Colorado Governor reduces sportsbook tax incentive to help fund state water plan

Jared Polis, a Colorado Governor, has chosen to sign a brand new bill which shakes up the sports betting world in the state by eliminating a tax deduction for sportsbooks on free bet promotions.

House Bill 1311, which was passed with an initial 52-13 vote in Colorado and now in the Senate by 28-7, switches up the 2019 Proposition DD that previously allowed a full tax deduction of any promotional wagers and more.

Instead, starting from Jan 1, 2026, the new bill only allows sportsbooks to deduct amounts equal to 1% of total wagers placed, with a full removal of all deductions by July 1, 2026.

What this will do is bring up tax revenue incredibly for the state, aiding Colorado’s Water Plan Implementation Cash Fund, which supports infrastructure improvements and overall water conservation.

The reason why is because the state’s 10% sports betting tax goes directly to the fund, so elimination of deductions will only add to the pot, and in a dramatic fashion.

It is being suggested by the bill’s fiscal note that $3.2m could be the initial figure the fund will receive in 2026 once the bill’s first cut comes into effect, with a jump to almost $13m in 2027 after the complete removal launches.

This isn’t the first time sportsbooks have taken a hit when it comes to taxes in Colorado, with a vote last year lifting the $29 million cap on tax revenue.

Because of this, and now the new legislation, it seems that the state will be reaping the rewards of sports betting growth and instead of squirrelling away the taxes or funding unnecessary projects, higher quality water looks to be on the cards for the population.

Whether we will see further laws on Colorado sportsbooks is yet to be seen but if the above is anything to go by, we know the state isn’t afraid of changing things up a bit.

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