New bill proposes Colorado to spend more on problem gambling services


As Colorado nears the second anniversary of legal sports betting on May 1, the Speaker of the House Alec Garnettthe leading market-building champion in Colorado, wants to exponentially increase the amount of money the state spends on problem gambling.

“This is an important step to ensure Colorado follows best practices to serve those who may need help,” said Alec Garnett, a Democrat from Denver. On April 28, Garnett was able to advance House Bill 1402which would spend at least $2.5 million a year on problem gambling services and programs, in a 9-2 vote by the House Finance Committee.

If the bill is approved by the Colorado Legislature and signed into law by Governor Jared Polis, the new funding will massively increase the current $230,000 that goes annually to problem gambling services. It will also close a loophole in the original legislation.

In 2019, Colorado lawmakers approved a bill to legalize sports betting in the state and allocate approximately 94% of tax revenue generated from sports betting winnings to the Colorado body of water, a creation of Governor John Hickenlooper’s administration that was designed to ensure the state has water for agriculture, drinking, and recreation for years to come. Since the bill included a tax, voters had to approve the DD proposal in the November 2019 ballot. A slim majority of Colorado voters did, and the market was launched on May 1, 2020.

Between then and the end of March 2022, bettors in Colorado wagered $6.55 billion on sports, which resulted in the state collecting more than $17 million in taxes.

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Alec Garnett was the top sports betting decision maker in Colorado.

Garnett for Colorado

In addition to providing funds for problem gambling services, HB-1402 would limit the amount that sports betting operators using free bets to win new customers can deduct from their taxable income. Due to free bet cancellations, the state has missed out on millions of dollars in potential tax revenue. Under this bill, the money captured by closing this loophole would go directly to implementing Colorado’s water body.

The additional $2.5 million for problem gambling services would come from state gambling tax revenue and go into a fund that would then be divided into grants to state agencies, local governments and organizations to non-profit. In particular, grants would go to gambling addiction prevention programs, public awareness campaigns, gambling addiction treatment, recovery services and workforce training. This element of manpower training is particularly important, since the Colorado Problem Gambling Coalition lists only seven certified gaming processing providers on its website.

“We hope to increase that number,” said Peggy Brown, chair of the board of the Problem Gambling Coalition of Colorado. “If we can work with the counties and make them understand the need for additional training and we can provide funding for that, I think we will be in a good position.”

In addition to the guaranteed $2.5 million, the bill calls for the problem gambling fund to receive hundreds of thousands of dollars in unspent harmless money. The disclaimer fund was created to potentially reimburse money lost by certain businesses, such as off-track betting facilities, due to the legalization of sports betting.

Any amount of money would help, says Brown, who notes that the state’s gambling hotline received far fewer calls before sports gambling was legalized in May 2020. In 2018, this hotline received 6,546 calls. In 2021, he received 9,686 calls.

“That’s a pretty significant increase,” says Brown, who notes that his organization takes a neutral stance on legal sports betting and gaming in general. “Anyone can do the right thing and still make money.”

Brown, a former compulsive gambler from Lakewood who has been recovering for more than two decades, points out that the negative consequences of problem gambling can be immense.

“With gambling addiction, there is no saturation point. If you are an alcoholic, you cannot consume that much. With gambling, there is no saturation level, so you can literally stay in action as long as you can get the money somewhere. The consequences for families, structures and relationships are devastating,” says Brown, referring to dire outcomes such as “high rates of divorce, bankruptcy, debt, jail and criminal behavior”.

Another key aspect of HB-1402 would be a new program allowing bettors to self-exclude themselves from all sports betting apps for a certain period of time – analogous to a current state program in which bettors self-exclude of all casinos. Additionally, the bill requires sports betting operators to submit an annual report outlining their efforts to “promote responsible gambling through advertising and other promotional methods and the licensee’s plans regarding such promotional efforts in the current fiscal year”.

In particular, Brown would like to see more emphasis on the gambling addiction hotline in sports betting commercials.

“What I saw on TV, the sports betting operators put it in such a small font and for such a short time on the screen that it can’t be read or when you see it , you can’t even take a screenshot,” Brown says. “We’re now trying to fix some of those things.”

Projects associated with the Colorado Water Plan will receive the first batch of sports betting money in July.

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