A new sports betting in the coming fiscal year.
The Governor’s Office of State Planning and Budgeting (OSB) estimated last week that Colorado will net $24 million in fiscal year 2022-23 (which ends June 30) from sports betting, compared to $12.4 million in 2021-22. The bump is due to House Bill 22-1402, which reduced tax write-offs for sportsbooks and took effect Jan. 1.
The OSB also estimates that Colorado will collect $25 million in sports betting taxes for fiscal year 2023-24 since the state will have all 12 months to collect taxes under the new legislation. Its estimate for the following fiscal year is $27 million.
The vast majority of tax funds from sports betting — $22.5 million this fiscal year — go to the Colorado Water Plan, a project launched in 2015 by then-Gov. John Hickenlooper to search for solutions to the state’s declining water supply, which has been depleted due to drought and the decline of the Colorado River. The remainder of the tax dollars go to problem gambling programs in the state.
Robust betting leads to increased taxes x47
House Bill 22-1402 was ed by a 50-15 majority in the House and a 25-8 majority in the Senate. Before it ed, sportsbooks could deduct an unlimited amount of promotional money from their taxable revenue.
Sportsbooks’ deductions now are subject to a maximum ceiling of 2.5% of their monthly handle. Many industry observers expect the new legislation to lead to decreased promotions offered to new Colorado sports bettors.
Since the state’s voters ed Proposition DD in 2019, legalizing sports betting, Colorado has sured most analysts’ expectations for gambling revenue. In November, for example, Colorado bettors risked $552.6 million in wagers, the fourth time the state eclipsed $500 million in handle in 31 months of legal sports betting. That marked a 4.9% increase from October 2022 and a 16.2% increase from November 2021.
Colorado’s 10% tax on sports betting is among the lowest in the United States, ranking far lower than large gambling states like mobile sportsbooks and retail operators.
