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06.d Staff Report-Lions Gambling Premises Permit Staff Report Date of Meeting: September 20, 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 21050 Ozark Court. The establishment at this address was operating as the Thirsty Buffalo, but was recently sold to a new owner who will operate the bar and restaurant as The Grillium. The Lions have been conducting charitable gambling at this location since March 2022. A new lease has been entered into with the new owner, so that the Lions Club must register with the MN State Gambling Board, triggering a local premises permit to be approved. The application was received on August 30, 2022. Issue: Should the Council approve a Lawful Gambling Premises Permit for the Scandia-Marine Lions Club to conduct charitable gambling at The Grillium, 21050 Ozark Court? 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 The Grillium. 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 include s 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 completed on September 16th with no occurrences that would prevent the city from approving the gambling permit application. 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 f ood 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. Fiscal Impact: The $100 permit fee has been paid. Options: 1) Approve Resolution No. 2022-30, approving the Lawful Gambling Premises Permit. 2) Amend Resolution No. 2022-30 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 August 30, 2022. Staff recommends Option 1. MINNESOTA LAWFUL GAMBLING LG215 Lease for Lawful Gambling Activity 6/15 Page 1 of 2 LEASE INFORMATION O izatlon: License/Site Number: Daytime Phone: J Cl rg A/,b tR IME Address: C State: Zip: 9 aX g` JL'f%f /MA/ S6'07% Nameof Leased Premier n Street Address: City: State: Zip: Daytime Phone: S41'1'01tq MNs SO%3 Name of Legal Owner: co Buslness/Street Address: G City: State: Zip: Daytime Phone: Name of Lessor (if same as legal own , write "SAME"): Address: City: State: Zip: Daytime Phone: Check applicable item: 0 New or amended lease. Effective date: Submit changes at least ten days before the effective date of the change. 2- New owner. Effective date: Submit new lease within ten days after new lessor assumes ownership. CHECK ALL ACTIVITY THAT WILL BE CONDUCTED (no lease required for raffles) D -full -Tabs (paper) Er Electronic Pull -Tabs 71 Pull -Tabs (paper) with dispensing device 7 Electronic Linked Bingo Bar Bingo Bingo Electronic games may only be conducted: 1. at a premises licensed for the on -sale of intoxicating liquor12-Tipboards or the on -sale of 3.2% malt beverages; or 0 Paddlewheel FiPaddlewheel with table 2• at a premises where bingo is conducted as the primary 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, including 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: All sales of gambling equipment conducted by the lessor or lessor's employee. ELECTRONIC GAMES: Monthly rent to be paid: 16 %, not to exceed 15% 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: o7d %, not to exceed 20% 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 10% 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: 0 %, not to exceed 10% of the monthly gross profit from all lawful gambling activities held during bingo occasions, excluding bar bingo. OR- Rate to be paid: $ 0 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 comparable 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. LEASE TERMINATION CLAUSE (must be completed) The lease may be terminated by either party with a written 9d day notice. Other terms: LG215 Lease for Lawful Gambling Activity 6/15 Page 2 of 2 Lease Term: The term of this agreement will be concurrent Other Prohibitions: The lessor will not impose restrictions on with the premises permit issued by the Gambling Control Board the organization with respect to providers (distributor or linked Board). bingo game provider) of gambling -related equipment and ser - Management: The owner of the premises or the lessor will not vices or in the use of net profits for lawful purposes. manage the conduct of lawful gambling at the premises. The The lessor, the lessor's immediate family, any person residing in organization may not conduct any activity on behalf of the lessor the same residence as the lessor, and any agents or employees on the leased premises, of the lessor will not require the organization to perform any Participation as Players Prohibited: The lessor will not par- action that would violate statute or rule. The lessor must not ticipate directly or indirectly as a player in any lawful gambling modify or terminate this lease in whole or in part due to the conducted on the premises, The lessor's immediate family and