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Mr. Joel R. Hanson <br />February 1, 1991 <br />Page Two <br />Section 815.020 of the City Code may be subject to <br />challenge as a result of the 1990 Legislation. As amended, <br />Minnesota Statute §349.213, Subdivision 1(c), now requires that <br />regulations or prohibitions of lawful gambling "apply equally to <br />all forms of lawful gambling." Under Section 815.020(A), only <br />those organizations holding Class A or B Licenses are required <br />to contribute at least 50% of their net profits from lawful <br />gambling to "lawful purposes conducted within the Little Canada <br />trade area_" Uncl.er the terms of this Scr+;r.n bingo halls are <br />immune from this requirement. If challenged, this Ordinance <br />might be invalidated as resulting in unequal treatment of <br />different forms of lawful gambling. As a result, the City might <br />be required to either eliminate the trade area requirement or <br />apply it equally to bingo halls. <br />The remainder of the amendments to the lawful gambling <br />statute do not require revisions in the City's Ordinance. <br />Knowledge of these changes, however, is crucial to the <br />administration and control of lawful gambling within the City. <br />In addition, several statutory changes provide municipalities <br />with the option of expanding their ordinances to further <br />restrict or regulate certain activities. <br />The Legislature amended the definition of "lawful <br />purpose." It appears that the Legislature attempted to be more <br />specific in its definition of lawful purpose, and concerns were <br />expressed at the time of the Legislation that the former <br />definition was open to excessive interpretation. Minnesota <br />Statutes §349.12, Subdivision 11(a)(1) now provides that a <br />contribution to a tax exempt 501(c)(3) organization is <br />automatically a lawful expenditure so long as certain standards <br />are satin °i:3. Undue r,; t.a .gt � 1 <br />1 .• iai.�Jl, .n L!...AI.CJ y.`h1 ♦SY, Subdivision <br />1, the Department of Gaming will prescribe the standards <br />governing organizations receiving proceeds from lawful gambling <br />by limiting administrative expenses and requiring that any <br />expenditures be related to the primary purpose of the <br />organization. <br />The new definition of "lawful purpose" is far more specific <br />than its predecessor, as it relates to contributions to <br />organizations which are not qualifying 501(c)(3) organizations. <br />Lawful purpose now expressly includes contributions to relieve <br />the effects of poverty, homelessness or disability, <br />contributions to public or accredited nonprofit educational <br />institutions and scholarship funds, and recreational, community <br />and athletic facilities and activities intended primarily for <br />Page 10 <br />