Bill 1311 Plans to End Colorado Free Sports Wager Tax Break

House Bill 1311 (HB25-1311), introduced by State Sen. Dylan Roberts (D), recommends increasing revenue from operators by taxing the free wagers given out by sportsbooks.

House Bill 1311 Aims to Boost Water Fund

The idea is to bolster the state’s water fund by ending the tax deduction that sportsbook operators take from free bets offered to clients. In many states, promotional bets and related spending can be subtracted from the total sports betting revenue. However, if Bill 1311 is approved, that deduction will be halted starting Sept. 1, 2025.

According to a summary of the bill, under existing law, sports betting and internet sports betting operators may deduct all player payouts, any federal excise taxes paid, and a specified portion of free bets used by players when calculating their net sports betting proceeds. Things like this have already happened in other states. For example, when mobile sports betting launched in Colorado almost five years ago, voters approved that form of wagering after it was marketed as generating revenue for the state’s Water Plan Implementation Cash Fund.

If House Bill 1311 gets approved, it could add another $12 million per year to the $30 million annual haul that the water fund already receives from sports betting. According to Roberts, the bill plays a key role in advancing water conservation, acquiring water rights, and updating irrigation systems across Colorado, which is a state that has faced numerous water scarcity challenges in recent years.

Here’s Why the Bill Is Higley Likely to Pass

The introduction of House Bill 1311 coincides with a growing push among states to boost sports wagering taxes. For example, North Carolina might double online sports betting taxes as representatives from the state are looking to significantly increase revenue. The idea is to use said extra income to benefit various college athletics programs.

Colorado’s sports betting tax rate stands at 10%, among the lowest in the entire US. Since the legalization of betting in May 2020, sportsbooks have earned $1.7 billion, but the state has received just $101.5 million in tax revenue. House Bill 1311 aims to increase said revenue without raising taxes.

Last, but not least, it’s been noted by some in the industry that the most effective sports betting tax hikes were initiated by state governors. This means that if Colorado’s Governor Jared Polis (D) gets behind Sen. Dylan Roberts’ proposal, the bill could have a much easier time passing.