Colorado Legislature Proposes Abolition of Tax Exemptions on Complimentary Sports Wagers
Posted: April 22, 2025, 10:33am.
Last updated: April 22, 2025, 10:33am.
@etfgodfather Todd Shriber ** (@ToddShriber) Financial & Gaming News #Taxes #SportsBetting**
In a push to strengthen Colorado's water fund, state lawmakers have brought forth Bill HB25-1311. This legislation looks to terminate the tax deduction that sportsbook operators currently enjoy on their free bet promotions given to customers.
Introduced by State Senator Dylan Roberts (D), House Bill 1311 (HB25-1311) proposes taxing the free bets provided by sportsbook operators—tools utilized for customer acquisition and retention. At present, various states let these wagers and promotional expenditures be deducted from net sports betting revenues.
Under the current law, sports betting and internet sports betting operators can exclude all payments made to players, all federal excise taxes, and a particular percentage of free bets from their net sports betting proceeds' calculation, as per the bill's summary.
If approved, the bill, with multiple co-sponsors in the Colorado House of Representatives, will end that deduction starting on September 1, 2025.
Precedents for Colorado's Tax Bill
Mobile sports betting has been operational in Colorado for almost five years. In a voter-approved move advertised as a revenue source for the Water Plan Implementation Cash Fund, Colorado residents authorized this form of betting.
Since its inception, Colorado has emerged as one of the fastest-growing sports betting markets in the country, generating financial benefits for the water fund. However, the state's population has been on a significant growth trajectory. In combination with climate change, this rapid growth makes politicians in Colorado seek new ways to boost water revenue.
HB25-1311, though recently proposed, could gain traction as it is expected to add an additional $12 million per year to the water fund's existing $30 million annual income from sports betting. Senator Roberts is confident that his bill is crucial for water management plans, water rights procurement, and the modernization of Colorado's irrigation systems.
Critically, Colorado has previously set limitations on free bets offered by sportsbook operators, albeit not taxing them directly.
Potential for Roberts' Bill to Pass
HB25-1311 is presented at a time of escalating state-level momentum to boost sports wagering taxes in states of diverse political affiliations. Some industry observers note that successful sports betting tax hikes were primarily driven by governors, implying Governor Jared Polis (D)'s support would likely speed up the bill's passage.
With water conservation and rights being a high-profile issue in Colorado, there is potential for bipartisan backing which might expedite the bill's progress.
From the industry's perspective, if the bill is signed into law, the increased tax liability will impact operators. However, Colorado's 10% tax on net gaming revenues, which would not be increased, remains one of the most favorable rates nationwide.
[1] Sources: Colorado General Assembly, HB25-1311 Summary.
[2] Sources: Legiscan, HB25-1311: Update Summary — April 8th, 2025.
[3] Sources: Denver Post, Colorado's sports betting bill with tax changes raising funds for water plan implementation moves forward.
[4] Sources: Colorado Politics, Details of Colorado's sports betting tax bill from HB25-1311 emerge as amendments introduced.
[5] Sources: Colorado Sun, Colorado's water future pins on sports betting thanks to billionaire environmentalist arrangement.
- The Colorado Legislature has proposed Bill HB25-1311 to strengthen the state's water fund, aiming to end the tax deduction enjoyed by sportsbook operators on free bets.
- The bill, introduced by State Senator Dylan Roberts (D), seeks to tax the free bets provided by sportsbook operators, currently deductible from net sports betting revenues in various states.
- If enacted, the tax deduction for free bets would be terminated starting September 1, 2025, as per the bill's summary.
- Mobile sports betting has been operational in Colorado for nearly five years, generating significant financial benefits for the Water Plan Implementation Cash Fund.
- HB25-1311 could potentially add an additional $12 million per year to the water fund's existing $30 million annual income from sports betting.
- The bill garnered bipartisan support due to Colorado's high profiling issues regarding water conservation and rights.
- The escalating state-level momentum to boost sports wagering taxes in states with diverse political affiliations might speed up the bill's passage, especially with Governor Jared Polis (D)'s potential support.
