Colorado presents House Bill 1311 to tax free bets

Colorado’s House Finance Committee has given its approval to new legislation aimed to increase tax revenue from free bets. 

House Bill 1311 represents an amendment to Colorado Revised Statutes and the tax framework for sportsbook operators.

Since 2019, betting companies in the Centennial State have been levied with a 10% tax on net sports betting proceeds with deductions permitted for federal taxes, payouts to players, and a small percentage of free bets. 

House Bill 1311, if passed, will herald change with the legislation proposing that an operator “shall not deduct any free bets placed by players,” meaning additional tax revenue will be generated from promotional wagers.

The legislation was presented by Speaker of the House Julie McCluskie and Rep. Matt Soper, with additional backing from Sen. Dylan Roberts, receiving a 9-3 vote from the Finance Committee.

It will now proceed to the Committee on Appropriations.

Supporters of the bill have projected that an additional $12 million would be available for state water programs (in the first year of implementation), representing an increase of almost 30%. 

It would enable lawmakers to maximise tax returns from sports betting, beyond the current contribution of approximately $30m that is sent to the state purse.

Sen. Roberts believes the pursuit of House Bill 1311 is critical, given the growing challenges posed to the water supply infrastructure. This includes increased demand and excessive drought conditions, exacerbated by climate change. 

The injection of additional funding would significantly assist long-term improvements, including key infrastructure upgrades, conservation efforts, and water rights acquisitions.

Two years ago, Colorado voters approved the removal of a $29m cap on sportsbook tax revenues, giving the state more flexibility to raise and collect funds, but this option has not been pursued aggressively. 

Instead, a 10% rate has been maintained, with incremental gains sought like those set out in House Bill 1311.

Conversely, other states, such as Illinois, have hiked their maximum tax rate from 15% to 40%, while Ohio and Massachusetts have also introduced significant increases to stimulate state revenues and associated projects.

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