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Colorado voters to decide if sports betting tax should go to water conservation

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(The Center Square) – Colorado voters in November will be asked to decide if the state should keep and spend revenue from an existing sports betting tax above $29 million on water conservation projects.

House Bill 24-1436, sponsored by Speaker Julie McCluskie, D-Dillon, Rep. Marc Catlin, R-Montrose, and Sens. Dylan Roberts, D-Frisco and Cleave Simpson, R-Alamosa, was signed into law by Democrat Gov. Jared Polis on Monday along with six other bills during a four-city trip along the western slope.

Legalized sports betting was approved by 51.4% of Colorado voters who voted for Proposition DD in 2019. It included a 10% tax on those conducting sports betting. The money was designated for implementation of the state’s water plan and other public projects.

Voters approved an annual revenue amount of $29 million for administrative and other costs when they approved legalized sports betting. The November ballot measure exempts the revenue from the state’s TABOR limit, which would refund the tax revenue to sports betting operators.

Currently, the tax revenue pays for the ongoing administration of the state’s gaming division, sends $130,000 annually to help those with gambling disorders and the remaining funds are transferred to the Water Plan Implementation Cash Fund.

If voters approve the ballot measure in November, annual tax revenue exceeding the $29 million benchmark is to be transferred to the Water Plan Implementation Cash Fund. If voters reject the measure, tax revenue collected above $29 million will be refunded to the licensed sports betting operations in a specific fund to be created for the refund.

“Over the past five years, more than $65 million has been generated from sports betting tax revenue to fund projects that would ensure our state has enough water to meet its needs by 2050,” Conservation Colorado, a nonprofit organization focused on environmental concerns, posted on X, the platform formerly known as Twitter. “This bill increases funding for these important water conservation projects rather than increasing the profits of casinos and sports betting operators.”

The Colorado Gaming Association didn’t immediately respond to a request for a comment, but reported tax revenue projections exceeded estimates for water conservation during the first years of legalized sports betting.

“In its first year, Colorado sports betting generated nearly five times more money for statewide water projects than anticipated,” according to the Colorado Gaming Association website. “State officials’ initial projects for 2020-2021 were between $1.5 and $1.7 million. Recent reports indicate that the gaming industry has generated more than $11.4 million for Colorado’s Water Conservation Board. As the sports gambling industry continues to grow, so will Colorado’s prospects of a secure water future.”

To date, the state’s sports betting tax revenue hasn’t exceeded the $29 million benchmark set in the legislation. However, the bill’s fiscal note, compiled by the state nonpartisan legislative council, estimated the amount of revenue exceeding $29 million will be $2.8 million in fiscal year 2023-2024, $5.2 million in 2024-2025 and $7.2 million in 2025-2026. There’s a lagged timeline for revenue collection, distribution and spending, so the tax revenue wouldn’t be available until September of the following fiscal year.

The first Colorado Water Plan was published in 2015 to help create and implement strategies to solve the state’s water challenges. The 2023 Colorado Water Plan was adopted by the Colorado Water Conservation Board last January and analyzed the state’s water issues through 2050.

“It identifies a range of tools like funding, equity, land use planning, storage, efficiency, education, and forest health to address identified risks and challenges,” according to its website.

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