Passage Of Prop JJ Lifts Cap On Colorado Sports Betting Tax Revenue
Colorado voters sent a clear message on Election Day when they passed Proposition JJ with 76.3% support. The ballot measure’s passage removes a cap on the tax revenue that the state can collect from sportsbooks.
The news comes as the Colorado sports betting industry has grown far beyond what Coloradans imagined when voters initially passed Proposition DD in 2019, legalizing sports wagering.
Prop DD allowed the state to keep up to $29 million in sports betting tax revenue while mandating that any excess would go back to sportsbooks and their casino partners. Prop JJ’s passing removes that yearly cap, allowing the state to keep 100% of sports betting taxes, which largely go toward funding Colorado Water Plan projects.
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Water projects get more funding
Sports betting was a much smaller industry when Colorado sports betting became legal. The state initially had projected $29 million in annual tax revenue from legal sports betting.
However, legal sports wagering has blown up in various locations around the nation since 2021. More importantly, Colorado bettors have shown their willingness to punch above their weight class. The state consistently has produced higher monthly betting volumes than other markets with similar or larger populations.
Colorado’s population has increased nominally, too, adding around 120,000 residents in the last five years.
Given these numbers, Coloradans faced an increased demand for water. They also had a potential way to make that happen that wasn’t fully tapped and voted to put that solution into action.
State Sen. Dylan Roberts (D-Frisco) co-sponsored the bill and said the following after it passed:
“This is an exciting and important day for Colorado’s water future. I am very grateful that the voters of Colorado have agreed that we need to continue to invest as much as we can into this important endeavor.”
Forecasts dictated the ballot measure
Colorado state law taxes sports betting operators 10% of their monthly proceeds. That tax revenue has grown significantly year over year and exceeded $30 million in Fiscal Year 2024, which ended on June 30.
- FY 2021: $8.1 million
- FY 2022: $12.4 million
- FY 2023: $25.6 million
- FY 2024: $30.5 million
After administrative costs, FY 2024’s tax revenue totaled $29.9 million.
The state’s sports betting industry continues to grow, too, and future tax revenue projections exceed $29 million, calling for $30.2 million after expenses in FY 2025 and $31.5 million in FY 2026.
Had Prop JJ not passed, any excess over $29 million would have gone back to Colorado sportsbooks rather than to the state.
What water projects does the state have?
The state of Colorado dictates where to appropriate its sports betting taxes through the Colorado Water Plan, which aims to help the state meet its demands for water through conservation and water development.
The Colorado Water Conservation Board released its first Water Plan in 2015. Its most recent revision came in 2023 and aimed to consider potential scenarios and risks through 2050.
Here are some examples of various water projects that the CWCB funds:
- Water storage and supplies, such as reservoirs and aquifers
- Environmental and recreation, such as watershed health
- Conservation and land use, including drought planning
- Agricultural, including water efficiency improvements and technical assistance
- Water education, outreach efforts and other innovations
Estimates also predict the CWCB will need to fund about $3.85 billion in loans and grants over the next 30 years. Current funding only accounts for about $2.35 billion.
Prop JJ won’t solve all of the state’s needs, but it will give the CWCB more resources to fund better projects and more flexibility to meet the state’s future needs.
