When Colorado voters OK’d Proposition DD last month, they were told sports betting would deliver millions in tax revenue toward solving the state’s water problems.
But a new analysis from the Polis administration shows that likely won’t happen in the first full year of wagering.
The Division of Gaming expects sports betting, which starts in Colorado in May, to generate between $1.5 million and $1.7 million in tax revenue in the 2020-21 fiscal year, which begins on July 1. That amount isn’t enough to reach the threshold under which funds would be transferred to water projects.
The projection is wildly different from what state lawmakers anticipated when they put the measure on the November ballot. In fact, it’s about the same amount the Colorado General Assembly’s fiscal analysts projected would be generated in the first two months of sports betting.
The annual revenue expectation also is far less than the $16 million in tax revenue that legislative analysts forecast would be collected each year for the first five years of sports betting in Colorado. The state is authorized to collect up to $29 million in sports betting tax revenue annually under the Taxpayer’s Bill of Rights…
The Division of Gaming’s estimates were presented Thursday to the Joint Budget Committee as it prepared to draft the $30 billion-plus spending plan for the coming fiscal year. And members of the panel expressed concern…
It’s likely that enough tax revenue will be generated in future years to go toward the water plan, but how much water managers can expect appears lower overall given the latest projections by the gaming division. Proponents of sports betting are bullish that tax revenue figures will rise once the industry matures in Colorado, though they admit initial estimates were likely too high.
A spokeswoman for the Department of Revenue, which oversees the Division of Gaming, noted “that all of these numbers are still projections.” She added that the department has been consistently conservative in its assumptions about sports betting revenue when speaking with lawmakers and legislative analysts…
One reason revenue projections are lower: The gaming division doesn’t believe the state’s casinos, which will operate sports betting, will be willing to pay the $125,000 per license — which would have to be renewed every two years — to offer wagering as originally projected. Instead, gaming officials think that the most they could reasonably charge for a license fee would be $40,000 and possibly much less, according to a memo presented to the JBC on Thursday.
Because the cost to implement sports betting is expected to exceed the tax revenue generated in the first months, it could actually end up costing taxpayers money.
If that deficit were to happen, the Joint Budget Committee would likely ask the Department of Revenue to dig into its pockets to cover the difference. The funds could, however, ultimately have to come out of the legislature’s discretionary fund, which goes toward paying for things like transportation and education…
The division’s revenue estimates came after the agency gathered 75 people representing gambling companies and operators from around the world to help create its rules around sports betting. The agency also visited other states where sports betting has been legalized, like New Jersey, to better understand how to implement the wagering in Colorado and what to expect.
The four-year-old Colorado Water Plan—the Centennial State’s proactive response to drought, flood, unpredictable water supplies, climate change, and a booming population that is likely to rise from 5.7 million today to nearly 9 million Coloradans in the next 30 years—is now guaranteed some of the annual $100 million needed to implement the plan. This month, Colorado voters narrowly approved Proposition DD to legalize sports betting (and a 10% tax on these casino revenues) which will result in an estimated $12 million to $29 million annually, the majority of which will go toward the Water Plan.
While we likely won’t see $29 million for the first several years, DD revenues bring Colorado’s first dedicated funding source to Water Plan implementation. The sports-betting tax money will flow into a new fund overseen by the Colorado Water Conservation Board. Revenues from DD are a drop in the bucket that renew every year, and represent a much-needed down payment toward the full $100 million per year for the Water Plan.
Revenues from DD could be used for a variety of Water Plan purposes including: stream and watershed management improvements, urban water conservation and efficiency, improved irrigation infrastructure for farms and ranches, and storage projects. At this point, it is not clear how the state will spend these dollars given the various priorities and the considerable funding gap. The language in DD was vague and will need refinement, and transparency. Stakeholders will likely explore options with the legislature to guide how DD funds are spent on Water Plan implementation.
Audubon will engage to advocate for spending that supports healthy rivers for the birds and people that depend on them—as we support a fully funded Water Plan. But even with the revenues DD will provide, additional dollars, heightened public awareness, and action will be critical to ensure healthy rivers—and the sustainable water future they enable for Colorado’s birds, economies, communities, recreation, agricultural heritage, and quality of life.
