When Colorado legalized sports wagering back in 2019, bettors across the state jumped for joy. Economists put forth a wealth of predictions regarding revenue possibilities, and many officials stood hopeful for a steady stream of earnings.
So, what’s the bottom line? As the first legal year of sports betting comes to a close in the Centennial State, here’s what we know about the tax proceeds and how our government is using them.
Sports Betting Tax Revenue in Colorado
Before it became legal, The Legislative Council of the Colorado General Assembly predicted that the enterprise could raise $6 million by the end of the 2020 fiscal year. But those numbers quickly dropped, and forecasts have changed to set the numbers between $1.5 and $1.7 million.
While the fiscal year is still not over, sports betting has made a major dent in tax collector’s pockets with over $814,000 in revenue collected so far.
The vast majority of those proceeds have come from online gambling on sports, rather than retail wagering at one of Colorado’s three casino cities. Considering that online retailers have only been active since May 2020, these numbers are nothing to scoff at.
Even though revenue may be smaller than predictions had put forth, experts urge us to play the waiting game. Many cite promotional free bets as the main reason for the lack of proceeds since free bets generate no revenue for the sportsbook and the government cannot tax them. It is possible that when these promotions end and customers begin to spend money from their own pockets, the market will stabilize, and revenue will climb back up like in other states.
How Does Colorado Compare to Other States?
Of course, Colorado isn’t alone. Other states like Pennsylvania are also reaping the rewards, as sites offering legal gambling in PA present both a smorgasbord of fun for bettors and a hefty sum of taxable revenue for the state itself. It all began back in 2017 when the house passed Bill 271 legalizing sports betting across the board that has only grown more extensive with the launch of online wagering in mid-2019. All in all, PA has seen over $73 million in tax revenue so far.
That’s a significant number, but it’s important to note that Pennsylvania has had legalized sports betting far longer than Colorado. So, what about states which have launched full-scale operations more recently?
Indiana also legalized back in 2019 and has brought in $12 million in taxes so far, while New Hampshire has a similar timeline and has brought in around $4.5 million. As the market becomes more stable in Colorado, we’ll get a more accurate comparison. However, we can already see considerable potential for profits.
Colorado Tax Spending & What the Future Holds
So, how does the Colorado government plan to spend all this tax revenue? There is a small section of profits promised for problem gambling assistance and other supporting services, but the vast majority of it will go to funding the Colorado Water Plan.
The plan lays out a guide for river systems management, farm water preservation, and keeping up with water shortages across the state. Lawmakers have struggled to find a source of income for the plan since its creation back in 2015, and sports betting taxes are expected to carry it almost entirely.
As Colorado moves into a new era of legalized online sports betting, the future looks bright. Residents will be able to participate in a vast wagering market, offering excitement and entertainment along with a chance to support the community. With opportunities for fun plus vital tax revenue flowing in, it’s a win-win situation for the Centennial State.