Colorado's Latest Sports Betting Tax Change
Colorado Proposes Tax on Sportsbook Revenues Generated by Complimentary Wagers
Get the inside scoop from industry insider, Michael Savio, on Colorado's proposed tax changes for sports betting. Here's what you need to know:
Straight Up Facts
- The proposed change eliminates the deduction for free promotional bets, raising revenue for the state by millions.
- Colorado's operator tax rate is one of the lowest in the US at only 10%.
- If passed, sportsbooks may offer fewer bonus bets due to increased tax liabilities on promotional incentives.
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Going In-Depth
The proposed bill aims to end the deduction of free bets from taxable sports betting revenue, set to take effect in July 2026. Normally, sportsbooks could deduct a portion of free bets (promo credits) from their taxable revenue, with the deduction capped at 2.25% in 2024, decreasing to 1.75% by FY 2026-27.
Under House Bill 1311, starting in 2026, the deduction will be reduced to 1%, then entirely removed by July 2026. This means that sportsbooks will no longer be able to dodge taxes on free bets, resulting in a higher taxable base and increased tax revenue for the state.
Stepping Up the Stakes for Sportsbooks
With free bets now fully taxable, sportsbooks face heavier tax burdens on their promotional incentives. This could force them to slash the volume or value of their bonus bets offerings to remain profitable.
For example, in March, sportsbooks generated $36.2 million in gross gaming revenue, but taxable revenue plummeted to $21.9 million after deducting over $14 million in promotional credits. By removing the deduction, the full $36.2 million would become taxable, boosting tax expenses for sportsbooks.
Show Me the Money
The bill is projected to generate substantial revenue for the state. In FY 2025-26, it's expected to bring in $3.2 million despite the July 2026 implementation delay. By FY 2026-27, the revenue is projected to jump to $12.9 million, with $11.5 million in FY 2027-28. The extra dough will be allocated to fund various operations, including water conservation projects and the state's Sports Betting Fund.
Keep Your Eyes on the Ball
The law's enforcement has been delayed to mid-2026 to allow sportsbooks time to adjust. Currently, the bill has passed the Colorado Senate and is under further scrutiny in the House. Once approved, it'll head to the governor for final approval[1][2][5].
So there you have it! Keep an eye on Colorado's sports betting arena as the tax change unfolds and the landscape shifts! Stay tuned to Michael Savio's insights at iknowmybiz and casinos.com for all the latest casino news and betting tips!
- Michael Savio, an industry insider, reveals that Colorado's proposed bill aims to end the deduction of free bets from taxable sports betting revenue, which may potentially lead to a higher taxable base for the state's online casinos.
- If passed, sportsbooks in Las Vegas and other parts of Colorado may offer fewer bonus bets due to increased tax liabilities on promotional incentives, as a result of the proposed tax change eliminating the deduction for free promotional bets.
- The proposed tax change could also impact the overall finance and business of sports betting in Colorado, as sportsbooks face heavier tax burdens on promotional incentives and may need to adjust their offerings to remain profitable, thus potentially affecting the state's sports-betting revenue.