Audubon is proud to have supplied nearly 20 percent of the nearly 30,000 public comments that informed Colorado’s inaugural Water Plan, and Audubon will be there every step of the way through Water Plan implementation. Colorado cannot thrive unless its rivers do too.
Everything we love about Colorado is connected to water. We need your help in raising awareness about water and healthy rivers throughout Colorado. Spread the word. Join us as Audubon works across the state for a water-secure future for people and the environment.
The Colorado Farm Bureau, Colorado Cattlemens’ Association and most agriculture organizations are celebrating the measure approved by voters to allow sports betting in the state. But it’s not a cure-all for what ails us.
The Farm Bureau’s Shawn Martini says it was a given they would support Proposition DD, as it is a way to guarantee future funding for the state’s Water Plan. The Water Plan – a blueprint for ensuring stable water supplies in the years and decades to come.
Martini: “And thus far it has not been funded anywhere close to what it needs. That initial figure of about 100 million dollars a year we need to fully fund the state’s water plan. While this doesn’t get us up to a 100 million a year, it at least provides us a dedicated revenue stream of maybe even up to 30 million a year to help continue to implement and build the projects that are a key part of the state’s water plan.”
Martini says they are waiting to see how much the state legislature will add to the Water Plan funding on a yearly basis. But with the passage of Prop. DD there is now a dedicated stream of funding that will allow the state to begin to chip away at the backlog of projects that need to be done to fulfill the state’s future water supply.
DD will legalize sports betting in Colorado and create a 10 percent tax on casinos’ house winnings that would largely benefit the Water Plan. Colorado’s 33 casinos will be able to offer in-person and online wagering on professional, collegiate, motor and Olympic sports beginning in May 2020.
Colorado voters narrowly approved a new sports-betting tax whose proceeds will help fund water projects across the state, including conservation programs, stream restoration, and new reservoirs.
The vote is a major victory for the bi-partisan coalition that backed the measure and represents the first voter-approved effort to fund the four-year-old Colorado Water Plan.
The nail-biter margins, 1.5 percent at press time, provide a cautionary tale on how much support exists for water funding and how much more will be needed in the future, backers said.
“I was surprised. It was super close,” said Alec Garnett, D-Denver, the lead sponsor of the bill that referred Proposition DD, as it was known, to voters. “But it’s a reminder to everyone that Colorado is a fiscally conservative state.”
Proposition DD legalizes sports betting and imposes a 10 percent tax on casino revenue derived from this new form of gambling. A statewide map of the vote count showed voters on the Front Range and in ski counties, such as Eagle, Summit and Ouray, had the most enthusiasm for the measure, while rural counties on the West Slope and Eastern Plains rejected it.
Garnett said he was proud of the consensus on water demonstrated by the win, and the power of the bi-partisan coalition of politicians, environmentalists, water utilities, and agriculture groups that came together to back the campaign.
“Any legislator will say, ‘You’re electing me to go in to help solve problems and bring people together,’ and I’m proud of how we did that here,” he said.
The vote sends an important signal to lawmakers and others, according to political pollster Floyd Ciruli.
“There is no better conversation to have than a ballot issue. You get everyone’s attention. This vote shows people do believe water is important and that this is a good way to [fund] it,” Ciruli said.
Early on, Prop DD was barely showing up on voters’ radar, with early polls indicating little support. But a digital and TV ad campaign launched last month helped turn the tide, Ciruli said.
Sen. Jerry Sonnenberg, R-Sterling, opposed the measure and said he remains concerned that there isn’t enough transparency in how the money will be managed and that it is improper to use a so-called “sin tax” to pay for something as fundamental as water resources.
“Water is such an important issue we should pay for it out of the general fund or out of severance taxes,” Sonnenberg said, adding that he will continue to fight in the Legislature to ensure the money is used for the water plan.
Estimated to total between $12 million to $29 million annually, the sports-betting tax money will flow into a new fund overseen by the Colorado Water Conservation Board (CWCB). It could be used for a variety of purposes, including water-saving programs for cities and farms, habitat restoration programs, storage projects, land use planning, and environmental water supplies for water-short streams.
