Colorado Proposal to Eliminate Tax Cap to be on November Ballot

The Centennial State could soon see an increase in tax revenue from its sports betting market. 

Colorado Proposition JJ will officially be on the ballot this November. The proposal would eliminate a $29 million tax revenue cap. The state is currently required to refund any tax revenue over that amount back to sports betting operators. 

The tax revenue cap was implemented when sports betting was legalized in 2019. It wasn’t much of an issue over the first few years, as revenue numbers were around $29 million. However, a 2022 law limiting the amount of free bet operators offered by operators led to a spike in tax revenue, leading to legislatures looking to remove the cap.

The state sends most of its tax revenue to the Colorado Water Conservation Board (CWCB), which funds water projects. Concerns over the availability of fresh water in the region have spurred the state to find solutions. Projects include widening canals to get water to farmers and ranchers and supporting water recreation activities across the state.

The CWCB estimates it will receive $3.85 billion in loan requests over the next 30 years. That number could increase if further water restrictions are placed on the Colorado River, the primary freshwater source for the entire region.

Operators Argue Against Prop

Unsurprisingly, sports betting operators in Colorado are crying foul over the proposed change. While they have not received much in terms of refunds, that changed in 2023 after a limitation was placed on the amount of free bets they could offer. 

Bookmakers claim that this change would be the equivalent of a tax increase. They entered the market knowing they would be entitled those refunds, but the state is now changing the rules. Expect to see them continue to lobby against the proposal ahead of November.