Colorado House Committee supports bill that would tax free bets 

Colorado’s House Finance Committee has backed legislation that would amend how free bets offered by operators are taxed. 

The Committee passed House Bill 1,311 by a vote of 9-3 on Monday, after it was submitted by Speaker of the House Julie McCluskie alongside Representative Matt Soper and supported by Senator Dylan Roberts. 

As a result, the bill has now progressed to the Committee on Appropriations. 

HB 1,311 looks to alter the regulations regarding tax rules for sports betting operators within the Colorado Revised Statues.

Currently, there is a 10% tax rate on sportsbooks’ net proceeds, which has been in place since 2019, but operators have been able to deduct a percentage of free bets from tax payments. 

Should HB 1,311 continue its progression, operators would be required to include revenue generated from free bets as part of their taxable income.

The bill applies to both the sports betting and igaming verticals and if passed into law, would come into effect on September 1. 

The lawmakers behind HB 1,311 voted in November to scrap a limit on the amount of sports betting tax revenue Colorado could retain, which was capped at $29m. 

The bill is viewed as a suitable alternative to raising revenues generated by the sports betting market without hiking the rate of tax operators are subject to, a measure several other states have adopted recently. 

Ohio doubled its rate of sports betting tax from 10% to 20% in 2023, but Governor Mike DeWine has pitched the idea of doubling the rate again to 40% as part of his budget plans published in February. 

Those plans were eventually knocked back, although hopes to double the rate in North Carolina from 18% to 36% are growing.

In 2024, Illinois implemented a sliding scale to its tax structure, with operators that amass more than $200m in revenue taxed at a rate of 40%.