Since 2015, the CWCB has financed the water plan using income derived from severance taxes, the state’s general fund, and other sources. Those amounts have varied widely, with the state setting aside $30 million this year, up from $5 million in 2015, according to the CWCB.
Backers characterize DD as a valuable down payment on the water plan. Assuming the tax is able to eventually generate $29 million a year, that’s still less than one-third of the $100 million a year the state has previously estimated it will take to protect scarce water resources and to prevent future water shortages.
This year, another group emerged whose intent is to raise additional money for the water plan. For The Love of Colorado, backed by the Walton Family Foundation (also a funder of Fresh Water News) and the Gates Family Foundation, is preparing to run a large public awareness campaign about the critical nature of the state’s water challenges and the need for funding.
The group’s executive director, Tim Wohlgenant, said the close vote demonstrates how much more work is needed.
“It’s great that voters did this. But I need to emphasize it’s literally only a drop in the bucket. And even though it passed, it barely passed. We have more work to do.”
David Nickum, executive director of Colorado Trout Unlimited, said he hopes Prop DD will stimulate environmental and water conservation programs, much like Great Outdoors Colorado has. GOCO is the 1992 ballot initiative that has helped preserve hundreds of thousands of acres of historical ranches and open space across Colorado, protecting them from development. It is funded with state lottery proceeds.
“We’re pleased that Colorado voters are making a decision to invest in our resources, using the water plan as a road map for that,” Nickum said.
“Hopefully it will lead to a proliferation of projects, much like GOCO did,” he said.
Jerd Smith is editor of Fresh Water News. She can be reached at 720-398-6474, via email at firstname.lastname@example.org or @jerd_smith.
From Western Resource Advocates (Jennifer Talhelm):
DD secures an important down payment for Colorado’s Water Plan, but full funding is still needed
A coalition of environmental and sportsmen groups today hailed passage of Colorado Proposition DD to help conserve and protect the state’s rivers and streams and drinking water. The coalition – which includes Conservation Colorado, Environmental Defense Fund, Trout Unlimited, Western Resource Advocates, American Rivers, Business for Water Stewardship, and the Colorado Water Trust issued the following joint statement:
“Passage of Proposition DD is a big win for Colorado and the quality of life we enjoy here. Taxing the revenue from legalized sports betting will create a dedicated down payment to help ensure that Colorado has healthy rivers and enough water for all. Still, it’s important to remember that this is just the first step toward addressing the growing gap between the water we have and the water we need.
“Four years ago, Coloradans came together to create Colorado’s Water Plan to protect all the things we love about our Colorado way of life – from healthy flowing rivers, to farming and ranching, and even beer. Our rivers contribute over $9 billion annually to the state’s economy, yet Colorado has not lined up adequate funding for the plan, despite overwhelming bipartisan support from across the state.
“Proposition DD will help generate a much-needed revenue stream to improve wildlife habitat, protect our agricultural heritage and the open spaces that come with it, and strengthen our economy. But the plan estimates the total need to be $100 million a year for the next 30 years, and we must keep working to ensure Colorado fully funds our water future.”
Proposition DD places a 10 percent tax on casinos’ profits from sports wagers, up to $29 million annually, and the majority of the revenue raised will go to implementing Colorado’s Water Plan. The annual funding is expected to be between $10 million and $15 million annually in the first few years.
It was a squeaker, but sports betting will be legal in Colorado beginning in May 2020.
Voters on Tuesday approved a ballot measure 51% to 49% to legalize and tax betting on certain professional and collegiate games at casinos and online, according to results from the Colorado secretary of state. The vote was too close to call until mid-afternoon Wednesday. The Associated Press called the race at 2:33 p.m.
Revenue from a 10% tax on the net proceeds companies make on sports betting will help pay for some of the state’s critical water needs. It is, in other words, a narrowly focused tax targeted for a widespread need.
The vote was far from the slam dunk many expected. While the success of its sister ballot measure, Prop CC, was always uncertain, Colorado voters have historically been more receptive to so-called sin taxes.
But the measure had critics on both sides of the political spectrum. For conservatives, the question about raising taxes may have been a non-starter. And for liberals, a regressive tax paid by gamblers, some of whom may struggle with addiction to gambling, perhaps was too problematic to support.
