Under proposed legislation, Colorado sportsbooks would not have limits on the revenue they can collect

In Colorado, 2019 was the first year the state authorized legal sports betting. Sportsbooks in the state can collect up to $29 million in revenue. Anything over that amount must be refunded. Earlier this year, lawmakers in Colorado referred Proposition JJ to be on the November ballot. 

This proposed legislation would remove the state’s $29 million tax revenue cap. Allowing sportsbooks to collect far more than the $29 million cap they’ve seen in the past. Colorado’s last fiscal year ended in June. It was their first to exceed the cap of $29 million. Under the current legislation, any money over the cap is refunded to operators. 

How successful has sports betting in Colorado been?

May 2020 was the official launch of Colorado sportsbooks. They started with a 10% tax as well as deductions from promotional play. Analysts believed the state would generate roughly $29 million in tax revenue annually. A constitutional amendment from 1992 noted that any number over the state’s projections must be refunded. In 2022, a bill was passed to phase out promotional deductions for sportsbooks. 

Deducting the promotions helped push Colorado’s tax revenue over $29 million in the last fiscal year. That tax revenue largely goes toward Colorado Water Plan projects. Since sportsbooks first opened for business in 2020, they’ve accepted more than $19.1 billion in wagers. Enough to generate $1.3 billion in sports betting revenue. Colorado has collected $73.9 million in taxes. During the 2023-24 fiscal year that ended on June 30, the state collected $29.9 million wagers. Without Proposition JJ, the state must hand that extra $900,000 back to operators.

What can Propisistion JJ do for state-funded water projects?

The Colorado Water Conservation Board is the state’s top water agency. Their job is to give loans and grants to committees around Colorado to support water projects. In the state’s 2023 Colorado Water Plan, they’ve outlined the need for billions in water projects over the coming decades. If Proposition JJ was passed, extra revenue the state makes could help fund water projects across Colorado. 

It’s projected that the Colorado Water Conservation Board will need roughly $3.85 billion in loans and grants over the next 30 years. Without the legalization of Propisistion JJ, the state estimates they are about $1.5 billion short in loans and grants. That is roughly $50 million a year through 2050.