Colorado Legislature forwards bill eliminating promotional tax breaks to the governor for approval
Colorado's Sports Betting Shake-up: Say Goodbye to Free Bet Deductions
Let's talk sports betting in Colorado
It's farewell to the good ol' free bets, Colorado! The state Senate has given a thumbs-up to HB 1311, a move that'll soon put an end to sports betting operators' ability to deduct their promotional bets from their taxable revenue. The bill sailed through with a vote of 28-7 and zero discussion - talk about blending in!
With the legislature wrapping up within the next day or so, this vote on the 6th of May was a crucial one.
The bill's journey has been a steady one, steamrollering its way from the House floor to the Senate in an impressive display of support. HB 1311 received a nod of approval from the House on April 28, 52-13, before making its way through the Senate Finance Committee (9-0) and the Senate Appropriations Committee (5-2).
The bill, as reworded, lays out a timeline for the reduction of promotional deductions. Come January 1, 2026, operators can only deduct a measly 2% of free bets, a figure that drops to 1% from January 1, 2026, and is completely wiped out by July 1, 2026. Now, you might think that's a long wait, but wait until you see the sweet, sweet state revenue this is going to bring in! A fiscal note suggests that this change could net at least $11 million more per year in taxes.
So, why all the fuss about free bets? Well, it turns out, those "free meals" weren't exactly free, hiding under the table and swallowing a chunk of the state's revenue. With this move, we're talking major dough, buddy!
The news here is that Colorado is about to say goodbye to the deduction of promotional bets, with operators no longer being able to write off free bets from their taxable income by July 2026. This legislative change is expected to give a significant boost to Colorado's tax revenue, adding around $11.5 million to the state's coffers by the 2027-28 fiscal year.
Where does the money go?
- The Wagering Recipients’ Hold Harmless Fund will snag the first 6% of the new revenue.
- The remaining revenue will be directed towards funding water projects in the state via the Colorado Water Plan Implementation Cash Fund.
Colorado aligning with national trends
The decision to tax free bets is in line with broader national moves to boost state budget revenues through changes in sports betting taxation. Other states like New Jersey and Ohio have also been mulling over raising tax rates on sports betting operators in 2025.
ON MY WAY OUT: Some operators, such as Smarkets, have waved goodbye to the Colorado market, potentially in response to the evolving regulatory and revenue landscape.
wrapping it up
Colorado appears on the brink of legitimizing HB1311, a law that will abolish promotional bet deductions and, by extension, increase the state's tax revenue. The new law is also set to channel funds towards water conservation projects in the state. With Governor Polis preparing to give HB 1311 the final nod, it's only a matter of time before Colorado's sports betting tax reform comes into full swing. Brace yourselves, Colorado! It's a new era for state coffers and the state's precious water resources.
- The upcoming legislation, HB 1311, in Colorado, aims to end the practice of sports betting operators deducting promotional bets from their taxable revenue, a change expected to take effect by July 2026.
- This legislative shift is predicted to significantly boost Colorado's tax revenue, with an estimated annual addition of $11.5 million to the state's coffers by the 2027-28 fiscal year.
- In response to these regulatory changes, some sports betting operators, such as Smarkets, may be exiting the Colorado market, potentially to adjust to the evolving revenue landscape.