“This has always been a white-knuckles job,” said Josh Penry, a former Republican state Senator and political strategist who worked on the Prop DD campaign. “There is real skepticism. It’s not a traditional right-vs-left issue.”
More than 90% of that new tax revenue, estimated at an average of $16 million per year, and as much as $29 million, would help pay for managing the state’s dwindling water supplies. That tax revenue alone is not enough to meet the state’s water needs, but in the minds of most of its supporters, it represents the best shot yet to pay for the general projects outlined by the 2015 Colorado Water Plan.
“The Colorado Water Plan will have a permanent, dedicated funding source,” said Becky Mitchell, the director for the Colorado Water Conservation Board, in a statement. “Sports betting tax revenue for the Water Plan will support critical environmental, agriculture, and storage projects as well as promote outdoor recreation opportunities across the state.”
Coming up with the money to help better manage Colorado’s water supplies is seen as critical to maintaining the state agriculture and recreation industries and preserving healthy river ecosystems threatened by slow flows and warming waters. The estimated cost of implementing the water plan is $100 million a year.
Lawmakers have struggled to find that money. They pulled together nearly $30 million in one-time money for water projects and planning last session, a historic yet insufficient amount. Prop DD, which was referred to the ballot by state lawmakers, was seen as the best shot at getting at least some funding and getting it fast.
“This is not the best way to fund such an important need, but we have to take the opportunities that come to us,” said Scott Wasserman, the president of the Bell Policy Center, a left-leaning think tank.
Opponents had concerns about paying for the Colorado Water Plan because it calls for possibly damming rivers to build reservoirs. The margins of victory in Boulder and Larimer counties were tight, areas where projects to expand or build reservoirs are planned. The Water Plan also calls for lining irrigation ditches, upgrading flood gates and paying farmers to use less water.
The measure struggled despite a $2.4 million campaign to promote it. FanDuel Group, a New York City-based sports betting company, spent $1 million backing the measure, according to campaign finance records with the secretary of state. Other top donors include DraftKings, a Boston-based sports betting company, Twin River Casino Hotel from Rhode Island and the Colorado Gaming Association.
A coalition of environmental groups backed DD, including American Rivers, Business for Water Stewardship, Colorado Water Trust, Conservation Colorado, Environmental Defense Fund, Trout Unlimited, and Western Resource Advocates. The Colorado Farm Bureau also supported the measure.
Colorado already allows limited stakes gambling — under $100 — in the towns of Black Hawk, Central City and Cripple Creek. Some supporters saw Prop DD as a way to regulate underground sports betting.
“Black markets aren’t conservative and they aren’t good for Colorado. Bringing sports betting into the daylight, regulating it, and leveraging it for the benefit of our water future is a common-sense approach,” said House Minority Leader Patrick Neville, a Republican from Littleton, in a statement.
From the Environmental Defense Fund (Brian Jackson):
Water in Colorado — one of the state’s most important natural resources — scored a major win today when voters approved Proposition DD. Prop. DD will provide up to $29 million a year for water projects from revenue raised by legalizing and taxing sports betting.
This funding will support critical projects to implement Colorado’s Water Plan and keep Colorado the state we know and love, with healthy rivers, clean drinking water, productive agriculture and abundant recreation.
EDF and EDF Action were key advocates for Prop. DD. We are thrilled voters approved the measure because it shows Coloradans across the political spectrum care deeply about building a more resilient future for our state.
Closing the water funding gap
Colorado’s Water Plan identified a funding gap of $100 million a year for 30 years to conserve and protect key elements of the state’s water system, including the environment, in the face of climate change and a growing population. Prop. DD will provide an impactful down payment to fill this funding gap.
Achieving voter approval of tax measures is always challenging, especially in Colorado, but EDF, EDF Action and our partners in the state worked hard to earn broad support for Prop. DD. Every major newspaper in Colorado endorsed it, and there was strong bipartisan support among state leaders and lawmakers who referred the measure to the ballot.
Uncommon partners rally around common-sense water solutions
The list of Prop. DD supporters was long and diverse, including the Colorado Cattlemen’s Association, Colorado Municipal League, Colorado River District, Colorado Farm Bureau, Denver Metro Chamber of Commerce, Conservation Colorado and Western Resource Advocates, among many others. Working side by side with some of these unlikely allies paves the way for more collaboration to deploy the funding to Colorado’s highest water priorities and best projects.
