olorado became the 19th U.S. state to legalize some form of sports betting as election officials tallied Wednesday a close vote in which ballots for the measure narrowly surpassed “no” votes.
More than 1.4 million Coloradans voted Tuesday on Proposition DD, a bipartisan ballot measure crafted by lawmakers that legalizes sports betting next year and taxes it to fund a state water conservation plan. It led by a 51%-49% margin mid-afternoon Wednesday, according to unofficial returns, reported by the Associated Press. With more than 1.4 million ballots counted, Prop DD had 50.8% of the vote by late afternoon, according to the Colorado Secretary of State’s Office.
Most of Colorado’s 64 counties rejected the measure, but there was enough support in more populous areas like Denver, Arapahoe, Adams, Jefferson and Douglas counties to push the question into the “yes” column.
Starting next May, Colorado’s 33 casinos can offer in-person and online wagering on professional, collegiate, motor and Olympic sports. They will manage the betting either at their locations in Cripple Creek, Central City and Black Hawk, or online and through mobile devices.
The proposal calls for a 10% flat tax on net sports betting proceeds, which is estimated to total about $11 million in the next financial year that starts July 1. The Colorado Division of Gaming is tasked with regulating the market, and the state expects to collect up to $29 million a year from the new tax. Proposition DD asked for the $29 million so that lawmakers wouldn’t have to go back to voters as revenue from sports betting grows. State lawmakers passed a bill earlier this year allowing the Colorado Water Conservation Board to use that money to award grants to help meet the state’s water plan.
Democratic House Majority Leader Alec Garnett is a co-sponsor of the legislation behind the measure, along with Republican House Minority Leader Patrick Neville. Both lawmakers cited several factors Wednesday for the close vote, including voters’ rejection Tuesday of another tax measure that would have allowed the state to keep revenue it currently is obligated to refund to taxpayers.
The betting ballot language didn’t help, Garnett said. It read, in part: “Shall state taxes be increased by twenty-nine million dollars annually to fund state water projects and commitments and to pay for the regulation of sports betting.”
That language is inspired by the Taxpayer’s Bill of Rights (TABOR), a 1992 constitutional amendment that requires voter approval of any new taxes, tax increases, revenue retention measures and bonding. TABOR is the reason Colorado lawmakers turned to voters to legalize sports betting rather than doing it themselves.
“We campaigned hard to explain to people that this is a new tax — but on something that right now is totally illegal,” said Neville, a strong TABOR defender who opposed the other measure. “This was as close as it was because a lot of voters got the two mixed up.”
“TABOR requires us to start with, ‘Shall we raise taxes,’” Garnett said. “There’s a baseline of voters in Colorado — it doesn’t matter if you’re taxing casinos or puppies — they’re going to be against taxes, period.”
Gambling is strictly controlled in Colorado, and table limits are among the lowest in the country. Casino betting is restricted to card games, slots and roulette. Maximum bets are $100. “Colorado has a unique relationship with gaming, and many voters don’t know we already have a responsible framework to regulate it,” Garnett said.
It’s likely that sportsbooks companies that are already operating around the country, like DraftKings or FanDuel, would manage the betting for the casinos. The two companies spent more than $1.5 million combined to support Proposition DD.
Also, both Wynn Resorts and UK-based sports betting company Smarkets entered into a contract with casino developer Full House Resorts to offer online sports betting in Colorado this year in anticipation of the vote. “It’s great news that the people of Colorado have legalized sports betting, and we can’t wait to bring our sportsbook platform, SBK, to the Centennial State in 2020 through our partnership with Full House Resorts,” Smarkets CEO and founder Jason Trost said in a statement. “As more and more states adopt sports betting legislation, the industry will be brought further into the light and regulated in a more professional manner, compared with the previous status quo of offshore bookmakers dominating the market.”