Colorado to Keep Excess Betting Tax Revenue for Water Projects
Next month, voters in Colorado will decide whether to support a measure that seeks to keep surplus tax revenue from sports betting and allocate it to various water initiatives across the state.
Colorado on the map of US. Colorado seeks to retain extra betting tax revenue.
LISTEN TO THIS ARTICLE:Proposition JJ, which will feature on the November ballot, asks Colorado voters to approve or reject the retention of excess tax revenue generated by legal sports betting. Sports betting became legal in Colorado following the November 2019 election, and online and retail sports betting was live by mid-2020. When the market launched, a $29 million cap was set on tax revenues from the 10% tax rate imposed on sports betting.
Since then, the market has outperformed initial projections. For example, in the 2022-23 fiscal year, tax revenue from sports betting reached $25.6 million, just under the $29 million limit. However, estimates for the 2023-24 budget year indicate the total could rise to $29.9 million, exceeding the cap by approximately $900,000.
Related: Colorado Tribes Sue State over Sports Betting Regulations
Keep the Revenue or Refund It?
Under current law, any tax revenue that surpasses this $29 million threshold must be returned to casinos and sports betting operators. Proposition JJ aims to change this, allowing the state to keep and use this excess revenue to fund water projects without increasing taxes.
Because the change concerns tax laws, voter approval is required. On November 5, 2024, Colorado residents will be asked: “Without raising taxes, may the state keep and spend all sports betting tax revenue above voter-approved limits to fund water conservation and protection projects instead of refunding revenue to casinos?”
Should voters approve Proposition JJ, Colorado will retain any sports betting tax revenue over the $29 million limit, using it for critical water conservation efforts. If the measure fails, the state will be required to refund the surplus to casinos and betting operators.
Currently, a significant portion of sports betting tax revenue already goes towards supporting water projects in the state. A smaller portion is also earmarked for addressing problem gambling.
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Future Projections for Excess Revenue
Proposition JJ comes at a time when excess tax revenues are expected to continue growing. The forecast for the 2023-24 fiscal year already predicts an overage of $900,000. Looking ahead, the surplus is projected to increase, with estimates suggesting $1.2 million in the 2024-25 fiscal year and $2.5 million for 2025-26.
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