State-Level Gambling Legality in Colorado
Colorado currently maintains a blended approach to gambling regulation, enabling certain types of gambling while restricting others. Land-based casinos are legal and operate under strict oversight from state authorities, which ensures fair play and protection for participants. Sports betting was officially legalized in May 2020 following voter approval, and several licensed sportsbooks now operate online and via mobile apps across the state. However, traditional online casino gambling (e.g., online slot machines, roulette, blackjack, and poker) is not yet legal under state law. While players can still access offshore platforms, these websites are not regulated by the state and therefore offer little protection in case of disputes. State legislators have discussed potential expansion of legal online gambling, but as of today, no formal proposals have been enacted. Residents who want to engage in digital wagering are encouraged to use only licensed sports betting platforms and to stay informed about future legislative changes that could open additional online casino opportunities.
Gambling Taxes in Colorado
Gambling winnings in Colorado are considered taxable income and must be reported to both the IRS and the Colorado Department of Revenue. Whether you earn money from land-based casinos, sports betting, or lottery wins, the state requires you to declare all winnings when filing your annual tax return. Operators may issue a W-2G form if your winnings exceed the federal reporting thresholds. Even if a form is not received, players are still legally obligated to report the income. Certain types of games are subject to automatic withholding, while others depend on the total amount won.
Key Points on Gambling Taxes in Colorado
All gambling winnings (land-based or online) are subject to federal and state income tax.
- Operators may automatically withhold 24% federal tax for winnings over a specific threshold.
- Colorado state income tax rate currently applies at 4.4% and must be included in your return.
- A W-2G form is issued for wins above:
$600 on sports betting or pari-mutuel bets
$1,200 on slots or bingo
$5,000 from poker tournaments
- Even if no W-2G is issued, players must still report all winnings as taxable income.