- [Kelly] Lawmakers easily approve sports betting in North Carolina.

And, when elected leaders change parties midterm, what really happens with policy?

This is "State Lines."

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[uplifting music] ♪ - Hello again, welcome to "State Lines."

I'm Kelly McCullen.

Joining me today is Dawn Vaughan of The News & Observer, and she also hosts the "Under the Dome" podcast, you should check out.

Caswell, Orange, and Person counties Senator Graig Meyer's here.

As is Lincoln County Representative Jason Saine, and our good friend and political analyst, Mr. Joe Stewart.

Hello, everyone.

- [Jason] Hello, hello.

- [Dawn] Hello.

- Thank you, Jason.

I appreciate the good tidings.

Governor Roy Cooper's signature is all that's needed to legalize sports betting in North Carolina.

A bipartisan House and Senate have agreed on betting legislation that would allow sports booking and horse racing in our state.

The deal sets an 18% tax on the betting companies.

The UNC System athletic department will get, departments, on the campuses, will get a cut of the revenue, I should say.

Final House vote, 69-44.

And if you look at the support and opposition, coming from both parties this time.

- Should it be the gambling industry that ultimately is the only entity that gains in the end?

That's why they're doing such a good job getting it to us.

Because they will profit, we will not.

Even with the increased taxed revenue.

- There you go.

Jason Saine, do you declare a victory lap here?

You almost got it last year.

In '20.

- Almost got it last year.

It was devastating.

- How do you go from the losing by 1 to winning by 25 on a bill?

- I'll try to clean it up.

You work your butt off.

[Joe chuckles] Look, we worked with legislators, both parties, helping them better understand what it would mean for our state, as far as revenue.

You know, and taking, you know, their input as well.

From running it the first time, you know, people kind of get in their corners and they decide they don't like something, they do like something.

We were able to talk with legislators, change that attitude on some things, change some language for them, and then new legislators helped.

And working in a very bipartisan manner.

Zack Hawkins and Ashton Clemmons were great to work with on this bill.

They worked their caucus.

John Bell and I worked our caucus.

Just really uncovering those things, and working diligently to make sure that we had the votes when we went to the floor.

- Joe, this is a fun issue, because it's one of those issues, you can throw it out there, and which party you think would be for and against it, it just gets thrown all up in the air.

- Well, in many ways, this is an interesting public policy issue, because in many ways, I think, it reflects the fact that North Carolina is changing.

I can remember in my youth, all of the liquor stores in North Carolina were walk-up counters, because the theory was, people would be mortified to ask for more than a little bit of liquor if they had to talk to a person, as opposed to go get it themselves.

The first time liquor-by-the-drink was on the ballot in Wake County in the 1970s, it failed.

I mean, we were a very conservative place.

These sorts of changes in North Carolina, sports betting, medical marijuana, other types of issues, even the lottery, as long ago as that was now, these are ways other states have long ago put in place ways to generate revenue for enterprises that are eminently lawful and able to be taxed, and revenue is able to be generated.

So in some ways, this is just another page in the modernization of North Carolina.

I know that there are people that have strong feelings about this one way or the other, but there are very few states left that don't have these types of operations in place.

- The reality is, this is already happening.

I mean, the thing that we did know is that there's so much of our money was going to offshore bookies, to other states, going to Virginia, going to Tennessee.

People in North Carolina were betting.

Sports betting was happening.

This is just an opportunity for us to capture that revenue, instead of us, you know, funding roads in Virginia and schools in Tennessee, we can keep that money here at home, and bring it back.

- How good is the revenue for the state, if you're asking and allowing people to gamble, including folks who don't need to be gambling?

- Yeah, well, as conservative estimates on the revenue piece of it, it's 100 million dollars, right, yearly.

Probably will exceed that.

It's very hard for them to project, you know, what exactly it would be, from a fiscal staff standpoint, but we can look at other states, and what that might be.

