Colorado Voters Pass Sports Betting: 51.4% Say YES

A recent ballot in Colorado, known as Proposition DD, saw voters come out and decide in favor of the legalization of sports betting for online bettors within the state. With the inclusion of tax revenue from such being directed toward Colorado’s state water projects, the proposition was approved on Tuesday, Nov. 5, with 51.41% of voters backing it. Neither online casinos nor online poker sites were included in this vote.

An Almost Even Split

Even though the Proposition DD ballot attracted a total of 1.55 million votes, it didn’t look like voters had the same opinion throughout the state on whether or not sports betting should be legalized. In fact, votes were still being thoroughly counted as of Wednesday, Nov. 6 when those in favor of sports betting legalization were leading by around 20,000 votes (roughly 1.5%). It was this narrow margin that almost triggered a recount, but in the end, the “yes” votes came out on top.

It is state law in Colorado that recounts must take place if a ballot margin is less than .5 percent. Yet, it didn’t quite come to this, and proponents of the measure began their celebrations with a press release on Wednesday.

Speaking of the victory for sports betting in Colorado, the House minority leader and one of the sponsors of the measure, Patrick Neville, had the following to say:

Black markets aren’t conservative and they aren’t good for Colorado. Bringing sports betting into the daylight, regulating it, and leveraging it for the benefit of our water future is a common-sense approach. I’m glad the voters agreed.

Colorado House Minority Leader Patrick Neville (R)

Why Was a Ballot Measure Necessary?

Proposition DD, also known as House Bill 1327, was designed to legalize sports betting within Colorado. At the same time, it would introduce a 10% tax on all sports betting proceeds to be levied on those choosing to conduct sports betting operations. While it’s common for bills to be voted on within the chambers of state legislatures, it’s not so frequent that the general public is required to turn out for a ballot with regard to such.

However, Colorado has quite a restrictive law in the Taxpayer Bill of Rights (TABOR). To summarize it, this was a 1992 amendment to the state constitution, which states that local governments are not allowed to raise tax rates without voter approval, while revenues cannot be spent under existing tax rates without voter approval if revenues should grow faster than the rate of inflation and population growth.

While numerous attempts have taken place over the years to repeal TABOR, it still remains in effect today, which is why the recent ballot was held over the proposal to implement a new tax with regard to casinos that choose to provide sports betting.

Colorado Water Plan to Take 65% of Tax Revenue

Revenue from the 10% tax on sports betting proceeds is expected to generate revenue for Colorado of around $10 million for the Fiscal Year (FY) 2020-21. It is then expected to grow to between $13.5 and $15.2 million for the following year. It is the revenue that is generated from this 10% tax that is to be used in order to create and fund the Water Plan Implementation Cash Fund whilst also being put to use for funding expenses relating to the administration and regulation of sports betting within the state. The Water Plan is in place to sustain growth within Colorado, which has doubled from one million people in 1930 to over five million today. This figure could potentially double again by 2060, and growth requires water.

Proposition DD also came with a table that displays how tax revenue from sports betting will be distributed for the first FY. The Water Implementation Cash Fund is expected to receive 65.90% of this, while 27.22% is expected to be diverted towards the administrative and regulatory expenses connected with sports betting. At least $534,000 is to be handed over to the Hold Harmless Fund, which would reimburse entities that can demonstrate that they have lost money as the result of the appearance of legal sports betting within the state. Last but not least, the remaining 1.35% of predicted tax revenue will be given to the Office of Behavioral Health, which administers the state’s two mental health hospitals.

As it happens, Colorado’s legislators passed the sports betting bill through the House on April 24 and the Senate on May 3 with the governor signing it on May 29. However, because of the new tax included, this legislative progress basically only meant that voters would have the right to render the final decision on it.

How Will Colorado Sports Betting Work?

The bill that voters approved introduces three types of licenses to Colorado, which each of the state’s 33 casinos have the possibility of applying for. These are:

• Master License
• Sports Betting Operator
• Internet Sports Betting Operator

The master license obtained by a casino would last for a period of two years though the costs attached to it are yet to be determined. Master license holders can partner up with a land-based operator as well as an internet operator (or potentially make use of the same partner for both of these), providing a single online and mobile platform. Online and mobile sports betting allow bettors to participate from any location within state borders.

As things stand at the moment in Colorado, state law dictates that commercial casino gaming is limited to three towns in the Rocky Mountains: Black Hawk, Central City and Cripple Creek. In addition, native tribes operate gaming halls in Ignacio and Towaoc. Colorado has historically been against the expansion of gaming beyond these towns. However, with the introduction of the internet sports betting licenses, casinos could extend their reach to customers further afield within Colorado.

Colorado Casino Towns (Red)
Denver (Blue) Shown for Reference

The earliest that instate licensed sportsbooks could appear is May 1, 2020. This, however, will be dependent upon the Colorado Division of Gaming promulgating the appropriate regulations and approving license applications by this date.

We've already seen instances of gaming regulators taking their sweet time getting their act together as, for example, in Pennsylvania, which passed online casino and poker legislation in October 2017 yet only saw the first licensed sites open for business in July 2019. Thus, it's possible that Coloradans will have to bide their time well beyond the May 2020 target.

USA Sports Betting Growing Day by Day

Ever since the Supreme Court rendered its landmark decision in Murphy v. NCAA – permitting state-sponsored sports betting – lawmakers have been clamoring to add their states to the list of those that derive revenue from legalized wagering on sporting contests.

Justices of the Supreme Court at the Time of the Murphy v. NCAA Decision

Colorado joins more than a dozen states that have legalized this activity, following in the wake of Indiana, Illinois, and North Carolina, which are just a few of the jurisdictions that passed the needed legislation earlier this year.

Online Gaming Already Possible in Colorado

Government-approved sports betting may be on its way to the State of Colorado, but various sportsbooks already exist that transact with the state's residents. They're located offshore where they can conduct their business without interference from federal and local law enforcement.

No individual bettor has ever been charged, much less convicted, of a crime for frequenting these internet establishments. Thus, it's completely safe to place your bets with them from a legal perspective.

To learn more about this topic, check out our list of the top online sportsbooks for Americans. If you are more interested in poker, then we've prepared a page with extensive information about Colorado-friendly online cardrooms as well as a guide to USA interactive poker.