Sports betting profits are exceeding expectations. Prop JJ would let the state keep the extra tax revenue

DENVER — Since Coloradans voted to legalize sports betting four years ago, the popularity of these wagers has far surpassed expectations. A tax on those bets is raising tens of millions of dollars for the state each year. But that extra tax revenue means Colorado voters have a choice to make: On the ballot this election, Proposition JJ asks voters whether to let the state keep the extra money or return it to the casinos and sports betting operators.

“Colorado was one of the early states to come online with sports betting,” said Peggi O’Keefe, the president of the Colorado Gaming Association, which represents much of the gambling industry in the state.

At the start, there wasn’t much information available to help lawmakers guess how much money sports betting might bring in.

“Everybody is very pleased that the revenues have come in higher than expected,” O’Keefe said.

Colorado’s casinos and online sports betting apps are raking in billions of dollars, and the 10% tax established in 2019 by Proposition DD means the state is seeing a significant chunk of that.

“From the gaming industry, we’ve been fairly pleased,” O’Keefe said. “We’ve seen several of these online operators move to the state, which has added additional jobs.”

O’Keefe said Colorado’s gaming industry was supportive of the tax on sports betting, and while the Colorado Gaming Association isn’t taking a formal stance on Proposition JJ, she sees it as a way to maintain the status quo of a 10% sports betting tax going to the state.

A “yes” vote on Proposition JJ would remove the cap that currently prevents the state from collecting more than $29 million per year, allowing Colorado to keep the full 10% tax revenue, no matter how big that grows.

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In the last four years, the sports betting tax has generated roughly $50 million, and the state now expects that number to continue increasing.

Where that money is going might surprise you.

“It’s definitely unique in Colorado that sports betting funding is tied to water projects,” said Cole Bedford, the chief operating officer for the Colorado Water Conservation Board.

Bedford said while marrying sports betting with water conservation might be unusual, it has been an effective way to fund the state’s Water Plan, “a vision for how Colorado will use water and conserve water in the future.”

A small portion of the tax revenue collected from sports betting goes toward administration of the Colorado Department of Revenue’s Division of Gaming, which oversees the industry. But the vast majority of that money goes to the Water Plan Implementation Fund.

The State then divvies out the money to partners — including counties, municipalities and nonprofits — through Water Plan grants awarded twice a year.

The projects include everything from watershed health and recreation to agriculture and local water supplies. Bedford said one recent successful project was the Maybell Diversion, which got rid of a dangerous, old concrete dam on the Yampa river in northwestern Colorado.

“The new project replaced that old dam with a boulder structure that’s safer for recreators, and it’s also allowed some fish passage. But it’s still able to be used for irrigation,” Bedford said.

Another recently funded project in Monte Vista will allow a local nonprofit to replace about a mile-long stretch of stream bank on the Rio Grande.

No matter what voters decide on Proposition JJ, Bedford said the state will continue to support projects “that conserve and use Colorado’s water as effectively as possible.” The Colorado Water Conservation Board is not taking a position on the ballot measure. But because the Water Plan grants are so competitive and in such high demand, lifting the tax revenue cap would increase available funding and allow for more projects.

There isn’t any organized opposition to Proposition JJ, however, some Coloradans worry about linking a crucial resource like water to gambling, which can at times lead to problematic addictions.

Sports betting profits are exceeding expectations. Prop JJ would let the state keep the extra tax revenue

The Problem Gambling Coalition of Colorado, which provides prevention and treatment resources, isn’t taking a position on Proposition JJ. But their president Jamie Glick said as sports betting grows, so has the need for help.

“There’s certainly been a significant increase in people who are reaching out for help,” Glick said. But it’s hard for service providers to keep up.

“There’s no federal money that’s available for prevention and treatment of problem gambling, and so it really is up to the state, and right now it’s just significantly underfunded,” he said.

Still, resources are available confidentially and free of cost through the Problem Gambling Coalition’s center in Lakewood, Colorado. You can also get help online at cogamblerhelp.org or by calling or texting 1-800-GAMBLER.

Oftentimes, “people wait until they’re in a deep hole, either financially or through disruptive relationships,” Glick said. “I would just encourage people to reach out, even if they they’re not sure.”

Denver7 went in-depth on sports betting legalization and addiction issues. You can read our report here or view the story in the player below.

Sports betting brings in more than $8 billion in bets since May 2020