Colorado, which launched its competitive sports betting market in 2020, could become the first U.S. state to eliminate tax deductions for promotions by sports betting operations.
When the sportsbook market went live, Colorado allowed operators to deduct the costs of bonuses. The recently passed Bill 22-1402, awaiting Governor Jared Polis’s signature, would gradually end the write-offs. Beginning next year, as much as 2.5 percent of the sports betting handle could be deducted as free play, but that number will decline until the summer of 2026 when only 1.75 percent of the handle will be deductible.
Promos currently account for 3.2 percent of the state’s sports betting handle, which works out to be 51 percent of the gross. Experts say that as the sportsbook market matures it will need to spend less on promotions.
Last year, outgoing House Speaker Alec Garnett, who co-sponsored this year’s bill, commented, “It might make more sense after a certain amount of time to start taxing those boosts and incentives that are offered to players. When you’re allowing all those boosts to not be taxed, you’re leaving some money on the table.”
