Why Sports Betting Exploded in Colorado

In the three months since sports betting debuted in Colorado, it’s grown into the fifth largest market in the country. What is it about the Centennial State that set sportsbooks on fire—even in the depths of the coronavirus pandemic?

Why Sports Betting Exploded in Colorado

Something about Colorado has proven highly fertile ground for both retail and mobile sports betting operators. In the three months since sportsbooks debuted in the Centennial State, it’s rocketed into the fifth largest market in the United States.

Just what made this market explode, at this time? Was it how the regulations were written, or just the freewheeling Old West style of the state’s three casino towns—Cripple Creek, Black Hawk and Central City?

Colorado sports betting launched May 1, in the early days of the coronavirus pandemic, when almost all forms of professional and college sports were shut down. But by July, sports wagers in the state had taken off, and brought in nearly $59.2 million, a 55 percent leap from June. The market contributed almost $242,000 in taxes from sports wagers in July.

Colorado has eight retail operators, including Penn National Gaming’s Ameristar Casino Black Hawk, William Hill US at Caesars Entertainment’s Isle Black Hawk, and Twin River Worldwide Holding’s Golden Mardi Gras, also in Black Hawk. Among the 10 internet operators are BetMGM, Circa Sports, DraftKings and FanDuel. The scale was clearly tipped toward the latter in July, when mobile sports wagering accounted for 99 percent of the state’s sports wagers.

‘Heck of a Start’

The rapid growth is the result of “a combination of a few things,” Dan Hartman, director of the Colorado Division of Gaming (DOG), told GGB News. “Obviously sports betting has tapped into a market with four of the major sports,” including Denver Broncos football, Denver Nuggets basketball, Colorado Rockies baseball and Colorado Avalanche hockey (there’s also a lesser known soccer team, the Colorado Rapids). “It’s a market that enjoys its sports, and that’s a heck of a way to start.”

Hartman also credits how the program was developed. “They gave us a lot of latitude to set it up, as long as it was safe and secure and well regulated.”

In November 2019, voters in the state narrowly approved the constitutional amendment that would introduce sportsbooks. In December, the DOG held meetings with about 70 stakeholders, from major league sports officials to responsible gaming representatives, along with 50 gaming companies from around the world. “They came together and sat around a table and talked about what works well and what doesn’t,” said Hartman. “We were able to find out best practices.”

Officials borrowed freely from other states. “We took those frameworks and put them through the lens of what works and doesn’t,” said Hartman. “We came up with regulations in January and February, so the operators knew what the landscape would look like on May 1 and they could be prepared. We changed one definition after that, and that was about it. We didn’t take the approach that we would run before we would walk.”

Most helpful in creating a user-friendly experience was legislation that “didn’t dictate that people go to a brick-and-mortar outlet to sign up,” said Hartman. “They left it up to us to allow sign-up from the mobile app from the get-go. In November, when the law was passed, none of us could have foreseen the pandemic, but being able to sign up on the app and not have to go into a retail outlet when all of those were closed was a big deal.”

In May, with shutdowns in effect across the U.S., “We were ready to launch the process for temporary licensing and worked with virtual commission hearings” to accommodate the few operators who wanted to begin offering sports bets amid the Covid-19 outbreak.

“We started with four operators on day one, and now we have 10,” said Hartman. “And with the opening of the football season, we have a lot of places ready to come on.”

Retail and internet sports betting are all tied to a master license held by a land-based casino, Hartman explained. “The casino can either run their own operation or have an operator. There are 33 casinos. Each can have one retail and one mobile, so with the number of casinos we have licensed, by the first of the year we will probably be up to 23 to 26 online operators and maybe 20 retail operators. It doesn’t mean someone couldn’t come in and buy a casino or open a casino down the road and have a sports betting operator’s license.”

Sportsbooks won’t spring up like mushrooms, because Colorado limits gaming to the three cities in two counties. “There are not a lot of properties left to expand into, but there are some,” said Hartman. The apps, although tied to a particular location, work anywhere in the state.

Although the constitutional amendment that allows sports betting did make things better for those towns, the beneficiary of the sports betting tax will be the Colorado Water Plan, designed to prevent water shortages and thus protect the state’s agricultural industry.

