Prop DD, which would legalize sports betting in Colorado, narrowly passes

The measure would also tax betting to help pay for critical water needs.

Blue Mesa Reservoir on Oct. 22, 2018. Proposition DD will help pay for water projects. (Photo by John Herrick)

It was a squeaker, but sports betting will be legal in Colorado beginning in May 2020. 

Voters on Tuesday approved a ballot measure 51% to 49% to legalize and tax betting on certain professional and collegiate games at casinos and online, according to results from the Colorado secretary of state. The vote was too close to call until mid-afternoon Wednesday. The Associated Press called the race at 2:33 p.m. 

Revenue from a 10% tax on the net proceeds companies make on sports betting will help pay for some of the state’s critical water needs. It is, in other words, a narrowly focused tax targeted for a widespread need.

The vote was far from the slam dunk many expected. While the success of its sister ballot measure, Prop CC, was always uncertain, Colorado voters have historically been more receptive to so-called sin taxes.

But the measure had critics on both sides of the political spectrum. For conservatives, the question about raising taxes may have been a non-starter. And for liberals, a regressive tax paid by gamblers, some of whom may struggle with addiction to gambling, perhaps was too problematic to support.

“This has always been a white-knuckles job,” said Josh Penry, a former Republican state Senator and political strategist who worked on the Prop DD campaign. “There is real skepticism. It’s not a traditional right-vs-left issue.” 

More than 90% of that new tax revenue, estimated at an average of $16 million per year, and as much as $29 million, would help pay for managing the state’s dwindling water supplies. That tax revenue alone is not enough to meet the state’s water needs, but in the minds of most of its supporters, it represents the best shot yet to pay for the general projects outlined by the 2015 Colorado Water Plan.

“The Colorado Water Plan will have a permanent, dedicated funding source,” said Becky Mitchell, the director for the Colorado Water Conservation Board, in a statement. “Sports betting tax revenue for the Water Plan will support critical environmental, agriculture, and storage projects as well as promote outdoor recreation opportunities across the state.”

Coming up with the money to help better manage Colorado’s water supplies is seen as critical to maintaining the state agriculture and recreation industries and preserving healthy river ecosystems threatened by slow flows and warming waters. The estimated cost of implementing the water plan is $100 million a year.

Lawmakers have struggled to find that money. They pulled together nearly $30 million in one-time money for water projects and planning last session, a historic yet insufficient amount. Prop DD, which was referred to the ballot by state lawmakers, was seen as the best shot at getting at least some funding and getting it fast.

“This is not the best way to fund such an important need, but we have to take the opportunities that come to us,” said Scott Wasserman, the president of the Bell Policy Center, a left-leaning think tank. 

Opponents had concerns about paying for the Colorado Water Plan because it calls for possibly damming rivers to build reservoirs. The margins of victory in Boulder and Larimer counties were tight, areas where projects to expand or build reservoirs are planned. The Water Plan also calls for lining irrigation ditches, upgrading flood gates and paying farmers to use less water.

The measure struggled despite a $2.4 million campaign to promote it. FanDuel Group, a New York City-based sports betting company, spent $1 million backing the measure, according to campaign finance records with the secretary of state. Other top donors include DraftKings, a Boston-based sports betting company, Twin River Casino Hotel from Rhode Island and the Colorado Gaming Association. 

A coalition of environmental groups backed DD, including American Rivers, Business for Water Stewardship, Colorado Water Trust, Conservation Colorado, Environmental Defense Fund, Trout Unlimited, and Western Resource Advocates. The Colorado Farm Bureau also supported the measure. 

Colorado already allows limited stakes gambling — under $100 — in the towns of Black Hawk, Central City and Cripple Creek. Some supporters saw Prop DD as a way to regulate underground sports betting. 

“Black markets aren’t conservative and they aren’t good for Colorado. Bringing sports betting into the daylight, regulating it, and leveraging it for the benefit of our water future is a common-sense approach,” said House Minority Leader Patrick Neville, a Republican from Littleton, in a statement.

This story was updated at 3:30 p.m. with the final results from the election. 

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