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484081v1 SJS NE136-14 the permit. Since most types of lawful gambling is licensed and regulated by the State, the City cannot require an additional license or permit in most situations. However, the City may regulate lawful gambling in the following ways: 1. The City may require a local permit for the conduct of lawful gambling exempt from state licensing requirements. The permit fee may not exceed $100. Minn. Stat. § 349.213, subd. 1 (b). 2. The City may require organizations to make specific expenditures of up to 10 percent of net profits derived from lawful gambling. This may cause legal issues because requiring specific expenditures may violate the U.S. Constitution, particularly when the City designates too specific of a cause, and approval of a gambling license or permit is conditioned upon the organization abiding by the regulation. Therefore, this option is not recommended. Minn. Stat. § 349.213, subd. 1 (d). 3. The City may charge an investigation fee to lawful gambling organizations applying for or renewing state-issued premises permits. For New Brighton, the investigation fee must not exceed $250.00. The City may not charge an investigation fee if it imposes a local gambling tax. Minn. Stat. § 349.16, subd. 8. 4. The City may require the lawful gambling organization to pay 10 percent of its net profits from lawful gambling conducted on the premises within the City to a City fund to be used for lawful purposes as defined in the statute (such as a city park) or for police, fire and other emergency or public-safety related equipment and training, excluding pension obligations. The City must file a report with the Board by March 15th of every year on a prescribed form that lists all monies collected and expenditures made for the previous calendar year. Minn. Stat. § 349.12, subd. 25. 5. The City may require that the lawful gambling organization expend all or a part of its expenditures for lawful purposes conducted or located within the City’s “trade area.” The “trade area” must include each city and township contiguous to the City. Minn. Stat. § 349.213, subd. 1 (g). 6. The City may impose a local gambling tax of not more than three percent per year of a lawful gambling organization’s gross receipts less prizes actually paid out. This tax may not be used for any purpose other than for the City to regulate lawful gambling. Annual reports must be filed with the Board showing the amount of tax collected and the use of the proceeds. Minn. Stat. § 349.213, subd. 3. If the City imposes a gambling tax, it may not assess an investigation fee against lawful gambling organizations.