Audit: Colorado Sports Betting Officials Dropped the Ball, Need to Improve

The Colorado Office of the State Auditor issued a stinging report earlier this week that criticized Colorado Division of Gaming officials for their handling of sports betting in the state.

The report claims Gaming officials failed to properly execute background checks on operator applicants, granted too many temporary licenses to satisfy a quick timeline, and potentially lost tax revenue due to improper documentation.

The report was commissioned by Colorado’s Legislative Audit Committee, chaired by State Senator Jim Smallwood, with the goal of surveying the first full year of legal sports betting in the state. It was prepared by the office of State Auditor Kerri L. Hunter.

The 56-page report analyzes the pre-launch period and the first full year of the sports betting market (May 1, 2020, and April 30, 2021).

The report states: “The Division did not have an effective process for investigating sports betting applicants for temporary licensure” and also “did not have evidence that it had completed the minimum required criminal history procedures that it had established for temporary investigations.”

They also found that one applicant had submitted income statements in Spanish, but there was no evidence that the Division of Gaming had a method for translating those key documents. The Auditor revealed that investigations of potential conflicts of interest were incomplete. The Auditor stated that the Division blamed understaffing, lack of resources, and the short three-week period made available to investigate applications.

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Colorado Division of Gaming Defends Actions

Too many temporary licenses were granted to shorten or uncomplicate the investigative process, according to the Auditor. Colorado has granted 35 temporary licenses and 37 permanent licenses.

Director Dan Hartman defended the Colorado Division of Gaming.

“The entire nation was navigating uncharted waters in the midst of the pandemic, the Division of Gaming was no different,” Hartman said in a written response to the report. “The temporary closure of Colorado casinos, the cessation of professional and collegiate sporting events, and internal hiring freezes posed significant challenges in setting up Colorado’s first regulated sports betting program.”

Even while offering an explanation for the department’s shortcomings in the months leading up to the launch of sports betting, Hartman admitted that improvement is possible, and will be following the recommendations of the Auditor report.

“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.

“We believe these improvements, especially with a new regulatory structure and an ever-evolving industry, will only make the program stronger.”

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