As The Details On Legalized Sports Betting Emerge, Competition Bursts Out Of The Gate
The details are starting to emerge on what sports gambling in Colorado will look like.
In a document obtained by CPR prepared by the state Department of Revenue, there are a number of scenarios for sports wagers.
It appears from the document that the Department of Revenue believes it makes the most sense for them to regulate it.
“We think that it is a better fit for the Department of Revenue, just given that we do have enforcement capabilities for horse racing, casinos, the lottery, etc.,” said Michael Hartman, executive director of the Department of Revenue.
The door to state-sanctioned sports betting was opened after a Supreme Court decision made in May.
A few things are certain: Starting with the fact that voters will have their say on sports gambling, at least when it come to taxes. The state constitution requires a vote on any new taxes, and the Department of Revenue is recommending a tax rate of between 6.5 and 16 percent of Adjusted Gross Proceeds.
“If the tax is set too high, it will discourage players from moving out of the black market,” according to the document.
Licensed facilities for sports betting should pay fees to cover the cost of regulation, according to the Department of Revenue. A commission, either under the Division of Gaming or Racing or a new division, should be given the power by the legislature to create permitted games and betting limits as well as conduct enforcement.
But importantly, the Department of Revenue believes the state’s horse track and mountain casinos, which don’t often agree on issues, should both get a piece of sports betting no matter which Department or division regulates it.
“From a practical political standpoint I think that both of those industries are going to have to have some level of involvement or it’s going to be pretty difficult to get anything passed [through the legislature],” Hartman said.
The casinos aren’t convinced. They don’t believe that the horse track is the proper place for this type of gambling.
“We believe it will be the voters of Colorado that decide whether they want sports betting at all,” said David Farahi, chief operating officer for Monarch Casino and Resorts.
That’s been the history in Colorado, Farahi said. The last time the horse track tried to expand casino-style games, voters defeated that at the polls.
Farahi said he has reviewed the Department of Revenue’s policy document, and doesn’t agree with all of it. Farahi also indicated that plans to allow both sides to be involved in sport gaming without a costly legal battle are still ongoing.
“I can say that conversations are ongoing,” Farahi said.
Calls for comment from the track operator, Mile High Racing, through their attorney were not immediately returned.
One thing DOR feels pretty strongly about is the state should not pay an “integrity fee” to sports leagues. Hartman said leagues have an strong incentive to drug test and maintain fairness already.
“We believe that the integrity fees are likely just an attempt to generate additional revenue for the owners in those leagues,” Hartman said.
Another thing that is certain at this time is the use mobile apps. The Department of Revenue believes a person should first have to sign up at a brick and mortar track or casino to verify their age. Apps would also have some age and location verification built in. The Department of Revenue would also require apps to have a feature allowing people to shut it down for a certain period if they feel like they’re becoming addicted.
The state legislature will have to act to make sports betting at licensed facilities legal under the criminal code, while maintaining that it would be illegal for a person to place bets outside of those entities. Employees where bets are taken would have to be fingerprinted with background, tax and credit checks.
Some states have talked about putting sports betting under the lottery program. The benefit would be that people could place bets on kiosks that are already around the state.
But in Colorado, that would require a change to the constitution. Further complicating that plan is the fact that the skills of regulators for lotteries don’t align with sports betting as the skills of regulators in the Division of Gaming and Racing do.
“I think that it likely will not end up in the lottery,” Hartman admitted.
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