This story was produced as part of the Colorado Capitol News Alliance. It first appeared at cpr.org.
Dave Vanderport says he was a sports gambler long before it was legalized in Colorado. Growing up, his grandmother taught him to bet on horses, and eventually he set up offshore sports betting accounts. Now he plays in the state-sanctioned apps.
He was not pleased to hear that lawmakers at the State Capitol are trying to limit the number of sports and lottery bets he can make on his phone.
“Prohibition has never worked in any situation. Give me one prohibition that has ever worked,” said Vanderport. "As somebody that has been a longtime gambler, you'll find ways around it. If we really want to do it, you're going to find a way around it.”
After years of explosive growth in app-based sports betting — and as Colorado moves toward fully digital lottery games — state lawmakers are trying for the first time to put guardrails on online gambling. The push has opened a fight over addiction, financial harm and whether the state has grown too dependent on gambling revenue.
Colorado was once known for its “limited” approach to gambling, confining most games to casinos in three former mining towns. But in 2019, everything changed. Voters approved no-limit sports betting, primarily on phone-based apps. Since then, it’s grown into a multibillion-dollar industry, with ads and promotions flooding the airwaves.
Also in 2019, the Colorado Lottery quietly went digital. So-called courier services entered the state, allowing users to buy lottery tickets on their phones, for a service fee, becoming one of the fastest-growing sources of sales. And last year, the Colorado Lottery passed rule changes that would allow a state-sanctioned iLottery platform, so customers could play lottery games that look similar to casino-style slots on their phones, and use credit cards to finance the transactions.
State lawmakers are pushing back for the first time. Two bills passed their first committee votes in the Senate in recent weeks.
"It is the only addiction where you think that the cure for your addiction is doing that thing one more time,” said Sen. Matt Ball, D-Denver, at a committee hearing.
Last week, Senate Bill 131 narrowly cleared the Senate Finance Committee. It would limit television advertising of sportsbooks, prohibit bets on individual player performance, and set deposit limits to keep people from chasing losses.
The data shows that sports betting is popular, and Coloradans are increasingly losing more money, as the sportsbooks refine their systems to entice bets that rarely pay off.
Last year, Coloradans placed $6.5 billion in sports bets, an increase of 26% since 2022. But DraftKings, FanDuel and BetMGM, among others, are increasingly beating bettors — their Colorado revenues have jumped 67% over that same time. The companies have found success by heavily promoting riskier parlay bets, where one bet is dependent on multiple outcomes.
“I've been the commissioner of a fantasy league since 2010,” said Ball in an interview. “I think there's absolutely a place for responsible sports betting, so we don't want to infringe on any of that. But I do think that we need to do something because problem gaming and addiction to gambling has exploded across the nation and in Colorado as well.”
It’s unknown just how much sports betting has resulted in addiction in Colorado. But a growing body of national research points to a problem. A UCLA study awaiting publication found “a substantial increase in average bankruptcy rates, debt sent to collections, use of debt consolidation loans, and auto loan delinquencies” in states with legal sports gambling.
Ball told lawmakers that calls to the state gambling addiction hotline jumped 45% in the first year of legal sports betting. But he admitted that Colorado-specific data is limited, and his bill would require state gaming regulators to collect and analyze data to get a sense of the scope of the problem.
A week earlier, in front of the same Senate Finance committee, lawmakers gave initial approval to a bill that would reverse the Colorado Lottery’s expansion into online games.
The bill sponsors worry that the state lottery’s plans go far beyond the original intent of offering scratch-off tickets and Lotto drawings, instead creating a sort of slot machine in your pocket on your phone — funded by credit cards if the player chooses.
“It is the single largest expansion to lottery in the history of lottery,” Sen. Jeff Bridges, D-Greenwood Village told lawmakers. His bill would prohibit the online lottery games and the use of credit cards to play those games, well before the state can get the program started.
The proliferation of online gambling in Colorado and dozens of other states has alarmed anti-gambling advocates.
Online gambling is “gambling fentanyl. That's what it is,” said Les Bernal, national director of Stop Predatory Gambling, based in Massachusetts. He said the expansion of lottery games online was particularly destructive. “It's coming from people who are addicted to gambling, and most importantly, it's coming from low-income citizens who are sacrificing their financial well-being.”
Sports gambling bill receives a frosty reception
Lawmakers were deeply skeptical about major provisions of the sports gambling reform bill. They passed the bill out of committee, but said much work needed to be done.
DraftKings’ chief legal officer, Stanton Dodge, told the committee that banning prop bets “risks pushing bettors toward the unregulated offshore operators that offer no consumer protections, no integrity monitoring, no responsible gaming tools and resources, and they pay no taxes in Colorado."
