Prop JJ Asks Voters to Move More Sports Gambling Revenue Toward Water Projects

Five years after Colorado voters opted to legalize sports betting, they’re being asked to vote on the practice again in 2024 with Proposition JJ.

This ballot proposal wouldn’t change the practice of sports betting, but would allow the state to keep all revenue collected from the 10 percent tax that betting operators pay rather than the current annual cap of $29 million.

The Colorado Taxpayer’s Bill of Rights (TABOR) requires that taxpayers be refunded surplus money when tax revenue goes above annual projections unless voters approve measures allowing certain government branches to keep and use the money; in this case, sports betting operators are the taxpayers in question. When sports betting was approved by voters in 2019, the expected annual revenue from taxes on gambling was $29 million, but 2024's revenues are forecast to exceed that number for the first time, totaling $31.8 million.

If the proposition doesn't pass, sports betting operators would be refunded the extra money.

If Prop JJ passes, the state will apply the extra dollars to the Colorado Water Plan Grants Program, which funds community-selected projects in areas such as agriculture and irrigation that help meet the goals of the Colorado Water Plan. Last updated in 2023, the state plan outlines how Colorado will deal with water challenges.

“These projects are ones that a community, or [a non-governmental organization] or a stakeholder group have developed that are important to them,” explains Cole Bedford, chief operating officer of the Colorado Water Conservation Board, which oversees the grants program. ”Not only is that project important for them in their area, but it also then dovetails with the broader goals of the plan.”

State representatives Julie McCluskie and Marc Catlin, along with senators Dylan Roberts and Cleave Simpson, ran a bill during the 2024 legislative session to refer Prop JJ to voters. The bipartisan bill passed with little objection among lawmakers.

The language approved by lawmakers maintains the voter-approved 10 percent tax, with part of the revenue paying for the regulation of sports betting, including funding a gambling addiction hotline. Of the total tax revenue, 6 percent is paid to traditional casinos and other gambling establishments that have lost money since sports betting was legalized. (Should revenue exceed $29 million, only 6 percent of $29 million will be paid into that fund.) Any extra then goes to the Water Plan Grants program.

Should Prop JJ pass and revenue be higher than the $29 million prediction, that money would go to the grants program instead of being refunded back to the sports betting operators.

According to a publication by the state’s nonpartisan legislative council staff this August, revenue from sports betting hasn’t yet crossed the $29 million mark, but it came close in the 2022 to 2023 fiscal years, hitting $26 million last year.

The estimated revenue for the 2023-2024 fiscal year is $31.8 million, with projections for 2024-2025 at $34.2 million.

The jump in revenue may not be entirely due to the popularity of sports betting. In 2022 the legislature passed a bill declaring no more than around 2 percent of all bets through an operator in a year may be free bets. The measure, introduced to curb gambling platforms from offering too many promotions, has caused revenues to rise.

Peggi O'Keefe, executive director of the Colorado Gaming Association, says the CGA has not declared a position on the measure, and the organization doesn’t have concerns with the proposition.

“We are supportive at the Colorado Gaming Association of ensuring that Colorado's resources are well spent and protected, so we generally are very supportive of the Colorado Water Plan and want to ensure that there's enough water as we continue to develop in Colorado,” O’Keefe says.

The Colorado Water Conservation Board does not have an official position on the measure, either, preferring to leave the decision up to voters. Whether the agency gets extra dollars or not won’t change its mission, Bedford says — but more sports betting revenue means more projects can move forward.

“Every single grant application that we receive for these types of projects is really important to the community that put that application together, but the program is really competitive, so we have to turn away projects that would undoubtedly have had value for those communities,” he adds.

So far, Colorado's water grants program has supported over 400 grants with around $100 million in funding. Launched in 2017, the program pre-dates sports betting legalization, so some projects and dollars have come from other funding sources. However, the entire $23.3 million budget for the fund came from sports betting money this last fiscal year, according to Bedford.

The first round of grants this year funded 32 projects, and Bedford says the total number of projects supported in the 2024-2025 fiscal year could reach the sixties or seventies. Water Plan grant projects are related to rivers, lakes and groundwater, not drinking water, which is funded by other state entities.

“The types of projects we support are agricultural water projects that help with more effective irrigation, watershed health projects to prepare and recover from fires, riparian restoration projects or water health-type work,” Bedford says. “It’s this really broad range of making sure that raw water is being used and conserved as well as possible in the state.”