The success of Prop. DD clearly demonstrates to our state lawmakers that water is a priority issue for Coloradans, and we hope policymakers will continue to focus on ensuring our water system meets our state’s needs for decades to come.
We can’t wait to roll up our sleeves to help effectively implement Prop. DD and usher in this important new era for water funding and resilience in Colorado.
Colorado voters have narrowly passed a measure that will legalize sports betting and use the taxes raised to fund projects outlined in the Colorado Water Plan.
As votes trickled in Tuesday night, the measure remained too close to call; at some points, the margin was just a few hundred votes. But by Wednesday evening the “yes” votes had decisively pulled ahead.
The unofficial results from the Colorado Secretary of State website show that 50.81 percent of voters supported Proposition DD and 49.19 percent were against it — a difference of more than 23,000 votes.
Pitkin, Eagle and Summit counties passed the measure, with 61 percent, 59 percent and 58 percent of voters, respectively, supporting it. Fifty-two percent of voters in Garfield County voted against Proposition DD.
Beginning May 1, 2020, the state is authorized to collect a 10 percent tax up to $29 million (but probably closer to $15 million) a year from casino’s sports-betting proceeds. The money will go toward funding projects that align with the goals outlined in the water plan, as well as toward meeting interstate obligations such as the Colorado River Compact.
The funds would be administered by the Colorado Water Conservation Board, a statewide agency charged with managing Colorado’s water supply.
District 5 State Sen. Kerry Donovan, who was a sponsor of the legislation behind Proposition DD, said going into Election Day she wasn’t sure whether it would pass. With Colorado’s growing population and the looming threat of climate change, the Western Slope will see an increasingly large burden when it comes to water supply, she said.
“As a rancher and a Western Slope native, I am really excited the state has decided to invest in the future of water in Colorado,” she said.
Water Plan funding
Funding the water plan could mean a number of things. Outlined in a 567-page policy document, the water plan does not prescribe or endorse specific projects, but, instead, sets Colorado’s water values, goals and measurable objectives. According to the water plan, there is an estimated funding gap of $100 million per year over 30 years, but CWCB officials have said that number is an estimate and not precise.
Some of the projects outlined in the water plan stand in opposition to one another — for example, stream-restoration projects with an emphasis on environmental health and building or expanding dams and reservoirs that would divert and impound more Colorado River water.
CWCB director Becky Mitchell highlighted that the money could indeed go toward many different types of projects.
“I think the most exciting thing for us is that we will have a more permanent pool of funding and it will support all types of projects,” Mitchell said. “So, whether it’s a watershed health or agricultural project or storage project or recreational project, the benefit of a more permanent source of funding is to have secure funding for all types of projects.”
In addition to being distributed in the form of water-plan grants, the revenue could also be spent to ensure compliance with interstate compacts and to pay water users for temporary and voluntary reductions in consumptive use. That could mean a demand-management program — the feasibility of which the state is currently studying — in which agricultural water users would be paid to leave more water in the river.
The measure had received broad support from environmental organizations, agriculture interests, water-conservation districts and even Aspen Skiing Company.
Glenwood Springs-based Colorado River Water Conservation District also supported Proposition DD. While the estimated $15 million a year is a good start, river district community affairs director Jim Pokrandt stressed it’s not enough to implement all the projects outlined in the water plan.
“What this does is creates a funding stream,” he said. “And it’s really only a down payment. What we don’t want to see is the other funding streams diminish because everybody will say ‘Oh, you got (Proposition DD).’”
Although there wasn’t much organized opposition to Proposition DD, the measure asked voters to consider three complex topics in one question: a new tax, legalizing sports betting and funding the water plan.
Political Action Committee Yes on Proposition DD spent more than $2.3 million, which came mostly from casino and gaming interests, on its campaign. The only registered group in opposition was small-scale issue committee Coloradans for Climate Justice, which argued that fossil-fuel companies should pay for the damage to water-supply systems caused by climate change.
Editor’s note: Aspen Journalism collaborates with The Aspen Times and other Swift Communications newspapers on coverage of rivers and water. This story appeared in the Times Nov. 6 edition.
