Colorado Governor Proposes Casino Tax Increase to Raise $80M Annually

DENVER, Colorado – Gov. Jared Polis proposed raising casino taxes by approximately $80 million annually in his final state budget plan on November 2. The proposal would increase the industry’s effective tax rate from 16.1% to 23%, with the additional revenue intended to support childcare and preschool programs.

The proposed increase forms part of Colorado’s $51.3 billion budget request for the 2027–28 fiscal year, which begins in July 2027. Polis is seeking a statewide ballot measure in 2027 to authorize higher gambling taxes, although the proposal must first advance through the legislative process.

Colorado Casino Tax Rates Could Rise to 35%

Under the governor’s plan, Colorado would introduce new tax brackets based on individual casinos’ adjusted gross proceeds, which represent gambling revenue after player winnings have been paid.

Colorado currently applies a graduated casino tax structure with a maximum rate of 20%. The proposed changes would increase rates for larger operators, potentially reaching 27.5% for casinos generating between $20 million and $100 million annually and 35% for those exceeding $100 million.

According to the budget proposal, four Colorado casinos currently generate more than $100 million in annual adjusted gross proceeds and would fall into the highest proposed bracket.

Collectively, the changes would increase the casino industry’s effective tax rate from approximately 16.1% to 23%, approaching the national average of 26.5% cited in the governor’s proposal.

Colorado’s existing gaming tax framework applies to commercial casinos operating in Black Hawk, Central City and Cripple Creek. Tax rates are based on adjusted gross proceeds rather than the total amount wagered by customers.

The proposed increase would primarily affect larger casino operators, although its ultimate financial impact would depend on the final tax brackets, legislative decisions and voter approval.

Additional Casino Tax Revenue Would Support Childcare

Polis proposed combining higher casino taxes with increased taxes on tobacco and nicotine products. Together, the measures are expected to generate approximately $128.9 million in additional annual revenue, including $80.2 million from casinos.

The governor wants to direct the additional funding toward childcare assistance and preschool programs, addressing rising costs and limited availability of early childhood services across Colorado.

The proposal arrives as the state faces an estimated $1.6 billion budget shortfall for the upcoming fiscal year. Polis’ broader spending plan also seeks to limit Medicaid expenditure growth to 4.3%, compared with an anticipated increase of approximately 15% under existing spending trends.

Those Medicaid changes would reduce projected spending by approximately $664.6 million, although the program’s general-fund allocation would still increase. The governor has argued that controlling healthcare spending growth is necessary to preserve funding for other state priorities.

While the broader budget addresses several financial challenges, the proposed casino tax increase has a separate objective of generating dedicated funding for early childhood education and assistance programs.

Casino Industry Awaits New Governor’s Budget Decisions

The Colorado Gaming Association said it was reviewing the proposal and expects further discussions after the state’s gubernatorial election on November 3.

“The industry is reviewing the details of the proposal,” the association said in a statement. It also indicated that industry representatives anticipate changes under the next administration and intend to discuss the tax plan with the incoming governor.

Polis is serving the final months of his second term and will leave office in January 2027. His successor will therefore have a significant role in determining whether the proposed casino tax increase advances.

The plan would add to broader debates about gambling taxation across the United States. Colorado’s proposal concerns commercial casino operators, while other states have pursued changes to sportsbook taxation, including higher sports betting taxes in Maryland.

Colorado’s Joint Budget Committee is scheduled to review the governor’s proposals on November 12. Lawmakers will then develop the state’s spending plan during the 2027 legislative session, with final budget approval expected in the spring.

For now, the casino tax increase remains a proposal. No new rates have been approved, and any ballot measure would need to complete the required legislative and voter approval processes before taking effect.

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