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A Colorado Senate committee’s 5-4 vote on March 17 set in motion a sweeping sports betting reform, but the proposal’s momentum has slowed as it moves toward the state’s coffers.
Senate Bill 26-131 is currently pending in the Senate Appropriations Committee after passing the Finance Committee earlier this month. While proponents argue the bill is a necessary shield against addiction, critics warn it could dismantle a key funding source for the state’s water supply.
Despite the Appropriations Committee meeting this past Friday, the bill did not receive a vote, as lawmakers continue to weigh a fiscal analysis that predicts a multimillion-dollar revenue drop. If eventually enacted, Colorado would become the first state in the nation to completely remove proposition wagering from its legal market.
SB 26-131: Beyond the prop bet ban
Prop bets—wagers on individual player statistics, penalties, injuries or officiating calls—would be outlawed in Colorado’s regulated sports betting market under the proposal. However, the bill’s reach extends well beyond the betting slip:
- Financial Guardrails: Sportsbooks would be prohibited from accepting credit card deposits.
- Deposit Limits: Users would be limited to five deposits within any 24-hour period.
- Communication Bans: Operators could no longer send push notifications or text messages encouraging users to place bets.
- Broadcasting Limits: Sports betting commercials would be banned from 8 a.m. to 10 p.m. and during all live game broadcasts.
The bill also mandates that operators submit performance data to the Colorado Division of Gaming. To protect state infrastructure, a “hold harmless” provision ensures tax revenue for the state’s water plan cannot dip below the previous year’s total, regardless of market fluctuations.
The measure is led by a bipartisan group, including Senate sponsors Dylan Roberts and Byron Pelton, and House members Steven Woodrow and Dan Woog.
Prop bet controversy, pocket casinos and youth gambling
The move against prop bets follows a national trend of disciplinary actions against college athletes who shared internal information with bettors. For Colorado lawmakers, these markets—which run 24/7 on mobile apps—are significantly harder to monitor for integrity than a standard game result.
The push for the bill is largely fueled by concerns over “digital casinos” in the pockets of young men. Jeff Hunt, former director of the Centennial Institute at Colorado Christian University, testified that legal sports betting has lacked meaningful guardrails since its 2019 approval.
The ban on push notifications remains one of the most debated provisions. According to news by Legal Sports Report, Sen. Dylan Roberts rejected the idea that users should simply “turn off” alerts, comparing the notifications to “repeatedly offering alcohol to someone in recovery.”
The $2.4 million fiscal impact
The gaming industry has launched a vigorous defense. DraftKings Chief Legal Officer Stanton Dodge informed lawmakers that prop bets account for 30% to 45% of total revenue. Removing them could slash state tax collections by as much as 50%.
Christopher Schroeder, director of the Colorado Division of Gaming, warned that a local ban would simply drive bettors to offshore, unlicensed markets. State fiscal analysts support these concerns, projecting a revenue loss of $2.4 million in the 2026-27 fiscal year, rising to $2.7 million by 2028.
Next steps for Colorado sports betting reform
The narrow 5-4 margin and the current pause in the Appropriations Committee indicate a difficult road ahead. With the legislative session typically ending in May, the bill must still clear the full Senate and the House committee process. Observers expect significant amendments regarding advertising and revenue protections before the bill has a chance of reaching the governor’s desk.
