In an overwhelming bipartisan vote, the General Assembly agreed to put a question before voters Tuesday to legalize sports betting.
But in a little-noticed vote in this year’s legislative session, top Colorado lawmakers rejected a different request to expand state-sanctioned gambling.
The bipartisan decision came in March — a month before the vote to put Proposition DD on this year’s ballot — and blocked a proposal from Gov. Jared Polis’ administration to extend Colorado lottery ticket sales to Walmart Super Centers.
In bipartisan fashion, the Joint Budget Committee voted it down, citing the lottery’s regressive nature and its impact on low-income residents.
The paradox is rooted in the lawmakers’ assumptions about the clientele for the different forms of gambling, even though the research so far is not conclusive.
The Department of Revenue wanted to put 200 machines in the retailer’s Colorado stores, a proposition that was projected to increase lottery sales by $29 million to $40 million. It would provide an estimated $6 million to $9 million in revenue for the program’s beneficiaries, such as state parks, land conservation and education.
Interestingly, the legalization of sports betting — which many expect to pass Tuesday — is projected to generate roughly the same amount of money at first, with fiscal experts projecting between $6 million and $15 million a year. The money from sports betting largely will go toward the state’s water plan.
State Sen. Dominick Moreno, the budget committee chairman, sees the contradiction in the two measures. He opposed the lottery sales at Walmart, but voted to put Prop. DD on the ballot.
The lottery, in Moreno’s view, “attracts investment from low-income communities with these promises that, ‘You, too, can become a millionaire.’ And the reality is it doesn’t happen for the vast majority of those folks.”
“I wasn’t excited about expanding gambling to where lower income communities visit a lot,” the Democrat from Commerce City concluded.
But when it comes to sports betting, he decided “it’s more of a conscious choice to place a wager on a sporting event than buy a lottery ticket and hope you strike it big.”
On a broader level, other budget writers felt the question about expanding lottery sales is a question the entire legislature should consider. “This is regressive taxation, and it ought to be a policy discussion in my opinion,” said Sen. Bob Rankin, R-Carbondale.
A similar discussion about the demographics of gambling colored the debate about House Bill 1327, which referred Prop. DD to voters. Only 14 of the state’s 100 lawmakers voted against it, evenly split between Democrats and Republicans.
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Sen. Jeff Bridges, D-Greenwood Village, is one of those who opposed it. “It will disproportionately impact the least among us, and that’s not what we are supposed to do as a state,” he said. “It’s essentially paying for our water plan on the backs of those who have the least to pay. It’s the most regressive way to fund a program that there is.”
He said he would approach a lottery expansion in a similar fashion, but would need to see the details before deciding how to vote.
The research supporting the regressive nature of lottery is well established, said Victor Matheson, a Boulder-native and professor at Holy Cross in Massachusetts who specializes in the economics of gambling.
“What we do find is that in areas where we have lottery sellers, they tend to be in very poor neighborhoods, and they sell a disproportionately large number of scratch-off tickets,” Matheson said.
But when it comes to sports betting, the impacted demographics are not clear. “We don’t have a lot of evidence on how regressive sports betting is at least in the United States because it’s been illegal everywhere,” he said.
Tom Seaver, the director of the Colorado lottery, said his agency’s numbers don’t support the regressive argument. He pointed to a 2017 survey that found the average household income for a lottery player was about $84,000, above the state’s median at the time.
His job is to expand the lottery to deliver more money for its beneficiaries. “For me, the biggest opportunity is broadening the player-base, getting more people involved, rather than trying to get more dollars from existing players.”
Seaver lamented that the Walmart expansion became mired in opinions about the world’s largest retailer, rather than his agency’s effort to provide better vending machines. He defended the lottery, but acknowledged that he won’t bring the request back to lawmakers in the 2020 legislative session.
“People in Colorado vote with their pocketbooks, and we’ve been fortunate that we have a pretty high level of support,” he said.