br />iSS7 <br />Suite 300 South <br />1711 W. County Road B <br />Roseville, MN 55113 <br />612/639 -4000 <br />Thank you for your response to our inquiry regarding an allegation that we received <br />regarding the city's administration of a 10% gambling fund authorized by Minnesota Statute <br />section 349.213, subdivision 1(a). <br />Your letter explained that the moneys from the fund are expended for lawful purposes, as <br />provided in statute, and that the lawful purpose is the city itself. Organizations in your city <br />are required to contribute gambling profits to the gambling fund. The fund is then used for <br />the support of the city of Little Canada. Your letter also stated that the city received a <br />recommendation from the auditor to charge the cost of their audit services against the fund. <br />Minnesota Statute states: <br />A statutory or home rule charter city or a county may not require an organization <br />conducting lawful gambling within its jurisdiction to make an expenditure to the city or <br />county as a condition to operate within that city or county, except as authorized <br />under section 349.16, subdivision 8, or 297E.02; provided, however, that an <br />ordinance requirement that such organizations must contribute ten percent of their <br />net profits derived from lawful gambling conducted at premises within the city's or <br />county's jurisdiction to a fund administered and regulated by the responsible local <br />unit of government without cost to such fund for disbursement by the responsible <br />local unit of government of the receipts for lawful purposes. is not considered an <br />expenditure to the city or county nor a tax under section 297E.02, and is valid and <br />lawful. Section 349.213 subdivision 1(a). (emphasis added) <br />A city may not directly contribute the money to itself under Minnesota Statute section <br />349.12 subdivision 25(a)(10) for general use outside the scope of lawful purpose. It is our <br />opinion that the city's use of the 10% gambling fund violates Minnesota Statute 349.213, <br />subdivision 1(a) by imposing an unauthorized tax which is used for the city general <br />expenditures and not lawful purposes as defined in statute, and also using moneys for <br />administration costs to the fund. <br />Page 50 <br />