Colorado SB 26-131: Prop Bet Ban Gets First Green Light

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March 25, 2026

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Colorado lawmakers advanced SB 26-131 through the Senate Finance Committee in 2025, a bill that would ban all proposition bets, block credit card deposits on sports betting platforms, and restrict advertising and push notifications targeting bettors. Industry representatives warned the legislation could slash operator revenue by as much as 50%, putting state programs funded by sports betting taxes, including Colorado’s water plan, at serious financial risk. Proponents argue the measures are essential to combat a growing gambling addiction crisis, particularly among younger bettors.

Colorado SB 26-131 Clears Senate Finance Committee in 2025

What the Bill Actually Proposes

Colorado Senate Bill 26-131 targets four specific areas of sports betting regulation: a complete prohibition on proposition bets, a ban on credit card deposits for sports wagering accounts, restrictions on push notifications that prompt users to bet, and tighter limits on sports betting advertisements. The bill represents one of the most sweeping attempts at sports betting reform in Colorado since the state legalized sports wagering in May 2020. Its passage through the Senate Finance Committee marks the first formal legislative approval in its path toward becoming law.

Proposition bets, commonly called prop bets, allow bettors to wager on specific outcomes within a game rather than the final result, such as how many yards a quarterback throws or whether a player scores in the first half. These bet types have surged in popularity since the U.S. Supreme Court’s 2018 Murphy v. NCAA ruling opened the door for state-by-state sports betting legalization. Prop bets now account for a significant share of total sports betting handle across regulated U.S. markets, making their removal a structurally significant change for any operator.

The bill now moves to the Senate Appropriations Committee, where lawmakers will scrutinize its fiscal impact before any full Senate vote. That committee review is expected to intensify debate around the revenue consequences outlined by industry groups. Legal Sports Report has tracked the bill’s progress as part of broader national coverage of responsible gambling legislation in 2025 [1].

Credit Cards, Push Notifications, and Ad Restrictions

Beyond the prop bet ban, SB 26-131’s credit card prohibition addresses a specific pathway to problem gambling. Research from the National Council on Problem Gambling found that bettors who use credit cards to fund gambling accounts are more likely to chase losses and accumulate debt compared to those using debit cards or bank transfers. Colorado would join a growing list of jurisdictions, including the United Kingdom, which banned credit card gambling deposits in April 2020, in targeting this funding method.

The push notification restrictions aim to reduce what addiction specialists call “trigger-based” betting behavior, where a well-timed alert from a sportsbook app prompts an impulsive wager. Limiting these notifications directly targets the mobile-first design strategies that major operators like DraftKings and FanDuel have used to drive engagement since Colorado’s market opened. Advertising restrictions would similarly reduce the volume of sports betting promotions across broadcast, digital, and social media channels in the state.

Industry Warns of Up to 50% Revenue Drop Threatening State Programs

Who Bears the Financial Impact

Industry representatives testified before the Senate Finance Committee that eliminating proposition bets alone could reduce operator revenue by up to 50% [1]. That figure reflects how central prop bets have become to the overall sports betting product. For context, Colorado’s sports betting operators generated approximately $53.5 million in taxable revenue during fiscal year 2023, according to the Colorado Division of Gaming. A 50% reduction would cut that figure to roughly $26.75 million annually, based on those baseline numbers.

Colorado’s sports betting tax revenue flows directly into the state’s Water Plan, which funds conservation, infrastructure, and drought resilience projects across the state. The Colorado Water Plan has relied on a dedicated stream of gaming revenue since voters approved Proposition DD in November 2019, which authorized sports betting and earmarked its tax proceeds for water projects. A sharp revenue decline would force state legislators to find alternative funding or scale back water plan commitments.

Operators including DraftKings, FanDuel, BetMGM, and Caesars Sportsbook all hold active licenses in Colorado and would face direct revenue consequences under the bill. None of these companies have publicly released Colorado-specific revenue breakdowns, but their combined market presence means the aggregate impact would be substantial. The 50% revenue warning is the single most powerful argument opponents of SB 26-131 are making in committee hearings.

The Responsible Gambling Case for the Bill

Supporters of SB 26-131 argue that the financial costs of gambling addiction far outweigh the tax revenue benefits. The National Council on Problem Gambling estimates that problem gambling costs the United States approximately $7 billion per year in social costs, including lost productivity, bankruptcy, mental health treatment, and criminal justice expenses [2]. Colorado’s own data shows that calls to the state’s problem gambling helpline increased following the launch of legal sports betting in 2020.

Younger bettors represent a particular concern for bill proponents. A 2023 survey by the American Gaming Association found that adults aged 21 to 34 are the fastest-growing segment of sports bettors in the United States. Prop bets, with their rapid resolution and high-frequency nature, are especially popular with this demographic and carry higher addiction risk profiles according to gambling disorder researchers at institutions including Harvard Medical School’s Division on Addiction.

