Editor's note: One in a series of articles about the decision Colorado voters face in November regarding sports betting in the state.
DENVER – Six months after he helped pass Colorado’s $30.5 billion annual budget, Alec Garnett is sitting in the state capitol building with unfinished business on his mind.
In his office earlier this month, the House majority leader contemplated ways to have one final piece of the 2019-2020 budget come into law. He was able to convince lawmakers from both parties and both chambers to support a complex, heavily negotiated measure that permits legal sports betting and uses wagering taxes to fund state water projects.
Now he needs his fellow Coloradans to support the taxing vehicle in what the government now calls Proposition DD.
“In Colorado it’s hard to pass new taxes and it’s hard to generate new revenue,” Garnett told Gambling.com. “It was a challenge to build this whole thing and get to this point, and I thought it was a worthy challenge.”
Garnett, like the proposition’s backers, worries an arcane mandate that frames this ballot measure as a tax increase will dissuade would-be “yes” voters, who would otherwise support legal sports betting. Even those who don’t wager on sports would benefit – the tax receipts would go to water projects designed to help current (and future) residents. The taxes are exclusively on the sports betting purveyors, not the citizens at large, or even bettors themselves.
With ballots now distributed to millions of Colorado residents, Garnett needs a majority to vote “yes” to Proposition DD, a daunting task because of the bill’s convoluted wording. It also comes in an odd-number election year without any marquee races, two factors that diminish turnout and skews the electorate away from the demographics many believe would most support sports betting.
Now Proposition DD backers are raising hundreds of thousands of dollars as part of a multi-faceted campaign to educate voters on the consequences of their vote. A “yes” vote permits legal sports betting, taxes the purveyors and could generate up to $29 million annually for state water projects. A “no” vote keeps the status quo.
This option stems from a sports betting bill that, on the surface, seemed to pass with more expediency and more support than nearly any comparable measure nationwide. It was, in reality, the result of unusual collaborations, tense discussions and some fortuitous developments.
With the formal legislative session concluded, Garnett wears a polo shirt and blue jeans to his office. It's fitting for a man who seems more like a sports bar patron than a politician.
Garnett is very much both those types of people. An avid sports fan he is also well-versed in the wins and losses of politics. His father, Stan, served as district attorney for Boulder County, and the younger Garnett has been in politics for most of his professional life, working as a legislative aide in Congress and later serving as executive director of the Colorado Democratic Party. He was elected to his current House seat in 2014 and has steadily risen through the hierarchy of the legislature, now serving as a leader for his party.
He has made a mark on a variety of state priorities including education and healthcare, but he may be the most influential voice on sports and gaming interests. It’s no coincidence his voice is in Proposition DD support radio ads.
In 2016, Garnett proactively addressed questions regarding daily fantasy sports, a form of gaming that had hamstrung lawmakers across the country. Some attorneys general in other states deemed these games of skill, and not subject to gambling laws. Others deemed these offerings as gambling, effectively outlawing them without further legislation.
Teaming up with Republican State Sen. John Cooke, himself a passionate sports fan, Garnett was able to use a bipartisan, bicameral approach to push a formal way to legalize and regulate DFS games. When the potential for legal Colorado sports gambling began, Garnett moved aggressively again.
After the Supreme Court struck down the federal sports betting ban, wagering wasn’t legal in all 50 states, but it allowed each state to consider accepting bets. The May 2018 decision came too late in Colorado’s legislative session to pass such a bill, let alone introduce a measure that could become law. In the meantime, Garnett began pulling the necessary legislative strings so the bill could be ready to go in 2019.
He started again with Cooke in summer 2018, and the bill quickly earned a key supporter from both parties and both houses. He later earned support from Republican House Minority Leader Patrick Neville and Democratic Senate Majority Whip Kerry Donovan, creating a diverse – and powerful – group of sponsors.
By August 2018, sports betting backers had gained a novel ally to gain more supporters.
