Prolific bettors may have noticed something striking about Colorado sportsbooks. While most of them offer welcome bonuses, there are a few holdouts. BetMonarch and Sky Ute Sportsbook don’t offer bonuses. Despite refraining from offering bonuses, BetMonarch and Sky Ute Sportsbook seem to be carving out their own corners of the sportsbook market. However, Bet Wildwood offers a welcome bonus in a break from the homegrown sportsbook pack. We reached out to Monarch COO, David Farahi, to discuss how Colorado homegrown sportsbooks do business differently than their big brand counterparts.
Sky Ute Sportsbook and Bet Wildwood representatives did not respond to our requests for interviews.
Homegrown Sportsbook Strategy In A Nutshell
Bonuses aren’t the only reason homegrown sportsbooks differ from the big brands. However, not offering bonuses affects homegrown sportsbooks in other ways, from their financials to their customer acquisition strategies. And that’s not even the biggest operational difference between big brands and homegrowns. Monarch COO David Farahi summarized the ripple effects early on in our interview:
“I think we talked about before we launched about how we would have better prices and better lines than the other guys because we had a much lower cost structure than the other guys. We don’t have partnerships with teams n the leagues. We don’t have a third party that’s managing our system. All these different parties are expensive. And because we run it ourselves, we don’t have all these costs and we’re able to offer better lines.”
While he can’t speak for the other homegrowns, David Farahi speaks to a cost-cutting strategy that BetMonarch is using. By forgoing extra costs like revenue-sharing partnerships, free bets, and deposit bonuses, BetMonarch hopes to improve its lines to attract and retain bettors. Farahi lays out what seems to be a sound strategy for smaller sportsbooks competing in a competitive market like Colorado. (His includes actually passing savings onto bettors, but we’ll get to that in a minute.)
How Good Are BetMonarch’s Odds?
BetMonarch has consistently competitive odds. When we compare sportsbook odds for reviews, BetMonarch often joins the big brands at the top of the market. (Sky Ute Sportsbook has pretty good odds, too–especially futures.) But David Farahi came prepared with hard numbers. He provided two sets of odds where BetMonarch had the highest underdog odds, beating the next highest set of odds by five points. His sample was small, but it made Farahi’s point that BetMonarch’s size doesn’t hurt its competitiveness.
Why BetMonarch Doesn’t Offer Bonuses
Although welcome bonuses can attract bettors, Farahi remains skeptical about how effective they are at retaining customers.
“Bonuses are necessary if you have to buy the business and then have higher prices later on,” Farahi says. “We have that everyday low-price model where you’re just gonna get a better line from us.”
He’s referring to the tradeoff between competitive odds and profit margins. When sportsbooks create odds, they add in an overround. That’s the extra percentage of revenue they expect to take from that line after paying out winnings. The higher the overround, the more money the sportsbook expects to take from that line. But higher overrounds mean lower odds for bettors. When we compare odds for our reviews, the sportsbooks with the lowest overrounds have the best odds and vice versa. It’s why BetMonarch and Sky Ute Sportsbook can create lines that stand out.
However, it’s also why Bet Wildwood’s odds aren’t as competitive. Its overrounds are high compared to other Colorado sportsbooks. That profit focus cuts into the odds that Bet Wildwood can offer bettors. In contrast, BetMonarch and Sky Ute Sportsbook take lower cuts from their lines, giving them more room to offer competitive odds on at least one side of the line.
Farahi is suggesting that because BetMonarch has fewer expenses, it can afford to take less on each sportsbook line. Whether that’s true for Sky Ute Sportsbook depends on its cost structure. But bonuses aren’t the only expense BetMonarch doesn’t have to deal with.
Where Partnerships Cut Into Sportsbooks’ Bottom Lines
Major partnerships between sportsbook brands and major league teams may seem exciting. They can give sportsbooks valuable data and marketing opportunities. But in return, major franchises can get a cut of their sportsbook partner’s revenue. “Basically, they take money off the gaming revenue,” Farahi says.
