HB 25-1311

House Bill 25-1311, which has been signed into law in Colorado, changes how sports betting operators can deduct free bets from their taxes. Currently, these operators pay a 10% tax on their net proceeds from sports betting. The bill reduces the percentage of free bets that can be deducted over time: from 2% between July 1, 2025, and December 31, 2025, to 1% between January 1, 2026, and June 30, 2026. Starting July 1, 2026, operators will no longer be able to deduct any free bets from their taxes at all. This bill affects sports betting companies operating in Colorado and aims to increase state revenue by limiting these deductions.

Official Summary

As approved by voters in 2019, a tax of 10% is imposed on net sports betting proceeds. For the purpose of calculating its net sports betting proceeds, a sports betting operator or internet sports betting operator (sports betting operator) has been 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 act alters the percentage of free bets that a sports betting operator is allowed to deduct so that: Between July 1, 2025, and December 31, 2025, no more than 2% of total free bets placed each month may be deducted; and Between January 1, 2026, and June 30, 2026, no more than 1% of total free bets placed each month may be deducted. Beginning on July 1, 2026, the act 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. (Note: This summary applies to this bill as enacted.)

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