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SportsTranscript
00:00Sam, good to have you. Let's start off with Colorado. We're seeing a lot of tax hikes being proposed across the country on sports betting. This is a really fascinating one in Colorado, very specifically on the promotional dollars here for the sports books. And boy, this is going to make a lot of people look a little bit closer here because, as we know, a lot of these books are living and dying off promotional spends.
00:22Yeah, it's that time of year when lawmakers are trying to finalize the budget in multiple array of states and really trying to look under the couch cushions as where we can find some more money to fund some more programs.
00:37Sports betting has been one of those targets over the past couple of years.
00:40And Colorado now they're looking up to not they're looking to not just change how sports betting is the tax rate, but the actual mechanism of how it's taxed itself.
00:49Lawmakers want to start taxing something they've never taxed before, which is promotional bets.
00:55So right now in Colorado, the sports books don't pay any taxes on the free money they give away, the bonuses or the sign up promos, which is standard in a lot of states.
01:05So under this new bill, House Bill 1311, that would change starting September 1st.
01:11And it comes as Colorado is looking for more ways to fund water conservation projects, which has been what sports betting is funded ever since voters approved it back in 2019 before the pandemic.
01:23Revenue from the 10% tax on sports betting is always gone towards those projects.
01:28So voters just recently removed a $29 million tax cap on those projects, basically meaning that those programs can now be funded more money.
01:37So now lawmakers are following up to fund that with more money from the same revenue stream that's always been funded with.
01:43So if this bill should pass, an estimated $12 million more a year would be generated from sports betting without actually changing the rate itself.
01:53It would just expand what is technically treated as taxable revenue.
01:58The sponsors in the House and the Senate both say it's about fairness.
02:02You know, they say sports books have made over $1.7 billion in revenue in Colorado since launch.
02:08But the state is only handled $100 million in taxes.
02:12So there's a lot more room to capture more revenue without really changing the core rules.
02:16And some states like Arizona, Maryland, Pennsylvania, North Carolina, they all have these mechanisms already in place.
02:23So this isn't necessarily a new thing that would happen.
02:26You know, an analysis we actually did at LSR showed that Colorado ranks near the bottom in terms of effective promotional tax rates.
02:34So they're leaving out a lot of taxes just by not including this.
02:37They taxed around 2% when you count the promos in that pool as well, which is compared to 3% in most other states.
02:46So this would be something that would have a lot of momentum in the legislature.
02:52There's, you know, it's tax hikes in general have been getting a lot of favor in other states.
02:57But because they're not changing the actual rate here and they're comparing it to other states, I wouldn't imagine lawmakers would have a hard time passing it.
03:04Now, sportsbooks are probably not going to like it, but there's not really much they can do about it.
03:09It just changes the base, not the rate itself.
03:12So while we're seeing some other states talk about raising taxes, Colorado is trying to do the same thing, but kind of in a different way here.