Lawful Gambling Tax Overview

Bingo, Minnesota’s first form of nonprofit lawful gambling, was legalized in 1945. Since then, additional types of lawful gambling have been added, including:

• Electronic bingo
• Electronic and paper pull-tabs
• Tipboards
• Paddletickets
• Raffles

The lawful gambling industry includes manufacturers of games and gaming equipment, distributors who sell games and gaming equipment and nonprofit organizations who purchase games and conduct lawful gambling. Manufacturers, distributors and organizations must be licensed through the Minnesota Gambling Control Board.

Nonprofit lawful gambling should not be confused with casinos, pari-mutuel betting or the Minnesota Lottery.

When you think “nonprofit lawful gambling”, think bingo at the American Legion, a VFW pull-tab booth at your local bar, or a church raffle.

The purpose of lawful gambling is to use a percentage of the net receipts on lawful purpose expenditures, or contributions to community organizations, educational programs, etc.

It also brings in tax revenue for Minnesota.

The Minnesota Department of Revenue began to administer the lawful gambling tax in 1987 (Minnesota Statutes 297E and 349).

Currently there are two taxes collected:

• Net receipts tax on bingo, raffles and paddletickets
• 8.5 percent on net receipts
• Combined net receipts tax on net receipts from electronic and paper pull-tabs, electronic linked bingo, tipboards and interest and other income
• 9 percent on net receipts of $0 to $87,500
• 18 percent on net receipts of over $87,500 to $122,500
• 27 percent on net receipts of over $122,500 to $157,500
• 36 percent on net receipts of over $157,500

Distributors and manufacturers do not file a return but submit a monthly report of sales.

Today, approximately one billion dollars is generated annually in Minnesota from nonprofit lawful gambling sales.