Unlike most of the two-dozen-plus states that introduced sports betting bills after the Supreme Court’s decision, Colorado included a specific allocation for any funds related to wagering. Besides funds for officials to monitor the games, as well as money for problem gambling, lawmakers decided to allocate all additional revenues toward water projects.
Funding Colorado’s Water Plan is crucial to the future of our state for many reasons. To have a dedicated source of funding for it would be a major benefit and that’s what this bill does. Thank you, @AlecGarnett, @PatrickForCO, @KerryDonovanSD5 and Sen. Cooke. #coleg #copolitics https://t.co/z3RrI9ttci— Rep. Dylan Roberts (@Dylan_RobertsCO) April 19, 2019
This was a clear and easy winner for Colorado politicians. Not only is water conservation supported by lawmakers of all political inclinations, but sports betting funds provided a perfect anecdote for the state’s byzantine spending restrictions. Along with a balanced budget requirement, the state must designate certain spending percentages to education and health care.
The state also has extreme restrictions on tax increases, a requirement under what’s known as the Taxpayer Bill of Rights, or TABOR. In essence, any new tax increase approved by lawmakers must also be approved by voters.
“It is a scare tactic that was built into the amendment to make sure that we scared people from voting ‘yes’ on any kind of thing, even when it’s not going to affect that many people,” Rep. Brianna Titone told Gambling.com. “I mean, not everyone is going to participate in sports gambling, but the benefit is to the entire state.”
These limits on new taxes and the stringent restraints on allocations leave little room to make moves with discretionary spending. Even some of the most worthwhile projects, such as suicide prevention, faced strict limits. Titone said her suicide prevention requests for $500,000 was slashed to $100,000.
That in part explains why Colorado’s water infrastructure has, in the eyes of lawmakers, been perpetually underfunded: there are many worthwhile projects and very few chances to spend money on them. Sports betting was a new way to recoup necessary water conservation funds in one of the fastest-growing states by population (and one which will likely see several million additional new residents in the coming decades).
Politically, the water provision opened up a new group of potential allies. A hydrogeologist by trade, Titone represented a wing of environmentalists who may otherwise have not been so aggressive to champion legal sports betting. Combined with figures such as Cooke in the Senate representing the more traditionally pro-business wing of the Republican party, sports betting now had two distinct – and significant – groups of allies by fall 2018.
"I’ve been around the political world for about 15 years,” GOP Rep. Matt Soper told Gambling.com, “and I don’t think I’ve ever seen a single issue that brought conservative ranchers from Western Colorado; environmentalists from Boulder; conservative Western Slope and Eastern Plains Republicans; liberal Democrats from mountain resort towns; and the inner city of Denver together.”
Sports betting in Colorado faced opposition from religious and conservative groups opposed to gambling in any form, but unlike the aggressive push that helped alter or even derail the legislation in other states, the organized resistance to sports betting had minimal impact on lawmakers.
“The religious groups are opposed because it’s gambling, but the people do it anyway,” Cooke told Gambling.com. “They have offshore accounts and the idea is to bring some of that revenue back to the state.”
With both chambers and both parties largely behind sports betting, the only question before a bill could be introduced would be which entities would be able to take bets.
That question would delay the bill’s introduction for several months and nearly derailed it.
To understand sports betting requires understanding horse racing at Arapahoe Park – or more accurately, its relationship with Colorado..
Even as racetrack attendance has dwindled across the country, the ineffable support for the historic industry seems to linger, especially out west. Even as the state’s population, demographics and culture grow dynamically in new, unprecedented directions, that tacit spirit of the Wild West still influences a state that celebrates a libertarian streak in politics and a sense of adventure in everything else.
And to have the Wild West you have to have horses. That has helped push support for the state’s horse tracks, and Arapahoe Park in particular. Plus, it hasn’t hurt to have multiple members of the legislature with deep roots within the equine industry.
Coloradans have been more than happy to permit and even cheer on pari-mutuel betting as part of the state’s most famous horse racing venue, but they have been far more leery of other regulated gambling options – even at the track itself.
