Jonathan Bowers/The Aspen Times
Four years after sports betting was legalized in Colorado, it has proven to be more popular than lawmakers who wrote the law anticipated.
That means a 10% tax on gaming revenue that helps fund the state’s water programs is bringing in more money than expected, and now lawmakers are asking voters for permission to spend the surplus money instead of giving it back to the casinos.
The issue will be on the November ballot after Gov. Jared Polis signed House Bill 1436 this week.
“In Colorado, we love sports,” said Brian Jackson of the Environmental Defense Fund, who helped write House Bill 1436. “The Nuggets just came off a great winning streak, and the Broncos are obviously like a religion.”
When Proposition DD, which legalized sports betting, was approved in 2019, lawmakers placed a $29 million cap on the amount of taxes that could be collected as part of an effort to secure bipartisan support for the bill, he said. Anything above that limit would go back to casinos and other gaming operations.
“I honestly didn’t think I’d get that far,” he said.
But because Colorado was one of the first states in the nation to legalize sports betting, the cap was calculated based on very limited data. A state fiscal analysis shows that revenues are projected to exceed the cap by about $2.8 million this year, and could exceed it by another $7 million by the 2025-2026 fiscal year.
“This is real money for water utilities in this state,” said House Speaker Julie McCluskey, D-Dillon, the lead sponsor of House Bill 1436.
When the state developed its first water plan in 2015, analysts estimated it would cost $100 million a year to complete all the necessary water projects in the state. The sports betting tax was designed to provide ongoing funding for those efforts.
“We’re hopeful that this will continue to be a steady source of growth for the water utility,” said Rep. Mark Catlin, R-Montrose, the lead sponsor of the 2019 legislation that authored House Bill 1436 and Proposition DD. “I’m very excited about this.”
The Colorado Gaming Association also supports the ballot measure.
“We’ve always intended to have a 10 percent tax on sports betting, and we don’t see that changing just because it came in higher than expected,” said Peggy O’Keefe, the association’s executive director.
In recent years, as concern about the future of the West’s water resources has grown, more money than ever has been poured into water projects in the state. While Proposition DD passed by a narrow margin, supporters of House Bill 1436 believe the margin won’t be so close this time.
“I think the public is beginning to understand how important water resources are to Colorado,” McCluskey said.
The funds will be used for a variety of water resource projects across the state as determined by the Colorado Water Conservation Board, including physical infrastructure like water storage, agricultural projects, watershed health, recreation and land use planning.
Only a portion of the tax would go to water utilities, and it would also help fund the state’s gaming agency and state programs for treating gambling addiction.
Elliot Wenzler is a Western Slope political reporter for The Aspen Times and its sister papers in Glenwood Springs, Vail, Steamboat Springs, Summit County and Grand County.
