The Future of the California Lottery

While legislators
tussle over how to fix the current gap in the state’s budget
deficit, at least they addressed last summer’s budget deficit.


Maybe wrong.

As part of the
compromise that closed that gap – then at around $17 billion –
legislators and Gov. Arnold Schwarzenegger agreed to put a ballot
measure before voters sometime in 2009 that would borrow against
future lottery revenues, with the understanding voters had to give
the okay to overhaul the lottery in such a way as to increase its
revenues for the state.

Days after the
budget was finalized, the national economy went into a severe,
visible tailspin, leading some observers to conclude that projections
of future riches from the state lottery were as wishful thinking as,
well, winning the lottery.

But there may be a
greater problem than that: voters.

When voters decided
to create a lottery in the 1980s, the promise was that doing so would
permanently solve education funding problems.

Any observer of
California politics since could tell you that such a promise never
bore fruit. And the lottery’s ability to raise much money has
since been curtailed by the expansion of other types of gambling,
most notably Indian casinos.

Those factors have
created both disdain among many voters toward the lottery, and a
powerful moneyed interest in gambling tribes that could make a big
impact on any ballot measure campaign involving the lottery.

So far, the lottery
ballot measure hasn’t gotten much public scrutiny, perhaps
because the governor hasn’t even scheduled the special election
where it will be decided. Most expect that ballot to be in June.

But when the
governor first proposed the idea last spring, a Public Policy Institute of California poll found only 30 percent of voters favored
the idea.

That’s a bad
sign. Historically, voters rarely pass ballot measures that start out
with less than 50 percent approval ratings.

And in the case of
the lottery, there are two voter groups who can’t be convinced
to support it: Religious types who see the lottery as sinful gambling
regardless of its provenance, and those who believe that it amounts
to a tax on poor people who are most likely to play it.

Factor in that the
Indian tribes could decide to spend against the measure because it
would hurt their own bottom lines if more people played the lottery,
and the proposed ballot measure may be running into a wall before
it’s out of first gear.

Against all that,
what choices do proponents have?

Schwarzenegger will
almost certainly campaign for the measure if it looks like it’s
in trouble. While his track record on backing government reform
measures is mixed at best, he does have momentum on his side after
his redistricting measure Proposition 11 passed last fall.

It’s also
possible that individual legislators could try to buoy the measure,
but there are several problems with such a scenario. One is that the
state legislature by and large isn’t popular among voters;
something they’re seen as being in favor of could lead many
voters to conclude they’re better off opposing it.

As well, the
governor’s relationship with legislators in both parties has
gotten especially rocky over the last year, and as long as the state
budget process involves loathsome choices – as it’s
likely to for 2009-10 – lawmakers may feel little inclined to
beat the bushes for a proposal the governor came up with.

All this means that
state leaders of all stripes must consider the ramifications if the
measure doesn’t pass.

According to state
Department of Finance spokesman H.D. Palmer, the state figured on
about $5 billion in 2009-10 from borrowing against lottery revenue,
subject to voter approval.

So failure of the
lottery reform measure would add that much to next year’s
deficit, and that much in future budget years as well.

Many of the
accusations hurled back and forth during the budget negotiations
center on how one side or another refuses to buck its
special-interest allies in the name of getting something done.

But in this case,
the state’s government may have forgotten to consider the most
powerful special-interest group of them all: California voters.