lessor's violation of this provision. If there is a dispute as to any agents or gambling employees of the lessor will not partici- whether a violation occurred, the lease will remain in effect pend - pate as players in the conduct of lawful gambling on the premis- ing a final determination by the Compliance Review Group (CRG) es, except as authorized by Minnesota Statutes, Section of the Board. The lessor agrees to arbitration when a violation of 349.181. this provision is alleged. The arbitrator shall be the CRG. Illegal Gambling: The lessor is aware of the prohibition Access to Permitted Premises: Consent is given to the Board against illegal gambling in Minnesota Statutes 609.75, and the and its agents, the commissioners of revenue and public safety penalties for illegal gambling violations in Minnesota Rules and their agents, and law enforcement personnel to enter and 7865.0220, Subpart 3. In addition, the Board may authorize the inspect the permitted premises at any reasonable time during the organization to withhold rent for a period of up to 90 days if the business hours of the lessor. The organization has access to the Board determines that illegal gambling occurred on the premises premises during any time reasonable and when necessary for the or that the lessor or its employees participated in the illegal conduct of lawful gambling. gambling or knew of the gambling and did not take prompt Lessor Records: The lessor must maintain a record of all action to stop the gambling. Continued tenancy of the organiza- money received from the organization, and make the record tion is authorized without payment of rent during the time period available to the Board and its agents, and the commissioners of determined by the Board for violations of this provision, as revenue and public safety and their agents upon demand. The authorized by Minnesota Statutes, Section 349,18, Subd. 1(a). record must be maintained for 3-1/2 years. To the best of the lessor's knowledge, the lessor affirms that any Rent All -Inclusive: Amounts paid as rent by the organization and all games or devices located on the premises are not being to the lessor are all-inclusive. No other services or expenses used, and are not capable of being used, in a manner that provided or contracted by the lessor may be paid by the organi- violates the prohibitions against illegal gambling in Minnesota zation, including but not limited to: Statutes, Section 609.75. trash removal Notwithstanding Minnesota Rules 7865,0220, Subpart 3, an electricity, heat organization must continue making rent payments under the snow removal terms of this lease, if the organization or its agents are found to storage be solely responsible for any illegal gambling, conducted at this janitorial and cleaning services site, that is prohibited by Minnesota Rules 7861.0260, Subpart 1, other utilities or services item H, or Minnesota Statutes, Section 609.75, unless the lawn services organization's agents responsible for the illegal gambling activity security, security monitoring are also agents or employees of the lessor. cost of any communication network or service required to The lessor must not modify or terminate the lease in whole or in conduct electronic pull -tabs games or electronic bingo part because the organization reported, to a state or local law in the case of bar operations, cash shortages. enforcement authority or to the Board, the conduct of illegal Any other expenditures made by an organization that is related gambling activity at this site in which the organization did not to a leased premises must be approved by the director of the participate. Board. Rent payments may not be made to an individual. ACKNOWLEDGMENT Of LEASE TERMS I affirm that this lease is the otal and only agreement between the lessor and the organization, and that all obligations and agreements are contained i or attached to this lease and are subject to the approval of the director of the Gambling Control Board. Other terms of theas . Signature of Less4p. h Date; Signa ar anization Official ssee): Date: Print Name and Title of Lessor: Name and Title of Lessee: I—ot v r 7ooO A. Om cff .4rM 3ctr G,41 ofV4G1_- Questions? Contact the Licensing Section, Gambling Control Board, at I Mail or fax lease to: 651-539-1900. This publication will be made available in alternative format (i.e. Minnesota Gambling Control Board large print, braille) upon request. Data privacy notice: The information requested 1711 W. County Road B, Suite 300 South on this form and any attachments will become public information when received by Roseville, MN 55113 the Board, and will be used to determine your compliance with Minnesota statutes Fax: 651-639-4032 and rules governing lawful gambling activities.