Voter’s guide to sports betting ballot question

University of Colorado Buffaloes fans could have made a lot of money if they’d been able to bet on their home team during the Sept. 7 game against the Nebraska Cornhuskers — especially if they were brave enough to make an “ingame,” or Tier II, bet at halftime, when the score was 17-0 in Nebraska’s favor.

Sports betting isn’t legal in the Centennial State, but it could be by next year’s CU football season opener if voters approve a statewide ballot question this November.

“I have the apps already downloaded on my phone, actually,” said Democratic House Majority Leader Alec Garnett, who co-sponsored the bill referring the question to voters.

Garnett isn’t gambling illegally, though he thinks the sports betting black market is alive and well in Colorado. He uses the payouts offered in the apps as guidance for his fantasy football team.

Proposition DD will ask Colorado voters if they want to give the 17 companies that own Colorado’s 33 casinos legal permission to apply for licenses to open a

physical sportsbook at one of their casinos. It would also let them contract with private companies to operate an online sportsbook or cellphone app. Those casinos would pay a 10% tax on their net proceeds, and all that money would go to Colorado’s water plan.

The measure would put sports betting under the regulatory thumb of the Division of Gaming and give the agency until May 2020 to write rules about things like how to verify a person’s age before they bet online and get the system up and running.

Lawmakers did set a few rules, though.

Betting on the in-game performance of college players wouldn’t be allowed, and all bets on high school sports would be forbidden. Sanctioned e-sports (video game tournaments) would be OK, but no betting could happen on unsanctioned sports of any kind.

Before you cast your ballot, here’s what you need to know:

Why now

In May 2018, New Jersey convinced the U.S. Supreme Court that a federal law limiting sports betting to a handful of states was unconstitutional. It was called the Professional and Amateur Sports Protection Act, and states across the country rushed to create their own sportsbooks as soon as the 6-3 ruling came down. In total, 42 states have passed or are working toward legalization.

“It’s a way to legalize a practice that we know has been taking place in Colorado for over 50 years,” Garnett said.

The Denver Democrat and his Republican co-sponsor, House Minority Leader Patrick Neville, put the question to Colorado voters because any new tax needs their approval.

A $29 million tax

The ballot question starts with the potential tax increase, as all tax questions must in Colorado. In this case, the question is: “Shall state taxes be increased by twenty-nine million dollars annually?”

But it’s not a tax on Coloradans, it’s a 10% tax on casinos. Sportsbooks would take a cut of each bet placed in person or through a mobile app, and this tax would be on a percentage of those earnings.

“It’s unfortunate the ballot language has to say that,” Neville said, adding that the wording might confuse some voters.

Colorado’s casinos support the ballot initiative. The Colorado Gaming Association worked with Neville and Garnett during the session to find a workable level of taxation. The state tax would be about the same as the ones levied by New Jersey and Delaware, but it wouldn’t be the lowest in the country. That’s Nevada’s 6.75% tax.

“This is a number we can live with and still make a profit,” casino lobbyist Peggi O’keefe told The Denver Post during the session.

The Colorado water plan

Where would the state’s proceeds go?

“In early 2014, Gov. (John) Hickenlooper was in a Cabinet meeting looking around the table and saying, ‘We have a health care plan, transportation plan, but we don’t have a water plan,’ ” said Brian Jackson, a senior manager at the Environmental Defense Action Fund.

The result of that meeting, Jackson said, was “a great big document with a ton of great ideas in it covering all aspects of water.”

The plan identified $20 billion worth of projects that would make sure Coloradans had access to clean drinking water, fishing, farming and river recreation as the state grows and the climate changes.

Most of the projects had a funding source — but about $3 billion worth of them didn’t.

“There’s a funding gap for things that are really important like river health and watershed restorations and improvements to agricultural infrastructure,” Jackson said.

That’s where the nine-member Colorado Water Conservation Board comes into play. It gives out grants and loans to projects across the state for water storage, education and outreach, recreation and land-use projects. For example, the Homestake Project near Leadville upgraded equipment that diverts water for agricultural needs to make it more fish friendly.

Lauren Ris, assistant director of water for the Colorado Department of Natural Resources, said $29 million a year would be substantially more than the $7 million to $9 million the board usually gets.

Gambling addiction

A yes vote on Proposition DD would allow Coloradans to legally place bets from their phones — something they can’t do right now — and effectively expand legalized gambling across the state.

Garnett and Neville said the reason for mobile betting is simple: It’s the way most black-market bets are placed now, and it’s what consumers will expect. Nearly 85% of all sports bets placed in New Jersey came from a mobile or online platform, according to an August revenue report from the NJ Division of Gaming Enforcement.

But gambling addiction experts aren’t sure the Centennial State is ready for the impact of making betting as easy as ordering on Amazon.

“Colorado has a really poorly funded problem gambling system,” said National Council on Problem Gambling executive director Keith Whyte. “They’re asking to expand on top of a very unstable foundation.”

The 2019 bill that set up the framework for sports betting allocated $130,000 annually to the Office of Behavioral Health in the Department of Human Services for things like a crisis hotline and certified gambling addiction counselors. That’s less than half of what Whyte said he considers a minimum investment in gambling addiction services. He said states should invest at least 1% of the money they make off gambling into treatment.

The council ranked Colorado 37th in the nation for state investments into programs for treating problem gambling in 2016, but Whyte noted that the bottom 10 states didn’t invest anything at all.

Off-track betting and racetracks

One of the biggest debates on the sports betting bill was whether to let companies who operate outside of the three mountain towns where gambling is legal to apply for licenses.

“To not include the off-track betting facilities is just a slap in our face,” said OTB owner Dan Kelliher during a committee hearing at the Capitol. “It’s very disrespectful, honestly, for being the small-business owners that we are.”

His customers will be in his business, taking advantage of his amenities, while placing bets with some other company on their phones, Kelliher said.

Colorado voters, however, have consistently said they want gambling confined to the towns of Black Hawk, Central City and Cripple Creek. An amendment proposed in 2014 to expand gambling to certain racetracks failed with a whopping 70% of voters against it.

Major-league sports

NFL commissioner Roger Goodell issued a statement when the ruling came down from the Supreme Court, which included some recommendations for states wanting to set up their own sportsbooks.

One of those suggestions was requiring companies to use official league data for all in-game bets.

That recommendation was reiterated during testimony on the bill here in Colorado by Marquest Meeks, an attorney for the Office of the Commissioner of Major League Baseball.

Meeks, who said he was supported by “a coalition of all the professional teams here in Colorado,” told Garnett and Neville that the reason to use league data for sports betting is it’s the most accurate, reliable and consistent information about what’s happening in any given game.

That didn’t end up in the final bill. Neville said he’s open to revisiting the idea, but he didn’t see a compelling reason to give major-league sports a “total monopoly.”

The Denver Post asked the Rockies, Nuggets and Avalanche whether they support Proposition DD, but none of them responded. The Broncos deferred to the NFL statement on sports betting that asked states to use league data.