As booming legalized sports betting brings the issue of problem gambling into sharper focus, Colorado lawmakers now are close to approving a grant-based program to fund research and treatment of what clinicians often call “the hidden addiction.”
A bill working its way through the legislature would make about $3 million annually available to address longstanding concerns that the state has given little attention, while also seeking to curb the so-called “free bets” offered by sportsbooks to attract new customers and create a mechanism by which problem gamblers can exclude themselves from both online and traditional sites.
State Rep. Alec Garnett, a Denver Democrat and architect of the 2019 enabling legislation that followed narrow voter approval of legalized sports betting, acknowledged earlier this year that Colorado has never prioritized treatment of problem gambling, and promised to introduce legislation to shore up its efforts.
The current bill — House Bill 22-1402, among Garnett’s last before he retires from politics — designates multiple funding streams for grants aimed at addressing problem gambling, an addiction often masked by accompanying issues like substance abuse or depression. Colorado ranked near the bottom in supporting such programs among 40 states according to a 2016 survey.
“This is the foundation that the legislature needs in order to get the resources in place to make sure that we can tackle any of the issues that will come up in the future around problem gaming,” Garnett said. “I think this is a very good start. And then it positions us in a flexible way to adjust with other national trends and best practices that are going to be emerging over the next few years.”
The legalization of sports betting in Colorado in May 2020 expanded an industry that took root in 1991, when the state permitted the first casino gambling in mountain towns. But lawmakers did little to deal with attendant concerns about problem gambling — committing roughly $100,000 annually toward treatment and related programs.
The bill that legalized sports wagering bumped that figure to $130,000 to fund a 24-hour helpline (800-522-4700) as well as prevention, education, treatment and workforce development. Still, advocates regarded that as inadequate, especially after legal sports betting arrived in May 2020. From 2020 to 2021, calls to the helpline nearly doubled, from 6,688 to 9,686.
Starting in the 2022-23 fiscal year, the bill identifies three funding streams: $2.5 million from the state’s share of the limited gaming fund; money undistributed after two years from the Hold Harmless Fund; and $200,000 from the lottery earmarked to encourage responsible gambling.
The grant process is designed to attract more organizations with resources for problem gamblers, Garnett noted, adding that one area of particular concern is the state’s few certified gambling addiction counselors.
“We have a workforce shortage,” he said. “And so there are things that the grants can go to, to help make sure that we have the counselors and the people with the expertise that is needed to help those who are suffering from gaming issues. I think we’ll just see more organizations providing the resources to those who might be in need.”
Peggy Brown, board president of the Problem Gambling Coalition of Colorado, which currently administers the helpline, said she’s pleased that the bill seems to be meeting little resistance as it moves through the legislative pipeline.
“We’re delighted,” she said. “We’re feeling really positive.”
A step forward
Brianne Doura-Schawohl, a Virginia-based consultant representing the National Council on Problem Gambling, testified at a hearing on the bill last week. The NCPG, which takes a neutral stance on legalized gambling, supports the bill as a much-needed start to dealing with the negative fallout supercharged by the addition of sports betting.
According to figures released in April, Colorado’s total sports betting for the period of July 2021 through March of 2022 was $3,749,743,663, a whopping 85.96% increase over the same period in the previous fiscal year. So far, sports betting has generated more than $9 million in taxes this fiscal year — a 78% increase from the previous year. That revenue goes to Colorado’s water plan.
Doura-Schawohl called the proposed legislation to fund problem gambling initiatives “an important first step to Colorado finally getting a handle on this.”
She suggested that the state conduct a survey to get an accurate picture of the scope of its problem gambling. She pointed to New Jersey, where a study showed that over 6% of the state’s population struggled with problem gambling — significantly higher than the generally acknowledged national figure of 1-2%.
While Doura-Schawohl said she doesn’t see a lot of other states administering resources through a grant program, she applauded the bill’s call for collaboration between the state’s Office of Behavioral Health and the gaming commission. That reflects the approach of Massachusetts, considered among the national leaders.
“So it’s not to say that grants absolutely can’t work,” she said, “especially if you’re going to be forthcoming with information about where the state stands, where there are gaps, and where there’s need — and if there’s a lot of open communication and transparency between the commission and the behavioral health department.”
Brown has been reaching out to counties across the state to gauge their outpatient needs. At the top of her priority list: training for counselors who can screen clients for problem gambling, often concealed by other issues — hence its description as a “hidden addiction.”
Currently, only seven counselors in Colorado are certified to treat gambling addiction.
“Most people I run across,” Brown said, “are not forthright about their gambling.”
The Colorado Gaming Association, an industry group representing both bricks-and-mortar and online operators, worked with Garnett on the pending legislation. The group supports additional funding to encourage responsible gambling, said executive director Peggi O’Keefe, adding that the CGA backed previous attempts to improve resources that never quite gained traction.
“It’s not for lack of desire amongst former legislators,” O’Keefe said, “but it just seems like this is the year that we really got attention from legislators wanting to fund additional programs for responsible gaming. Probably sports betting added to the whole high profile of it, but it’s been a high priority for our association and we’re thrilled that it looks like we might get something over the finish line — knock on wood.”
The bill passed easily in the House and now awaits action in the Senate.
Scaling back “free bets”
The measure also would gradually reduce an operator’s percentage of “free bets” — basically, house money that usually carries restrictions — that can be deducted from net proceeds, or handle, to determine tax liability. Proponents hope the provision would both scale back that pervasive marketing strategy, visible in an onslaught of TV and radio ads, as well as produce more tax revenue.
Some states have imposed similar tiered steps to reduce the promotions by limiting operators’ ability to deduct them, Doura-Schawohl said, while others don’t allow any promotional deductions. But the impact of such limits on problem gambling remains unknown.
“This is something that would be wonderful research to understand the correlation or even the causation as it relates to the types of ads you’re getting in this state,” she said.
Colorado probably has seen a lot more “free bet” offers owing to its recent adoption of legalized sports betting and that area’s expansion, O’Keefe noted. Colorado currently lists 26 online operators and 17 retail outlets competing for new clients.
“As the market matures, as things kind of settle down, there will probably be a lot less of that,” she said of the free-bet enticements. “So we believe having this percentage of handle will probably coincide with where the market is going.”
Another provision of the bill would allow individuals with gambling issues to place themselves on an “exclusion list” that would bar them from either online or in-person betting and could connect them with treatment resources. Garnett said he hopes the lists eventually could include agreements with neighboring states, “because this is one area where we should all be talking to each other and coordinating.”
“We’re following national best practices when it comes to that,” he added. “And I think what you’ll see is when they promulgate rules through the Division of Gaming, they will reach out to anybody who signs up for that exclusion list and just say, ‘These are the resources that are available to you.’ So I think we’re finally going to have a comprehensive approach to helping folks out.”
The grant funding arrangement would be subject to review after 10 years. Garnett said the features of this bill will equip Colorado to meet the challenges of a rapidly evolving industry.
“The rest of the country is moving faster than we are in things like igaming, and so they are moving quickly around responsible and problem gaming issues,” he said. “What we need is the resources to be put in place, and some of the rules to be promulgated, around best practices in existence now. And then we’ll be in a position to adjust in the future.”