Colorado Progresses House Bill 1311 to Reduce Gambling Tax Exemptions
Colorado lawmakers are shaking things up in the sports betting and online casino landscape by proposing to end a tax break that lets companies write off free bets and promotional offers. House Bill 1311 aims to close this loophole, demanding that companies pay taxes on their full revenue, including promotional wagers.
Here are the deets:- State Revenue Boost: Eliminating the deduction could net Colorado an extra $11.8 million in the 2025-26 fiscal year.- Wider Tax Net: Retail sportsbooks and online casinos would suddenly find themselves paying more taxes as a result of this bill.
The House Finance Committee has given a thumbs-up to the proposal, with a 9-3 vote, and it's now facing review by the Committee on Appropriations. If it gets the green light, betting companies would have to include all free bets when settling their taxes with the state's 10 percent tax rate.
Since the launch of legal sports betting in Colorado in 2019, operators have enjoyed a loophole that lets them deduct payouts, federal excise taxes, and a chunk of free bet costs from their taxable income. But HB 1311 aims to cut that out, and it could seriously impact both retail sportsbooks and online casinos.
Revenue Boost Without Rate Hike
Proponents of the bill believe it's a smart move that lets the state boost revenue from sports betting without hiking the current tax rate. House Speaker Julie McCluskie, Rep. Matt Soper, and Sen. Dylan Roberts are championing the bill, arguing that it could strengthen key state programs.
Last year, Colorado voters agreed to lift the $29 million annual cap on tax revenue from sports betting. HB 1311 takes advantage of this move, allowing legislators to tweak revenue calculation without messing with the existing 10 percent rate operators already pay.
If HB 1311 passes, it'll kick in on September 1, effecting more revenue for the Wagering Recipients' Hold Harmless Fund and the Water Plan Implementation Cash Fund, which funds water conservation and management efforts across the state.
Tough Times Ahead for Betting Operators
For betting companies, the proposed change means losing a popular player acquisition tool. Free bets are a common promotional strategy, but if they're no longer deductible, operators will likely have to rethink their tactics. Lawmakers are optimistic about the bill's potential to make the market more financially beneficial for the state, especially as betting continues to grow. Operators, however, are keeping a close eye on the bill's progress, as it directly impacts their profits.
- The proposed House Bill 1311, if passed, would require betting companies in Colorado to include all free bets in their taxable income, leading to a possible increase in taxes they pay.
- This bill, if enacted, could potentially boost Colorado's revenue from sports betting by $11.8 million in the 2025-26 fiscal year, without increasing the current tax rate.
- The elimination of the deduction for free bets, as proposed by HB 1311, could significantly affect both retail sportsbooks and online casinos operating in Colorado.
- Advocates of HB 1311 argue that it allows Colorado to increase revenue from sports betting without raising the current tax rate, thereby strengthening key state programs like the Wagering Recipients' Hold Harmless Fund and the Water Plan Implementation Cash Fund.