So we think we get somewhere between 100 million, it could be more, it could be less, but it's certainly significant, and it's a place particularly significant to some of our smaller schools, as you saw in the bill.

We're taking care of those schools, too, that don't normally get that kind of revenue stream into their athletic programs.

- I want to ask you about the money.

Where does it go?

Who gets it?

Did you make some sort of deal, where the public schools get money, and God forbid you ever supplant that?

And you know, remember the lottery debate was like that, and it got kind of messy.

- It did, and we tried to avoid that.

But we did want to, you know, looking at that, who's gonna benefit and what they're betting on.

Quite frankly, college sports.

So why not shore up some of our smaller universities, our HBCUs, getting them injected with some of the cash, while, you know, certainly, you know, probably folks are betting on the, you know, NC State and Carolina game, or the Duke and Carolina game, or whatever.

But some of these smaller schools are still gonna benefit from those big games, because, as those revenues come in, when people in North Carolina are betting on the Super Bowl or whatever it is, then some of that money is going to those schools.

- Is your partnership with the UNC System on how this revenue's going to be dispersed in future years?

Or do you expect the campuses to sneak their chancellors and other folks at the campus level in there, to whisper in your ear, independent of the system itself?

- I've got great confidence in our athletic directors that, across the state, that they'll make sure that that goes to their program, that's how it's written and it will go to their athletic programs.

- Dawn, what's the view from the Capital Press Corps on this bill?

It was close and it was fun last year.

This year was, as long as they voted on it, it was gonna pass.

- It changed a lot, you know, as it moved.

And the tax rate is low compared to other states.

A lot higher...

The Senate, which is usually much more conservative on what it wants for taxes, wanted to tax higher than the House.

So that was one of the final changes.

It's 18%.

They probably could have gotten more out of it, but that was still, I think it wasn't even 10% when it was first discussed, maybe it was around 8%.

So that was a significant change.

And obviously the UNC system schools that are going to get the money was an advantage to get the more support, more bipartisan support.

But it might be the most bipartisan bill I think I've ever covered, where people are so strongly, yes, this is great and also, no, this is terrible, depending on on which lawmaker was talking.

But as Representative Saine said, Governor Cooper, and everyone else, this is something that's already going on.

The state can get tax revenue from it, so why not regulate it?

- There you go.

Senator Meyer, you did not vote on this bill.

You called me and said, "Hey, I recused myself."

So that's why we're not going to you, the last guy on the list.

You can explain why you didn't vote if you'd like.

If not, I'll ask you about the, the ethics of voting for legislation when you feel you may have a conflict.

- Yeah, I followed our ethics rules and did recuse from voting on this, because I have an adult daughter who lives in my house and is declared on my statement of economic interest, and she's employed by the industry.

And so I felt like that created a household conflict of interest.

It's up to individual legislators to decide when we recuse, but I think the public expects us to act with integrity and not take on issues, whether it be in voting on an issue or a sponsoring legislation on issue that has potential personal benefit to you or your family.

And it was better for me to sit this one out.

- The vote didn't matter in that case.

It was a lost vote for the Democrats on that.

But, and I won't ask you how you would've voted or whether you support it or not, but the ethics of gaming.

I remember years ago on video poker, Greg, that people always were whispering the poker industry's giving the politicians money.

How important is it for state legislators to keep their noses clean as we go through these different steps towards casinos?

- I mean that's why we have these rules in place, right?

It is about integrity.

And whether it is the gaming industry or any other industry, the public wants to know that we're making our decisions based on what's in the best interest of all, rather than what's in the best interest of ourselves.

And certainly there are assumptions the public makes about some industries are worse at that than others, but ultimately who they should hold accountable for that is the elected officials.

- Representative Saine, I can't blame any industry for coming to you and offering legal contributions and whatnot.

How do you keep things above board from your powerful position to say, you know, "Hey this is a bill that's done on the merit and what's for the best of North Carolina?"

- Yeah, I just go back to how the bill started.

I mean, this bill actually started in a bar in Mooresville, North Carolina, because I'm watching two friends, and I won't name them, place bets.