Last year, Colorado collected nearly $44 million in taxes on sports gambling, and proceeds are directed to water conservation projects. Dodge said proposition wagers now account for up to 45% of sportsbook revenue, and eliminating the bets would cost the state up to $15 million a year in tax revenue.
Proposition bets are fueling major growth in sportsbook revenue and tax collections. Prop bets, like how many rebounds or touchdowns a player will score in a game, are closely tied to the growth of parlay bets, which are more lucrative than standard win/lose bets.
Parlays are often built on these player performance wagers. For instance, a bettor can place a parlay wager that the Nuggets will win, Nikola Jokic will have double-digit totals in points, rebounds and assists, and Jamal Murray will score more than 25 points. These bets are packaged as suggested parlays by sportsbooks, then heavily promoted because hitting on three or more “legs” is a long-shot bet.
Prop bets are also seen as a threat to the integrity of sports. Scandals are piling up across all sports, with federal indictments implicating players and coaches with trading on insider information to win bets.
Despite that, State Sen. Janice Marchman, D-Loveland, noted that voters approved prop bets when they voted for sports gambling in 2019.
“I feel like if we want to take prop bets out, we owe it to the voters to go back to them and ask them to take that part out,” said Marchman.
The bill also would restrict advertisements for sports betting. Even a casual sports fan cannot escape the onslaught of ads for the major sportsbooks: from billboards at stadiums, to promoted segments on sports news and talk shows, to TV commercials.
Broadcasters told state lawmakers that banning those advertisements will be essentially impossible as they are woven into every aspect of the telecast, which almost exclusively originates from out-of-state channels.
“Local stations generally receive those feeds as complete programs including advertising, and they don't have the technical ability to selectively remove or replace individual advertisements without disrupting the broadcast,” testified Justin Sasso, president of the Colorado Broadcasters Association.
Proponents acknowledge that’s a tricky provision to implement, but must be balanced with the harm of indoctrinating adolescents and younger bettors exposed to nonstop advertising.
iLottery expansion draws ire of lawmakers
Last November, the state’s lottery commission passed controversial rule changes that would allow the state to implement fully online games that players can finance through credit card purchases.
"If consumers want to use their credit card, I don't feel like it's on us to tell them they can't,” said Tom Seaver, director of the Colorado Lottery, in an interview. He added that many consumers use credit cards for everything, for the rewards points.
He said part of the reason they want to start fully online lottery games is the popularity of the courier model. Last year, courier sales for lottery tickets online totaled $38 million.
“And that's a lot. And what that tells us again is that players have an appetite for that. They want to play online. So all we're doing is satisfying demand,” said Seaver.
Michigan has had iLottery games since 2012, and they look like a digital slot machine. Colorado’s lottery rules could allow for similar games, but those would have to be approved by the lottery commission.
“We haven't got to that point,” said Bill Clayton, vice chair of the lottery commission. “But it's not going to be anything like that. I mean, we've worked really hard and diligently and took this very slowly to make sure that we're not creating what you're talking about a casino in your hand.”
But they may never get the chance.
Sen. Bridges’ bill SB26-117 would roll back those games before they even start. He told lawmakers in the finance committee earlier this month that iLottery games in other states are “essentially roulette and slots on your phone.”
The bill passed out of committee on a 5-4 vote, after lawmakers adopted an amendment allowing courier services to continue operating.
“I do feel like expanding into taking credit cards and expanding into having this available on your phone all day, every day is going to turn out to be extremely harmful to a subset of the citizens of Colorado,” said Sen. Judy Amabile, D-Boulder, a co-sponsor of the bill. “And we will pay the price here in this building.”
Gambling funds hundreds of millions in state programs
The effort to put guardrails on online betting runs headlong into the state’s reliance on sin taxes to raise money.
Proponents for online sports betting and iLottery said restricting gaming will result in less state revenue, at a time when the lawmakers must contend with a massive structural deficit in the budget.
Seaver noted that the lottery has an obligation to increase lottery revenues to continue to fully fund outdoor programs, like Great Outdoors Colorado, or GoCo, which has collected $720 million in lottery revenue over the last 10 fiscal years.
When there’s a down year for lottery proceeds, like last fiscal year, the obligations to GoCo mean less money goes to other programs, like grants for parks and social equity programs.
Sports betting proceeds, meanwhile, go to water projects, and there was concern that limiting those bets would mean drawing money from the general fund to maintain those grants.
Rob Minnick, who’s in recovery for a sports gambling addiction and runs an anti-gaming group, told lawmakers that’s a twisted way for the state to pay for something.
“If the funding for your water projects can only happen at the expense of your most vulnerable citizens, maybe build some wells for the ones that go homeless in the process.”
