Is Initiative No. 257 The Lifeline Colorado Casino Towns Need?

Written By Ian St. Clair on 06/24/2020 - Last Updated on July 12, 2022

Initiative No. 257 is the latest possible lifeline for Colorado casinos.

The state’s three mountain towns felt the financial toll of months-long casino closures, as did the two counties they call home, and hundreds of casino workers.

The hope is the initiative will increase local control and bring added revenue to the casinos, and with it, more jobs. In the same refrain, it also creates tax revenue that will benefit state community colleges and small businesses and increase tourism.

David Farahi, president of the Colorado Gaming Association (CGA) and COO of Monarch Casino and Resort in Black Hawk, said to PlayColorado:

“The CGA voted unanimously to endorse the initiative. That says a lot because the CGA is made up of large and small casinos from all three gaming towns. All members voted for endorsement.”

Why Initiative No. 257 is necessary

By now, most know that Gov. Jared Polis called for Colorado casinos to close on March 17 because of the COVID-19 pandemic.

They are now open again in a limited fashion in Black Hawk and Central City, and with great enthusiasm on June 15 in Cripple Creek.

But it could take years to close the financial gap created over the last three months.

As Gilpin County Commissioner Gail Watson said to PlayColorado recently:

“Every month that the casinos are closed, we lose an estimated $1 million in gaming tax revenue. Allowing the casinos to open with the necessary safety precautions puts us on the long road back to financial recovery. It also allows our residents who work in the casinos to return to work.”

As for Cripple Creek, it was also in bad shape.

Paul Harris said at the Colorado Limited Gaming Control Commission (CLGCC) meeting on May 22 that the closures turned Cripple Creek into a ghost town. Harris is the finance director for the city of Cripple Creek.

That’s where Initiative No. 257 comes in.

What is Initiative No. 257?

The proposed initiative would give the voters of Black Hawk, Central City and Cripple Creek the right to approve the maximum bet of any amount.

The voters would also approve the addition of casino games to what is allowed in the Colorado Constitution: blackjack, craps, poker, roulette and slots.

However, the initiative does not alter gaming laws in Colorado.

If the initiative passes, it merely gives residents in the three towns the option to hold a local election and decide whether residents want to extend betting limits and games.

“It gives local control,” Farahi said. “It lets the communities that are most greatly affected by gaming decide for themselves what they want limits to be. And what new games they want to introduce. For example, baccarat is a pretty standard game in casinos around the country. But as a card game, baccarat is not legal in Colorado.”

Farahi went on to add that if, for example, Black Hawk added baccarat, it wouldn’t just create revenue but new jobs, since the casinos would need more dealers and tables.

“It’s a way for local control to decide for themselves how and if they want to grow the pie.”

Where Initiative 257 stands now

For the initiative to get on the November ballot, it needs to generate 125,000 signatures by the beginning of August.

Karen Crummy, the spokeswoman for the initiative, told PlayColorado, “We are doing well gathering signatures with stringent protective measures in place.”

If it does get on the ballot and gets above 50% approval from state voters, it would go into effect May 2021.

Arguments against Initiative 257

Not everyone will sign their name in support of the proposed initiative.

In the written proposal, it includes the possible benefits but also the consequences.

Take the economic impact, for example. As it states in the proposal:

“This measure may increase gambling losses for Coloradans or others who choose to bet additional money on games. Gamblers will have less money available to save or spend in other sectors of the economy and may incur new debts as a result.”

So, the gaming communities and state could benefit from the increase in tax and tourism revenue, but it could get offset by the rise in expenditures.

Here’s another possible argument against the proposal: What’s the point of having the CLGCC and other government entities if any time casinos want a change, they have the voters decide?

While local control is nice in theory, not every eligible voter is equipped to make that decision. Is it fair to put that onus on the citizens of Black Hawk, Central City and Cripple Creek?

Yes, gaming is the lifeblood of those communities, but the citizens are not experts. Nor should that expectation exist, especially now with the realities of a pandemic.

Colorado is one of two states with max bet limits

A limit on maximum bets is full of great intentions.

As it stands now, two states limit the max bet: Colorado and South Dakota. The limit at casinos in Colorado is $100, and it is $1,000 at the casinos in the historic town of Deadwood.

After all, no one wants to throw gobs of money on one hand of blackjack only to lose it.

But when you dig a little deeper, there are ways to circumvent those great intentions. For example, a person can put unlimited max bets on that one hand and still lose all that money.

Similar measures have passed before

In terms of historical background, this type of initiative has been approved by Colorado voters in the past, and not too long ago.

In 2008, Colorado voters approved Amendment 50. The constitutional amendment granted the residents of the three gaming towns the authority to institute changes. The residents could vote on whether to extend casino hours, approve additional games and increase the maximum bet limit.

Of note, Amendment 50 added craps to the list of games Colorado casinos could offer and set the max limit bet at $100.

If that sounds a lot like what Initiative No. 257 aims to do, that’s the point. The two are near-identical in what they want to happen and how they get there.

Gaming taxes make a huge difference

Since gaming was legalized in 1990, substantial revenue has been generated to better the community, not only in the three gaming towns, but throughout the state of Colorado.

The CGA highlights how gaming revenues have made an impact on the state.

On the passage of legalized limited stakes gaming in 1990:

“Taxes from the Colorado casino industry have made the Colorado State Historical Fund the richest in the nation. Since 1992, over $300 million has been provided to the fund to preserve Colorado’s rich history.”

The CGA adds that the CO State Historical Fund was created in 1990 by the same constitutional amendment that legalized limited stakes gaming.

The assistance doesn’t stop there.

The CGA also says the passage of Amendment 50 in 2008 allowed a partnership to take root with the state’s community colleges.

“All new revenue generated from increased bet limits, expanded operating hours and the new games of craps and roulette will benefit the state’s community colleges.”

How Initiative 257 will help

The proposed initiative looks to strengthen that partnership with the state’s community colleges.

Here’s a breakdown of what the additional tax revenue will do:

  • Generate a modest amount of new tax revenue for community colleges to help more students stay in school and graduate. The money will provide resources to help students complete certificate programs and obtain a degree.
  • Benefit small businesses and the trades, which need skilled workers, by helping community college students graduate.
  • Boost travel and tourism jobs and revenues for restaurants, hotels and casinos, which are the lifeblood of these mountain communities.

Road to recovery

Colorado casinos are on the slow road back to recovery, as are the three gaming towns, two counties and casino workers.

While casinos in Colorado are reopening, albeit with guidelines and health restrictions, this is just one step.

The launch of sports betting will help. The $25.5 million handle for May is from only four CO sports betting apps and without major sports offerings.

As sports return to play and more sportsbooks launch, that number should increase. But nothing substantial, and certainly not enough to recoup the losses of the last three months.

Initiative No. 257 is the latest possible lifeline.

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Ian St. Clair

Ian is an award-winning sports journalist and a University of Northern Colorado graduate. He’s a Colorado native and has over a decade of experience covering college and professional athletics. He broke into the gambling industry right as Colorado launched legal sports betting in 2020. Ian now manages the sites for some of the biggest gambling markets in North America and is an analyst for PlayColorado.

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