# Title 99 — State Gaming Commission

## Article 99-01.3 — Games of Chance

## Chapter 99-01.3-14 — Eligible Uses

### § 99-01.3-14-01. Restrictions and requirements.

1. An organization may not accept, and a recipient or potential recipient of net proceeds may not
give or offer to give, a payment, gift, service, loan, personal or real property, or other thing of
material value, for disbursing or receiving net proceeds. However, a recipient or potential
recipient of net proceeds that is an organization or group of people may initiate and transact a
formal agreement with a donor organization to voluntarily provide a gaming or nongaming
related service to the donor organization in exchange for receiving net proceeds; provided, the
agreement is first approved by the attorney general or complies with guidelines prescribed by
the attorney general. If the attorney general approves the service, the donor organization shall
document the service by recording the location, names of volunteers, description of service,
number of hours volunteered, and value of the service based on a reasonable hourly rate. The
donor organization shall offset the value of these services against the amount of net proceeds
disbursed to the recipient during a quarter by reporting the value of these services as an
adjustment on a tax return.
2. A disbursement of net proceeds must be specific as to recipient and use. After an organization
disburses net proceeds, it may not interfere with a recipient's control of the funds or attempt to
own or influence the use or sale of personal or real property bought by or for a recipient of the
funds.
3. Use of net proceeds for economic development or tourism programs may not directly benefit a
member, employee, or board of directors' member of a donor or donee organization nor may
this person have a financial interest in a funded economic development or tourism program.
4. No private athletic, social, hobby, trade, business, professional, or similar clubs or
associations may receive net proceeds, unless the use of the funds complies with
subsection 2 of North Dakota Century Code section 53-06.1-11.1 or section 99-01.3-14-02. An
expense related directly or indirectly with gaming is not an eligible use.
5. Restrictions on fundraising activities are:
a. An organization or recipient may not use net proceeds for a fundraising activity that
relates directly to the conduct of gaming, including purchase of equipment or consumable
goods for a cafe for a site or for direct or indirect expenses and capital costs for a
business involving material unrelated business income;
b. An organization may only use net proceeds for expenses related to fundraising activities
if the gross receipts from the fundraising activity are deposited into the trust account and
the net income of the fundraising activity is used for a specific recipient or purpose that
qualifies as an eligible use of net proceeds;
c. If an organization conducts a qualifying fundraising event and deposits the event's gross
receipts in or pays the expenses from other than its trust account, it may not disburse net
proceeds to the recipient unless it transfers the net income from the event to its trust
account and makes a proper adjustment on a tax return; and
d. If a civic and service, fraternal, or veterans' organization uses net proceeds to conduct a
fundraising activity and the amount spent on expenses exceed the net income generated

by the activity, it shall reimburse the trust account for the difference between the expense
amount and the net income amount with nongaming funds and make a proper
adjustment on the tax return.
6. The attorney general may require a recipient of net proceeds to document the use of the funds
and reimburse a donor organization if the funds were used for an ineligible use.
7. Unless an organization has first received approval from the attorney general, it may not sell a
gift certificate or other thing of value to a recipient of its net proceeds.
8. If a check for a disbursement of net proceeds is not cashed by a recipient within six months of
the date of the check, an organization shall contact the recipient to cancel or cash the check.
If a check is voided, an organization shall make a proper adjustment on a tax return. If a
recipient of net proceeds cashes a check related to a disbursement of net proceeds but has
not applied the amount toward the intended eligible use within six months of the date of the
check, the organization may request the recipient to return the net proceeds.
9. An organization may only disburse net proceeds to a recipient provided the recipient first
requests a donation in writing and provides a description of the intended use and amount
requested and the request is signed and dated. This rule does not apply to an unsolicited
donation of net proceeds or a disbursement of net proceeds by an organization to a program
or service that qualifies as an eligible use and which is supported directly by the organization.
10. If an organization conducts or enables a nonprofit corporation, community or school club, or
other similar entity to conduct a fundraising event at the organization's facility, the organization
may not exchange the gross or net receipts of the fundraising event for net proceeds.
11. An organization may not disburse net proceeds to a recipient on the condition that the
recipient hold a meal or banquet at the donor's facility.
12. No disbursement of net proceeds can be used for services or fees that do not qualify as an
eligible use or for any gaming-related expense. No disbursement of net proceeds to a
recipient can be designed to circumvent the allowable expense limit.
13. If an organization is involved in any of the following types of transactions, it shall deposit the
net proceeds, income, or receipts directly into its trust account or, if it is exempt from having a
trust account, deposit the net proceeds, income, or receipts in its gaming account, and make a
proper adjustment on a tax return:
a. The organization receives net proceeds from another organization and the net proceeds
have been designated for a specific eligible use which the recipient has paid for or will
pay for with net proceeds, or the net proceeds have not been designated for a specific
eligible use;
b. The gross receipts derived from fundraising activity according to subdivision b of
subsection 5 of section 99-01.3-14-01;
c. The organization loans net proceeds and receives interest or repayment of principal, or
both;
d. A recipient returns net proceeds to or reimburses the organization; or
e. The organization disburses net proceeds, which qualify as an eligible use, and receives
back funds that are directly associated with the disbursements or receives back income
that is directly derived from the disbursement of the net proceeds.

