Colorado Division of Gaming Under Scrutiny from State Auditors

The Colorado Division of Gaming has come under scrutiny from the a state audit for handing out too many temporary gaming licenses. The audit claims the state is possibly losing tax revenue by not requiring operators to provide more documentation.  

Colorado’s Office of the State Auditor produced a 56-page report that covered time between May 1, 2020 and April 30, 2021. During that time, Colorado bettors wagered nearly $2.3 billion.  

“Overall, the audit found that the Division and the Commission did not have effective processes to investigate sports betting operators and make sure they were qualified for temporary licensure, or to collect sufficient documentation to determine if sports betting operators’ monthly tax filings were accurate,” the report said.  

According to the report, auditors found that as of March 2020, 35 of the 39 casinos licensed for online sports wagering or retail sports betting have temporary licenses. In five of those cases, auditors found operators who “did not complete the minimum background investigative procedures for a temporary license.” 

“Which means that these operators underwent a much more limited background investigation than they would have for a permanent license,” the report stated. “However, the temporary licenses allowed them the same privileges as permanent licenses.” 

Varied Reporting 

In 2021, Colorado reportedly earned $8.6 million in tax revenue. The state imposes a 10% tax on all net sports wagering proceeds reported by the operators. But according to the report, auditors found “wide variation between the amount of wagering activity that operators reported after each gaming day and the totals they reported in their monthly tax filings.” 

According to the report, from May 2020 through April 2021, “if operators had not been allowed to deduct and carry forward operating losses the state would have collected an additional $706,000 in sports betting tax revenues during the first year.”

The state’s gaming division reported they are “currently engaged with the Governor’s Office of Information Technology (OIT) to develop our sports betting data management system,” according to the Denver Gazette. 

“With the implementation of the Sports betting Data system, the audit team will be able to run reports generated from direct daily data feeds from the operators and verify them to the monthly tax obligations.” 

Colorado Revenue 

In its first two years of Colorado sports betting going live, bettors have wagered $6.945 billion, averaging $289.4 million per monthly handle. 

Only Nevada, New Jersey, Pennsylvania and Illinois have taken in more sports bets during that time than Colorado. New York will soon be added to the list, too, because of the high weekly gaming figures.  

Since May 2020, the state has reportedly taken in $17.7 million in tax revenue from sports betting sites.