Posted on: April 25, 2024, 11:33h.
Last updated on: April 25, 2024, 11:33h.
Colorado voters could decide this November to lift the cap — currently $29 million — on sports wagering taxes that are directed to water projects in the state.
House Bill 24-1436 (HB 24-1436) has bipartisan support in both houses of the Colorado legislature. If passed, it could lead to a ballot question being put to voters this November that would allow for that $29 million figure being raised.
Concerning the referral of a ballot issue related to the revenue from the sports betting tax, and, in connection therewith, referring a ballot issue to the voters to allow the state to keep and spend all sports betting tax revenue in excess of the twenty-nine million dollar estimated increase in state tax revenue approved by voters in 2019 for the purpose of funding water conservation and protection projects rather than refunding such excess revenue to casinos,” according to text of the bill.
Currently, Colorado applies a 10% tax rate to sports wagering activities in the state. Some of the revenue generated is directed to oversight of operators and the rest is directed to water projects, but that is limited to $29 million.
Sports Wagering Long Pitched as Boon for Colorado Water Issues
In November 2020, Colorado voters approved Proposition DD, a ballot initiative to legalize sports wagering to direct revenue to the state’s water projects. Regulated sports betting debuted there the following there.
While sports wagering taxes delivered just $19.4 million in revenue to state water projects in the first two fiscal years, the overall tally since 2021 is about $43.1 million and it’s trending in the right direction, having nearly tripled to $23.7 million in 2023 from $7.9 million in fiscal 2021, according to the Colorado Department of Revenue.
There’s sound reasoning for HB 24-1436 to pass and for voters to approve boosting the $29 million cap. Colorado needs to make more water investments and if the sports betting tax revenue limit is reached, any excess funds go back to the industry.
“If the majority of electors voting at the November 2024 statewide election vote against allowing the state to keep and spend all sports betting tax revenue as outlined above, then any tax revenue collected in excess of $29 million annually will be refunded to the licensed sports betting operations that paid the sports betting tax according to a reasonable method to be determined by the department of revenue,” according to the bill.
Colorado Water Needs Clear
Colorado is one of the fastest-growing states in the country. As of the end of 2022, the state had 5.84 million residents, up from 4.43 million at the start of this century, and by some estimates, the state’s population could almost double by 2060. That creates significant water needs.
That population growth has also been a boon for sports wagering receipts in the state, indicating HB 24-1436 is the rare example of well-timed, common sense bipartisan legislation.
Forecasts bear that out. Brian Jackson, director of Western water for the Environmental Defense Fund, told the Colorado Sun tax revenue from sports wagering could reach $31 million in the current fiscal year and $35 million in 2025, meaning as much as $8 million combined is at risk of flowing back to gaming companies and not to water projects.