History: Effective May 1, 1998; amended effective July 1, 2000; July 1, 2002; July 1, 2010; April 1,
2016; July 1, 2018.
General Authority: NDCC 53-06.1-01.1
Law Implemented: NDCC 53-06.1-01.1, 53-06.1-11
### § 99-01.3-14-02. Eligible uses.

1. A use of net proceeds for erecting, acquiring, improving, maintaining, or repairing real or
personal qualifying property owned by an organization is an eligible use provided the
organization agrees that, upon abandoning the exclusive use of the property for an eligible
use, it will transfer the property to a governmental unit or to an organization that will use it for
an eligible use. However, if an organization sells the property, the portion of net receipts from
the sale related to the original net proceeds must be deposited in the trust account and
disbursed to an eligible use, or reinvested in property used for a similar purpose.
2. In applying subdivision a of subsection 2 of North Dakota Century Code section 53-06.1-11.1,
net proceeds must be disbursed to or by a recognized nonprofit city or county job
development authority or certified or noncertified local development corporation.
3. In applying subdivision b of subsection 2 of North Dakota Century Code section 53-06.1-11.1,
net proceeds must be used to attract in-state and out-of-state visitors by publicizing
attractions, promoting, planning, conducting, and sponsoring market research, trade shows,
meetings, conventions, seminars, sporting events, and festivals, and by developing and
promoting the state's attractions, recreational opportunities, shopping malls, and other
tourism-related activities. Uses may not directly benefit a for-profit business.
4. In applying subdivision c of subsection 2 of North Dakota Century Code section 53-06.1-11.1,
eligible uses include:
a. A scholarship for a student. A scholarship may be based on criteria, including community
service, patriotism, leadership, education, talent, athletic ability, course of study, or
special disability. No scholarship award may be decided by a donor organization, unless
the organization administers an education program for special students or students
inflicted with disease. Net proceeds may be disbursed to a scholarship board or to an
educational institution. A majority of the members of a scholarship board may not be
members of a donor organization. A disbursement must be payable to an educational
institution and a recipient, scholarship board and a recipient, or to an educational
institution or scholarship board. A student receiving a scholarship may apply it at a
nonprofit public, or for-profit or nonprofit private, educational institution, including a trade
or business school, registered with or accredited by any state board. A scholarship may
be for housing, books, tuition, and meals that relate to a student's educational need. A
scholarship may be awarded through a pageant, contest, or tournament; however,
associated administrative and operating expenses do not qualify. No scholarship may be
based on criteria that includes a person's physical appearance;
b. Supplemental assistance to a primary, secondary, or postsecondary nonprofit educational
institution, including affiliated alumni associations, booster clubs, parent-teacher councils,
and college sororities and fraternities. Net proceeds may be used for youth activities,
educational equipment, musical instruments, playground equipment, extracurricular
activities, sporting events, field trips, cultural exchanges, maintenance of buildings,
remodeling, fixed assets, administrative and operating expenses, and supplies;
c. Assistance to a library for maintenance of buildings, remodeling, fixed assets,
administrative and operating expenses, supplies, program services, special events,
promotions, educational material, books, computer systems, information services,
exhibits, story hours, film showings, and discussion groups. A disbursement to a museum

