Colorado Approaching Sports Betting With A Practical Eye

Written By Bart Shirley on December 11, 2018Last Updated on March 10, 2022
Colorado officials seem to have a rational mindset when it comes to legalizing sports betting.

Colorado wants to join the second wave of states to legalize sports betting. However, officials in the Centennial State seem to be approaching the practice with a rational mindset uncommon to most state overseers.

Planning for sports betting seems to be a wise decision. A 2017 Oxford Economics study estimated that annual revenue from sports betting in Colorado could exceed $300 million.

The state attorney general already issued an opinion that sports betting’s introduction could be achieved using a statute, rather than a constitutional amendment. So, the road to accepting wagers on sports in Colorado may be shorter than in other states. As such, portions of the government, like the Colorado Department of Revenue, are already preparing for sports betting’s arrival.

Sports betting strategy document tells a reasonable tale

The Colorado Department of Revenue (DOR) believes itself to be the logical oversight body for sports betting in Colorado. The DOR occupies a similar role regarding casino gambling and horse racing in the state.

Accordingly, the agency is already thinking about the different issues confronting sports betting’s introduction. Colorado Public Radio recently obtained a document from the agency that outlines the DOR’s thought process.

The first part of the document outlines the organizational possibilities for managing sports betting in the state. Four different divisions of the department (Racing, Enforcement, Gaming and Lottery) are listed as possible homes for oversight, although Lottery is the least likely of the four.

The meat of the document, however, is its list of 14 minimum requirements for a regulatory framework over sports betting in Colorado. The list reveals both wisdom and concern are at the heart of introducing wagering on sporting events. Some of the highlights from the list include the following:

Competitive tax rate

The recommended tax rate on sports betting is pegged between 6.5 and 16 percent. The report calls for the rate to adjust on an annual basis. The department cautions against excessive tax rates, as that encourages players to seek out black market sites.

Allow mobile wagering

In no uncertain terms does the report emphasize the importance of allowing mobile and online sports betting in Colorado. However, the proposed framework specifies that all the activity, from the wagering to the server maintenance, must take place in-state. Players must physically set up their sports betting accounts at the resident casinos or tracks.

Both casinos and racetracks can offer sports betting

The DOR believes that all gambling venues in Colorado should have the ability to offer sports betting. This particular item is a guaranteed point of contention. Casino interests, which have traditionally held political serve in the state, want to reserve sports betting for themselves, rather than share with the horseracing people.

No integrity fees

Rather than displaying any of the vacillation seen in places like West Virginia or Washington, D.C., the DOR unequivocally repudiates the idea of paying money to the sports leagues to uphold integrity. State officials have gone so far as to challenge the sports leagues to prove they won’t just pocket the funds.

Instead, the report expresses the view that integrity over betting should lie with the states. Quite reasonably, the DOR feels that its regulatory experience and framework is superior to any ad hoc program the leagues could form.

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Colorado betting limits may hamper growth and do little else

The state’s betting limits — one aspect of legalizing sports betting in Colorado — go largely unaddressed by the report. The only mention about them is a statement that the commission wants autonomy to dictate the limits itself.

However, that mild assertion is likely not going to be sufficient to overcome the strict $100 limit in Colorado. Colorado is one of two states (the other is South Dakota) with mandated betting limits, and voters only approved the limit raise to $100 back in 2008.

The problem with these limits is twofold. The first issue is they don’t actually restrict people from losing gobs of money through gambling.

The law simply limits the maximum amount for a single wager to $100. However, there is no limit on the number of wagers a player can make. So, for a practice like sports betting, with its hundreds of variations available for wagering, thousands of dollars can still leave a bettor’s wallet.

On the other hand, the limit may have the effect of squeezing potential bettors into black market sites. Operators will have fewer options for promotions or other perks that they can offer to players. Thus, Coloradans will have less incentive to try the state’s sites.

Unfortunately, it will take a constitutional amendment to raise the limit further. So, much like a traveler moving east or west across the state, lawmakers still have some high mountains to climb before they’re home free.

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Bart Shirley

Bart Shirley is a senior evergreen content writer for Playin USA. He?s been writing and reporting on the gambling industry since 2013. Prior to working for Playin USA, Shirley was a feature writer for QuadJacks, a site covering issues in poker. He also writes for BonusCodePoker, a poker satire site that lampoons the lighter side of card games. Shirley is a graduate of the MBA program at Texas Christian University?s Neeley School of Business and has a degree in English from Texas A&M University. He grew up in Houston, TX, and lives in Katy, just west of Houston. Shirley is also a former high school teacher. He is married, has one daughter, and practices Brazilian jiu jitsu in his spare time.

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