Colorado Proposes a Possible Sports Betting Model

Colorado Proposes a Possible Sports Betting Mode

by Ken Edwards, 19 December 2018.


Colorado is the latest of the U.S. states to openly express an interest in introducing legalized sports betting for the state’s sports-mad public. The Centennial State’s Department of Revenue (DOR) has released a public policy information document describing a series of possible options around legal sports betting in the state, and how it may potentially be managed. Putting- up-its-hand to administer legal sports wagering in a less-than-subtle manner, the DOR confirmed that there will be a need for statutory, rather than constitutional amendment to facilitate the introduction of a legal framework for sports betting.

The DOR push to manage Colorado Sports Betting

Outlining the potential management options available, the document states:

“After researching and examining laws and regulations of other states that have begun to allow sports betting, it is recommended that the DOR act as the regulatory agency over sports betting in Colorado. Within DOR there are four options for organizational management and oversight of the Colorado sports betting industry: incorporate sports betting under the enforcement and regulatory duties of the Division of Racing, the Division of Gaming, the Colorado Lottery, or create an entirely new division dedicated to the regulation of sports betting.”

All options should, wrote the DOR, incorporate a mobile-component and include a licensing model for regulation. Moreover, no matter which model, consensus should occur among all sectors of the industry to ensure its success

Most importantly of all the points raised is the tax rate. The DOR has recommended a level of between 6.5% and 16% of the adjusted gross proceeds (AGP);

“If the tax is set too high, it will discourage players from moving out of the black market,” the DOR notes, adding: “Tax collected on sports betting should be directed to a specific purpose/need et transportation or education funding for the state.”

As we have seen in other States of the Union, the tax rate has been the stumbling block to setting out upon a successful legislative push for sports betting legalization. The way the DOR has learnt from the experience of other states that have already gone down to the sports betting track is commendable and further reinforces their claim to administer Colorado sports betting.

Colorado’s DOR learns from other states experiences

Further evidence of the DOR research into the experience of other states is the DOR’s understanding that online and mobile sports betting is critical to sports betting’s success in Colorado. The policy document suggests that regulation should ensure servers are located within state lines, protected by geolocation technology, and that player’s online accounts should be physically registered and account sign-up completed at a licensed land-based casino. Moreover, the DOR document implies that both casinos and racetracks in the state should be allowed to offer sports betting to the Centennial State’s sports betting aficionados.

The DOR says NO to integrity fees

From the DOR comments, it’s seems unlikely that Colorado will have the disingenuous integrity fees of some other states;

“These sports should already have integrity built into their games and regulations, and integrity fees are simply a means for handing over money to the leagues,” wrote the DOR, continuing to learn from experience, “Sports betting can make sports more interesting, negating the need for any payment.”

It’s worthwhile to recall that the professional leagues attempted to prevent the Garden State of New Jersey from taking-up legal sportsbooks.

“If integrity fees are allowed, it is recommended to require any league requesting an integrity fee provide proof of a verifiable integrity program,” wrote the DOR.

Clearly, Colorado may need to compromise its ideals, importantly however, the DOR is clear in its objectives.