And I asked the question, "how are you betting on sports today while we're watching the games on television?"

And they explained it to me.

They were using a VPN, going offsite, outta state, offshore, and placing their bets.

Knowing, and I'm like, so just as someone who spends that revenue that comes into the state as an appropriator, I asked that question.

I said, "so you're doing this."

And I'm not trying to judge them.

I mean, they were doing it, like I said, I'm not gonna call 'em out, but it made me wonder how, what, how much money are we missing?

And I was already working on some fantasy sports issues too.

And so that's kind of where we came to the bill.

That being said, watching, you know, doing things openly and being very transparent of what it would mean, how it's gonna work, what will it entail for the state?

And then seeing what happens afterwards.

You know, I have no plans to now, since we passed the bill, to go join the gambling industry and work for them.

You know, it wouldn't matter if I wasn't in office, but that's not, that's not what we do.

And I think your call was absolutely correct.

If you personally stand a gain from something, you recuse yourself.

You just, you say, no, I'm not gonna do that.

That's not what most people believe about politicians, but by and large, both parties, that's what we do.

We just, we don't involve ourselves in those type things.

- For research purposes only, if place a dollar bet on the ballgame and it's an 18% tax, does on my phone or whatever, do I really bet a $1.18 or does the gaming company take a dollar and they keep 82?

- Just like any sales that you make, if you're a retailer and you sell something for a dollar, you're essentially the tax collector for the state and then you gotta turn that back into the state.

- There you go.

Well, I'm scared of money anyway, so it doesn't, I don't think I'll place much bets.

But congratulations on your bill, it's a lot of hard work.

Legislative democrats are proposing some new election laws to require a fresh election be called if a sitting elected leader changes political parties midterm.

Democrats have called this partisan fraud.

They want a special election when a politician changes political party and for the campaign contributions to be refunded.

Mecklenburg County Representative Tricia Cotham, the former Democrat, who's now a Republican, says her former party needs to use her story to raise money.

Perfect set up, Senator Meyer, as a Democrat, is she right?

Are you, are you making money off the name of Tricia Cotham?

- Well look, this issue is, it picks up where we just left off in the last one.

This is really about integrity and it's also about both political communications and policy and the fact that Democrats would be raising money off of something that Republicans did shouldn't shock anyone who's ever been in office or paid attention to the way that politics work.

Sure.

But what the bill points out is that the public really does, is we were just talking about around ethics issues.

The public expects a certain level of integrity and accountability from elected officials.

And if you run under the guise of one party and then you change to the other party, there is no mechanism for the public to hold that person accountable for what they see as a lack of integrity except for waiting to the next election.

We don't have recall petitions, just like we don't have citizens referendums in North Carolina.

And we're in a situation right now where part of what we're arguing about is that the Republican majority in the legislature is saying, hey, trust us.

We give us power.

Then Bills like Senate Bill 5:12 and others are like, give us power to lead this state and do what we want to do.

And the Democrats that we are saying, we trust you people.

We trust you, and if you want the power to be able to do a recall election, that type of thing, we believe in putting the power back in the hands of the people.

- Representative, saying you added a colleague.

Did it change who she was as a, not as a person, that's private individual, but as a public figure, did anything change with Tricia Kaufman joining your ranks?

- Well, I said to the press conference when she switched, I said, she's the same today as she was yesterday.

I've known Tricia for a very long time.

I was her aisle mate when I first got to the legislature and so got to know her and other democrats that I sat around.

We certainly voted differently on a lot of issues, but we also voted the same as we do a lot at the legislature.

You know, 80, 90% of the bills that we vote on, you know pass overwhelmingly.

I think she's just the same today.

She is a leader.

She is someone who is very independent and was always independent as a Democrat.

She's independent as a Republican and she wants to work hard for her district.

And I think when we look at the reaction to Tricia versus some of the other party switches that have happened in the past, like Paul Tine, wasn't that long ago.

