Colorado Casino and Card Room Gaming
The Gaming Division is self-sustaining and receives no state general fund money. The Gaming Division functions using revenues generated from gaming taxes, application and license fees, and any fines levied against casinos. All revenues generated from gaming are placed in the Limited Gaming Fund. After the agency's operational expenses are met, the remaining money is distributed to state historical restoration projects to mitigate impacts caused by gaming. After the passage of Amendment 50, the fund is also used to contribute to community colleges and help gaming locales with the associated costs of gaming, such as law enforcement and infrastructure.
The Gaming Division is supported by the Colorado Limited Gaming Control Commission, a five-member regulatory body appointed by the governor. The Commission is responsible for communicating the rules and regulations governing limited gaming in Colorado, and gives final approval for all gaming licenses issued by the Gaming Division. By statute, the Commission members must be from different professional, political and geographic backgrounds, including a regulatory law attorney, a corporate CPA, a law enforcement official, a corporate manager and a registered voter.
The Gaming Act imposes a tax of up to 40% on casino adjusted gross proceeds (AGP). AGP is simply the amount of money wagered minus payouts from casinos. The Commission is obliged, by law, to set the gaming tax rate each year, but it cannot increase rates above 2008 rates without a ballot vote. Historically, the Commission has maintained a graduated tax structure whereby casinos pay a percentage proportional to AGP generated. This tax structure was designed to support casinos of all sizes. In May 2008, the Commission amended the gaming tax structure for the first time since 1999. The Commission, in a split vote, adjusted the middle tiers of the graduated structure to give tax relief to casinos making between $4 million and $15 million a year. In May 2012, the Commission set tax rates for 2013 at the same rates as the previous two years, a 5% reduction from 2010 rates. Colorado’s sliding scale and maximum 20% rate falls roughly in the middle in comparison to nearby states.
Casinos must be licensed by the state and must be located in certain districts of the three approved towns. The only casino games allowed are slot machines, including video poker, blackjack and keno machines. The Limited Gaming Act of 1991 set gaming limits for single wagers to $5 on slot machines and live blackjack and poker games. The Act also permitted only 35% of the total square footage of a building for casino gaming, and no more than 50% on one floor. Moreover, at most, only two separate and distinct licensed gaming areas were allowed on a single floor. To change the location of gaming in Colorado, to increase the betting limit, or to change the types of games allowed requires an amendment to the Constitution by a statewide vote of the people.
The Commission issues five types of licenses: Manufacturer/Distributor, Retailer, Operator, Key Employee and Support Employee. Support Employees are those employed in the field of limited gaming, such as dealers, cashiers, cage personnel, slot repairmen, security personnel, pit bosses, floor managers, supervisors, and slot machine and slot booth personnel. Before 2005, licenses were valid for one year, with an annual renewal requirement. All licenses are now valid for two years. There are two types of applicants: Type 1, having up to six people on the application with a 5% or greater interest in the license; and Type 2, all other applicants not meeting Type 1 qualification.
The Gaming Division also collects a deposit for costs incurred completing a background check. The Gaming Division bills against the deposit using an hourly rate. It also charges for all travel or out-of-pocket expenses.
In 1999, the Commission did away with a state device fee, an annual fee of $75 per slot machine, blackjack table or poker table for all retail license holders. The three approved gaming municipalities assess and collect their own device fees, which range from $750 to $1,265 per year. Slot machine regulations do not allow a payout of more than 100% and must pay out between 80% and 100%. Most machines pay out at 90%.
In the 2003 legislative session, the Amendment 33 ballot initiative tried to authorize video lottery terminals at the five racetracks in Colorado. The casino industry was concerned about the impact this change would have on revenues. The initiative failed.
In November 2004, the Central City Parkway was opened, creating a direct link between an interstate highway and the gaming towns. Before the new road, the main route to Central City was through Black Hawk, giving Black Hawk casinos an advantage. In the first month the road was in operation, revenues at Central City casinos increased about 40% over the same month in 2003. Also in 2004, due to the popularity of televised poker, more players came to the tables, resulting in table game revenues growing at more than three times the rate of slot machine revenues.
