Colorado to Phase Out Sportsbook Promo Deductions by 2026

For the most part, sportsbooks have had a great time. Their promo bonuses are treated as deductibles, which allows them to promote their brand, boost customer acquisition, and even save on tax. But this strategy may no longer be viable in Colorado, after the state Senate on Tuesday passed HB 1311 with an overwhelming majority.

Colorado Wants Promos as Deductibles to Be Gone

28 lawmakers voted in favor, while only 7 opposed it. HB 1311 was almost rushed through to the voting floor without any discussion, as the significant number of backers made it so that the against camp had zero chance of impeding its progress. HB 1311 has had very few hurdles to speak of, including a quick passage through the House on April 28, when 52 lawmakers voted in favor compared to only 13 against.

Why is this important? Colorado will essentially strip sportsbooks from the right to write off the amount of promotional handed out to customers. The process will begin once the bill has been signed into law, and it will conclude on July 1, 2026, when sportsbooks would no longer be able to use this practice.

What this means is that the state could raise additional tax money – around $11 million based on lawmakers’ current estimates right now. In the meantime, sportsbooks will start gradually lowering the number of bonuses they offer, as they will have to adapt to the new reality which will see them become less generous.

Will the Legal Market Lose Momentum?

How this will impact the business in the future is difficult to see. Historically, opponents argue that by not allowing companies to advertise more aggressively, offshore companies and alternative not fully licensed may take advantage and encroach on their territory. However, the United States and individual states have shown themselves willing to turf out offshore operators, targeting large brands such as Bovada, BetOnline, and others.