Proposition bets are popular in Colorado — too popular (and lucrative) to kill.
State lawmakers voted Tuesday morning to remove a proposed ban on prop bets from Senate Bill 131, a larger sports gambling reform measure. Prop bets — wagers on things like individual player performance — have been linked by advocates to gambling addiction and corruption in sports.
This story was produced as part of the Colorado Capitol News Alliance. It first appeared at cpr.org.
The effort to rein in the growth of sports gambling met the cold reality of a tight state budget. The bill will still require data collection and other changes, like limiting advertising and push notifications and enacting daily deposit limits. But the removal of the ban on prop bets leaves much of the structure of sports gambling in Colorado as it exists today.
Prop bets have become a centerpiece of the sports gambling industry. Sportsbooks often package prop bets into complex, high-risk, high-reward wagers, where three or more outcomes have to happen for a single bet to win.
Sportsbooks warned lawmakers that banning those bets could cost Colorado millions of dollars in tax revenue at a time when the state is contending with a major budget deficit. Much of the tax revenue from sports gambling is directed to water projects approved by state authorities.
Lawmakers were worried that the cash-strapped general fund would be on the hook to fund water projects.
Sen. Matt Ball, D-Denver, a prime sponsor of the bill, said removing the ban on prop bets was a “friendly amendment” and would reduce the cost of the bill: from $2.4 million lost sports betting revenue to a loss of $800,000 in the first fiscal year.
So there’s still a cost, “but it does greatly reduce the fiscal impact,” Ball told lawmakers at the Senate Appropriations Committee.
The loss of $800,000 in revenue is because the bill would still ban the use of credit cards for sports gambling. Without citing data, Ball said the “fiscal impact of that will be limited to wagers by individuals with a gambling problem. Those are the individuals who would be using a credit card who can’t switch to a debit card because they’re betting with money that they don’t have.”
Most, but not all, current online sportsbooks operating in the state already voluntarily decline to accept credit cards, but a handful that do would be restricted if the bill becomes law.
The state would still spend about $1.25 million in the first two fiscal years under the bill to collect data from sportsbooks and publish a report compiling the information.
The proposed spending in a tight budget year means final passage of the bill and the governor’s signature are by no means a sure thing.
There’s some research that states with sports gambling have higher rates of bankruptcies, auto loan defaults and lower overall financial health. But there’s little data about state-specific addiction rates or how bettors develop disorders for an industry that is now fully online, mostly played on phone-based apps.
The bill retains other reform provisions: limiting advertising (which broadcasters still oppose), capping daily deposits to five times a day and banning certain push notifications for the solicitation of bets.
The bill passed the Senate Appropriations Committee with the prop bet ban removed. It now moves to the full Senate, and then must still clear the House before the end of the legislative session next month.
This story was produced by the Capitol News Alliance, a collaboration between KUNC News, Colorado Public Radio, Rocky Mountain PBS, and The Colorado Sun, with support from news outlets throughout the state. Startup funding for the Alliance was provided in part by the Corporation for Public Broadcasting.