Purpose

This bill changes the rules for how licensed veterans organizations and similar nonprofits can use money they make from lawful gambling. It adds many new allowed uses of gambling profits (gross profits) and sets rules to govern how those funds can be spent on property, programs, and activities. The overall goal is to let these organizations support real property (like buildings they own or operate), while still keeping oversight and limits to protect the public interest.

Main ideas and what the bill seeks to accomplish

• Allow gambling profits to be used for broader purposes connected to the organizations’ missions, including:

  • Repairs, maintenance, and improvements to real property and capital assets.
  • Support for charitable, educational, religious, military, and community programs.
  • Community events, arts programs, youth-focused facilities, and services for people in poverty or with disabilities.
  • Payments related to taxes, utilities, and certain government-allowed fees.
  • Contributions to or expenditures for other qualified nonprofit organizations and certain types of organizations (with specific rules).
  • Activities honoring military service and veterans, and certain color guard/marching unit activities with per diem allowances.
  • Environmental and natural resources-related projects in some cases (like water quality monitoring or DNR-approved projects).

• Create uniform standards for how these monies may be spent:

  • Standards must apply equally to 501(c)(3) organizations and festival organizations, with oversight from a board.
  • The board can set rules about which types of expenditures are allowed, the size of those expenses, and how they’re reported.

• Put specific financial and timing controls on major property-related expenditures:

  • A yearly cap: a percentage of gross gambling profits that may be spent on repair, maintenance, or improvement of property or capital assets.
  • For certain property projects, at least 51% of the work must be completed within two years of board approval, or the organization must reapply.
  • In some cases, a separate cap of up to 50% (for projects approved before July 1, 2031) applies, with the same 51% completion rule.
  • Expansions of buildings or bar-related expenditures are generally not allowed under these rules.

• Require property-related work to align with the organization’s primary mission and to be usable by others who rely on the organization's services, and to meet accessibility requirements (ADA).

• Limit political influence and certain restricted uses:

  • Prohibits expenditures intended to influence the nomination/election of a candidate or to influence governmental decisions.
  • Prohibits using gambling proceeds to fund pension or retirement programs of government bodies, and prohibits certain uses by 501(c)(3) organizations intended to circumvent lawful-purpose rules.

• Add reporting and governance requirements:

  • Some expenditures require prior board approval.
  • Some categories require expenditures to be completed to certain percent thresholds within set time frames.

Key provisions and categories (highlights)

• Expanded lawful purposes (examples):

  • Expenditures or contributions to 501(c)(3) or festival organizations that meet board standards.
  • Charitable uses for poverty, homelessness, or disability relief.
  • Education, prevention, or treatment programs for problem gambling.
  • Scholarships and educational institutions.
  • Support for military service recognition programs.
  • Youth and community facilities and activities for those under 21 (non-discriminatory by gender) that comply with applicable rules.
  • Payment of local and federal taxes and related charges.
  • Real estate taxes and assessments on permitted gambling premises.
  • Support for church-related activities and religious observances.
  • Certain environmental monitoring and natural resources projects approved by the appropriate state agencies.
  • Community arts programs and services (visual, literary, performing, or musical arts).
  • Utilities and operating costs (e.g., water, fuel, heating, electricity, sewer) for property used as the organization’s primary headquarters (with specific sharing rules).
  • Per diem and travel-related allowances for military color guards and related activities, within stated limits.
  • Meals and events for members and spouses recognizing military service, with annual caps and aggregation rules.

• Major property-related expenditures:

  • Repairs, maintenance, or improvements to real property or capital assets, with annual caps based on gross profits and strict completion timelines.
  • Acquisition or improvement of capital assets above a small-dollar threshold (e.g., $2,000) with board approval.
  • Real property acquisition, expansion, or debt service for replacement buildings in certain circumstances (e.g., destruction, eminent domain), with limits on what portion can be funded from gambling proceeds if not reimbursed by insurance or government compensation.
  • ADA compliance improvements and replacement buildings may be funded with board-approved amounts.
  • Real property expansions or bar-related expenditures are generally not allowed under these specific provisions.

• Contributions to and from other entities:

  • Contributions to or expenditures for other licensed organizations (with prior board approval) for purposes listed in the bill.
  • Contributions to or from a parent organization under certain conditions (e.g., if the parent has not provided funding to the contributing organization within a year, and the project is board-approved and aligned with lawful purposes).
  • Contributions to a 501(c)(19) organization (a veterans or fraternal group) under specific restrictions (not allowed to expand buildings or fund bar-related expenses; not to be used by statewide consortia of 501(c)(19) groups).

• Prohibitions and limits:

  • Expenditures cannot be used to influence public office elections or ballot questions.
  • Expenditures cannot be used to influence government decisions in ways that bypass the intended lawful purposes.
  • Some constraints apply to contributions to certain kinds of organizations to prevent misuse of funds.

• Timeframes and completion requirements:

  • Some major projects must be at least 51% complete within two years of board approval; otherwise, the project sponsor must reapply.
  • Specific timelines are tied to July 1, 2031, for certain allowances, after which rules may change.

Significant changes to existing law

• Broadening of what gambling proceeds may be used for, especially for property-related purposes and capital improvements.
• Introduction of standardized board oversight with explicit completion and reporting requirements.
• New caps and completion thresholds that tie spending to a percentage of annual gross profits and require substantial progress within set timeframes.
• Stronger ADA compliance and accessibility considerations tied to property improvements.
• Restrictions on expansions of facilities and bar-related expenditures under major expenditure provisions.
• Expanded allowances for veterans organizations to fund military and community-related activities, subject to board approval and governance rules.
• New and clarified rules around contributions to other organizations, including 501(c)(3) and 501(c)(19) entities, with specific limits and prohibitions to prevent misuse of gambling proceeds.

Relevant terms section follows.

Relevant Terms - lawful gambling - gross profits - licensed veterans organization - board / board approval - Minnesota Statutes 2024 section 34912 subdivision 25 - 501(c)(3) - 501(c)(19) - Americans with Disabilities Act (ADA) - real property - capital assets - repair maintenance improvement - per diem - color guard / marching unit - bar-related expenditures - expansion (of real property or facilities) - scholarships - problem gambling education - local taxes / real estate taxes - charitable contributions - fundraising / expenses - distressed or destroyed property (emergency replacement) - eminent domain - nonprofit educational institutions - transparency and completion requirements (51% complete, two-year deadline) - fiscal year (July 1 - June 30) - environmental / natural resources projects (e.g., water quality monitoring) - problem gambling education programs - rhythm of funding and oversight (board standards apply to 501(c)(3) and festival organizations)

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