Colorado Amendment to Eliminate Cap on Sports Betting Tax Passes

Significant changes are coming to the Centennial State.

Colorado residents voted in favor of sports betting Amendment JJ in Tuesday’s election. The amendment eliminated a $29 million cap on sports betting annual tax revenue for the state. Any revenue over that cap was returned to sportsbook operators but will now be kept for Colorado water projects.

The Amendment was passed with over 75% of the vote, showing strong support from residents across the state. 

Growing Market Led to Change

Last year was the first Colorado had to give up a significant chunk of tax revenue. They refunded operators almost $1 million for 2023, money they could have used. That began discussions in the state legislature to eliminate the cap, which they have now achieved.

The Centennial State is on pace to shatter last year’s numbers, and there is little reason to believe it will cool off any time soon. 

Colorado Sportsbooks Did Not Oppose Proposal

While sportsbooks will lose out on refunds, they remained silent as voters have considered the amendment over the last few months. They see the amendment as an alternative to raising the state’s 10% tax rate on operators, which was a tradeoff they were willing to make.

States across the country have been aggressively raising tax rates as their markets continue to grow. Colorado’s is now one of the lowest, making it a valuable market among sportsbooks. With the cap eliminated, the hope is that the state will maintain the 10% rate as a result.

With sportsbooks not investing in the opposition, it ensured the amendment would pass.

Water Projects Drove Support

Unlike many other US sports betting markets, the tax revenue is not used to fund education. Instead, it is used to fund water projects across the state. Those projects are vitally important, but they struggled to find funding before sports betting became legal.

Like many western states, Colorado has seen its freshwater supply begin to shrink. Denver's continued growth has made this worse, as the population continues to rise at an incredible rate. While sports betting tax revenue has had a significant impact, the projects can use all the funding they can get. 

Residents in the state have been supporting these projects, knowing they will need solutions soon. That gave voters all the necessary reason to support Amendment JJ on Tuesday.