Colorado’s three casino towns, Black Hawk, Central City and Cripple Creek, are anxious that Proposition DD passes in November so that they can start offering sports betting. But the potential for profits from the activity is largely speculative.
If the voters say yes, Colorado will become the 20th state in the U.S. to allow sportsbooks. No state officials expect that tax revenues will be expansive, but they hope for at least a small but steady stream that will be dedicated for the Colorado Water Plan, a water conservation program.
If approved, it will be the first expansion of gaming in the state since 2008, and the second since the voters approved of casino gaming in 1991 in three cities. It follows the Supreme Court’s 2018 decision striking down the 1992 federal ban on sports betting.
The ballot measure allows for collecting as much as $29 million in taxes, although forecasters for the legislature are more conservative, projecting about $16 million. According to some experts, it could take up to five years to reach that level. Setting the bar at $29 million means that policymakers won’t have to return to the voters to authorize higher taxes if sports betting brings in more than expected.
Even though legalized sports betting might not make much of a dent in the state’s economy or government funding, it will remove from the shadows something that’s been illegal for many years. The activity nationally is estimated to generate about $150 billion a year, although obviously illegal sports betting must be declining, since so many states are legalizing sportsbooks.
Critics of the plan, including Coloradans for Climate Justice, are unhappy that the water plan will be dependent on gamblers. They prefer that taxes be imposed on those who contribute to water shortages and climate change. They also oppose on principle some infrastructure construction because they fear it will contribute to climate change.
Aside from that group, there’s very little actual opposition to Prop DD and House Bill 1327 was approved overwhelmingly in both chambers of the legislature.
If passed, the measure would tax the net proceeds of sports betting at 10 percent, compared to the 20 percent casinos pay on casino gaming. It would take effect May 2020. Bettors could wager on professional and college games, plus Olympic contests, plus video and esports. High school contests would be excepted. Prop bets on the performance of an individual athlete, would not be allowed for college athletics.
Bets are restricted to the three casino towns, although they may be placed in person or online through licensed contractors who are connected to a brick and mortar casino, such as DraftKings or FanDuel.
Fantasy sports were previously legalized by the legislature in 2017.
Although the Colorado Water Plan will be the main beneficiary of taxes on sports betting, $2 million will go to the Division of Gaming, and 6 percent to mitigate decreases to payouts to local government from other forms of gaming and horse racing. The Colorado Office of Behavioral Health will get $130,000 to fight gambling disorders and for a crisis hotline.
That leaves nearly $15 million annually for the Colorado Water Plan.
