Colorado Sportsbooks Staying Silent Over Upcoming Tax Proposal

Michael Savio
By: Michael Savio
10/23/2024
Sports Betting
Colorado Loses Third Sports Betting Operator as SI Sportsbook Exits
Photo by Flickr, CC BY 2.0

Key Takeaways

  • Colorado currently has a $29 million cap on sports betting tax revenue
  • Sportsbooks believe this change would help avoid a tax hike
  • The state has one of the lowest sports betting tax rates at 10%

The Centennial State is considering changing its laws around tax revenue generated from sports betting, but operators are staying silent.

Colorado residents will have a chance to vote on Proposition JJ in November. The proposal would eliminate the state’s cap on tax revenue from the sports betting industry. The law currently requires the state to return any revenue over that cap back to the sportsbooks. Prop JJ would change that, allowing Colorado to keep all of it. 

Rising Revenue Led to Proposal

The driving force behind Prop JJ is the state’s rising sports betting revenue numbers. Colorado had not exceeded the cap much before the last few months, making it a non-issue. However, the industry continues to grow in the market, leading to more money being returned to operators.

Currently, the state can only keep $29 million in sports betting tax revenue per year. As of August, the state has seen just under $20 million. With over $12 million more expected to come in over the final few months, the state will set a new annual record.

Sportsbooks Opting to Stay on Sidelines

One of the most surprising parts of the debate over Prop JJ is the lack of input from sportsbooks. Operators have been fighting hard against states attempting to increase tax revenue, usually through tax hikes. However, Colorado’s current proposal is being seen as a compromise.

While operators would lose out on more revenue over the coming years if JJ passes, it would also prevent the state from raising its tax rate. Many states have aggressively raised their rates to capture more revenue, leaving Colorado with one of the lowest in the country.

Given the market’s size and the low tax rate, sportsbooks believe giving up the cap would be worth avoiding a significant hike. 

Extra Revenue Would Go to Water Projects

Unlike many other states, Colorado does not funnel sports betting tax revenue into its education system. Instead, it uses that money to fund water projects across the state, including improving areas where residents can enjoy the water and conservation projects.

Colorado is one of the states strongly affected by low water levels in the Colorado River. States have struggled to determine how to divvy up the dwindling fresh water supply, leading to federal intervention. That has motivated the state to look for solutions instead of relying on negotiations with its neighbors.

                    

Michael Savio covers the US online casino industry, giving readers insights and information they won’t find anywhere else. He has followed the retail industry since his time living in Las Vegas and has continued to do so as the online industry has taken off. Michael covers everything from online casino reviews to industry news, making him one of the most trusted insiders in the business. Check out Michael’s latest articles at casinos.com to see what he has to offer!