The Colorado Lottery sold its first ticket in 1983, nearly 20 years after the first modern lotteries returned to the U.S. Though a staple at convenience stores in nearly every state, skeptical Colorado voters supported the endeavor in large part because of its funds for ecological concerns via Great Outdoor Colorado, a direct funding vehicle that Garnett said was part of the inspiration for the bill’s support for water projects.
The largest break with gambling prohibition came in the early 1990s, when citizens allowed three historic mining towns, facing tumbling tourism, to offer casino gaming. This was a way to preserve the vibrancy of these towns, and not as some sudden urge to create a Las Vegas in the Rockies.
Since then, voters have allowed new laws to permit more options in the towns of Cripple Creek, Black Hawk and Central City — but simultaneously have worked to prevent these types of options anywhere else.
This battle was best underscored by Proposition 68, a voter referendum in 2014 that still impacts Colorado gambling. Arapahoe Park, as well as its proponents in the legislature, hoped to open casino gaming options at the park as a way to attract new patrons. In Colorado, that wasn’t an easy request.
More money was spent on Proposition 68 than any other ballot measure in state history to that point. The casinos, with more than two decades of experience in Colorado and with increasingly more cash via out-of-state gaming conglomerates that had scooped up state gaming licenses, invested millions in the “no” campaign to try to keep out any competitors.
They aligned with area residents’ “not in my backyard” fears. That community aversion was a key factor in the rejection of casino gambling then, and a problem for sports betting now, said Rep. Rod Bockenfeld, who represents the region and previously served more than a decade as an Arapahoe County commissioner.
“I think it would have complicated things if (gambling) was at Arapahoe Park,” Bockenfeld told Gambling.com. “There are some communities around the park that resist any further expansion.”
Combined with the state’s underlying gaming aversion, the casino expansion measure was soundly rejected. But it wouldn’t mean the state’s best-known horse racing venue was done looking for new gaming opportunities.
Five years later, the scars of the Arapahoe Park casino battle still linger. It will likely take another generation for voters to warm up to the idea if they ever do so at all. For current lawmakers, it remains a political third rail which no one with interest in another term would dare touch.
With that in mind, lawmakers had to find some avenue to accept bets. The mountain towns, and the 33 casinos split between them, were obvious choices. Voters had approved expanded hours and offerings a few years before Proposition 68 and there still seemed little political backlash for a new gaming offering.
Each of the 33 casinos, legislators determined early in the legislative process, would be eligible to add a sportsbook. They would also be able to host online sportsbooks for eligible bettors statewide.
Early on sports betting adopters made clear online access was crucial, and without mobile access the bill wouldn’t be worth considering. More than 85 percent of bets in New Jersey, a state with far more gambling history, are placed online, and states with land-based only betting have garnered a fraction of the tax dollars they initially predicted. Though it might upset staunch anti-gambling opponents who disliked the idea of placing a bet with a mobile device anywhere in the state, lawmakers knew it was a risk they had to take.
With the casino eligibility settled, the biggest question surrounded Arapahoe Park.
The track publicly asked to be included in the bill, setting up a difficult decision for sports betting backers. Exclusive access for the historic gaming communities would be more likely to appease voters, who would ultimately have to approve the measure. But that could jeopardize Arapahoe Park’s supporters in the legislature.
Conversely, lawmakers were reticent to approve any type of gaming expansion for the track, when a new ticket window – let alone a sportsbook – would be sure to draw public scrutiny (and the ire of the powerful casino lobby).
“(Voters) only want gambling in the three mountain towns,” Cooke said. “They don’t want it to be extended to anywhere in the Metro area or in Denver or to race tracks or anywhere else. So why would we go down that road?”
Sports betting was stuck – until a development several thousand miles away opened the door for Colorado’s first legal bet.
As any commercial entity with deep ties to the community, Arapahoe Park touts its long-standing ties to Colorado and not its ownership by a multi-faceted gaming conglomerate headquartered in Rhode Island.