You know, we had a much different reaction and I wanted to make sure that I put this out here, in 2015 when Paul Tine switched parties, the minority leader at the time, Larry Hall, said, while it's disappointing that he waited until after he was elected, talking about time, as a Democrat to reveal his decision.

We will continue working with everyone committed to moving North Carolina forward.

That's how they reacted to Paul Tine.

When Tricia Kaufman does it, the reaction is for the minority leader, Robert Reeves, to call for her resignation.

It's a much different way that she's been treated for essentially the same thing that just happened.

You also gotta know the backstory.

Like I said, Tricia's been a long time friend.

As we got into this session, she'd just come back, she took a hiatus, she did other things, and this, and now she's come back to the legislature.

Talking to her in the hallways I'd say, what's going on, Tricha?

You okay?

She just had this doer look on her face, eh, I just got outta my caucus.

They're pretty brutal to me.

Well, I'm sorry to hear that.

And kind of jokingly I said, you know, there's always a place where you can come join.

We love you.

And that happened over the course of multiple months.

So I don't think this should have been a shock to anybody in the other caucus from the stories that I was hearing things that were said at some of the events, that legislatures from both parties were at, just quite frankly, some of the cattiness that was going on.

I think they helped force her out and then they were mad at themselves for for giving us a super majority.

We only needed one vote.

Oh, I think that you would treat every member with the respect that they deserve in your caucus to keep if nothing else, to keep us from getting a super majority.

And unfortunately for them it happened, you know benefit to us.

But we're glad to have Tricha in our party.

- Well, I've gotta send Robert Reeves, a rain check now, Greg.

How delicate is it inside the caucus?

It... All the egos, everyone's elected, everyone's powerful in Raleigh.

Must any leader, Democrat or Republican be careful not to alienate or to even give the impression that they don't want a member of their caucus sitting in their meetings?

- I mean, I'm often more frustrated with my own colleagues in the Democratic caucus than I am with the Republicans 'cause I have certain expectations about what each side is gonna do and I don't want my own people to let me down.

I think that makes sense.

It's a human reaction.

But ultimately, this isn't about Tricia Kaufman, this is about how are we accountable to the people of the state and people do expect that there is some level of one, playing by the rules, two doing what it is that you said you were gonna be elected to do.

And sometimes people do things that seems like you are breaking both of those.

In this case and where we are in today's world, I think you have both parties with people on the extremes who want a high degree of allegiance.

You have over, I think there are 53 county parties that have censored Tom Tillis for being two bipartisan, it's 53 Republican county parties that have censored him.

And so you have this pressure from the base in both parties and you have people who are in the middle saying, well, really, which side is it that is trying to do what we think is the most common sense and the best interest of all of us?

And as we head into the weekend with the GOP convention and the President here, that is gonna be a part of what the narrative continues to be, is where are the parties going and which one actually represents the majority of the people?

- I think the Senator hits the conundrum, right, as an elected official.

I get elected, I run as a Republican, and certainly, I get a lot of Republican support, not 100% in my district.

Nobody gets 100% of their party in their own district.

But I also get a lotta Democrat support and a lotta independent support.

I won last time with 75% of the vote.

We don't take every call that comes to my office from a constituent and go, "Republican, Democrat independent, what's our level of helping them?

Are they measuring how loyal we are to the Republican party?"

No, they're calling us to help them with whatever their issue is.

And so I think for voters in Trisha's district, the decision they'll make is, "Did she continue representing our best interest for our district, not the other side of the state, not some district in the mountains of North Carolina or down on the coast, but what did she do for us in our district, and did she make the right call in finding a way to be more effective and doing what we hired her to do, which is be effective for the people in the district?"

- I would assume that the maps are the same next round or that she would run for the same office.

So I think people are thinking future elections too.

But I think what a lotta people don't realize, because the base is always the loudest in both parties, is that especially I've learned in the General Assembly, there are a lot of people toward the middle.

And the caucus will want you to vote a certain way.

