California Lottery Gambling Improvements Rejected by Voters

A bill seeking to improve the California lottery and increase state gambling revenue was defeated as voters were perturbed by clauses borrowing future money for today.

California voters Tuesday gave a big thumbs-down to Proposition 1C, known as the Lottery Modernization Act. The bill included ways to generate new lottery revenues, such as higher prizes and expanded marketing, but also allowed the state to loan itself money from future gambling profits.

The bill would have given the state $5 billion against winnings from the lottery, but opponents compared the idea to borrowing against tomorrow's paycheck because today's doesn't pay the bills.

Voters turned down the concept by a whopping 65-35 vote, and observers suggested residents are telling lawmakers to rein in spending and live within their means.

Provisions which would have allowed for higher prizes and increased advertising mirrored recommendations made by studies nationally on sustaining lottery sales. The studies also had found Internet sales vital to the state gambling programs' future.

But the borrowing aspect dominated recognition of the bill. Residents also were troubled by removing requirements lottery funds go to education so that the general budget could benefit, according to exit polls.

Opponents said borrowing $5 billion would take debt service payments of $400 million for more than twenty years.

"The more the state borrows in the short term, the more investors will have to be compensated through higher interest rates," said Jason Dickerson, a fiscal and policy analyst.