Colorado House Bill 1327, titled “Proposition DD: Legalization and Taxation of Sports Betting” was put to voters in a ballot measure and was narrowly approved on Tuesday, November 5. Colorado Governor, Jared Polis, signed Proposition DD into law in May 2019 and Colorado voters decided its final, successful outcome making Colorado the 19th state to legalize sports betting. The law will permit land-based sports betting at Colorado’s 33 casinos, as well as state-wide mobile betting. Notably, Proposition DD does not permit proposition bets for college sports.
The Colorado Division of Gaming is charged with regulating the new market which will allow three types of licenses to be submitted for approval. Each casino will be limited to a single online/mobile platform or “skin.” A master license will be issued to an operator that holds a retail gaming license in the state prior to May 1, 2020, or has obtained one through the purchase of an ownership interest in a casino that was in operation prior to May 1, 2020. A sports betting operator license or an internet license sport betting operator license will be allowed to contract with a master licensee to operate sports betting in person or online. The bill sets the maximum license fee at $125,000 and each license must be renewed every two years.
Proposition DD’s passing will allow legal bets to be placed as early as May, 2020 and will tax a casino’s net sports-betting proceeds at a 10% rate. This tax revenue will be used to pay for regulating sports betting in Colorado, a hold harmless fund, gambling addiction services, water projections, and other obligations. According to Colorado’s fiscal impact statement, lawmakers expect around $10 million in tax revenue in the first year based on the expectation that Colorado sports betting licensees would take between $1.3 billion to $1.5 billion in bets. We will continue to monitor this topic and provide updates on this legislation.