Colorado’s Wager for Water Won’t Go Down Drain Because of Stunted Sports Betting Revenue

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What could cause a Coloradan to cheer against the Broncos? Drip, drip, drip …

“It’s a little odd to root against the Broncos, but that means more money for this very important project,” said Andy Schultheiss, executive director of the Colorado Water Trust.

Considering that professional sports in the U.S. have been on hiatus since mid-March, the Broncos, who finished second in the AFC West last season and won Super Bowl 50 just five years ago, would have to do a lot of losing for Schultheiss to get his wish.

In Colorado, the future of water is tied to the success of the state’s sportsbooks, the first of which went live on May 1, amid the COVID-19 crisis. Since May 1, six digital sportsbooks — BetMonarch, BetMGM, BetRivers, DraftKings, FanDuel, and FoxBet — have launched mobile sports betting platforms, and there are plenty more to come. But with little to bet on, sports betting revenue, which is earmarked for Colorado water conservation projects, won’t touch the $10 million per year water stakeholders were hoping for.

Too early to tell how much short-term revenue available

“We keep getting asked the revenue question,” said Dan Hartman, director of the Colorado Division of Gaming. “It was kind of all over the place before the coronavirus and now it’s, ‘When do we get back to some kind of different normal, when do sports come back?’ But even with the sports we’ve had, we’ve had strong signups and those are looking a little better.”

According to Colorado Politics, gaming officials initially projected $9.6 million in tax revenue for the current partial fiscal year, but revised that to $1.5 million after the onset of the COVID-19 crisis. The Colorado Sun reported that according to a 2019 fiscal impact statement from the Legislative Council Staff, a nonpartisan services group for the Colorado Legislature, projected $16 million in tax revenue during each of the first five years.  Under post-COVID revised estimates, the state’s Water Plan Implementation Cash Fund could receive a distribution of at least $1.35 million for Fiscal Year 2019-2020

With live sports betting less than a month old, the Department of Revenue doesn’t have any revenue reports yet. But with the limited number of operators that have launched apps — there will likely be dozens of mobile platforms across the state — and the dearth of sports, the first report is sure to be below projections.

But that won’t stop the Colorado Water Conservation Board (CWCB) from beginning to implement the state’s Water Plan, which was completed just a few years ago and got its final technical update in 2019. The plan is not a mandate, but rather a suggested pathway for Colorado — which supplies water to other Western states including Arizona and California — to better preserve its resources, ensuring that water will continue to be available well into the future.

“The Colorado Water Plan was developed, through a state-wide effort, to figure out how to share water better, so we can be as efficient as possible,” Schulthiess said. “It’s very detailed, but everything in it costs money. … It’s a recommendation under the previous governor, and it’s as good as an effort as we’re ever going to make.”

“Unlike most calls for public money, the water plan is kind of unusual because it benefits everyone in the state. Everyone is in this boat — pun intended — together.”

Schultheiss’ group is similar to a land trust in that it purchases or leases water from people willing to sell, and in some cases keeps it in reserve. As an example, if a farmer has the rights to water but only needs it for the growing season, the farmer could sell those rights for other parts of the year to the Colorado Water Trust, which would then “save” the water.

Fewer sports betting dollars will mean fewer water projects

The Trust is one of many partners in Colorado with an interest in water conservation. But it is the CWCB that is the government agency responsible for implementing the Plan. The CWCB isn’t your typical government agency — rather than allocate funds it may or may not have or sell bonds, it spends only what it has. In the current climate, the CWCB will have fewer dollars to allocate toward water conservation projects, but it won’t put the Plan on hold.

“What would happen is that we would receive the revenue from whatever funding would come in — in this case, taxes from sports betting,” said Sara Leonard, CWCB marketing and communications director. “It would go into our grant program. (The current situation) won’t change how we would operate normally at all.

“This new revenue stream, which would be a little more permanent than what we have now, would just go into the pot of money and be allocated through the same legislative process.”

In a nutshell, the CWCB gets most of its funds from construction loans it makes. That money goes into the state’s general fund and then the state legislature reallocates the money back to the CWCB. The Board reviews applications from conservation organizations, such as the Colorado Water Trust, and awards grants as money becomes available.

“We really do rely on our water community in Colorado to develop project ideas and come to us with what they think they can do on the ground,” Leonard said. “All kinds of passionate people come to us with these ideas, and … we create a roadmap of ideas.”

The Department of Natural Resources will have administrative costs of approximately $400,000 starting in FY 2020-21 to administer the funding for implementation of the Water Plan, according to the 2019 fiscal impact statement.

At full implementation, the Colorado Water Plan calls for $100 million per year in funding. Mature sports betting could funnel tens of millions of dollars per year to the project. But even a few million is enough, Leonard says, to get started once the sports betting revenue tap begins to open.

“In terms of what we’re seeing today, there are no opportunities for sports betting, so there is no revenue,” Leonard said. “We didn’t have any kind of big game plan for how we were going to use the money because the projections were all over the place, and kind of low for the first few years. We’ll be able to award more grants to our water partners on the ground, but we might not be able to award as many grants as we’d hoped for.”

Coloradans loves the outdoors, sports

In general Coloradans are outdoorsy people — many move to the state to take advantage of hiking, skiing, mountain biking, or snowshoeing in the Rockies. The state has four major rivers, including the Rio Grande and Colorado Rivers,  both of which originate in the state, and a relatively temperate climate for a cold-weather state. That enthusiasm for the outdoors translates into an environmentally conscious population that wants to preserve what it has for its own use — and for future generations.

CO-Water-Sports-Betting

“The average Coloradan is environmentally cautious,” Leonard said. “One of the reasons people live here is because of the outdoors. Whether you’re in the Highlands Ranch suburb of Denver or the West Slope on a farm, we all go to the same mountains to ski, and we see the severe droughts in the summer and crazy snowstorms in the winter.”

To that end, sports betting became legal in Colorado via a referendum — Proposition DD — that linked revenue to water conservation. The measure barely passed, due in part to the wording, which is mandated by the state, on the ballot. Voters legalized sports betting in November 2019, and the Department of Revenue was then tasked with developing regulations, approving applications and a host of other administrative tasks in order to be ready for operators to go live on May 1, 2020 — just six months later.

“I would rather have not come up during this time, but you have to embrace the reality that you are in, and that is what we have done,” Hartman said.

In the weeks since the first sportsbooks launched, there have been a handful of live sports events, from UFC to NASCAR to charity golf events.

“You can tell that people are hungry for sports, and I’m not sure they really care if they are in the stands or not,” he said.

“I’m anxious to see at the end of the month, of when we start getting those reports in, how those numbers have climbed. Operators have been pretty happy with how Colorado has come on and how things have grown.”

On the water side, Schultheiss knows he must practice patience. While he’d like to see the Water Plan fully funded, both he and Leonard say the state is not in danger of running out of water in the near term, and the idea, really, is just get started on implementing the plan.

“This is a really good initial investment,” he said.

The only negative? The investment will be even bigger if the Broncos — or Rockies or Nuggets or Avalanche or Buffaloes — have down years.

 

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Jill Dorson

Jill has covered everything from steeplechase to the NFL and then some during a more than 30-year career in sports journalism. The highlight of her career was covering Oakland Raiders during the Charles Woodson/Jon Gruden era, including the infamous “Snow Bowl” and the Raiders’ 2003 trip to Super Bowl XXXVII. Her specialty these days is covering sports betting legislation across the country.

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