A new probe from the office of Colorado State Auditor Kerri Hunter has criticized the western state’s Gaming Division and Colorado Limited Gaming Control Commission regulators for the way in which they have been approving online sportsbetting licenses.
The independent agency used an official Monday filing (pdf) to declare that the first-year performance audit found that the regulatory bodies ‘did not have effective processes to investigate sportsbetting operators’ for the purposes of ensuring these ‘were qualified for temporary licensure’. The executive bureau stated that the watchdogs had moreover failed ‘to collect sufficient documentation’ so as to allow them to determine if these firm’s monthly tax filings were accurate.
Colorado is home to almost 5.8 million people and began allowing residents over the age of 21 to place online sports wagers from May of 2020. The investigation detailed bettors in ‘The Centennial State’ responded by racking up some $2.3 million in aggregated first-year handle via a collection of over 35 domains such as DraftKings.com, FanDuel.com and BetMGM.com.
Jenny Atchley from the Colorado State Auditor’s Office pronounced that the inaugural examination had determined five of these locally-licensed online sportsbetting operators had not undergone ‘minimum background investigative procedures’. The official asserted that this meant some of these had escaped thorough ‘criminal history checks’ as well as financial stability inspections, regulatory history assessments or any probes to determine if they were capable of ‘carrying out their planned business operations.’
Read a statement from Atchley…
“Incomplete investigations increase the risk that the Colorado Limited Gaming Control Commission is making temporary licensing decisions that are not fully supported or defensible.”
Atchley noted that the assessment had also identified ‘wide variations’ in the amount of daily handle online sportsbetting operators in Colorado were recording when compared with their monthly tax filings. The official divulged that a random sample of 22 enterprises had found numerous first-year discrepancies including one provider who had chalked up $1.4 million more in net proceeds compared to its monthly tax filing.
The statement from Atchley read…
“The state imposes a 10% tax on the net sportsbetting proceeds reported by operators with sportsbetting tax revenues distributed to several beneficiaries. In fiscal year 2021, sportsbetting tax revenue distributions to these recipients totalled about $8.6 million and sportsbetting operators’ monthly wagering activities are a key data point for determining tax liabilities.”
Finally, Atchley asserted that the performance audit identified an issue that could be of interest to legislators in the prevalence of ‘free bets’, which are gratis wagers made utilizing non-cashable coupons, vouchers, promotions or credits. The official proclaimed that current rules allow sportsbetting operators to deduct such ventures from their net proceeds although the Colorado Limited Gaming Control Commission additionally permits firms to reduce their tax liabilities by carrying over any monthly losses.
Atchley’s statement read…
“Our analysis of the 324 tax filings reported from May of 2020 through to April of 2021 showed that if operators had not been allowed to deduct and carry forward operating losses, the state would have collected an additional $706,000 in sportsbetting tax revenues during the first year.”