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Colorado Auditors Cite Sports Betting Oversight Issues

In the rush to bring regulated sports betting to the people of Colorado, the Colorado Division of Gaming cut corners and didn’t vet operators as well as they should have. That’s one of the conclusions drawn by the Colorado Office of the State Auditor in a scathing report released earlier this week.

According to the Auditor’s Office, the Division of Gaming has still not completed thorough background checks on operators who have been working in the state since May of 2020. As of March, 2022, complete background checks had only been run on five operators, leaving 34 operators still working off of temporary licenses.

Auditors also found discrepancies between reported daily wager reports and monthly tax filings. In one case cited by auditors, the difference was $1.4 million.

The potential of tax cheating is made worse by the fact that Colorado is already one of the friendliest states for operators with a paltry 10 percent tax that includes a generous deduction for free bets. (Auditors pointed out that that deduction has already cost the state $700,000 in lost tax revenues and recommend cutting it out completely.)

As has been the case for so many problems in the pandemic era, state officials are placing the blame for the background check backlog on labor shortages. In 2021, the State of Colorado had an office of three investigators and one supervisor to handle roughly 72 background investigations. There are now seven investigators working in that same office.

Auditors offered up a ten-point plan aimed at getting the licensing process back on track, which the Gaming Division has agreed to implement.

Since regulated sports betting became legal in Colorado, players have wagered more than $2.3 billion, contributing $7.3 million to state coffers.