Getting Started

Opening on May 1 allowed “obscure sports to come front and center, European and Asian markets. We had some Korean and Italian baseball, some European soccer leagues that came up from the beginning. Regular tennis. A lot of things that sustained the market and got the operators going. When MMA came on, when golf and auto racing came on, it allowed us to progress into what is now a huge market, with major sports running their playoffs and next week, the NFL. Our numbers keep doubling every month, and we’re excited about what this market can mature into.”

Kevin Hennessy, director of publicity for FanDuel Group, isn’t surprised at the growth of sports betting in Colorado. “It’s a state with a passionate sports fan base, and the Denver basketball and hockey teams have put on incredible displays during the playoffs, which always excites FanDuel customers,” he told GGB.

“The Colorado market has been set up great by the regulators, giving sports fans a wide assortment of operators at both retail and online that can innovate,” he added. “That always benefits the consumer.”

Monarch Casino Resorts’ Monarch Casino in Black Hawk operates a retail sportsbook. David Farahi, chief operating officer, told GGB, “First and foremost, Colorado’s legislators and regulators created a solid framework for a robust industry. They allowed for a competitive market with up to 22 operators, and gave those operators a large menu of betting options to offer consumers. I’d also suggest that once major league sports restarted and state mandates, sports betting benefited from the same tail wind as e-commerce in general. We’ve also seen several operators heavily invest in advertising across the state.”

Another reason for the market’s success, Farahi said, is its sports leagues, as well as a “relatively younger, more active population. It doesn’t hurt that we also have teams in both the NBA and NHL playoffs right now.”

The “vast menu of bets” allowed in the state have “encouraged more operators to come in,” he added. “Consumers may not use all the niche bets, but it signals to operators that Colorado wants to be on the cutting edge of the industry.”

Monarch Casino has also taken some steps to make its venue more welcoming for guests. “BetMonarch, our physical book and mobile sports app, are unique in a couple of ways.,” said Farahi. “Unlike most casino operators, we have our own in-house risk management team. This allows us to not only provide a better guest experience, but offer betters the best lines. It also means we’re the only sportsbook in Colorado where you can earn comps at our resort while betting on sports.”

Monarch’s app went live in early May. “We do currently offer kiosks for betting at the casino,” Farahi said, “and look forward to unveiling our new sports betting area soon.”


Why It Works

Mike Van Ermen, sportsbook strategic operations manager for Circa Sports, which is licensed through three casinos in Cripple Creek, told GGB, “One of the things the state did that’s really put it in a position to succeed is looking at other states that came before them, like New Jersey, and asking, ‘What works and what doesn’t?’

“Remote registration—in my opinion—is the single strongest indicator of a successful market,” he stressed. “Every other major player in national sports betting has remote registration. They looked at Indiana and New Jersey. You want the technology to execute it safely. They looked at Las Vegas to make sure operators like us are conducting business fairly. The idea is to drive consumers away from the black market. You can’t tell people it’s more secure, then say you have to drive 100 miles to register . . . They did a great balancing act of consumer protection and ease of access.”

Van Ermen said he’s happy with the result. “This our first non-Nevada sportsbook expansion. As a company, we put a great emphasis on sportsbook product, with remote registration, higher splits and bigger limits. At that point, if you can download every single app from your couch, we figure the best possible product will win out.”

He says other states can look to Colorado as a model. “That’s how the industry learns. As long as each state learns from the previous states, this industry will flourish on very short notice.”

In a nutshell, the following factors fed the Colorado sports market success, said the DOG’s Hartman: “The way it was crafted to take suggestions from everywhere. The collaborative effort to bring on a new industry. Having a tax rate competitive with other states. Ten percent wasn’t too high or low. That—combined with regulations that everyone had a hand in and was part of—was a big draw.

“Plus in Colorado, the barrier to entry doesn’t cost a lot. They pay the license fee and they get to function within the marketplace. I think it was good legislation. It allowed us to set up a good regulated market in a business-friendly way. I can’t stress enough that it was good legislation, with stakeholders, that allowed us to flourish even in the midst of a pandemic with no sports running.

Articles by Author: David Ross

David D. Ross edits the Escondido Times-Advocate and Valley Roadrunner newspapers. A freelance journalist for over 40 years, Ross is knowledgeable about San Diego's backcountry and has written on tourism in Julian, Palomar Mountain, San Diego Safari Park—and the area’s casinos. He has a master’s degree in military history from Norwich University.