Colorado Proposes Tax on Free Sports Bets to Boost Water Project Funding

The bill’s sponsors, Senator Dylan Roberts and House representatives Julie McCluskie and Matt Soper, emphasized the urgency of securing more resources to address Colorado's water challenges. Drought conditions, climate change, and population growth have heightened the need for investments to stretch the state's water supplies further.

“It's time to make this change. It’s a great way to generate more funding,” Senator Roberts stated. Under the current law, sports betting companies are not required to include revenue from free bets in their taxable income. If passed, the new legislation would mandate the inclusion of these revenues, aligning tax calculations with other streams of income.

Since legalizing sports betting in 2019, Colorado has exceeded expectations in tax revenue generated through this sector. However, with increasing competition from other states and declining marijuana tax revenues, the state is exploring innovative ways to secure additional funds. While other states like Illinois and Massachusetts are raising tax rates, Colorado has chosen to focus on eliminating tax exemptions like those for free bets.

Although the potential opposition to House Bill 1311 remains uncertain, industry representatives, such as the Colorado Gaming Association, are closely monitoring its progress. The bill was introduced on March 28 and is set for review by the House Finance Committee on April 21. If successful, this initiative could set a new precedent in utilizing gaming revenues to address Colorado’s critical water needs.