Legislators first introduced the idea of a state-operated lottery during the 1972 legislative session. However, it wasn't until 1988 that legislators put a state lottery amendment on the ballot, which voters approved in November that year. Then, in June 1989, Gov. Perpich signed legislation creating a start-up fund of $8.5 million and established the Minnesota State Lottery and a governor-appointed lottery director and advisory board. Governor Perpich viewed the Lottery as a means to finance a $1.8 billion rural economic development and natural resources program and was the first governor to incorporate a state lottery into his spending proposals. On 17 April 1990, the Lottery first sold instant scratch tickets, and it added online games in August. That same month, the Lottery repaid the $8.5 million start-up loan to the state.
Legislators directed one-half of the proceeds to an environmental trust fund and the second half to the Greater Minnesota Corporation. Currently, 40% of net proceeds are transferred to the general fund and the remaining 60% to the Environment and Natural Resources Trust Fund, the Game and Fish Fund, and the Natural Resources Fund. The monies benefit the state's natural resources, public education, local government and public safety. By law, the Lottery's operating budget is limited to 9% of gross revenue and advertising expenses are capped at 2.75%.
There are more than 3,100 authorized Lottery retailers located throughout Minnesota serve as the primary sales and distribution channel for all Lottery products. Lottery retailers represent many types of businesses; however, convenience stores account for more than half. Retailers receive 5.5% of their ticket sales in commission and an additional commission of 1% of the amount of each winning ticket cashed at their store. Retailers are authorized to pay prizes up to $599. Retailers may also receive a bonus for selling qualifying top prizes or jackpot-winning tickets once the prize has been claimed. Winning ticket bonuses paid to retailers range from $130 to $50,000, depending on the game and the prize amount. The cost to become an authorized retailer in Minnesota is minimal, with an initial contract application fee of $100 and $20 for each annual renewal. Retailers do not pay for items such as ticket dispensers or telecommunication fees that many other states require. Additionally, in Minnesota, scratch tickets are sold to retailers on commission as opposed to an upfront cost.
Lottery tickets may not be purchased using a credit card. However, debit cards and personal checks are allowed.
In 2007, Minnesota legislators enacted the Revenue Recapture Program, which authorizes the Department of Revenue (DOR) to intercept payments such as a Lottery prize to collect a debt that the taxpayer may owe for child support, unpaid taxes or other governmental debt. The debt owed must be at least $25 to be subject to recapture, and child support receives first priority for collection.
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