A Bill Legalizing Sports Betting In Colorado Cleared The Capitol, But There Are More Hurdles Ahead

John Locher/AP Photo
<p>A man watches a baseball game in the sports book at the South Point hotel-casino, Monday, May 14, 2018, in Las Vegas. The Supreme Court on Monday gave its go-ahead for states to allow gambling on sports across the nation.</p>
Photo: Sports Gambling In Las Vegas - AP Photo
A man watches a baseball game in the sports book at the South Point hotel-casino, Monday, May 14, 2018, in Las Vegas. The Supreme Court on Monday gave its go-ahead for states to allow gambling on sports across the nation.

The bill defied the odds.

Sports betting cleared the state Senate in the waning moments of the legislative session, and now awaits Gov. Jared Polis’ signature.

Polis has indicated he supports the bill. But even with his approval, the measure would still face many tests in the months ahead.

The legislature set a tax of 10 percent on sports betting proceeds. The tax must be approved by voters in November before any sports bets are allowed. Colorado’s constitution requires all tax increases go to a vote.

In addition, voters in Black Hawk, Central City and Cripple Creek must also approve any in-person sports gambling in those cities. Casinos are confined to those three historic mountain mining cities by the 1991 constitutional amendment that established gambling in Colorado. Existing casinos can apply for a license to open physical gambling locations, or sportsbooks, and casinos can develop mobile betting apps that can be used anywhere in the state.

A U.S. Supreme Court decision last year lifted the federal prohibition on sports gambling, giving states the authority to allow the wagers if they choose. Eight states are up and running and another 36 states are considering or have recently passed laws, according to ESPN.

Despite broad bipartisan support, not everyone is thrilled with the legislation. Teams like the Broncos and Rockies didn’t get much of what they asked for. Among other things, the teams unsuccessfully lobbied for casinos to use official league data and for betting kiosks to go in at stadiums and ballparks.

The horse track in Aurora and its associated off-track betting locations in the metro area also failed to get a piece of the action. Physical sportsbooks will be confined to the mountain casinos. The logic behind the split was that voters have historically sided with keeping casino-style games out of the metro area.

Despite the differences, the bill made it “because of house leadership,” said David Farahi, chief operating officer of Monarch Casino, which is building a 23-story hotel in Black Hawk.

Democratic House Majority Leader Alec Garnett and Republican Minority Leader Patrick Neville “kind of forced everybody into a room, and we were able to construct a bill that had a lot of support,” Farahi said.

The state estimates sports betting could bring in more than $11 million in tax revenue by the second year, although some view that as a low estimate. The bill directs the bulk of those proceeds to the state’s Water Plan, a series of conservation and water storage projects that lack a funding source.

An amendment to the bill also establishes a fund that will dole out payments to groups that could lose tax money from traditional table games and slots because of sports gambling. The State Historical Fund, for instance, relies on taxes from casino games.

Under the bill, the State Historical Fund can apply for funds from sports gambling proceeds to offset the loss in tax revenue if gamblers turn away from slots and table games to sports betting. Cities and counties that currently rely on casino revenue can also apply for funds.

Casinos were skeptical sports gambling would hurt traditional games.

“I think frankly it’s the opposite,” Farahi said.

His experience in other states shows sports betting brings new customers into the casinos and lifts overall revenue. This is critical for the casinos, as they’ve struggled to grow revenue in Colorado over the last few years.

Casinos are free to decide their own limits on sports wagers, in contrast to table games like poker, which are capped at $100 by the state Constitution. Some lawmakers worried about the lack of limits.

A small portion of the sports gambling tax proceeds, $130,000 annually, will go to Department of Human Services to fund gambling addiction services, including a crisis hotline