That means after paying winnings, sportsbooks have to pay their partners next. That cuts into how much money sportsbooks keep–and how much they pay in taxes. If BetMonarch can leverage its low operating budget to offer the kind of odds that keep bettors at their sportsbook, then this strategy could work for them. However, Sky Ute Sportsbook and Bet Wildwood will have to decide whether they want to spend money on partnerships that will grant them exposure but eat at their profits over time.
Why Would Sportsbooks Forge Expensive Partnerships?
The goal would be to attract customers and keep them betting at one sportsbook. But a customer acquisition strategy is worth ongoing costs if it leads to high customer retention. If most bettors who try one sportsbook remain dedicated to it, that sportsbook will have a more reliable revenue stream. But if bettors don’t stick to one sportsbook, maintaining a steady revenue stream may be more challenging. It’s not enough to get many customers to try one sportsbook. Bettors also have to stay there.
That’s why BetMonarch is relying on a home-field advantage unique to homegrown sportsbooks: integration.
“Whether you bet in person in the casino on a kiosk or whether you bet on the app,” Farahi says, “you earn comps with your account–the same account you earn comps with when you’re playing blackjack.”
Since BetMonarch is run by the same company that owns Monarch Casino, it can keep track of each bettor account. Some other retail sportsbook kiosks allow bettors to sign into their accounts to wager. But they don’t track casino reward points or make immediate payment transfers because not every partner has access to the necessary data.
Pulling that level of integration off requires in-house expertise. That could be a significant cost for any new homegrown sportsbook to pay up front. It’s hard to imagine oddsmakers’ salaries being cheap. And that’s before investing in the technology and licenses needed to operate a sportsbook legally–much less effectively. But if a new homegrown sportsbook can overcome those costs, it could offer a seamless product that rivals its competitors.
How Homegrown Sportsbooks Compare On Tax Day
Altogether, homegrown sportsbooks are less likely to have bonuses and partnerships cutting into their profits. That allows them to either rake in more money or offer bettors more competitive odds. But it also solves a mystery that lies in September’s tax figures.
In September 2020, gross online gaming revenue–everything left over from online sportsbooks after paying winnings–was $3.76 million. But net online gaming revenue–everything after paying the federal excise tax and promotion expenses–was -$3.79 million. That negative is not a typo. Online sportsbooks lost money in September 2020. But somehow, online sportsbooks still paid $30,355 in taxes. Somebody made a little bit of money.
It was likely the homegrown sportsbooks.
Since they didn’t have to subtract site credits from promotions, Colorado’s homegrown sportsbooks were likely profitable when the big brands were still trying to attract customers. The 2020 NFL season began in September, so big brands likely saw a rush of customer signups. Bettors would’ve spent free site credits from sportsbook bonuses in September, increasing sportsbook costs across the market. The entire sportsbook market bounced back in October and November–when bettors would’ve used all their site credits and had to wager with their own money.
The big brands obviously weren’t put out of business by what was likely a last-minute rush to sports betting. But David Farahi remains skeptical of the bonus strategy.
“It’s certainly not sustainable,” Farahi says. “and I think [sportsbooks] are looking to buy as much market share as they can and hope that it’s sticky–that the players they get at the beginning will stay with them.”
What To Expect From Colorado Homegrown Sportsbooks
Despite fierce competition from the largest sportsbook brands in the country, Colorado homegrown sportsbooks are making names for themselves. However, they’re doing it in different ways. Bet Wildwood is going the traditional route by offering promotions and mimicking the big brands’ strategies. But BetMonarch and Sky Ute Sportsbook aren’t relying on bonuses to attract customers. BetMonarch’s integration with its casino rewards program offers lasting value to bettors who stay with them. Whether Sky Ute Sportsbook will adopt a similar strategy remains to be seen.
But Colorado homegrown sportsbooks show that there’s more than one way to achieve success in an industry dominated by massive brands. As Colorado’s sports betting industry matures, we’ll see which strategies pull sportsbooks to the top of the market and which ones cause sportsbooks to leave. But less than a year in, multiple paths to success remain open in one of the most competitive sports betting industries in the country.