Sports betting is alive and well in the Rocky Mountain State but there has been some debate as to where the revenues will be allocated. However, that question will be decided by the voters in November.
Where’s the Dough Go?
Colorado passed its sports betting legislation on May 1, 2020, and it has continued to gain popularity, which means the revenues it has provided for the state has grown as well. At a tax rate of 10% on retail and mobile sportsbooks’ gross revenues there is more money pouring into the state’s tax coffers than projected.
Now the question remains, what to do with all this money? Well, the genesis of the question stems from the $29 million cap that the state can collect with any remaining money going back to the sportsbooks and casinos. But the lawmakers who write legislation don’t always have a grasp on how popular an industry may become and they clearly missed the mark on sports betting revenue.
Brian Jackson of the Environmental Defense Fund, an organization that helped craft House Bill 1436, noted the need for the legislation, saying, “Frankly, we never thought we would reach that ($29 million).”
Governor Jared Polis recently signed House Bill 1436, which will allow the voters to answer the question of where the extra money will go. And that is a refreshing change from many state legislatures that unilaterally decide where sports betting revenue will be allocated.
Colorado’s electorate will be able to choose either conservation projects or return the money to the operators once the amount exceeds the cap, as originally intended. The former appears to be the front-runner in a state lauded for its scenic beauty and picturesque landscapes but the voters will ultimately decide.
Protect the Environment
The revenues generated from sports betting are expected to top the cap by more than $3 million at the end of this year and that excess is estimated to soar above $7 million by the end of FY 2026. Therefore, the citizens of Colorado will get their chance to put that money into projects that will benefit and protect the Colorado environment in the form of the Water Plan Implementation Cash Fund.
House Speaker Julie McCluskie, D-Dillon, the primary sponsor of House Bill 1436, said, “That’s real money for water projects in this state.” McCluskie also added, “I believe our public has grown to understand how critical water resources are to Colorado.”
“I’m hoping it will continue to be a growing, steady revenue stream for water,” said Representative Marc Catlin, a supporter of House Bill 1436 and the 2019 sports betting legislation bill. “I have high hopes for this.”
Peggi O’Keefe, executive director of The Colorado Gaming Association, is also supportive of HB 1436, stating, “We certainly always intended to pay that 10% tax with sports betting. The fact we exceeded expectations I don’t think changes that.”
It is unlikely the sportsbooks will push back on this, as the 10% they are paying to operate in Colorado is among the lowest in the nation. It should also be noted that state legislatures have been increasing the tax on sports betting operators after witnessing the startling number they are doing and wildly exceeding expectations. Colorado may eventually turn its attention to a tax increase but right now, it is focusing exclusively on maintaining the revenue stream it has been enjoying since May of 2020.
