For the 18 ranchers who rely on the Maybell Irrigation District’s canal to funnel water to their fields, the 127-year-old headgate that diverted flow from the Yampa River meant a two-hour round trip through a rocky canyon whenever they needed water.
The rusted structure was barely hanging on, and its operation was time-consuming for the busy ranchers, who had to lug special tools on all-terrain vehicles and on foot to open or close the mechanism. But it seemed impossible for the tiny district to find the $6.8 million needed to replace the headgate and the rocky diversion dam that pushed water into the canal.
Then legalized sports betting came along, and, with it, millions of dollars for Colorado water projects. The tiny irrigation district, in Moffat County in the far northwest corner of the state, soon became the poster child for how gambling money is benefiting Colorado’s waterways.
The district received a $750,000 grant from the Colorado Water Conservation Board, which doles out money from sports betting tax revenue, said Diana Lane, sustainable food and water program director for The Nature Conservancy in Colorado, which helped the district land the grant. That led to a matching grant from the U.S. Bureau of Reclamation’s WaterSMART program. With those two grants in hand, other organizations jumped on board, and money poured in, she said.
In 2024, the Maybell Irrigation District installed a new headgate that can be opened or closed via cellphone. If a rancher is cutting hay and doesn’t need to irrigate, he can close the gates to match the amount of water he actually needs at that moment, Lane said. And the diversion structure no longer uses boulders to control the water flow. Instead, it’s a modern structure that is the right height for water control.
The project also benefited four fish species, including the threatened humpback chub, and it made river navigation easier for boaters, helping the region’s outdoor recreation economy.
“That $750,000 was really the ball that got it all rolling, that showed people, ‘Oh, this is going somewhere,’” Lane said of that initial state grant.
Since sports betting became legal in May 2020, the state has collected more than $154 million in taxes, and the Colorado Water Conservation Board has funneled $140 million to various projects that preserve and conserve Colorado’s precious water. Supporters say the gambling money is a godsend for ranchers, fishermen, paddlers and others who want to protect the state’s water and those who depend on it for their livelihoods. Critics, however, say legalized sports betting has come at a cost — fueling an addiction crisis that the state was unprepared for and is underfunding.
This is the second story in The Denver Post’s three-part series exploring the impact of legalized sports betting in Colorado, including the billions spent on wagers, rising addiction rates, and the impact on athletes and the games they play.
Erin Karney Spaur, executive vice president of the Colorado Cattlemen’s Association, said she reminds her family members and friends who bet on sports that every time they place a wager, they are helping ranchers like those in Maybell access precious water.
“It’s exponentially more than we could ever imagine,” she said of sports betting’s impact on ranches and water. “Coloradans like to gamble on sports, and water is the beneficiary.”
‘That’s our ticket’
In 2015, the Colorado Water Conservation Board — at the behest of then-Gov. John Hickenlooper — released a report on how to best conserve and protect the state’s water.
“It made a lot of plans. It set a bit of policy, and it identified two big funding needs,” said Brian Jackson, director of western water for the Environmental Defense Fund.
The board determined at the time that Colorado needed $100 million per year for projects to improve river and stream health and restoration, to replace the agricultural industry’s aging irrigation systems and to conserve as much water as possible.
“The 2015 water plan put up that price tag and then continued on its merry way,” he said.
But the money wasn’t there.
A consortium of groups with interests in the state’s waterways — including environmental, agricultural and recreational organizations — began meeting to figure out how to fund the water plan. They considered various tax schemes, such as asking the state to put a levy on bottled water or rental cars. But none of their ideas came with an easy path to voter approval — something necessary to raise statewide taxes in Colorado.
“We sat around a table for over a year and a half trying to figure out how to do this, and there were no good options,” Jackson said.
Then, in 2018, the U.S. Supreme Court delivered a ruling that offered the answer to funding water projects in Colorado: . That decision overturned the Professional and Amateur Sports Protection Act, paving the way for states to legalize sports betting.
“I said, ‘That’s it. That’s our ticket,’ ” Jackson said.
Jackson thought Colorado voters would be sympathetic to the state’s water crisis, caused by decades of drought and climate change. They also wagered that a tax on sports betting would be easier for voters to digest because it would only be paid by those who chose to gamble; if someone didn’t want to pay the tax, then they didn’t have to participate, he said.
