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10.a Staff report - gambling permit Lions Club Staff Report Date of Meeting: January 18, 2022 To: City Council From: Brenda Eklund, City Clerk Re: Scandia-Marine Lions Club Application for Lawful Gambling Premises Permit Background: Todd Smith, Gambling Manager for the Scandia-Marine Lions Club, has applied for a Lawful Gambling Premises Permit for the organization to conduct charitable gambling at Thirsty Buffalo Saloon, 21050 Ozark Avenue. The application was received on January 13, 2022. Issue: Should the Council approve a Lawful Gambling Premises Permit for the Scandia-Marine Lions Club at Thirsty Buffalo Saloon? Proposal Details: City of Scandia Code of Ordinances, Chapter 130: Gambling Regulations governs lawful gambling within the city. The purpose of the ordinance is to “regulate lawful gambling within the City, to prevent its commercialization, to ensure the integrity of operations, and to provide for the use of the net profits only for lawful purposes.” The ordinance establishes the qualifications that must be met by organizations and premises for gambling. The Scandia- Marine Lions Club plans to conduct electronic pull-tabs, paper pull-tabs, and bar bingo activities. The organization has signed a lease agreement with the owner of Thirsty Buffalo Saloon. Form LG215, Lease for Lawful Gambling Activity is attached to this report. Only certain organizations are authorized to conduct lawful gambling in Scandia. They must be licensed by the State and also meet at least one of five criteria in the ordinance (Section 130.07). The Lions Club Foundation is licensed by the MN Gambling Board and is currently in good standing. The physical site for the organization’s headquarters and where the organization regularly holds meetings and conducts its activities is located within the city, meeting the criteria of Section 130.07. The organization currently conducts charitable gambling at Meister’s Bar & Grill in Scandia and at Brookside in Marine. Section 130.08 of the ordinance specifies the qualifications of the personnel/gambling manager of the organization. Review of the application includes a background check on the gambling manager and a review of the state licensing information by the Washington County Sheriff’s office. The inspection was requested on January 13th and is currently pending. Section 130.14 requires that a licensed organization shall spend 75% of its lawful purpose expenditures derived from gambling conducted at the premises within the city’s trade area. The trade area is defined as Scandia, contiguous cities and townships and any portion of the Forest Lake School District. The organization reports that 100% of proceeds will be donated within the trade area of Scandia to support the local food shelf, fire department, Scandia Elementary, and high school scholarships as among examples of where charitable gambling proceeds from this premise will go. Once approved, a premises permit runs concurrently with the organization’s gambling license on a perpetual basis, unless the permit is suspended or revoked by the Gambling Control Board or is voluntarily terminated by either party. The ordinance does not allow more than one licensed organization to conduct lawful gambling activities at one premises. In April 2021, the City approved Hugo Dead Broke Saddle Club to conduct charitable gambling at Thirsty Buffalo, and the lessor must give the required 30-day notice to Dead Broke Saddle Club that this lease is being terminated. Mr. Smith reports that the business owner has initiated a lease termination with Hugo Dead Broke Saddle Club. The Lions propose an effective date of March 1, 2022 to begin the Club’s charitable gambling activities at Thirsty Buffalo Saloon. Fiscal Impact: The $100 permit fee has been paid. Options: 1) Approve Resolution No. 2022-04, approving the premises permit effective on March 1, 2022 conditioned on a successful background investigation of the organization and its Gambling Manager and the termination of the business’s lease with Dead Broke Saddle Club. 2) Amend Resolution No. 2022-04 with conditions. 