Loophole: California lawmaker looks to end gambling tax deduction for ‘wealthy’ Indian casino customers Howard Stutz, CDC Gaming Reports · June 11, 2019 at 12:01 am A California lawmaker, long known for his support of gaming expansion issues in the state, wants to end a gambling tax deduction and target the money toward improving the health and drinking water for residents of his Central San Joaquin Valley community. Democratic Assemblyman Adam Gray is sponsoring bill that would redirect a “$300 million loophole” that he says mostly benefits wealthy customers of the state’s Indian casinos. “This is a … sin subsidy for the rich,” Gray said in a May 30 statement. “If Congress wants to pay to subsidize gamblers that’s their business, but we have families in California who cannot safely drink the water in their homes or get in to see a doctor.” Gray plans to use the funds to pay for a new University of California teaching hospital at UC Merced and additional money for the UC Riverside School of Medicine. the bill also provides clean water for at least 1 million Californians who cannot currently safely drink from their taps. Gray, chairman of the Assembly committee that oversees gaming issues, said the tax loophole “benefits fewer than 150,000 people, primarily millionaires and billionaires.” The tax loophole allows gamblers to deduct losing bets on their state income taxes. The loophole was created by a federal tax law to which California currently conforms. Gray’s proposal would disallow the deduction on state incomes taxes, but gamblers would retain the federal deduction. According to economist Alan Meister in the annual Casino City Indian Gaming Report, California Indian casinos produced $8.4 billion in revenue in 2016, roughly 27 percent of overall revenue nationwide. Indian gaming leadership was taken aback somewhat by the legislation. “Although seemingly popular, elimination of this deduction will have consequences–primarily on tribal governments–which we have not had the opportunity to adequately analyze given the absence of any meaningful consultation with Indian tribes,” according to a statement from California’s Tribal Alliance of Sovereign Indian Nations that was provided to the Cal Matters news website. A spokesman for the Alliance did not return a phone call seeking comment. Gray has long been a proponent of gaming expansion in California. In 2016, he introduced a measure that would have legalized Internet gaming in the state, and he’s tried to work on a compromise between the tribal casino industry, casino-like card rooms that only operate table games, and the state’s struggling horse racing tracks. In 2018, Gray introduced legislation that would legalize sports betting following the U.S. Supreme Court ruling that ended a nationwide ban on single game wagering. A spokesman for Gray did not return an email message seeking comment. Gray’s district includes the city of Merced, which is north of Fresno, south of Stockton and just west of Yosemite National Park. Gray is proposing to provide more than $100 million in new funding for public education and to dedicate a minimum of $115 million annually to fund drinking water improvements. California’s Franchise Tax Board estimates the bill would generate revenues of $490 million in fiscal 2019-20, $320 million in fiscal 2020-21, and $320 million in fiscal 2021-22. “Thousands of families throughout California are forced to buy bottled water, because they cannot safely drink the water in their own homes,” Gray in the statement. “They are essentially forced to pay two water bills. It’s another example of just how expensive it is to be poor.” Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at email@example.com. Follow @howardstutz on Twitter.