The legislature agreed to put it on the 2019 ballot, and voters approved with 51% in favor. The bill established a 10% tax on sports betting companies’ revenue.
“Water certainly pushed it over,” Jackson said.
Sports betting was slated to open in Colorado on May 1, 2020. But the big date was a false start. The COVID-19 pandemic hobbled betting like a quarterback with a bum knee.
“Sports betting was legal, and there were no sports,” Jackson said. “And I thought to myself, ‘What the hell did we just do?’ ”
Gross sports betting revenue in Colorado was $2.6 million, with 25% of wagers placed on table tennis. Tax revenue was just $96,544.
But that freeze on sports did not last, and the gambling money began flowing as rapidly as Clear Creek during the early summer snowmelt.
The revenue stream
Colorado leaders soon realized sports betting was far more lucrative for tax revenues than had been predicted. In the first six years of legalized sports betting, the Colorado Department of Revenue has reported record-setting figures each year.
“It’s been hugely successful,” said Drew Peternell, Colorado state director at Trout Unlimited. “Revenues from sports betting have greatly exceeded any expectations when these mechanisms were put in place.”
By May 2021, when sports betting in Colorado hit its first anniversary, monthly tax revenue hit $635,640 — more than five times what sports wagering had brought in during the same month just a year prior, according to data from the Department of Revenue.
In its most recent report on sports-betting taxes, the department reported it collected $4.4 million in April. The Colorado Division of Gaming’s news releases often tout the success of sports betting and the benefits it brings to state waterways. They also include links to BetSmart.Colorado.gov, the state’s website for problem gambling resources.
The April tax revenue was 28% more than the amount collected in April 2025, and taxes collected for the current fiscal year through April were at $40.7 million, up 35% over the same period last year.
Thus far, the largest single-month record for tax revenue came in January when the state collected $5 million from $57.8 million in revenue. Coloradans bet $630.2 million, with $119 million wagered on professional football in a month when the Broncos made a run to the conference championship game.
Proposition DD’s 10% tax on net proceeds from sports betting means casinos and companies doing business in Colorado pay the tax after they pay out winning bets and federal taxes.
But the Colorado General Assembly placed a $29 million-a-year cap on sports betting tax revenue when it approved Proposition DD for the statewide ballot. If the state collected more than $29 million each year, the overage was to be refunded to the casinos and licensed gaming companies.
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Proposition DD also determined how sports betting proceeds were to be divvied up between programs, with water projects receiving 93% of the tax revenue.
The first projection estimated that sports betting would generate about $16 million annually and that water projects would receive $14.9 million.
Six percent of the tax revenue, or an estimated $960,000, would be set aside in a special fund that would be distributed to Colorado’s three casino cities and other entities that received gaming revenue if they could prove that the new sports betting market caused them to lose money due to decreased bets on traditional gambling and horse racing.
So far, no one has tapped that fund.
Problem gambling would receive just $130,000 annually for establishing a crisis hotline and training for gambling addiction counselors. That amount was increased to $2.5 million annually in 2023.
The Post interviewed seven people whose agencies receive sports betting tax revenue, but only one — Jackson — said they bet on sports themselves. And only one person, who did not want their family’s story to be told publicly, said they sometimes were bothered by the addiction problem because a loved one had died by suicide after gambling away his money.
The tax revenue proved so lucrative that water proponents returned to the legislature to ask for another statewide ballot. This time, which voters approved in 2024, eliminated the $29 million cap, meaning casinos and licensed sports betting companies can no longer receive refunds. And more money will pour into the water conservation fund.
In 2025, water proponents returned to the revenue well again.
This time, they asked the General Assembly to eliminate a clause that had allowed sports betting companies to use their free bet promotions as tax write-offs.
In those promotions, DraftKings, FanDuel and others lure prospective gamblers by offering “free bonus bets” when users apply a promo code advertised on television.
During the NFL’s wild card playoff weekend between Jan. 10 and 12, for example, FanDuel offered a promotion in which bettors would receive $300 when they placed a $5 bet on a game. In the past, FanDuel would have been allowed to write that $300 off as a tax deduction.
