Proposition JJ: Colorado’s Excess Sports Betting Tax Would Be Used for Water Conservation Projects
Date: 2024-10-08 Author: Alex Crawford Categories: SPORTS BETTING
An initiative will be on the ballot in Colorado next month that would ask residents of the state to decide whether to preserve excess tax revenue from legal betting. Sports betting was legalized in Colorado on a November 2019 ballot, leading to a rapid launch of online and retail betting in May and June 2020. However, the state placed a $29 million cap on tax revenue from the activity, with a 10% tax rate.
However, the sports betting market has exceeded initial expectations, with tax revenue for the 2022-23 budget year coming in at $25.6 million. While that amount is below the $29 million cap, preliminary results for the 2023-24 budget year indicate $29.9 million, $0.9 million above the current cap.
What does that mean under current law? Under the current system, tax revenues above the $29 million cap must be returned to casinos and sports betting operators. That’s why lawmakers are backing Proposition JJ, which would allow the state to retain and use excess betting tax revenue to fund water projects. It’s important to note that if the proposal passes, taxes would not be raised.
Retain Excess Tax Revenue or Return It to Gaming
Since the changes to the laws affect taxes, they must be approved by Colorado voters. So on November 5, 2024, voters will be asked: “Without raising taxes, can the state retain and use all sports betting tax revenue above the voter-approved cap to fund water conservation and protection projects instead of refunding casino revenue?”
If the proposal is approved by voters, Colorado would retain and use excess tax revenue above the $29 million cap to benefit water projects. Otherwise, if Coloradans vote against Proposition JJ, “the state would refund casinos and sports betting operators when sports betting tax revenue exceeds previously approved amounts.”
Most of the state’s sports betting tax revenue is already used to benefit water projects in Colorado. Not surprisingly, some of the revenue is also earmarked for problem gambling treatment.
Proposition JJ is not a surprise given the $0.9 million in tax revenue expected from betting above the $29 million cap for the 2023-24 budget year. Further projections indicate that surplus revenue will continue to grow, reaching $1.2 million and $2.5 million for budget years 2024-25 and 2025-26, respectively.