may be for maintaining buildings, remodeling, fixed assets, administrative and operating
expenses, and assembly of exhibits for preservation, collection, education, and
interpretation;
d. Assistance to a nonprofit performing arts and humanities organization for studio and
auditorium rental, speaker fees, equipment, travel, administrative and operating
expenses, and uniforms. Functions may include children's theater, summer camps, and
developing art parks;
e. Preservation of cultural heritage, including restoring, reconstructing, improving, or
preserving public buildings in North Dakota which are listed in the state historic sites
registry or the national registry of historic places. Net proceeds may be used for
programs of nonprofit organizations that provide historical information or tell a story about
a local region, North Dakota, or the nation and which primarily educate and inspire the
public, elderly, disabled, schoolchildren, teachers, and foreign visitors. Qualifying
programs include the lifestyles and human experiences of homesteaders, immigrants,
Indian culture, frontier army, and fur trade. Net proceeds may be used for interpretive
programming, including exhibits, publications, simulations of life, classroom outreach
services, audiovisual presentations, special events, and tours. Special events such as
chautauquas and community celebrations of Norskfest, threshing bees, and Octoberfest
qualify for expenses of parades, displays, equipment, educational materials, and awards.
School reunion expenses do not qualify;
f. Youth community and athletic activities open to all youth, less than eighteen years of age.
An organization shall disburse, to the extent possible, equal amounts to activities for
each gender. Net proceeds may be used for uniforms, equipment, tournament fees,
private and public ground transportation, coaches' salaries and mileage, judges, field
trips, speaker fees, father-son and mother-daughter banquets provided that the meals for
these banquets are provided free, meals, and lodging. Meals and mileage may not
exceed the state per diem rate and lodging expenses must be documented with a
receipt;
g. Adult amateur athletic activities within North Dakota. Net proceeds may be used for
sponsorship and league fees for entire teams, uniforms, umpire fees, construction, use
and maintenance of a sports complex, and team equipment. Uniforms and equipment
must be owned by the team or league association. Tournament fees, individual player
fees, food and drink, lodging, trophies, prizes, yearbook, advertising, and private or
public transportation expenses do not qualify, except transportation expenses for a
disabled player. Unless specifically allowed in this section, net proceeds may not be used
for adult hobby and recreational activities that personally benefit adult individuals.
Rodeos, car, or horse racing, car or gun shows, shooting events, fishing derbies, tractor
or pickup pulls, and similar activities do not qualify;
h. Maintenance of religious buildings, remodeling, fixed assets, administrative and
operating expenses, gospel outreach programs, youth church activities, uniforms for a
choir, furnishings, and supplies for church groups and services; and
i. Scientific research for a cure to relieve human beings of disease and suffering.
5. In applying subdivision d of subsection 2 of North Dakota Century Code section 53-06.1-11.1,
eligible uses include:
a. Food, temporary housing, clothing, utilities, medical services, and fuel for private and
public transportation for an individual or family suffering from poverty or homelessness,
or financial distress due to a natural disaster or medical problem;