From email from the Colorado Water Conservation Board (Sara Leonard):
Colorado voters have officially passed ballot measure Prop DD (50.71% Yes to 49.29% No), which will legalize sports betting in the state and create a tax of 10% on proceeds to fund the Colorado Water Plan Grant Program.
Official statement from Colorado Water Conservation Board Director Rebecca Mitchell:
“Thanks to Colorado voters’ approval of Proposition DD, the Colorado Water Plan will have a permanent, dedicated funding source. Sports betting tax revenue for the Water Plan will support critical environmental, agriculture, and storage projects as well as promote outdoor recreation opportunities across the state.”
It took until Wednesday afternoon, but Colorado’s Water Plan is getting a significant financial boost.
Proposition DD, the statutory measure that institutes a 10%, $29 million tax on recently legalized casino sports betting, was still too close to call Tuesday night, but by Wednesday afternoon around 2:30 p.m., the ayes had it. DD won a 50.7% approval with about 12% of the vote left to count.
A yes vote means the water plan, a multi-faceted, highly complex living document that seeks to implement measures to conserve and protect Colorado’s precious water resources, would receive some much-needed funding.
Proposition DD received broad bi-partisan support across the state, from the Colorado Farm Bureau and the Colorado Cattlemen’s Association to Democratic and Republican legislators and environmental groups.
But there were detractors. Some Weld County farmers felt the water plan left them out, and at least one local state senator, Jerry Sonnenberg, didn’t feel gamblers should have to pay for a tax that benefited all Coloradans.
Proponents admitted that the water plan isn’t perfect, and that there are some crucial compromises made in the implementation, but said that the nature of its construction, which uses local roundtables to build and develop the plan for the sake of each distinct basin in the state, is the best way to achieve the kind of broad and dynamic action needed to save the resource in the growing state long-term.
Bill Jerke, a former Weld County commissioner and former statehouse representative, has said that Proposition DD is a win for bipartisanship. Cattlemen’s Association executive vice president Terry Frankhauser invited those concerned to get involved.
It was a nail-biter, but Proposition DD has passed, ushering in the state’s first legal sports bets.
Colorado has joined 19 other states in jumping on the bandwagon after the U.S. Supreme Court threw out the near-nationwide ban on sports gambling in 2018…
Where do the taxes for sports gambling go?
Casinos will essentially pay a 10 percent tax on profits from sports gambling wagers. That is expected to raise about $15 million annually by the second full year of taking wagers. The bulk of the collections will go to the Colorado Water Plan, a long list of projects agreed to by lawmakers to help prepare for future population growth and make the state more resilient to climate change. It’s not a lot of tax revenue, but advocates say it’s a start to handling some of the $3 billion shortfall for the plan. Some of the money will also go to behavioral health services and addiction hotlines for gamblers.
While there is always noise from the Front Range about water, and there is always concern about a Front Range run on Western Slope water, Coram is less concerned about that than he is a threat from the other direction, specifically downstream on the Colorado River and the Rio Grande.
“I am not as worried about the Front Range, I am more nervous about the possibility that people will use fear (about drought) and Colorado will try to cut deals with the Lower Colorado Basin states,” Coram says. “But the water here doesn’t belong to the state, it belongs to the people. The people (who own the rights) need to be involved.”
The Colorado Water Plan is five years old. Is it functional?
“No,” says Coram. “And it won’t until it retains sustainable funding.”
The Colorado Water Plan names any number of sources for funding within the pages of the plan. One of the main sources should be the severance tax. Colorado severance tax is imposed on nonrenewable natural resources that are removed from the earth in Colorado. The tax is calculated on the gross income from oil and gas and carbon dioxide production. Anyone who receives taxable income from oil or gas produced in Colorado pays the tax.
“Water is supposed to get severance tax funds,” says Coram. “But the governor and legislators always seem to find other needs for the money. In the good years, some senator or assemblyman gets a good idea and they rob money from the severance tax.”
At this point in history Coram says the state legislature owes $300 million to the Water Plan. When the subject comes up in the halls of the Capitol, Coram says that since it appears that when water comes out of the tap, nobody seems to really care about the Water Plan funding.