Colorado to Vote on $29M Cap Exemption for Water Projects from Sports Betting Tax

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This November, Colorado citizens might find themselves at the heart of a crucial decision – the potential exemption on the sports betting taxes cap estimated at $29 million, lucratively channeled towards water projects in the region. An intriguing prospect for the Colorado locals thanks to House Bill 24-1436 (HB 24-1436), gaining bipartisan endorsement in both houses of the state legislature. If the bill saunters through, the voting public may find themselves determining whether this $29 million constraint should soar.

The heart of HB 24-1436 lies in entrusting the public to allow the state to retain and utilize all sports gambling tax revenue that surpasses the $29 million mark. The state had previously approved this as the expected rise in state tax revenue back in 2019. Any gains exceeding this predetermined limit would directly finance water preservation and protection projects instead of rewarding this excess revenue back to the casinos.

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Colorado currently levies a 10% tax on all sports gambling ventures within the state. A certain portion of this revenue goes into monitoring operators while the balance is allocated to water projects. However, the latter portion is capped at $29 million.

Backtracking to November 2020, Colorado residents made their voices heard by giving the green light to Proposition DD. This move legalized sports gambling while ensuring the revenue was meticulously channeled into the state’s water projects. The intertwining of regulated sports gambling and environmental preservation was inaugurated the following year.

Initial returns on sports gambling taxes showered the state’s water initiatives with a solid $19.4 million yield in the initial two fiscal years. Yet, from 2021 onwards, the cumulative tally crescendos to about $43.1 million, indicating a promising trend. The revenue saw a substantially impressive hike, almost tripling to $23.7 million in 2023 from a mere $7.9 million in fiscal 2021, according to data from the Colorado Department of Revenue.

The mathematical rationality within HB 24-1436 makes the bill attractive and could potentially inspire the electorate to favor the revocation of the existing $29 million cap. Colorado’s thirst for water investments is only intensifying, and reaching tax revenue limits would mean unwarranted loops back to the industry.

Essentially, if the majority of the impending November 2024 electorate leans against continuing the state’s retainment and spending of every penny of the sports gambling tax revenue as proposed, surplus taxes collected beyond the annual $29 million will circle back to licensed sports gambling operations. This cycle is based on a logical method put forth by the department of revenue, according to the bill.

Unsurprisingly, Colorado’s burgeoning population presses an escalating water need – echoing the urgency of rallying behind water projects. End statistics of 2022 portray a population of 5.84 million residents, a stark surge from the mere 4.43 million people residing at the turn of the century. Some estimates speculate a possible doubling of this figure by 2060.

Interestingly, this explosion of residents has proven profitable for sports gambling revenue in the state. This correlation transforms HB 24-1436 into a gem of bipartisan legislation showcasing rare alignment and timely execution. Future projections echo positive sentiments. Brian Jackson, director of Western Water for the Environmental Defense Fund, shared with the Colorado Sun that tax revenue from sports betting could hit $31 million in the ongoing fiscal year and may crest $35 million by 2025. This indicates that a combined $8 million is on the verge of potentially being returned to gaming companies instead of being invested in enormously valuable water projects.