3) Do not approve. A resolution to deny must be acted on. Recommendation: Action to either approve or deny must be taken by the Council within 60 days after receipt of the application which was made on January 13, 2022. Staff recommends Option 1. MINNESOTA LAWFUL GAMBLING LG215 Lease for Lawful Gambling Activity 6/15 Page 1 of 2 LEASE INFORMATION 01.9 lxatlonTi., , v License/Site Number Daytime Phone 9 Address City Stat Zip SSo 3 Name of Leased Premises Street Address lu altuo (4 Nr 3C 1 5 • O zar l< City State Zip: Daytime Phone' t MN Name of Legal Owner Business/Street Address: 7-V,- \ mky--) r()S I SE Ctty: 45 . State- Zip Daytime Phone? MN Name of Lesser (if "me as legal owner, write "SAME"') Address o ` Gb -laor\ a t56 G24•(- C-+ Q city State: Zip Daytime Phone tG mN Qle applicable item: l New or amended lease. Effective date; i I 2D` 2' -Submit changes at least ten days before the effective date of the change. QNew owner. Effective date: Submit new lease wlthin ten days after new lessor assumes ownership. CHECK ALL ACTIVITY THAT WILL BE CONDUCTmr11 - d f an Pull -Tabs (paper) Pull -Tabs (paper) with dispensing device no ease require or ra es] Electronic Pull -Tabs Electronic Linked Bingo FZ'Bar Bingo FIBingo Electronic games may only be conducted: 1, at a premises licensed for the on -sale of intoxicating liquor Tipboards or the on -sale of 3.2% malt beverages; or Paddlewheel FlPaddlewheel with table 2. at a premises where bingo is conducted as the pnmary business and has a seating capacity of at least 100. PULL -TAB, TIPBOARD, AND PADDLEWHEEL RENT (separate rent for booth and bar ops) BOOTH OPERATION: Some or all sales of gambling equipment are conducted by an employee/volunteer of a licensed organization at the leased premises. ALL GAMES, induding electronic games: Monthly rent to be paid: %, not to exceed 10% of gross profits for that month. Total rent paid from all organizations for only booth operations at the leased premises may not exceed ;1,750. The rent cap does not include BAR OPERATION rent for electronic games conducted by the lessor. BAR OPERATION: Ali sales of gambling equipment conducted by the lessor or lessor's employee. ELECTRONIC GAMES: Monthly rent to be paid: /,Z%, not to exceed 150/o of the gross profits for that month from electronic pull -tab games and electronic linked bingo games. ALL OTHER GAMES: Monthly rent to be paid: o210 %, not to exceed 20016 of gross profits from all other forms of lawful gambling. If any booth sales conducted by a licensed organization at the premises, rent may not exceed 100/a of gross profits for that month and is subject to booth operation $1,750 cap. BINGO RENT ( for leased premises where bingo is the primary business conducted, such as bingo hall) Bingo rent is limited to one of the following Rent to be paid: I&- %, not to exceed 309/6 of the monthly gross profit from all lawful gambling activities held during bingo occasions, excluding bar bingo. OR- Rate to be paid: ; per square foot, not to exceed 110% of a comparable cost per square foot for leased space, as approved by the director of the Gambling Control Board, The lessor must attach documentation, verified by the organization, to confirm the cnrnparable rate and all applicable costs to be paid by the organization to the lessor. Rent may not be paid for bar bingo. Bar bingo does not include bingo games linked to other permitted premises. VASE TERMINATION CLAUSE (must be completed) I The Kase may be terminated b either art with a written —3IYYparty _a day notice. Other terms - LG215 Lease for Lawful Gambling Activity Lease Term: The term of this agreement will be concurrent with the premises permit Issued by the Gambling Control Board I Board). I I Management: The owner of the premises m the lessor will not manage the conduct of lawful gambling at the premises. The organization may not conduct any activity on behalf of the lessor on the leased premises. Participation as Players Prohibited: The lessor will not par- ticipate directly or indirectly as a player- in any lawful gambling conducted on the premises. The lessor's Immediate family and any agents or gambling employees M the lessor will not particl pate as players in the conduct of lawful gambling on the premis- es, except as authorized by Minnesota Statutes, Section 349.181. 