Twin River Worldwide Holdings owns gaming entities in four states, including the most famous race track in Colorado. Owner of the two commercial casinos in Rhode Island, Twin River properties accepted some of the first bets of any state.
Behind the scenes, Twin River officials pushed for wagering at the track, a move that made sense for the company, but lawmakers knew would be a daunting undertaking in Colorado. At the same time, Twin River was finalizing a move that further expanded its footprint out west.
In the midst of gambling negotiations, Twin River announced in late January 2019 it had purchased Golden Gates, Golden Gulch and Mardi Gras, three casinos in Black Hawk, the historic gaming community closest to Denver. With these casinos poised to gain sports betting licenses, Twin River now, by extension, had a way to enter Colorado’s sports gambling market.
And since online betting would undoubtedly make up the majority of sports betting dollars, Twin River had little incentive to fight for an in-person sportsbook at Arapahoe Park. Along with a clause that provided for financial restitution should equine interests prove sports betting was hurting their revenue streams, another key block of lawmakers was now on board.
“I think that was a game-changer in the legislative path that I knew I could now give it to the House,” Garnett said. “I think it would have been pretty complicated in the Senate if Arapahoe Park was ultimately opposed.”
With the biggest possible obstacle cleared, the only other brick-and-mortar gaming entities had lost much of their influence. Arapahoe Park has 13 off-track betting sites across the state, including five within Denver or its immediate suburbs. These OTB owners had also asked for sportsbook permission, but with Arapahoe Park appeased they had little political capital left.
All that remained was the state lottery, which was never in serious consideration for a license, as well as real estate speculators who claimed they had purchased land in downtown Denver in hopes of opening a sportsbook. With no ties to these commercial interests and zero political motivation to expand gaming against the will of voters, their requests were never seriously considered.
That same mindset carried over to the major professional sports leagues.
Colorado was a key target for sports league representatives looking to shape the law. One of the few states considering sports betting legislation with NFL, MLB, NHL and NBA teams, Colorado was also enticing because of its younger, more educated and more affluent demographics.
That’s in addition to the state’s rabid support for its teams. Gov. Jared Polis is an avid Rockies fan, the state legislature hung banners for the Nuggets and Avalanche during their respective playoff runs in spring 2019 and the entire state seems obsessed with the Broncos, regardless of their performance on the field.
“I think the leagues began applying pressure on (the teams),” Garnett said. “But the pressure wasn’t getting to us.”
Lawmakers rejected the leagues’ requests for “integrity fees,” official league data mandates and regulatory access for a nationwide network to monitor unusual betting activity. They also requested far-reaching proposals to permit team (or league) owned sportsbooks within the major sports stadiums, a non-starter in the legislature.
The bill entered the House April 18, and from there it wouldn’t be stopped. On final reading it passed the House 63-1 and two weeks later in the Senate, 27-8. Between swings at a Denver-area batting cage, Garnett had helped persuade Polis to support the bill as well. He signed it into law seven days after it reached his desk.
Today @GovofCO signed my bill to legalize sports betting. The 💵 raised from this will protect our water and our CO way of life. The next step is voter approval this November. Remember to vote #YESonDD! pic.twitter.com/AnBMstmiCp— Alec Garnett (@AlecGarnett) May 30, 2019
Just over a year to the day the state’s leading sports betting backers first envisioned legal sports betting, elected officials had completed every step to make it happen. Now all that remains is a vote of the people – a bar that even the most ardent support admits will be the most-difficult challenge yet.
Though seemingly everyone in Denver supports the bill, it is still subject to the mandates of TABOR. Government staff helped craft the question, which they determined must phrase the sports-betting-funds-for-water authorization as a tax. Proposition DD reads more as a tax increase than a simple yes-no to approve sports betting.
It’s because of that wording sports betting backers such as Garnett are still scrambling to educate the public.
“I hope it passes because I think we did it the right way in the legislature,” Garnett said. “I think it’s crafted with a very moderate approach to all this. And I think Coloradans support this idea.”
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