The Lake Elmo City Council voted Dec. 2 to adopt ordinance 2025-017, updating Chapter 11.04 of the city code to align local lawful-gambling rules with state statute and to formalize a gambling fund for reporting and budgeting.

Finance Coordinator Kramer told the council the 1997 ordinance included language more restrictive than state law; the changes remove antiquated liquor/gambling provisions, eliminate a 3 percent grocery-suites requirement, remove premise-permit and renewal fees the city had not been collecting, add a trade-area definition covering surrounding cities and three local school districts, and retain a 10 percent revenue-share clause the city had not previously enforced. Kramer said staff has already created a gambling fund and tentatively budgeted $20,000 in gambling revenue for 2026, noting roughly $6,500 has been collected so far.

Kramer recommended using proceeds to offset the city's law-enforcement contract with the Washington County Sheriff's Office, an allowed use under state statute. "We're tentatively budgeting 20,000 in revenues for 2026," Kramer said, and added that the city would report contributions and uses and include the fund in next year's budget.

Council members split on the intended use. One councilmember argued the funds could support youth sports or community events such as the Fourth of July parade and cautioned against effectively taking money from local fundraisers. "I just I think this is something we could come back to in the future... these are specifically for sports organizations where they're fundraising money for kids," the member said. Another councilmember responded that the revenue could reduce the law-enforcement contract amount or lower levy pressure, calling such a transfer "a sleight of hand" in budget terms.

After discussion, the council voted on a motion to authorize staff to budget gambling revenues in the city fund and allocate proceeds toward the city's law-enforcement contract; the motion failed (the presiding officer announced "Motion fails 1 2 3" in the minutes). The council also approved resolution 2025-081 authorizing publication of the ordinance summary. A subsequent motion to reconsider the ordinance resulted in a 2-2 tie and did not pass, leaving the ordinance's 10 percent provision in the code but without a designated recipient for the funds.

Kramer said collected funds will sit in the gambling fund until the council appropriates them and that there is no statutory deadline that would force immediate spending; she noted staff must file required paperwork by March 15. Councilmembers agreed they could revisit allocation at a later meeting.

What happens next: The ordinance and its publication summary were adopted and will be published per the approved resolution; the council did not yet designate how gambling proceeds will be spent, leaving the newly created fund unallocated until a future council action.