Colorado regulators criticised in audit
Colorado’s Office of the State Auditor has conducted an audit of the regulators work in the first full year of legal sports betting.
US.- Colorado’s Office of the State Auditor has made a number of criticisms of the state’s two gambling regulators in an audit of their work. It said the Division of Gaming and the Colorado Limited Gaming Control Commission hand out far too many temporary licenses and could be losing tax revenue by not requiring more documentation.
The 56-page report covers the period between May 1, 2020, and April 30, 2021, when Colorado customers bet almost $2.3bn. Colorado legalised sports wagering via referendum in November 2019, while mobile sportsbooks launched in May 2020.
“Overall, the audit found that the Division and the Commission did not have effective processes to investigate sports betting operators and make sure they were qualified for temporary licensure, or to collect sufficient documentation to determine if sports betting operators’ monthly tax filings were accurate,” the report said.
Audit manager Jenny Atchley said that incomplete investigations increase the risk that the Commission is making temporary licensing decisions that are “not fully supported or defensible.”
The audit found that 90 per cent of operators were still trading under temporary licenses, “which meant that these operators underwent a much more limited background investigation than they would have for a permanent license. The temporary licenses allowed them the same privileges as permanent licenses.”
In five of those cases, auditors found the division “did not complete the minimum background investigative procedures required for a temporary license.”
Auditors recommended that “the Division of Gaming should improve the efficiency and effectiveness of sports betting license investigations by incorporating them into a regulatory framework that provides the strict regulation intended by statute.”
The state office also discovered major inconsistencies in financial reporting accuracy, with some firms initially declaring more revenue earned than what was subsequently submitted to the tax office.
The local legislature, which imposes a 10 per cent tax levy on all sportsbook operators, is likely to have missed out on significant funds, the audit found.
It reads: “Between May 2020 and April 2021, the State collected $6.6 million in sports betting tax. Our analysis of the 324 tax filings reported during this time period determined that if operations had not been allowed to deduct and carry forward operating losses, the State would have collected $7.3 million, or an additional $706,600, in sports betting tax during that first year.”
Colorado Division of Gaming response
The state’s gaming division reported that it is “currently engaged with the Governor’s Office of Information Technology (OIT) to develop our sports betting data management system,” according to the previously cited source.
“With the implementation of the Sports betting Data system, the audit team will be able to run reports generated from direct daily data feeds from the operators and verify them to the monthly tax obligations.”
Colorado Division of Gaming director Dan Hartman said: “We can assure you that under the direction of the Colorado Limited Gaming Control Commission, the Colorado Division of Gaming, and the multiple implementation teams who worked tirelessly, we have delivered an effectively regulated market to provide the best economic and social outcomes for Colorado.”
See also: Colorado sports betting handle comes in at $392.3m for April