It is confusing, but the reason it is worded this way is because if you had California lottery losses, but no lottery winnings, and your winnings were all from something else, you would need to enter the total California losses as a negative number to the extent they were deducted on the Federal return. None of the California losses are deductible for California because the winnings aren't taxable.
See the Instructions for CA Schedule CA.
See this thread for another example of this issue.
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