b. Purchase and maintenance of a ground transportation vehicle for the elderly;
c. Services for abused persons, including to:
(1) Provide emotional support, guidance, and counseling to victims of crimes of rape
and sexual assault and encourage prosecution of perpetrators;
(2) Establish educational programs about rape, sexual assault and incest, the dramatic
effects it has on victims and their families, and the cost to society;
(3) Establish and direct services for abused spouses and their children in the
community, including advocacy, emergency shelter and food, information services,
referrals, and peer support; and
(4) Develop and coordinate programs to encourage and assist development of a strong
volunteer advocate network;
d. Support for youth centers and halfway houses;
e. Recognize an individual or group of people who volunteer their time to community
services, nursing homes, or hospitals if a gift, prize, or other gratuity does not exceed
one hundred dollars per person per calendar year;
f. Net proceeds may be used for public or private nonprofit nursing homes, day care
centers, and medical facilities for maintaining buildings, remodeling, fixed assets,
administrative and operating services, supplies, reading programs, and craft activities for
patients;
g. Complying with the Americans with Disabilities Act of 1990 by remodeling a publicly
owned facility; and
h. To remodel or improve a veterans' organization's owned facility to make it accessible or
usable to youth, senior citizens, people with disabilities, and nonmembers of the
organization, for community programs, services, or functions. The community shall use a
building for free or a reasonable fee. To make a building accessible, net proceeds may
be used to widen doorways and hallways, remodel bathroom fixtures and facilities, install
chair lifts, wheelchair ramps, elevators, handrails, and automatic door openers. To make
a building usable, net proceeds may be used to repair a building to meet a building code
or make it structurally fit for use, to enlarge a facility, replace a furnace, water heater, and
air-conditioner, and to make it safe. Net proceeds may not be used to remodel or improve
an area of a facility where alcoholic beverages are prepared.
6. In applying subdivision e of subsection 2 of North Dakota Century Code section 53-06.1-11.1,
eligible uses include burial expenses and flowers provided an organization does not
discriminate between members and nonmembers.
7. In applying subdivision f of subsection 2 of North Dakota Century Code section 53-06.1-11.1,
eligible uses include promotion and celebration of civil rights, nondiscrimination, patriotism,
and freedom. Net proceeds may not be used for social or recreational activities or for events,
activities, programs, or expenses that are of a direct benefit to the organization and are
primarily beneficial to organization members and their families. This includes state and
national convention expenses; recognition nights that may include a banquet, program, and
dance for past commanders or past members; and ceremonial and ritual activities.
8. In applying subdivision g of subsection 2 of North Dakota Century Code section 53-06.1-11.1,
eligible uses include maintaining parks and perpetual trust funds for public cemeteries.

9. In applying subdivision j of subsection 2 of North Dakota Century Code section 53-06.1-11.1,
net proceeds may be used for subsistence for a family member traveling with an ill family
member to an out-of-town medical facility.
10. In applying subdivision l of subsection 2 of North Dakota Century Code section 53-06.1-11.1,
eligible uses include:
a. Adult and city bands, choirs, drum and bugle corps, and color and honor guards; parade
floats; director fees; rent of storage; postage; insurance; laundry; utilities; uniforms; gun
safe; firearm; sheet music; audio system and instruments owned by a band, choir, or
organization; transportation vehicle owned by the organization; in-state lodging, and
private and public ground transportation for performances at community concerts,
homecomings, open houses, parades, festivals, funerals, nursing homes, hospitals, and
special events. For only a color or honor guard, net proceeds may be used to pay a
member a maximum per diem not to exceed the daily funeral service rate paid to
members of the armed forces ready reserve;
b. Community celebrations that recognize or honor the military service of individuals in the
armed services;
c. Educational agricultural trade shows and conventions held in North Dakota. Meals and
entertainment do not qualify;
d. Nonprofit organizations that protect animals. Uses include:
(1) Hatcheries and wildlife preserves, wetlands, and sanctuaries;
(2) Teaching and promoting ecology, game and wildlife management, and outdoor
interests involving animals, fish, and birds; and
(3) Spay and neuter programs, pet placement, lost and found pet services, educational
programs, investigations of animal abuse, and information services;
e. Preserving and cleaning up the environment, including air quality, water quality, waste
and recycling programs, and conservation of natural resources; and
f. Outreach public medical care.
11. In applying subdivision m of subsection 2 of North Dakota Century Code section 53-06.1-11.1,
a special trust fund:
a. Must be managed and controlled by trustees, who may be board members, appointed by
an organization. However, if an organization dissolves, it must establish a nonprofit
corporation limited to the primary purpose stated in its declaration of trust. A trust may be
revocable or irrevocable; and
b. Must be comprised only of net proceeds which can be disbursed to the trust periodically
or in a lump sum. Net proceeds must be invested only in marketable securities. A trust's
principal, interest, dividends, and gains on sales of investments must be applied toward
the trust's primary purpose. No trust's principal can be disbursed until a donor
organization has permanently discontinued conducting games or dissolved.
History: Effective May 1, 1998; amended effective July 1, 2000; July 1, 2002; July 1, 2004; October 1,
2006; April 1, 2016; July 1, 2018.
General Authority: NDCC 53-06.1-01.1
Law Implemented: NDCC 53-06.1-01, 53-06.1-01.1
