Casinos: Commercial Casinos - Colorado

During the 1800s gambling halls and saloons with card games were prevalent throughout the mining towns of Colorado. However, gambling was outlawed in the state around the turn of the twentieth century.

In November 1990, Colorado voters approved a constitutional amendment permitting limited-stakes gaming in the towns of Black Hawk and Central City, near Denver, and Cripple Creek, located near Colorado Springs. The first Colorado casinos opened in October 1991 and had gross revenues of nearly $8.4 million during their first month of operation. Only blackjack, poker, and slot machines are permitted, with a maximum single bet of $5. Any increase in betting limits, additional types of games, or new gambling locations would require a statewide vote authorizing change in the constitutional amendment. Since 1992, there have been seven votes on whether to expand casino gaming to additional locations; each time, expansion has been defeated by at least a two-to-one margin. The most recent vote was held during November 2003. Voters rejected by an 81% to 19% margin a proposal to allow slot machines at the state's horse and dog racetracks.

According to the Colorado Gaming Commission there were forty-four casinos operating in the state during 2003. They had gross revenues of $711 million during fiscal year 2004 (July 2003–June 2004). As shown in Figure 4.7 annual revenue grew steadily from 1992 through 2002 and then leveled off. The Black Hawk casinos have historically been the most successful in the state, accounting for 70% to 75% of casino gaming revenue each year. The Cripple Creek market is second in gross revenue, accounting for 20% to 25% of the annual total. The Central City casinos typically account for 5% to 10%.

According to Gaming in Colorado: Fact Book & 2003 Abstract, a publication of the Colorado Division of Gaming, total adjusted gross revenue earned between the inception of casino gambling and February 2004 added up to $5.8 billion. The casinos have paid $780 million in gaming taxes to the state over that time period. The

FIGURE 4.7

money has been used to fund historical restoration projects in Colorado and to offset the costs of casino gaming to state and local governments (including regulatory costs associated with the casino industry).

The casinos are overseen by the Colorado Division of Gaming, a division of the Colorado Department of Revenue. The Division of Gaming, which is responsible for regulation and enforcement, is headquartered in Lake-wood, near Denver. It investigates gaming license applicants and monitors existing license holders for problems, such as ties to organized crime. Division investigators patrol the casinos to watch for any violations of gaming laws, rules, and regulations.

Casino rules and regulations are promulgated by the Colorado Limited Gaming Control Commission, a five-member group appointed by the governor. The commission establishes the gaming tax rate and has final authority over all gaming licenses issued in the state.

The gaming tax rate is graduated depending on each casino's adjusted gross proceeds (AGP), the amount of money wagered minus the amount paid out in prizes. The tax rate is set by the commission on an annual basis. In June 2003 the commission decided to retain the tax structure in place since July 1999 as follows:

• 0.25% on $0–$2 million AGP
• 2% on $2–$4 million AGP
• 4% on $4–$5 million AGP
• 11% on $5–$10 million AGP
• 16% on $10–$15 million AGP
• 20% on AGP greater than $15 million

In addition the casinos pay an annual state device fee of $75 per slot machine and game table. They also pay annual device fees ranging from $750 to $1,265 per year to their local jurisdictions. The Colorado Gaming Commission newsletter reported in October 2004 that there were 15,663 slot machines and 175 table games operating in the state. The slot machines range in denominations from pennies to $5 per play. All machines are legally required to pay back at least 80% of all money taken in by the machine over the long term.