Minnesota: Mankato considers changing the way it taxes gambling Holly Bernstein, KEYC-12 · October 15, 2019 at 8:26 pm Mankato City Council is considering changing the way they tax gambling, so that funds can be used for charitable contributions. The council is considering dropping their three percent lawful gambling regulatory tax. Currently, the city can only use this tax to regulate lawful gambling. But Monday night, the council held a public hearing to consider dropping this tax and replacing it with a ten percent tax, that’s based on ten percent of net of a charitable gambling organization, which could be used for charitable purposes. “So state law talks about different types of charitable purposes, so the activities of 501(c)(3) organizations, humanitarian services and youth recreation services.