You decide as a caucus that, you know, this is where we are on the party line vote.

But before the Cotham switch, as reporters, we were all watching certain Democrats who suddenly didn't have that pressure anymore because of the assumption of Cotham was that vote, and she definitely was one of the Democrats that we were watching that would vote with Republicans.

But I think except for these, unless you're in a swing district, of course, and how you play when you're running, some people keep more of their bipartisan thoughts to themselves.

You can see when they vote and how they talk eventually, but it's just not as loud as the base, you know.

- I do think you'd be surprised by how infrequently there is top-down authority that says everybody has to vote the same way.

And I've heard that from Republicans.

I know it's true from sitting in both House and Senate Democratic caucuses.

It doesn't happen very often that they're like, "Everybody's gotta do this."

There's often any bill that gets you to the place where everybody is on the same page, it's either everybody's already there or there's a ton of consternation on the way to get you there.

- Like the sports betting vote.

[laughs] - Right, exactly, exactly.

- Some part of this is a reflection of the changes that are taking place within the parties, that there's not as much of a broad ideological spectrum within the parties.

If you go by the Pew Charitable Trust did an analysis, how many members of Congress overlap, how many liberal Republicans were there and conservative Democrats?

So there was that gap.

In the '70s, about 160 members of Congress had that overlap from an ideological partisan mix, and now it's fewer than two dozens.

So to some extent, someone like Paul Tine, who changed his affiliation, in part because the district that he represented was changing.

- He went independent though he didn't go Republican.

- He became an independent, but his district was changing, and he felt in some ways that identity more closely reflected the people he had been elected to represent.

In Representative Cotham's case, that's not the case.

The district that she came to Raleigh to represent is overwhelmingly Democratic in its orientation.

But I think it is true, it is very difficult within the broad base of both the Democrat and Republican party to be much more than adherent to the ideological rigidity that is that small group of very consistent primary voters.

- I wanna ask you, Joe.

Here's what I see.

Republicans are sniping off perceived moderate Democrats, but in the Republican primaries, the right-leaning candidates will run to the right in a primary.

Seem like Republicans are taking out their role into the primary.

And sweet folks like Tim Moore and Jason Saine are recruiting any Democrat that feels disaffected by their own party.

Is that an accurate observation?

- Well, you know, there may be some room for us to have a discussion about whether we're selecting our party's candidates in the right way.

We, in effect, allow the taxpayers in North Carolina to subsidize the party's selection of its candidates through a primary election, and we do that to prove that there's integrity in elections.

Other states do it a different way.

Louisiana, California, it's sort of an open primary.

Top two vote getters go on to the fall.

Some argument could be made you get more moderate candidates of the two parties if you have an open primary process, so.

And I'm not sure you need an additional blandishment for somebody making a decision once they've been elected.

They always have to go back home and face the voters at some point and no matter what they did, whether they switched parties or did something else while in office.

But to some extent, this is just really a reflection of the politics in which we live.

The composition of the House at the time, there were several other Democrats that would've likely voted with the Republicans to override a veto given a particular issue.

So I don't know if Cotham's switch was absolutely necessary to guarantee the ability to override a gubernatorial veto on a party line vote, but such as it is, I don't know.

There's nothing in the history of America that necessitates party.

It's an artificial construct.

There's nothing that says you have to have a minority leader and a majority leader.

We've invented all of that in our legislative process.

Do we wanna go to a European style where we have 15 political parties and everything is a coalition government?

I don't know that the answer to the problem of two is to have 17.

But to some extent, this is just a reflection of where Americans are right now.

People feel very strongly about their ideology within the context of their partisan identities.

- Well, most North Carolinians are unaffiliated.

You don't have to declare a party to vote in a primary, even though again the party loyalty votes in the primary is gonna determine that general election candidate.

But I mean, unaffiliateds overtook Democrats last year.

- Do you take care of Tricia Cotham redistricting for 2024?

- We take care of all of our members and we're gonna look at it and do it in a fair way given what court decisions have come down and then see what happens.

