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90-2065 , � � Council File � �0 O��✓ G� �.� ���r������q � � �o � Green sheet ,� ��,/7� • RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented By Referred To � Committee: Date WHEREAS, the State Legislature has adopted �legislation requiring lawful gambling operators to post the names of the winners of large prizes for all pulltab games played in Minnesota, and WHEREAS, this posting requirement has had a negative impact on some lawful gambling operators because players are reluctant to purchase the remaining tickets on. games where all the large prizes have been awarded, and WHEREAS, the problems created by posting are exacerbated by two other State requirements that do not allow operators to remove games before all of the top tier of winners has been redeemed and taxes operators for all tickets whether sold or not, and WHEREAS, the City recognizes the need for the posting requirement but wants to lessen the financial impact that posting has on gambling operators, now therefore, be it RESOLVED, that the City Council of the City of Saint Paul does hereby urge the State Gambling Control Board to recind the prohibition against removing pulltab games before the top tier of winners is redeemed, and be it FURTHER RESOLVED, that the City Council also recommends that the State eliminate the tax liability on unsold pulltab tickets. ,�„� Navs Absent Requested by Department of: on swi z �— o -�— License & Permit Division � acca ee �"— e an — ����=�--- , nn e -� z son � — BY� „� Adopted by Council: Date NOV 2 7 rggp Form Approved by City Attorney Adoption Certified by Council Secretary By: By� Approved by Mayor for Submission to �. ,��� Council Approved by Mayor: Date � � 990 �� / .� ,, BY= 7i/����lC��'�'1�� By' FUBLiS�i'cD D E C 81990. � � ��a -ao� DEPARTMENT/OFFICE/COUNCIL DATE INITIATED ,,. GREEN SHEET N° _ 12171 CONTACT PER30N&PHONE INITIAUDATE INITIAUDATE �DEPARTMENT DIRECTOR �CITY COUNCIL ASSIGN �CITY ATTORNEY �CITY CLERK MUST BE ON COUNCIL ACiENDA BY(D TE) NUMBER FOR ❑BUDGET DIRECTOR �FIN.8 MQT.SERVICES DIR. ROUTINQ ORDER �MAYOR(OR ASSISTAN� � ASAP TOTAL#OF 81GNATURE P GES (CLIP ALL LOCATIONS FOR SIGNATURE) ACTION REQUESTED: To urge the �tate egisl ture to ameliorate the posting requirements for charitable gambling operators RECOMMENDATIONS:Approve(A)or R ect(R) PERSONAL SERVICE CONTRACTS MUST ANSWER THE FOLLOWING�UESTIONS: _ PLANNING COMMISSION CIVIL RVICE COMMISSION �• Has this person/firm ever worked under a contract for this department? _CIB COMMITTEE YES NO _STAFF 2• Has this person/firm ever been a city employee? YES NO _ DISTRIC7 COUR7 3. Does this person/firm possess a skill not normally possessed by any current city employee? SUPPORTS WHICH COUNCIL OBJECTI E? YES NO Explaln all yes answers on separate sheet and attach to green sheet INITIATING PROBLEM,ISSUE,OPPO UNII'Y( ho,What,When,Where,Why): The State's posting requ'rement has had a negative impact on lawful gambling operators. The City wants the Stat to escind the prohibition against remaining pulltab games before the top tier of prizes re a arded and to change the State law to eliminate the State tax on unsold tickets. ADVANTAOE3 IF APPROVED: Will lessen the neg tive impact of the State posting requirement for charitable gambling operators. DISADVANTAGES IF APPROVED: None DI3ADVANTAOE3 IF NOT APPROVED: Charitable gambling proc eds will be reduced for both the operators of the games and the recipients of the c arit ble contributions. TOTAL AMOUNT OF TRANSACTI N S COST/REVENUE BUDGETEp(CIRCLE ONE) YES NO FUNDING SOURCE ACTIVITY NUMBER FINANCIAL INFORMATION:(EXPLAIN) , , (,�-�� °�a(�S - LEGISLATIVE BRIEFING PAPER TITLE Ameliorate state posting requirements for charitable gambling operators. ISSUE The 1989 Minnesota Legislature adopted legislation requiring lawful gambling operators to post the names of winners of large prizes for all pulltab games played in the state. The requirement was adopted by the state to address the serious illegal activity of insider trading. Insider trading is a situation where information about unsold large prizes is given to certain people so that they can increase their odds of winning a large prize. The Legislative Auditor reported widespread insider trading in the charitable gambling industry in an extensive report to the legislature in January, 1990. The state's posting requirement has had a negative impact on some lawful gambling operators because players are reluctant to purchase the remaining tickets in pulltab games when all the large prizes have been rewarded. As a result, operators can't sell all their tickets and their income drops accordingly. The problem is exacerbated by two other state requirements that do not allow operators to remove games before all the top tier prizes have been redeemed and the rule which taxes operators for all the tickets whether sold or not. The License Division urges the Mayor and City Council to advocate that the State Gambling Control Board rescind the prohibition against removing pulltab games before the top tier of winners is redeemed. The Division further urges the Mayor and Council to ask the State Legislature to change the state law to eliminate the tax on unsold pulltab tickets. ADVANTAGESfAISADVANTAGES The License Division realizes that the posting of major pulltab winners has had a negative financial impact on a number of smaller organizations in Saint Paul that sponsor lawful gambling operations. An increase in the number of unsold tickets is an inevitable result of posting. However, we feel that posting is the best way to minimize the significant problem of insider trading that was identified in the Legislative Auditor's report of January, 1990. The posting of ma�or winning tickets allows all players the same access to information about the number of winning tickets that have been redeemed. From an enforcement point of view, the License Division does not support the elimination of posting. However, the financial concerns of the small charitable organizations are legitimate and serious. We feel that these concerns can best be addressed by encouraging the State to make the changes noted above without eliminating posting. ALTERNATIVES TO LEGISLATION We see no other alternatives to addressing the negative impact of posting without the changes advocated above. . , . ���-a��.� POLITICAL CONTEXT The licensed gambling operators throughout the state are strongly opposed to the posting requirement. However, a number of the local operators expressed support for the changes the License Division is proposing, but expressed their feeling that the changes are only "half a loaf" . The State Attorney General's Office and the Gambling Control Board strongly advocated the posting requirement and the current Gambling Control Officials seem very willing to reconsider the prohibition against removing pulltab games before all the tickets are sold. We have not been able to gauge the state's reaction to the tax liability issue. PRIORITY This is a top priority for the License Division. NAME AND DATE This briefing was prepared by Robert Kessler on November 14, 1990.