Colorado residents will decide Tuesday whether to legalize sports betting and tax it to help conserve the state’s most precious resource: water.
Proposition DD, referred to the ballot by the Legislature, has bipartisan support from lawmakers and interest groups and only token opposition. It would allow online and in-person wagering on professional, collegiate, motor and Olympic sports starting in May.
Legal sports betting has grown since New Jersey won a U.S. Supreme Court case in 2018 allowing all 50 states to offer it. Federal law previously limited it to Nevada, Delaware, Montana and Oregon.
Most states have since generated limited tax revenue from sports gambling. Colorado’s proposal would dedicate a similarly limited revenue stream to a state water conservation plan launched under former Gov. John Hickenlooper.
In an era of climate change and frequent drought, the plan envisions a decades-long effort to meet the needs of the Denver metropolitan area, the state’s multibillion-dollar agriculture and outdoor recreation industries and its commitments to Southwest states that rely on the Colorado River.
Legislative economists project the tax could generate $11 million in fiscal year 2020-21. Colorado’s Taxpayer’s Bill of Rights requires voters to authorize any new taxes, and lawmakers are asking for $29 million a year so they don’t have to go back to the ballot as sports betting grows.
Colorado’s proposal confronts the unregulated offshore betting market and raises voters’ awareness of water issues, said Democratic House Majority Leader Rep. Alec Garnett.
“It became clear as we worked on this proposal that water was the issue that would bring Democrats and Republicans, environmentalists and agriculture interests together,” said Garnett, whose House co-sponsor of the proposal is Republican Minority Leader Patrick Neville. “This ballot question elevates water into Tier One of Colorado’s priorities that people need to pay attention to.”
Gambling is strictly controlled in Colorado. In 1990, voters approved legal gambling in the Rocky Mountain communities of Black Hawk, Central City and Cripple Creek. Games generally are restricted to card games, slots and roulette, and maximum bets are $100.
Voters will decide whether to OK a 10% flat tax on net sports betting proceeds. Parent companies operating 33 casinos in Colorado could seek licenses for onsite betting as well as online and sports gambling apps. Operators would determine their own cash limits on bets.
The online gaming firms FanDuel and DraftKings have contributed well over $1 million to the campaign for Proposition DD. It’s anticipated they and other mobile firms will operate on behalf of casinos entering the sports market, using geofencing technology to ensure bets are placed in-state.
Enabling legislation passed this year would allow the Colorado Water Conservation Board to use the tax revenue for matching grants that further the water plan’s goals.
Those goals include watershed restoration, water storage and supply, irrigation efficiency, dredging reservoirs and drought planning.
Among many grant applications, the Colorado Cattlemen’s Association has applied for $74,000 to match its own funds for watershed and stream management planning. It notes in its application that agricultural producers own or control some 80% of surface water in the state.
Lawmakers this year allocated $10 million to the water plan but have yet to find a way to meet its estimated annual price tag of $100 million.
“This won’t fund the plan, but it will double what the general fund appropriation would be,” Garnett said. “Beggars can’t be choosers.”