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Sports betting operators in Colorado will no longer be able to deduct promotional bets following the state Senate passing HB 1311.
That bill's language was as follows:
As approved by voters in 2019, a tax of 10% is imposed on net sports betting proceeds. Under current law, for the purpose of calculating its net sports betting proceeds, a sports betting operator or internet sports betting operator is allowed to deduct all payments to players, all federal excise taxes paid, and a certain percentage of free bets placed by players as follows:
Between July 1, 2025, and June 30, 2026, no more than 2% of total free bets placed each month; and
On and after July 1, 2026, no more than 1.75% of total free bets placed each month.
The bill alters the current percentage of free bets allowed to be deducted as follows:
Between July 1, 2025, and December 31, 2025, no more than 2% of total free bets placed each month; and
Between January 1, 2026, and June 30, 2026, no more than 1% of total free bets placed each month.
Beginning on September 1, 2025, July 1, 2026, the bill removes the deduction for all free bets placed. For the 2025-2026 state fiscal year, $17,135 is appropriated from the sports betting fund to the department of revenue for personal services and tax administration IT system support.
The bill was passed in the Senate late Tuesday by a 28-7 vote.
Colorado voters legalized sports betting during the November 2019 election, and when betting went live in May 2020, operators were allowed to deduct 100% of promotional play.
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