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The expansion of the gambling industry is a hot topic in many states across the United States. While there are still some concerns about gambling addiction and other negative effects, there’s no denying that this industry has been beneficial for job creation and generating new tax revenue. In fact, many states have started to embrace the idea of expanding their gambling industries as a way to boost their economies.
Colorado was one of the first states to take advantage of the US Supreme Court’s decision to repeal the Professional and Amateur Sports Protection Act (PASPA) in 2018. PASPA had prevented states from legalizing sports betting, but its repeal opened up a massive new market for sportsbooks and bettors alike. In May 2020, Colorado officially launched its sports betting market, becoming one of the first players in this rapidly growing industry.
Since its launch, the betting market of The Centennial State has experienced year-over-year growth of around 50%, and over $7.88 billion has been wagered within Colorado borders by sports bettors.
For the 2021-22 fiscal year, they collected about $12.4 million in sports betting taxes.
Colorado imposes a 10% tax on casinos’ net sports betting proceeds, which seems small compared to what states like Massachusetts have established. In Bay State, Category 1 & Category 2, Sports Wagering Licensees are taxed on 15% of gross sports wagering revenue. Category 3 Sports Wagering Licensees are taxed on 20% of gross sports wagering revenue. Massachusetts Sports Betting is expected to bring in $60 million in annual tax revenue in 2023 compared to Colorado’s projected $24 million.
They are trying to put gambling taxes to good use in Colorado since The Colorado Limited Gaming Control Commission (CLGCC) approved the distribution of $11,359,790.17 to the state’s water plan.
In addition, 6%, that is, $746,726.88, were distributed to the Hold Harmless Fund.
For its part, The Office of Behavioral Health received $130,000, of which $30,000 went to maintain the operation of a problem gambling hotline. The rest of the money is used to address gambling addiction and other related problems.
The Governor’s Office of State Planning and Budgeting and the nonpartisan Legislative Council Staff are optimistic that by the fiscal year 2022-23, the state can raise $24 million according to their projections, which would mean more money destined to improve the lives of the state residents.
Colorado’s water plan has received little investment from the state government. The plan started in 2015 under Gov. John Hickenlooper, and at that time, he considered that he would need some $20 billion that were planned to be collected with higher water rates, federal grants and loans, and severance tax collections.
For the fiscal year 2022-23, the program has received $11.4 million from gaming, $17 million from oil and gas severance tax revenues, and $10 million in general fund revenues.
The program is essential to ensure safe drinking water and improve farm irrigation; as Colorado Governor Jared Polis commented, water is life for the state. “In Colorado, water is life. Colorado’s Water Plan sets a vision for vibrant communities, successful farming and ranching, thriving watersheds, and climate-resilient planning. I’m excited to see how the updated plan supports a more resilient future here in Colorado for years to come.”
Massachusetts also has policies to allocate gambling tax revenue to improve the quality of life in its territory, as 45% is allotted to the General Fund, 27.5% to the Gaming Local Aid Fund, 17.5% to the Workforce Investment Trust Fund, 9% to the Public Health Trust Fund, 1% to the Youth Development and Achievement Fund.
This distribution is expected to have a significant impact on the state. For example, the state’s General Fund is the pool of money used to pay for government services; therefore, gambling tax revenue will be one of its primary sources of capital, even more than income and sales taxes.
For its part, around $5.4 million will go to the Public Health Trust Fund’s $17.2 million budget, which means a great contribution to the prevention and treatment of gambling problems.