Sports betting operators in Colorado will find themselves short of some revenue from now on after voters on Tuesday approved a ballot measure that removed the cap on the proportion of wagering tax revenue the state can keep.
Proposition JJ allows the state to keep all sports betting tax revenue and use those dollars for water projects. The ballot measure had around 76% of the votes as of the time of writing on Wednesday afternoon, with 73% of the estimated vote total reported.
Since 2019, the state has been able to keep up to $29 million in sports betting tax revenue, in line with the legislative projection at the time the sports betting bill passed, and has been mandated to return any additional money to sports betting operators.
Colorado taxes sports betting proceeds at 10% and that has yielded nearly $80 million in tax revenue since the market launched in 2020. The number has increased significantly since the state legislature passed a bill in 2022 to phase out promotional deductions. This fiscal year, operators can deduct no more than 2.4%, dropping to 2% on July 1, 2025.
Preliminary data suggests that in the last fiscal year ended June 30, the $29 million limit was exceeded by about $900,000. Sports betting revenue is expected to keep climbing in Colorado, meaning the surplus would likely have increased this year and beyond. Legislative projections estimated it would be $1.2 million in 2024-25 and $2.5 million the following year.
The excess revenue kept by the state will primarily help fund projects like improving canals that bring water to farms and ranches throughout the state, helping preserve endangered fish and funding conservation projects and drought plans.
Football season, parlay frenzy pushes September revenue to $563M
in the state’s most recent sports betting revenue report, for September 2024, Colorado sportsbooks enjoyed a nearly 10% year-over-year bump in handle. More than $350 million of the total $563 million in wagers placed were on football and parlays.
Parlays comprised a full 24% of total wagers compared to 19.4% last year.
