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356753v1 MJM MU125-65 Kennedy Graven C H A R T E R E D 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis MN 55402 (612) 337-9300 telephone (612) 337-9310 fax www.kennedy-graven.com M E M O R A N D U M TO: City Council Members Jim Ericson, City Administrator-Clerk FROM: Scott Riggs, City Attorney Melissa Manderschied, Assistant City Attorney DATE: August 28, 2009 RE: Proposed Gambling Ordinance The City Administrator asked us to review and comment on the existing ordinances related to lawful gambling (City Code, Ch. 502 and 503) and to add a provision about donating funds to the City. Based on our review, a new Chapter 518 is proposed for your review and possible adoption along with some changes to Chapters 502 and 503 to simplify and streamline the existing ordinances. In consultation with the City Administrator, we decided to provide the Council with a comprehensive ordinance that largely reflects existing practices at the City as well as some additional optional provisions. One such additional provision is a $100 investigation fee at Section 518.06, subd. 4. The City may assess this fee on an organization applying for or renewing the state-issued premises permit. If the City charges this investigative fee, it may not impose a local (up to) three percent gambling tax. If a City collects a gambling tax it must file an annual report with the state. The proposed gambling ordinance does not provide for the three percent tax. The City may also require a local permit when lawful gambling that is otherwise exempt from state licensing requirements is conducted within the City. This local permit requirement is provided at Section 518.07. It is important to note that state law does not mandate that a city require a local permit; state law simply allows a city to require a local permit. Another notable new provision is in Section 518.11. This provision requires each organization licensed to conduct lawful gambling within the City to contribute ten percent of its net profits derived from lawful gambling in the City to a fund administered and regulated by the City. In turn, the City disperses these funds as charitable contributions. As indicated above, the ordinance provided for your review and consideration is comprehensive. However, every provision is not required by state law. In several instances, we have provided comments in brackets to assist in your discussion. We look forward to working with you to adopt an ordinance that meets the needs of the City. &