In May 2006, the Gaming Division changed the inspection of slot machines. Having little time to certify that the thousands of slot machines on casino floors were in compliance, the casinos were given authorization to inspect and approve their new slot machines and game changes themselves. Division inspectors would then certify the machines for compliance. Before the change, Division inspectors had been spending most of their time responding to casino requests to inspect and approve the machines, and casinos were affected by having to delay moving new machines onto the floor until a Division inspector was available.
In December 2006, the Division also proposed changes to its slot machine rules to make Colorado rules and standards consistent with those in other states.
In April 2007, the Colorado legislature amended a law restricting smoking to include casinos starting on 1 January 2008. Immediately after the smoking ban was put in place, a casino in Black Hawk claimed a "cigar bar" exemption and three Cripple Creek casinos followed suit a few months later. The city of Cripple Creek ended up citing the casinos, and the courts determined that the casinos did not meet the cigar bar exemption. As a result of this ban and other economic factors, gaming revenues in Colorado declined in 2008.
In the 2007 General Assembly, the Gambling Payment Intercept Registry Act (the Act) was first introduced (HB07-1349) and became effective on 1 July 2008. The Intercept program is a system that requires casinos and racetracks to access the Colorado Department of Human Services (CDHS) child support database to determine if winners of large cash jackpots are delinquent in the payment of child support payments. If winners owe back child support, casinos and racetracks are obliged to withhold the child support owed and submit it to the state. If the amount owed is less than the cash prize, the remainder is paid to the winner. Casinos were given authority to withhold $25 of the winnings, keeping $15 to cover compliance costs. Then, in 2009, Legislation HB09-1137 was passed by the General Assembly, expanding the Act to include outstanding victim restitution. This legislation was implemented on 1 July 2011. In 2011, the General Assembly amended the Act again (SB11-051), to add intercepts of any certified state debt, such as overpayment of unemployment insurance benefits and delinquent taxes, to be effective 1 January 2012. C.R.S. 24-35-607 was amended to allow a racetrack or casino to retain $30 of each payment as a cost of compliance. DOR rules were amended effective 14 November 2012, to change the amount withheld by the casino or racetrack operator to $40, of which $30 goes to the licensee to offset compliance costs. The $25 to the gambling payment intercept cash fund remained the same.
On 4 November 2008, Colorado voters approved Amendment 50 (HB1272), giving the voters in Black Hawk, Central City and Cripple Creek the choice to approve raising the maximum wager limit to $100, adding craps and roulette table games, and allowing 24-hour gaming. The amendment also directed the additional state revenues generated from the changes to be distributed to community colleges and to the gaming towns. It also made voter approval a requirement for any increase in gaming tax rates higher than the rates in place on 1 July 2008. Voters in all three towns approved all of the changes for casinos in their communities, and the changes went into effect 2 July 2009. Before passage of Amendment 50, the wager limit was $5; slots, blackjack and poker were the only games allowed; and casinos were required to be closed from 2 a.m. to 8 a.m. Before the passage of Amendment 50, seven unsuccessful attempts to expand gaming to other locales had appeared on ballots since 1992.
During the 2011 legislative session, a bill was introduced (SB11-233) that would have significantly impacted the state's commercial casino industry. If passed, the bill would have authorized the Commission to issue two lottery retailers a "VLT license" that would be considered an additional license. Only a pari-mutuel licensee could install and operate VLTs at an age-controlled site that the lottery retailer owned or controlled. The lottery retailer could install as many as 2,500 VLT machines in two locations, one of which could be a racetrack, anywhere in Colorado, for a total of 5,000 VLTs. On 9 May 2011, the bill was postponed indefinitely and ultimately dropped.
In 2012, the Colorado House attempted to resurrect the VLTs concept in HB-1280, which would have brought VLTs to a Colorado racetrack. But that bill failed to gain traction as well, and the VLT plans for Colorado expired, at least for now.
Colorado Casino and Card Room Gaming Properties
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