Colorado (USA): gambling regulation and licensing
State of Colorado
Part of United States
- Online sports bettingRegulated
- Online casinoProhibited
- Land-based (reference)Regulated
- Regulator
- Colorado Division of Gaming
- Headline tax
- 10% GGR
- Licence required
- Not yet verified
- Last verified
- 30 Aug 2026
Summary
Colorado taxes sports betting at 10% of net proceeds, one of the lower rates in the United States, and directs the money somewhere no other state does: the Colorado Water Plan. Betting was approved by voters as Proposition DD in November 2019 and launched on 1 May 2020. The interesting change is not to the rate but to the base. Operators could originally deduct free bets when calculating taxable net proceeds, which in a promotion-heavy launch market meant a great deal of revenue was never taxed. House Bill 1311, signed by Governor Jared Polis on 15 May 2025, phased that out: the deduction was capped at 1% of handle from 1 January 2026 and removed entirely from 1 July 2026. The effect is a tax rise that leaves the headline rate untouched. Colorado projected an extra $3.2 million to the water fund in fiscal 2026, rising to $12.9 million in 2027 once the deduction is fully gone.
Common pitfalls
Comparing Colorado's 10% headline rate with other states understates what operators now pay: the free-bet deduction that made the rate cheap was removed in stages through to 1 July 2026.
Key facts
- Regulator
- Colorado Division of Gaming
- Regulator type
- Sub-national body
- Headline tax
- 10% GGR
- Licence required
- Not yet verified
- Minimum age
- Not yet verified
- Tax base
- 10% of net sports betting proceeds. The deduction for free bets was phased out under House Bill 1311: capped at 1% of handle from 1 January 2026 and removed entirely from 1 July 2026, so the effective rate rose without the headline rate changing.
- Capital
- Denver
- Currency
- USD
- Official languages
- English
Legal framework
Key amendments
- 15 May 2025House Bill 1311, signed by Governor Jared Polis, phased out the deduction for free bets from taxable revenue: capped at 1% of handle from 1 January 2026 and removed entirely from 1 July 2026.
Taxation
- Headline GGR tax
- 10% GGR
- Effective date
- 1 Jul 2026
- Tax base
- 10% of net sports betting proceeds. The deduction for free bets was phased out under House Bill 1311: capped at 1% of handle from 1 January 2026 and removed entirely from 1 July 2026, so the effective rate rose without the headline rate changing.
Earmarked levies
- Water Plan Implementation Cash Fund: the bulk of sports betting tax receipts (State of Colorado)
Advertising
- Advertising permitted
- Yes
- Affiliate rules
- Affiliates are not separately licensed. The operator remains accountable for advertising published on its behalf, and only state-licensed operators may be promoted.
- Celebrity and influencer rules
- Advertising must not be directed at people below the legal minimum gambling age, which constrains the use of personalities and channels with an under-age following.
- Penalties for breach
- T supervises advertising as part of its licensing function and can take disciplinary action against the licence.he Colorado Division of Gaming
Restrictions
- Advertising is regulated by the Colorado Division of Gaming as a condition of licensure rather than under a separate advertising statute.
- Only operators licensed in the state may lawfully be promoted to its residents.
- Advertising must not be directed at people below the legal minimum gambling age.
- Operators must not direct marketing at self-excluded persons.
- Online casino is not authorised, so only sports betting may be promoted. This is the most common misreading of a US state record: a sports betting licence is not an iGaming licence.
- Colorado has specifically addressed the advertising and tax treatment of free bets and promotional credits, which bears on how acquisition offers may be presented.
Outlook
Removing a promotional deduction is the quieter route to more revenue, and several states have taken it. Colorado is the cleanest worked example of how much it raises without a rate change.
Frequently asked questions
- What is Colorado's sports betting tax rate?
- 10% of net proceeds, though the free-bet deduction that reduced taxable revenue was removed entirely from 1 July 2026.
- Where does Colorado's sports betting tax go?
- Chiefly to the Water Plan Implementation Cash Fund, under the terms of Proposition DD.
Sources
- Colorado Division of Gaming
Colorado Department of Revenue
Tier 1Accessed 22 Aug 2026 - Tier 2Accessed 22 Aug 2026