But starting in January, that tax deduction was no longer allowed, which means FanDuel and other companies doing business in Colorado pay even more in taxes.
For years, the sports betting companies had argued that losing the tax deduction would force them to pull back on those offers and lead to fewer players, Jackson said. But Colorado watched other states that did not offer similar tax deductions and realized those promotions were still available to gamblers.
“It’s still the primary marketing scheme,” Jackson said. “Colorado was very much an outlier in allowing the deduction.”
Colorado’s water woes
As the planet’s temperature rises, Colorado’s rivers and streams become more threatened by drought.
Last year was one of the driest on record for Colorado after the state marked its 10th-warmest year out of 130 years of data, according to the Colorado Climate Center at Colorado State University. It was the 51st driest year on record, and a swath of northwestern Colorado fell into exceptional drought — the most dire category recorded by the U.S. Drought Monitor.
And 2026 has brought even hotter and drier weather, with the winter being the warmest on record and snowpack at its lowest levels since records started being kept in 1941.
While drought dries up lakes, rivers and streams, it also impacts almost every person living in Colorado. People live with a shortage of drinking water supplies, irrigation becomes trickier for ranchers, rivers dry up for rafters and fishermen, fish and wildlife struggle, and manufacturers must cope with less water.
Less water also boosts the state’s risk for devastating wildfires and can cause insect infestations or forest diseases to spread.
“Climate change is water change in Colorado, and we need every resource we can to put towards building a more resilient future,” said Lauren Ris, the Colorado Water Conservation Board’s director.
The conservation board intends to help Coloradans address all of those issues with the grants it distributes through the state’s water plan.
“It primarily focuses on water supply, not water quality,” Ris said.
Projects awarded money during the most recent grant cycle in September included:
- to build a new water storage facility at the Jurgens Reservoir in Weld County that will increase the Lower Latham Reservoir Company’s irrigation supply
- to Adams 12 Five Star Schools to evaluate 54 irrigation systems across 475 acres of irrigated landscape and develop a water conservation plan for the district
- for a Colorado River conservation exhibit at the Confluence Center of Colorado in Mesa County
The water board employs a team of regional grant managers who live and work in the areas they serve. They become familiar with their region’s needs and help decide which projects are worth funding, said Jeannine Shaw, the grants section chief at the water board.
The more organizations applying for a grant together, the more competitive the application becomes, she said. And all of the grants awarded require the applicants to find matching funds, doubling the amount of money available.
And, as more money is spent on sports betting, Colorado can expand its outreach to all four corners of this parched state.
“The difference that makes on the ground is pretty incredible,” Ris said.
In the San Luis Valley, ranchers have long spread water over their grasslands when temperatures start to freeze to create a sheet of ice over the vegetation. As the ice slowly melts during the spring thaw, it seeps into the ground, recharging the water table. It also helps revegetate retired farmland and creates a habitat for wintering birds and wildlife, said Fay Hartman, conservation director for the southwest region of American Rivers.
In September 2025, American Rivers received a $199,761 grant funded by sports betting to study how the winter ice sheet practice actually benefits the environment. The grant will provide the money for a groundwater study so scientists can collect data by placing groundwater wells at the Russell Lakes State Wildlife Area near Saguache. American Rivers secured $145,956 in matching funds.
There just wasn’t good data on the benefits of creating the winter sheet ice, Shaw said. Different groups wanted to quantify what happens so they would be better informed about the practice and find ways to improve it.
The project, named Frozen Assets, demonstrates the water conservation board’s desire to support innovative ideas for Colorado’s water management, Ris said.
“We’re really able to test some of these theories and use this funding where there is not a whole lot of other opportunity out there to really test some concepts and pilot some things that could have pretty big benefits,” Ris said.
So far, Ris and others who are working to solve Colorado’s water woes believe sports betting revenue is the lifebuoy the state needs to start solving the crisis. It’s not enough, they said, but it’s charting the right course as the state responds to increasing drought, floods and wildfires worsened by climate change.
“We’re thrilled,” she said. “What we really needed was a steady funding stream for water projects, and that’s what this proved to be.”
READ PART 3 NEXT: Sports betting is changing the game for Colorado’s fans and athletes as big money adds new pressures
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