Colorado Sports Betting Market: Key Numbers Since 2020

Colorado legalized sports betting through Proposition DD, which passed with 51.4% of the vote in November 2019. The state set a 10% tax rate on net sports betting proceeds, with all revenue directed to the Colorado Water Conservation Board. Since launch, the market has grown into one of the most competitive in the country, with more than 25 licensed operators at various points holding active status with the Colorado Division of Gaming [3].

The rapid growth of prop betting nationally has mirrored Colorado’s trajectory. The American Gaming Association reported that U.S. sports betting handle reached $119.84 billion in 2023, a 27.5% increase over 2022. Prop bets, player performance markets, and in-game wagering now drive a disproportionate share of that handle, which is precisely why their removal would hit operator margins so severely. Colorado’s SB 26-131 is being watched closely by regulators in other states, including Massachusetts, Ohio, and Maryland, all of which have introduced or considered similar responsible gambling measures in 2024 and 2025.

The broader national context matters here. Several states have already moved to restrict certain bet types or advertising practices. Ontario, Canada, banned certain gambling advertisements from appearing during live sports broadcasts in 2023. The United Kingdom’s Gambling Act review, completed in 2023, introduced stake limits on online slots and tighter affordability checks. Colorado’s bill fits a clear international pattern of regulators pulling back on the most aggressive commercial features of legalized gambling markets.

Gambling Addiction, Mental Health, and Your Overall Wellbeing

For readers focused on health and personal wellbeing, the connection between gambling regulation and physical health is more direct than it might first appear. Problem gambling is classified as a behavioral addiction by the American Psychiatric Association in the DSM-5, sharing neurological pathways with substance use disorders. Chronic gambling stress contributes to elevated cortisol levels, disrupted sleep, poor nutrition, and neglected preventive health care, including routine dental visits, which are often among the first discretionary expenses people cut when facing financial pressure from gambling losses.

If you or someone you know is experiencing gambling-related financial stress, the National Problem Gambling Helpline operates 24 hours a day at 1-800-522-4700. Colorado also funds the Problem Gambling Coalition of Colorado, which provides free counseling referrals and support resources specifically for Colorado residents. Legislation like SB 26-131 is designed to reduce the conditions that make problem gambling more likely, but individual support resources remain available regardless of what the legislature decides.

Key Takeaways

• Colorado SB 26-131 passed the Senate Finance Committee in 2025 and now moves to the Senate Appropriations Committee for fiscal review.
• The bill proposes a complete ban on proposition bets, a prohibition on credit card deposits for sports betting, limits on push notifications, and restrictions on sports betting advertising.
• Industry representatives warned the prop bet ban alone could reduce operator revenue by up to 50%, based on testimony before the Senate Finance Committee [1].
• Colorado’s sports betting tax revenue funds the state Water Plan, which received approximately $53.5 million in taxable gaming revenue in fiscal year 2023.
• Proponents cite rising gambling addiction rates, particularly among bettors aged 21 to 34, as the primary justification for the restrictions.
• Colorado voters approved Proposition DD in November 2019 with 51.4% of the vote, setting a 10% tax on net sports betting proceeds directed to water conservation.
• Similar prop bet and advertising restrictions have been introduced or considered in Massachusetts, Ohio, Maryland, and internationally in the United Kingdom and Ontario, Canada.

Frequently Asked Questions

The Bottom Line

Colorado’s SB 26-131 represents a genuine inflection point for one of the country’s most active sports betting markets. The bill’s first committee approval signals that at least some Colorado legislators believe the social costs of aggressive sports betting products now outweigh the revenue benefits, even when those revenues fund popular programs like the state water plan. The 50% revenue warning from industry groups is not a bluff: prop bets are structurally central to how modern sportsbooks generate profit, and their removal would reshape the market significantly.

The bill’s path through the Senate Appropriations Committee will be the real test. Fiscal committees tend to weigh revenue impacts heavily, and the water plan funding argument gives opponents a concrete, popular program to defend. Supporters will need to present equally concrete data on gambling harm costs in Colorado to counter that argument effectively. The outcome will likely influence how other states approach their own responsible gambling reform efforts in 2025 and beyond.

Colorado set a national example when it legalized sports betting in 2020. If SB 26-131 becomes law, it may set another example by showing that states can and will pull back on the most commercially aggressive features of legalized gambling when public health concerns reach a tipping point.

Sources

1. Legal Sports Report – Coverage of Colorado SB 26-131 passing the Senate Finance Committee, including industry testimony on up to 50% revenue impact from a prop bet ban.
2. Legal Sports Report – Reporting on responsible gambling legislation trends across U.S. states in 2024 and 2025, including advertising and credit card deposit restrictions.
3. Legal Sports Report – Historical data and analysis on Colorado’s sports betting market since the launch of legal wagering in May 2020 following Proposition DD.