Why Wagering At Licensed Colorado Sportsbooks Is So Important

Who Regulates Sports Betting in Colorado?

Sports betting in Colorado is overseen by the Colorado Department of Revenue. While that might seem an odd fit at first, it’s worth noting that the CDOR is already the regulator for the state’s legal casino industry, making it a natural fit for the role of overseeing legal sports betting in Colorado.

The agencies within the CDOR that are directly responsible for sports betting regulation are the Division of Gaming and the Colorado Limited Gaming Control Commission. It’s not at all uncommon for a state to have two agencies overseeing gaming; typically, one body is charged with making the rules, and another body is charged with enforcing them.

What Are the Rules for Colorado Sports Betting?

You can review the adopted rules and regulations for legal Colorado sports betting here.

It’s important to note that these regulations are likely to change somewhat over time. Sports betting is wholly new to Colorado, as it is to most states, and online gambling of any kind is also new to Colorado regulators.

As regulators gain more experience with both forms of gambling, they are likely to add, edit, and otherwise amend the existing regulations for legal CO sports betting.

Who Can Get a Colorado Sports Betting License?

It’s a little complicated. There are multiple tiers of licenses. The most important license is what’s called a Master License. These are restricted to the state’s land-based casinos (currently 33). The state’s two tribal casinos would also be eligible to offer sports betting, bringing the total number of potential sportsbook operators to 35.

Anyone offering sports betting in Colorado has to either hold a Master License or be in partnership with a Master License holder. That’s the critical point in this discussion. To put it another way, you can’t offer legal sports betting in Colorado unless you either operate a retail casino in the state or have a partnership with a retail casino in the state.

As the rules are currently written, each Master License holder can operate one online sports betting brand. So the number of potential online sportsbooks is also capped at 33, pending additional casinos opening in Colorado.

The application form for Colorado sports betting can be viewed here.

How big will the Colorado sports betting market be?

Colorado is generally expected to be a mid-tier market when it comes to sports betting. This is largely a function of the relatively limited population of Colorado versus more densely-populated states in the east and geographically larger states such as California and Texas.

On a per-capita basis, the story may be much different. When you look at all U.S. states on a per-capita GDP basis, Colorado does quite well. There the state is in the top 20, suggesting that Colorado is likely to punch above its weight when it comes to legal sports betting.

The market will also be helped by what is shaping up to be intense competition among multiple national operators for supremacy in Colorado. With major operators such as DraftKings, FanDuel, and William Hill fighting for share, there will be no shortage of the kind of marketing spend and promotional offers that tend to drive over-performing markets.

How big the market will ultimately be is obviously an open question. But a survey of various forecasts for Colorado’s legal sports betting market suggests that a round-number estimate of $300 million is a good starting point for understanding Colorado’s annual legal sports betting revenue potential.

How Much Of Colorado's Sports Betting Market Will Online Bets Comprise?

The trend with legal sports betting in the U.S. has been clear: Mobile is the dominant product, generally accounting for over 75% of total activity states that offer both retail and online sports betting. In New Jersey, for example, mobile’s share of the overall market is steadily heading north of 80%.

With a few months of data to look at, so far in Colorado mobile sports betting has positively dominated. In August 2020, 98.5% of all sports bets placed in the state were made through apps or websites.

That’s not to say there’s no place for retail sports betting. The retail sportsbook experience is a unique one, and will always appeal to some consumers some of the time. But the sheer convenience of the online sports betting experience ensures that most consumers will place most of their bets through computers and mobile devices.

How Much Tax Revenue Will Colorado Get From Sports Betting?

Estimates from Eilers & Krejcik Gaming call for Colorado’s legal sports betting market to reach roughly $300 million in annual revenue at maturity, with online sports betting accounting for more than 80% of that total.

Colorado taxes sports betting at 10%, meaning that the state should eventually expect to see about $30 million a year in revenue from sports betting taxes.

There are also some additional benefits for the state from legal sports betting. For example, legal sports betting will bring hundreds of new jobs to Colorado. Those jobs will generate additional tax revenue and economic activity for the state. And legal sportsbooks will spend tens of millions of dollars locally in marketing efforts, spend that will expand the economic impact of legal sports betting in Colorado.

That’s the bright side. But those gains do need to be balanced against some additional costs that will arise as a result of the legalization of sports betting in Colorado. For example, it will cost the state hundreds of thousands of dollars annually to regulate sports betting. There is also the chance that some of the money spent by consumers on sports betting is redirected from other forms of entertainment, which could offset some of the employment and economic activity gains.

Finally, it’s important to consider the overall budget picture in Colorado when thinking about sports betting’s benefits. While tens of millions of dollars is a lot of money, it does represent a tiny fraction of the overall budget in Colorado.

Will Sports Betting Create Jobs In Colorado?

While there is no formal estimate of how many jobs Colorado will gain from sports betting, it’s clear that that the legalization of sports betting will bring new jobs to the state.

One useful parallel is New Jersey. A study from industry trade group iDEA Growth concluded that the introduction of online gambling resulted in the creation of some 6600 new jobs in the state.

Some jobs will come to Colorado thanks to the opening of retail sportsbooks. After all, a sportsbook needs employees, whether it’s ticket writers, servers, or the technicians and managers who keep the whole thing running.

Others will come thanks to the need for online sportsbooks to establish a presence in the state. A great example of this trend is PointsBet, who opened up a second U.S. headquarters in Denver in 2019 and continues to hire new staff to support both their Colorado and their broader U.S. sports betting efforts.

About the Author

Christopher Gerlacher

Christopher Gerlacher is a freelance writer tucked into the foothills in Colorado Springs. He works as a content writer, a professional resume writer, and authors search engine optimized professional articles in multiple industries.