111e"ll Gambling: The lessor is aware of the prohibition against illegal gambling in Minnesota Statutes 609,75, and the penalties for +tlecial ganlbirng violations in Minnesota Rules 7865.0220, Subpart 3. In addition, the Board may authorize the organization to withhold rent for a period of up to 90 days if the Board determines that illegal gambling occurred on the premises or that the lessor or its employees participated in the illegal gambling or knew of the gambling and did not take prompt action to stop the gambling. Continued tenancy of the organiza- tion is authonzed without payment of rent during the time period determined by the Board for violations of this provision, as authorized by Minnesota Statutes, Section 349.18, Subd. 1(a). To the best of the lessor's knowledge, the lessor affirms that any and all names or devices located on the premises are not being used, and are not capable of being used, in a manner that violates the prohibitions against illegal gambling in Minnesota Statutes, Section 609.75. Notwithstanding Minnesota Rules 7865.0220, Subpart 3, an organization must continue making rent payments under the terms of this lease, if the organization or its agents are found to be solely responsible for any illegal gambling, conducted at this site, that is prohibited by Minnesota Rules 7861.0260, Subpart 1 Rem H, or Minnesota Statutes, Section 609.75, unless the organization's agents responsible for the illegal gambling activity are also agents or employees of the lessor. The lessor must not modify or terminate the lease in whole or in part because the organization reported, to a state or local law enforcement authority or to the Board, the conduct of illegal gambling activity at this site in which the organization did not participate. OF LEASE TERMS 6/15 Page 2 of 2 nher Pronlinimons: Ine lessor w... not impose rexnruons on he organization with respect to providers (distributor or linked nnga gafne provider) of gambling -related equipment and ser- lces b, In the use of net profits for lawful purposes. he lessor, the lessor's immediate family, any person residing in he same residence as the lessor, and any agents or employees A the lessor will not require the organization to perform any i'ction that would violate statute or rule. The lessor must not nodify or terminate this lease in whole or in part due to the rssor's violation of this provrslon. If there is a dispute as to whether a violation occurred, the lease will remain in effect pend - ng a final determination by the Compliance Review Group (CRG) of the Hoard. The lessor agrees to arbitration when a violation of this provision is alleged. The arbitrator shall be the CRG. Access to Permitted Premises: Consent is given to the Board and Its agents, the commissioners of revenue and public safety and their agents, and law enforcement personnel to enter and inspect the permitted premises at any reasonable time during the business hours of the lessor. The organization has access to the premises during any time reasonable and when necessary for the conduct of lawful gambling. Lessor Records: The lessor must maintain a record of all money received from the organization, and make the record available to the Board and its agents, and the commissioners of revenue and public safety and their agents upon demand. The record must be maintained for 3-1/2 years. Rent All -Inclusive: Amounts paid as rent by the organization to the lessor are all-inclusive. No other services or expenses provided or contracted by the lessor may be paid by the organi- zation, including but not limited to: trash removal electricity, heat snow removal storage janitorial and cleaning services other utilities or services lawn services security, security monitoring cost of any communication network or service required to conduct electronic pull -tabs games or electronic bingo in the case of bar operations, cash shortages. Any other expenditures made by an organization that is related to a leased premises must be approved by the director of the Board. Rent payments may not be made to an individual, I affirm that this lease is the total and only agreement between the lessor and the organization, and that all obligations and agreements are contained in or attached to this lease and are subject to the approval of the director of the Gambling Control Board. Other terms of the lease: re of Lessor; Date: Signature of Giga ization Gfflc al (Lesse ; D te: Wntame and Title of Lessor: print Name and Title of Lessee: T 0VN1 ,X o-ooA LA TW Qr+ 7 Antatt the Licensing Section, Gambling Control Board, at Mail or fax'lease to: 651-539.1900. This publication will be made available In alternative format (i.e. Minnesota Gambling Control Board IarQa print, braille] upon request. Data privacy notice: The information requested 1711 W. County Road B, Suite 300 Southonthisform0ridanyattachmentswillbecomepublicInformationwhenreceivedbyRoseville, MN 55113 the Boafd. sod will be used to determine your compliance with Minnesota statutes Fax: 651-639-4032 and rule gorarning lawful gambling activities.