The tax revenue generated by sports betting in Colorado more than doubled last fiscal year to about $25.6 million, meaning a lot more money will be available for state water projects.
The haul, collected from July 1, 2022, through the end of June, was a 106% increase over the previous fiscal year, according to the Colorado Department of Revenue. The state’s sports betting tax revenue in the 2021-22 fiscal year was $12.4 million.
The big increase was expected in the 2022-23 fiscal year after the legislature passed a bill in 2022 limiting the number of free bets that sports betting operators could offer starting Jan. 1, 2023.
Colorado imposes a 10% tax on casinos’ net sports betting proceeds. A free bet doesn’t generate any proceeds.
The Office of State Planning and Budgeting in Gov. Jared Polis’ office predicted that the 2022-23 fiscal year sports betting tax would be $24.1 million, so expectations were surpassed.
Proposition DD, the 2019 ballot measure approved by voters legalizing sports betting, directed the state to spend almost all of the tax revenue generated by sports betting tax on the Colorado Water Plan. The plan includes projects aimed at preparing Colorado for a growing population in a warmer, drier climate.
When Proposition DD was drafted, nonpartisan legislative analysts expected Colorado to make about $16 million each year in new tax revenue. The state is authorized to collect up to $29 million in sports betting tax revenue annually under the Taxpayer’s Bill of Rights before the legislature must either refund the excess or ask voters to let the state exceed the cap.
More than $310 million in sports betting wagers were placed in Colorado in June, all but $2.4 million made online. That was down from $385 million in May, when the Denver Nuggets won their first NBA title.
In November 2022, there were $552.6 million in sports wagers placed in Colorado, while in January there were $547.2 million in bets.
There have been more than $13 billion in sports wagers made in Colorado since legal sports betting began in May 2020. Basketball has been the top sport wagered on, at more than $3 billion.
See the chart below for a breakdown of how much was wagered in Colorado by sport from May 2020 through April 2023: