How did sports betting come to be legal in Colorado?

The business of betting on sports

Sports betting in Colorado was officially legalized in November of 2019, in response to the passing of House Bill 19-1327. That bill called for a public referendum – Proposition DD – on whether or not to legalize sports betting, with the resulting tax revenue to be used to fund the state’s water projects. The measure was approved by a narrow margin, with “yes” votes accounting for 51.41% of the vote.

Who supported legal sports betting in Colorado?

Most of the proposition’s financial support came from the Colorado casino industry, legal online sportsbook stakeholders such as DraftKings, and other companies with a financial stake in legal sports betting coming to Colorado.

These groups joined together with farmers, water conservationists, and other outdoor-recreation supporters that would greatly benefit from the additional funding (projected to eventually grow to $29 million per year). Many of these groups argued that the funding unlocked by legal sports betting would help build additional water storage and allow Colorado to retain more of its water in-state.

How exactly will sports betting tax revenue be used to support Colorado water projects?

According to the bill, the money obtained from the 10% tax will be used for a few different things, like grants for the water plan. The grants will allow for support of the projects needed to complete the overall goals for the water plan. Here is a breakdown of how the funds are intended to be allocated for the project:

  • $3.75 million towards the development of additional storage recharge into aquifers and dredging existing reservoirs to restore the previous capacity
  • $500,000 towards water education/awareness, outreach, and innovation
  • $1.75 million towards technical assistance and funding for agricultural projects
  • $1.75 million towards long-term conservation strategies, land use, and drought planning/preparedness
  • $2.25 million towards recreational and environmental projects

The money for the water plan could also be used to ensure that the state is in compliance with its neighboring water allocation compacts. The amount that is allotted is determined through the Colorado Water Conservation Board, (CWCB) and the legislative process. There are currently 19 other states that rely on Colorado for their water.

It’s important to note that sports betting tax revenue won’t be enough to cover Colorado’s total water tab. According to estimates from the state, Colorado’s water plans will require $100 million dollars in funding per year for the next 30 years. With sports betting taxes expected to generate some $30 million annually, Colorado will still need to come up with another $70 million or so in order to cover the bill.

Why did Colorado decide to legalize sports betting?

In order to understand what allowed Colorado to legalize sports betting, it is important to be aware of the 2018 Supreme Court ruling that opened the door to legalizing sports betting. The ruling overturned a 1992 federal law (the Professional and Amateur Sports Protection Act, or PASPA) that essentially banned commercial sports betting in nearly every state outside of Nevada. The Court ultimately ruled that the law was unconstitutional, opening the door for other states to consider legalizing sports betting.

With that roadblock removed, over a dozen states – including Colorado – moved quickly to introduce different forms of legal sports betting, motivated by the new revenue stream legal sports betting could provide as well as the chance to siphon demand from the illegal market for sports betting in the state.

How will legal sports betting work in Colorado?

According to the Colorado Department of Revenue (CDOR) Enforcement Division, following the approval of Proposition DD, the Colorado Limited Gaming Control Commission and the Colorado Commission of Gaming will become the statutory authorities that are responsible for the regulation of legalized sports betting in Colorado.

Coloradans who want to place wagers on sporting events will be able to do so at a licensed facility in either Central City, Blackhawk, or Cripple Creek starting May 1st, 2020. Alternatively, they are able to place their bets using their mobile phones or computers through authorized, in-state internet operators.

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