The Colorado Division of Gaming is Under Scrutiny After Auditors Find Significant Flaws with the Market Regulation


Since the Colorado sports betting market launched in May 2020, the Centennial State’s overall post-PASPA handle is currently in sixth place, as reports have shown from approximately three weeks ago.

As a result of the audit, the Colorado Division of Gaming and the Colorado Limited Gaming Control Commission have been put under scrutiny.

What Came Out of the Audit in Colorado?

The audit covered the first year of operation, which started on May 1, 2020, and went through April 30, 2021. The audit conducted by the Colorado Office of the State Auditor found that the state was handing out too many temporary licenses without providing enough documentation.

The 56-page document highlighted three issues with the market and how it was handled.

  • Sportsbook operators were able to carry their losses month to month for tax purposes which lowered the required amount needed to pay.
  • Most operators were given temporary licenses without adequate background checks.
  • There were too many discrepancies in the operators’ monthly revenue and tax reports which means that there are serious flaws in the regulatory aspects of the market.

During that span noted in the audit report, bettors across the state wagered a total of $2.3 billion. Colorado has one of the lowest tax rates in the country, as it’s slated at 10 percent. In the first year of operation, the state has collected $6.6 billion in the first year of operation.

As of March 2022, 35 of the 39 operators, or about 90 percent, held temporary licenses in the Centennial State, which led to limited background checks. Five of the gaming facilities did not undergo a minimum background check, allowing them to use their licenses as permanent licenses.

There Were Too Many Varied Reports in Regards to This Situation

The carry-over costs the state an additional $706,000, which the state could have collected during the first year. A sample of 22 tax filings was also examined, and the auditor found a wide variation between monthly and daily reports. In the monthly tax filings of a sportsbook, there was an increase of $1.4 million in net gaming revenue, which is a concerning measure.

Colorado’s Division of Gaming has seemed to have failed in numerous aspects that involve tax-filing discrepancies and awarding licenses between permanent and temporary which are all important aspects of regulating one of the biggest markets in the United States.

Looking at the Overall Colorado Market and Other News Covering the State

Bettors in Colorado have wagered $6.945 billion since launch, which ranks sixth as the only states that have higher post-PASPA handles are New Jersey, Nevada, Pennsylvania, Illinois, and Indiana. New York’s numbers will also eventually be on this list. Since May 2020, sports betting has generated $17.7 million in tax revenue for the state.

It was announced Thursday that the Colorado Limited Gaming Control Commission had approved a $130,000 fine between the state’s Division of Gaming and payment processing company WorldPay because the company operated without a license in the state for 13 days in April.