Colorado Sports Betting Reform Heads to Governor’s Desk

It appears Colorado is about to make some big changes to its sports betting market.

Today, the Colorado Senate passed SB 131, which proposes new rules to help fight problem gambling. It will create new rules governing sportsbook deposits and advertising to protect struggling bettors. It also includes language to ensure that sports betting revenue directed to water projects does not decline year over year.

The bill now heads to the desk of Colorado Governor Jared Polis.

Colorado Changes Could Provide Roadmap for RG

The proposal currently sitting on the Governor’s desk contains two significant changes that other states will watch closely.

The first is a deposit limit, allowing sportsbooks to accept no more than 6 deposits within a 24-hour betting period. This will force losing bettors to take a break and cool off, giving them time to appreciate the financial impact of the losses. A forced break can make a big difference for someone struggling with problem gambling, and could save them from life-altering consequences. 

The other is a ban on sportsbooks' push notifications prompting bettors to place wagers or make deposits. While they can still communicate via text or email, push notifications can be far harder for bettors to ignore. That’s especially true for those struggling with addiction, and may be fighting hard to avoid logging into their sportsbook account.

Colorado will be the first major market to implement these changes, potentially providing a roadmap for other states as they seek to combat problem gambling.

Will Credit Card Ban, Ad Restrictions be Effective?

The two other changes proposed by SB 131 may sound significant, but there is reason to question their actual impact. 

While credit cards have been linked to problem gambling, they are not often used by bettors in the US. While states like Colorado have not banned the deposit method, most sportsbooks have refused to offer it. That means the change won't be felt by many operators or customers in the state’s betting market.  

The final change involves a ban on sportsbooks advertising at events where the majority of the audience is under 21. This likely wouldn’t apply to college athletics, and sportsbooks aren’t advertising at high school games. While this could cover advertising at events around the state, underage residents would still see plenty of promos on TV and the internet. 

“Trojan Horse” Strategy Borrowed From Tax Fights

When SB 131 was originally proposed, it was projected to cost the state over $2 million in annual tax revenue. That was largely due to major proposals, such as a full ban on prop bets, which were projected to lead to far fewer wagers being placed. While those changes were stripped during reviews in the Colorado legislature, they may have still served their purpose.

Over the last few years, states have attempted to add tax hikes for sportsbooks, but most have failed. The industry pushback would be too much for even small hikes, leading to a new “Trojan Horse” strategy. This tactic involved states proposing massive tax hikes that forced sportsbooks to negotiate, leading to the smaller hikes lawmakers had previously wanted.

The sports betting industry has been largely unwilling to accept limits on advertising or deposits, but they had far bigger concerns about SB 131. The bigger proposals the industry was able to get lawmakers to strip drew the most attention, helping the smaller ones get through. This feels similar to what we saw from states when fighting to raise taxes, and it could inspire others to follow their lead.