As tax revenue from sports betting skyrockets, Prop JJ would let Colorado keep it all

DENVER – Since Coloradans voted to legalize sports betting four years ago, the popularity of these bets has far exceeded expectations. A tax on these bets brings in tens of millions of dollars to the state each year. But that extra tax revenue means Colorado voters have a choice to make: On the ballot this election, Proposition JJ asks voters whether they should let the state keep the extra money or give it back to the casinos and sportsbooks.

“Colorado was one of the first states to offer sports betting online,” said Peggi O’Keefe, president of the Colorado Gaming Association, which represents much of the gaming industry in the state.

Initially, there wasn’t much information available to help lawmakers estimate how much money sports betting could bring in.

“Everyone is very pleased that revenue came in higher than expected,” O’Keefe said.

Colorado’s casinos and online sports betting apps generate billions of dollars, and the 10% tax imposed by Proposition DD in 2019 means the state gets a significant portion of that.

“From the gaming side of things, we were pretty happy,” O’Keefe said. “We have seen several of these online operators migrate to the state, creating additional jobs.”

O’Keefe said Colorado’s gaming industry supports the sports betting tax, and while the Colorado Gaming Association doesn’t take a formal stance on Proposition JJ, it sees it as a way to maintain the status quo of a 10 percent sports betting tax going to the state.

A “yes” vote on Proposition JJ would remove the cap that currently prevents the state from collecting more than $29 million per year, allowing Colorado to keep the full 10% tax revenue no matter what it is.

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Over the past four years, the sports betting tax has brought in around $50 million, and the state now expects that number to continue to rise.

Where the money goes might surprise you.

“It is definitely unique in Colorado to have sports betting funding tied to water projects,” said Cole Bedford, the chief operating officer of the Colorado Water Conservation Board.

Bedford said that while it is unusual to combine sports betting with water conservation, it is an effective way to fund the state’s water plan, “a vision for how Colorado will use water and conserve water in the future.”

A small portion of tax revenue from sports betting goes to the Colorado Department of Revenue’s Gaming Division, which oversees the industry. However, the majority of this money goes to the Water Plan Implementation Fund.

The state then distributes the money to partners – including counties, municipalities and nonprofits – through water plan grants, which are awarded twice a year.

Projects include everything from watershed health and recreation to agriculture and local water supplies. Bedford said a recent successful project was the Maybell diversion, which removed a dangerous, old concrete dam on the Yampa River in northwest Colorado.

“The A new project has replaced the old dam with a rock structure that is safer for recreation and also allows some fish to pass through. But it can still be used for irrigation,” Bedford said.

Another recently funded project in Monte Vista will allow a local nonprofit to replace a one-mile section of streambank on the Rio Grande.

Regardless of how voters decide on Proposition JJ, Bedford said the state will continue to support projects “that conserve and use Colorado’s water as effectively as possible.” The Colorado Water Conservation Board is not taking a position on the ballot measure. However, because the Water Plan grants are so competitive and in high demand, lifting the tax revenue cap would increase available funds and enable more projects.

There is no organized opposition to Proposition JJ, but some Coloradans fear that such an important resource as water is linked to gambling, which can sometimes lead to problematic addiction issues.

The Problem Gambling Coalition of Colorado, which provides prevention and treatment resources, has no position on Proposition JJ. But its president, Jamie Glick, said as sports betting increases, so does the need for help.

“The number of people asking for help has definitely increased significantly,” Glick said. However, it is difficult for service providers to keep up.

“There’s no federal funding available for problem gambling prevention and treatment, so it’s really up to the state, and right now it’s just significantly underfunded,” he said.

However, resources are available confidentially and free of charge through the Problem Gambling Coalition Center in Lakewood, Colorado. You can also get help online at cogamblerhelp.org or by calling or texting 1-800-GAMBLER.

Often, people “wait until they’re in a deep hole, whether it’s financial or broken relationships,” Glick said. “I would just encourage people to reach out, even if they’re not sure.”

Denver7 took an in-depth look at the legalization of sports betting and addiction issues. You can read our report Here or watch the story in the player below.

Sports betting has generated more than $8 billion in bets since May 2020