Colorado budget analysts expect tax revenue from sports betting to double in the coming year in what would amount to a touchdown, a field goal and a safety for the Colorado water projects.
The Governor’s Office of State Planning and Budgeting and the nonpartisan Legislative Council Staff project that sports betting tax revenues will be as high as $24 million in the 2022-23 fiscal year, which began July 1. Of that money, $22.5 million would go toward the Colorado Water Plan, the project aimed at ensuring Colorado has enough water for its growing population amid climate change-induced drought.
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The state collected only about $12.4 million in sports betting taxes in the 2021-22 fiscal year, which ended June 30, about $11.4 million of which will go toward the water plan. Hence, the touchdown ($6 million), field goal ($3 million) and safety ($2 million) analogy.
Bryce Cook, chief economist for OSBP, said the reason for the big forecast increase is that the legislature passed a bill this year limiting the number of free bets that sports betting operators can offer starting Jan.1. (Colorado imposes a 10% tax on casinos’ net sports betting proceeds. A free bet doesn’t generate any proceeds.)
“We’ve also just seen record wagers this year in sports betting,” Cook said.
When voters passed Proposition DD in 2019, allowing sports betting in Colorado, nonpartisan legislative analysts expected Colorado to make about $16 million each year in sports betting 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.
The OSPB, in its quarterly economic and tax revenue forecast presented to the legislature’s Joint Budget Committee on Dec. 20, said the agency expects the state to collect $25 million in sports betting tax revenue in the 2023-24 fiscal year and $27 million in the 2024-25 fiscal year.
Legislative Council Staff had similar sports betting tax revenue projections, forecasting $22 million in the current fiscal year, $26.2 million in the 2023-24 fiscal year and $28.9 million in the 2024-25 fiscal year.
October was the second highest month in terms of total sport betting wagers in Colorado since sports betting began in Colorado in May 2020. About $526 million was wagered, a 17% increase over the prior month and a 7.2% year-over-year increase.
The October wagers netted the state $2.3 million in tax revenue.