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Sports Betting Taxes Could Double Laws & Regulations

Sports Betting Taxes Could Double This Fiscal Year in Colorado

By Lisa Spencer Senior Editor Updated: 16 January 2023

Lisa Spencer Senior Editor

As a Senior Editor at Betting.US, Lisa Spencer is a valuable member of our expert team. With a Master’s degree in Applied Mathematics, Lisa is adept in gambling theory and analyzing odds. She contributes by writing online sportsbook reviews and finding competitive markets to help our readers make an informed choice.

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It has been reported that sports betting taxes in Colorado could double this fiscal year as the result of a new law. According to estimates from the Governor’s Office of State Planning and Budgeting (OSB), the state could collect around $24 million in sports betting tax revenue compared to $12.4 million in the last fiscal year.

The increase in tax revenue for the state is due to House Bill 22-1402. This bill is designed to reduce tax write-offs for sportsbook operators, and it means that the state will make more money from taxes as a result.

The new rules came into force at the start of this year, and state finances stand to benefit moving forward. In the 2023-2024 fiscal year, it is projected that the state will collect $25 million in taxes, and for the following fiscal year, this rises to $27 million.

A Boost for the Colorado Water Plan

Most of the taxes that are collected from sports betting activity in the state go toward the Colorado Water Plan. This was a project that began in 2015 and was launched to help deal with the water supply decline in Colorado. Any remaining funds are put toward gambling support programs in the state.

A report in the Colorado Sun reads:

Bryce Cook, chief economist for OSBP, said the reason for the big forecast increase is that the legislature passed a bill this year limiting the number of free bets that sports betting operators can offer starting Jan.1.

This will benefit the state because it charges 10 percent tax on the net proceeds from sports betting, but with free bets, no proceeds are generated. Therefore, by limiting these free bets, the state will be able to maximize the tax revenue it collects from operators.

A High Level of Sports Betting Activity

While the 10 percent tax rate in Colorado is among the lowest across the country – New York, for example, has a 51 percent tax on revenue – tax dollars are boosted by the huge popularity of sports betting in the state.

Many undertake online sports betting in Colorado, particularly during the busy season such as the football and basketball seasons and Super Bowl. The level of sports betting activity in the state is said to be far higher than many analysts had expected.

Bettors in the state wagered more than $552 million in November, and this marked the fourth time that the state surpassed the $500 million barrier since it launched legal sports betting. This figure was up by more than 16 percent compared to November 2021 and marked a 4.9 percent increase compared to the previous month.

The state has enjoyed a busy few months since September due to the football and basketball seasons, which have generated huge levels of betting from fans across Colorado.

There is still the Super Bowl 2023 to look forward to next month followed by March Madness, along with the NBA season, which means that both sportsbook operators and the state will be expecting to see an influx of money coming in.