Sometimes we lose members that we really wanted to keep there but given whatever the construct is at the time, wherever the courts have put us, we just can't make things happen.

And so I think first, we have to understand what the rules are going to be, when we get back to redistricting and figuring out what it'll be.

So you can't even answer that question.

Certainly we want to be helpful to members.

We see that as we work through, we look at where they live and so forth.

But at the same time, we still have to follow the rules and we still have to figure out what those rules are as best we can.

And gosh knows that over the last decade or two decades they've changed every time you sneeze.

But nevertheless, politics is not about one person.

And we gotta understand that.

My district's pretty homogenous.

It's a pretty solid Republican district and mine's one of the constitutionally correct 'cause it's a whole county and the population's been right, but yes, I'm elected to represent them but it's not about me, it's about the people that we represent.

So I think politicians come and go, we change.

It's up to the voters.

- All right, Joe will come back to you talk about insurance.

Every once in a while national issue arises and it gets my attention.

North Carolina putting together a North Carolina show, it's California, State Farm, says they will not underwrite any more new homeowners insurance policies in that state blaming wildfire risk and expensive construction costs.

State insurance regulators seem to be powerless to force these companies to resume underwriting, closer to home, Joe, I'm not worried about wildfires, other than mix the Canadian fires make us our asthma trigger.

However, it's hurricane season.

Can we expect the California trend of we're not gonna insure your vacation home or your beach home, is that coming here to North Carolina and it starts in California in fires?

- Yeah, part of the challenge on insurance issues is people think of it as their individual policy, the premium they pay for the coverage that they receive but the money that backs up that coverage is actually part of a global pot of capital that is all influenced by a number of economic issues.

We are currently in what's called a hard market and that means the cost of capital that insurance companies must pay when any large carrier looks at their book of business, says "These are all the risks that we insure."

We think if a catastrophic event occurred and we had a maximum amount of claim activity, we would need more money to pay all of those claims than we actually have available to us through our surplus and reserves.

They buy what's called reinsurance and it's just basically the Lloyd's of London kind of huge pots of money globally that they can tap into.

And when those markets harden and that capital becomes more expensive, the carriers have to pass that cost along in terms of higher premium.

So anytime there's greater peril, we've had a lot more natural disasters, over the last several years.

The parallel wildfire, climate change is definitely impacting the cost of the risk that's being insured.

Even if there's not a significant storm in North Carolina this year, if there's a significant storm in Louisiana or Texas or Florida, some other coastal state it could impact rates here.

- And for transparency Joe works for the insurance industry for independent insurance agents.

So with the insurance company and that's a real legitimate question, Greg Meyer we got just about a minute.

The market will fail if we have a bad enough disaster, the private market can't sustain insurance.

- Look, this is a sign that businesses understand that you can't look at climate as being something that is a complete externality.

We all worry about paying for our heating and air conditioning.

We understand that the weather impacts our bottom line.

And businesses of all different types are saying, we get it, that what's happening to climate change is going to impact the money that we're able to make or lose.

And we're gonna have to make decisions based on that.

And politicians, elected officials should figure that out too.

- 30 seconds, you write a budget, here we go.

- Turns out the world's always changing and so we do have to adapt to whatever's happening right in business, in politics, whatever.

Yeah, talking about the budget, we're close.

We're working very hard right now to get to hopefully a June 30th budget and get out of here.

- All right, Dawn, last word, 10 seconds, no pressure.

- I'll hold you to that, June 30th.

[group laughing] Senator leader Berger, said the other day that, we were talking about taxes earlier.

Taxes is the argument and how much to save which is the perennial story of the budget.

- There you go, guys, well we have this show.

- And raises too, of course.

- Thank you all for being all great conversation and thank you for watching.

Email your thoughts and opinions directly to me, statelines@pbsnc.org.

We'll read every email and I'll forward this crowd some every once in a while.

I'm Kelly McCullen and thank you for watching.

We'll see you next time.

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