Time For a Change? Colorado Casinos Look Towards New Post-Shutdown Realities

Legal sports betting apps went live on May 1, bringing sports betting online across Colorado at a challenging time for casinos in the state. Not only are most major sports leagues on hiatus, but the shutdown prevents them from physically opening.

Last year, Colorado casinos brought in $213.4 million from bettors in March, April and May. This year, with casinos shutting down in mid-March, they only picked up $31.9 million and barring a radical change, buildings will likely stay closed until at least June. The hope now for some casinos is that sports betting will provide some of that lost revenue, but what about the long-term? Will sports betting make a difference or will casinos have to consider other options to generate revenue once the shutdown ends? 

Sports Betting Brings in Dollars

Can sports betting generate revenue for casinos? That answer is a definite yes. The question remains how much, a new sports betting market typically takes three to five years to fully mature. There are two benefits Colorado has over other sports betting launches, however. First, you can remotely sign up. You just pick the app and set it up on your phone, as some casinos have their own apps and others partnered with sports betting companies. 

The Monarch Casino in Black Hawk, for example, has its own BetMonarch app. Golden Mardi Gras partnered with DraftKings, while Golden Gates signed a deal with FanDuel. Midnight Rose is working with BetMGM, while BetRivers is working with JP McGill’s Hotel and Casino. In other states, the rules aren’t as simple. Las Vegas, for example, requires bettors to register in person at a casino before placing bets.

The second benefit could be the timing of it all. Colorado launched sports betting at a time state residents are still under a ‘safer-at-home’ order, so there are plenty of potential gamers with nothing but time on their hands. Also, sports leagues are starting to reopen. UFC 249 is scheduled for May 9, and NASCAR will restart their season in mid-May and futures betting is open for the NFL season. 

Casinos Say They Can Keep Going

So with opportunity and interest, sports betting does offer casinos some benefits, especially in the current situation. An April 14 Gallup poll said 9 percent of people would wait indefinitely before going on vacation and 71 percent said they would wait and see what happens with the virus. Another April poll highlights the financial impact COVID-19 has had for potential gamers. Both polls highlight the fact people might not be walking back in the doors anytime soon. 

However, that’s not enough for officials to dramatically change how they operate. For example, Full House Resorts, owner of Bronco Billy’s in Cripple Creek, expects to generate $7 million from sports betting at its Colorado and Indiana properties this year. That’s a drop in the bucket when it comes to revenue generated and expenses. In 2019, Full House generated net revenues of $73.2 million. 

“Looking forward, we estimate our ‘burn rate’ of minimal expenses with operations closed is in the neighborhood of $3 million per month, including debt service,” Full House officials said in a statement to media. “Based on this, we believe the company has sufficient liquidity to endure this temporary shutdown for several months.” 

According to the Full House statement, the company had approximately $29.9 million of cash and equivalents as of December 31. As of April 17, that number had dipped to $21.4 million as a result of paying accrued vacation pay and employee benefits. 

A Focus on Luxury 

Other casinos agree that while sports betting is great to have during a shutdown, it’s not going to change their focus. 

“Sports betting is nice to have,” said David Farahi, Chief Operating Officer for Monarch Casino. “We’re excited about launching our app BetMonarch. But I don’t know that it moves the needle that much.” 

Farahi pointed to last year, where sports betting made up less than 10 percent of revenue for the company’s Atlantis property in Nevada. While he sees sports betting as part of the overall package, Farahi believes the way to bring people back is to offer a more complete vacation. 

“I think you’ll see a more luxurious experience,” Farahi said. “The people who like to game, they want the full experience.” 

That’s where Farahi says Monarch’s focus is for the future. The company invested $442 million to expand the Black Hawk property in Colorado, which will have double the casino space as before and offer 516 hotel rooms in a 23-story tower. 

“It will have a world class spa and all the benefits of a resort,” Farahi said. 

That was a point Dr. Richard McGowan echoed in an earlier discussion with Colorado Sharp. 

“They will need to offer more of a vacation, with a swimming pool available or something like that,” he said. “The gambling part would still be there, but especially right now, you can’t expect people to spend as much time on the floor.”

About the Author

Brian Carlton

Brian Carlton is an award-winning journalist who has covered casinos, the gaming and finance industries for more than a decade. His work has been published by the BBC and a variety of newspapers across the U.S.