Even more remarkably, most of that growth came from online sports betting alone. Retail sports betting was such a small portion of June’s revenue that it was lumped in with online sports betting revenue. The first retail sportsbook in Colorado didn’t even open until mid-June. The Saratoga Casino in Black Hawk took the state’s first-ever legal sports bet on June 17.
Considering retail sportsbooks’ late start due to three full months of local casino closures, a full picture of financial information was unavailable. It would’ve been tracked meticulously. But these companies would need a bare minimum of a full month to begin any meaningful analysis. It’s possible the Colorado government agreed and felt that a couple weeks’ worth of retail revenue wasn’t worth reporting separately.
But what are the consequences of such a massive imbalance between online and retail sports betting? Will the sports betting industry be okay during the rest of the pandemic?
Or when the pandemic ends?
Is An All-Online Sports Betting Industry A Good Thing?
During the pandemic, an entirely online sports betting industry is the best way to mitigate the pandemic’s dangers. Casino tellers could be exposed to hundreds of bettors throughout a busy day. Masks can mitigate infection risk. However, it only works if everyone wears masks. If the teller is the only one wearing a mask, then the volume of customers would render the mask useless.
A room full of masks helps keep the coronavirus from spreading through a crowded room. However, shared surfaces present a problem. One infected person can leave the virus on a surface. Lots of people may be resting on the same tables and bars. If enough of them touch their faces to adjust their masks, one retail sportsbook could become an outbreak of dozens or hundreds of cases. Hand sanitizer can mitigate that risk, too. But while masks are enforceable, hand sanitizer use is impractical to monitor and enforce.
Online sports betting keeps bettors from facing these risks in the first place, making them the premier choice for sports betting during the pandemic.
Colorado Sports Betting After The Pandemic
Eventually, the pandemic will end. Once that happens, everything that makes retail sportsbooks potentially dangerous will be what makes them so desirable. They’re fantastic spaces for social gatherings. Sports betting adds new stakes to the outcome of popular sporting events (and darts.) Add in a bar and great food, and retail sportsbooks can be a great place to gather to watch a game.
And betting in person will be especially attractive after months of social distancing and isolation.
But that means retail sports betting will have to be up and running by the time it’s safe to congregate. It doesn’t make sense for all these retail operators to wait until the last minute to open sportsbooks. How are sports betting operators supposed to prepare for what will be a monumental industry pivot?
Preparing For The Incoming Sports Betting Shakeup
Before the pandemic, 84% of New Jersey’s sports betting revenue came from online sportsbooks. Leaving 16% of the sports betting market to retail sports betting may not seem like a lot. However, Colorado is an immature market compared to New Jersey. Colorado could go from an entirely online sports betting industry to one where retail sports betting takes up almost one-sixth of the market. That’s a big leap for retail operators to prepare for.
Retail sportsbooks will have to be ready for a massive influx of stir-crazy bettors. That means expanding staff available for each sports betting window. It’ll also mean streamlining sportsbooks’ process for accepting bets. Bettors may be able to manage their accounts at tellers during the pandemic. But retail sportsbooks will likely have to move those bettors out of line to accept the influx of bets. A separate window for account management issues and self-serve kiosks will both help manage the influx of new bettors.
Sportsbooks will likely have to rearrange their spaces in response to these changes. Any retail sportsbooks open during the pandemic is designed to:
- Maximize space between bettors.
- Minimize shared surfaces touched by bettors.
Any pandemic design choices will have to change almost overnight. That’s another process that retail sportsbooks will need in place to anticipate the bettor surge that will follow the pandemic’s end.
How Will This Hit Retail Operators’ Finances?
All these new initiatives will cost money. If they were available, analysts would likely see these changes in monthly cash flow statements.
Operating cash flows would increase but would include new short-term costs. Retail sportsbooks will certainly generate more revenue from the post-pandemic bettor surge. They’ll incur costs when they buy kiosks or increase staffing. However, all the new customers will undoubtedly generate more cash than the sportsbook changes will cost.
But if a smaller retail sportsbook hasn’t prepared for this influx, analysts could see negative investment cash flows and positive financing cash flows. That would mean that a retail operator borrowed money to pay for significant changes. If a retail operator needs to borrow money to accommodate bettors and make changes so fundamental that they fall under PPE costs, they’ll show how unprepared they were for the pandemic to end. Those would be changes like expanding new spaces and incurring long-term costs to accommodate all the new bettors.
What Will The Pandemic Do To Colorado’s Retail And Online Sports Betting Operators?
During the rest of the pandemic, online sports betting will consume retail revenues. As virus cases ebb and flow, retail sports betting attendance will fluctuate accordingly. However, the end of the pandemic will bring bettors to casino sportsbooks in flocks. Everyone will be sick of being inside and alone, so bettors will be more than happy to wager in person.
But that will bring Colorado’s sports betting industry to a crossroads. Retail sports betting may maintain a strong market position after the pandemic. No one’s going to take social gatherings for granted after COVID-19–at least, not for a few years. But retail sports betting could experience a decline after its initial spike of angsty bettors. That contraction could be large enough to destabilize retail sportsbooks’ staffing plans.
The pandemic’s end is still a long way away. However, sports betting industry is unusual in that it has advance notice of a major shift in consumer behavior. They must plan for it or risk missing out on what could be the largest gain in market share that Colorado’s retail sports betting operators will ever see.