Colorado was among the first batch of states to legalize sports betting after PASPA’s repeal. Colorado sports betting went live in May 2020 and has flourished ever since. Because so many Colorado sportsbooks are online, Colorado saw high handle and revenue compared to other markets that launched around the same time.
Sports betting is seasonal. It has a peak season from September to March. It begins with football season and ends with March Madness. The slow summer months from April to August see lower handle and revenue, because the most popular sports are in their offseasons.
So far, 2022 handle and revenue are expected to beat 2021. Colorado sportsbooks have made 59% of 2021 handle in the first five months of 2022. It’s a promising sign of growth for one of the earliest legal online sports betting markets in the United States.
Colorado Sports Betting Handle
Handle is the total amount of money that bettors wager. It’s a measure of a market’s size and bettor enthusiasm. Colorado is home to several major sports teams, including the Broncos, Rockies, and the Avalanche. It’s unsurprising to see Coloradans so enthusiastic about sports betting.
In 2022, Coloradans have wagered $2.3 billion on sports wagers. That’s 59% of what Coloradans wagered in 2021. 2022 Monthly handle is up by an average of 63% year-over-year. The traditionally slow month of May 2022 saw $60 million more in handle than March 2021, which is traditionally a high month. The level of growth in Colorado’s slow season promises an explosive high season at the end of 2022.
Colorado Sports Betting Gross Revenue
Gross revenue is the amount of money left after sportsbooks pay winnings. This can vary because a sportsbook’s hold can vary by month. That’s the chance component to sports betting.
So far in 2022, monthly gross revenue is an average of 57% higher year-over-year. Sportsbook gross revenue is on track to overtake 2021’s total by September or October. On average, sports bettors have made about 94% of their money back from sportsbooks. While there’s some monthly variation, that’s a normal hold for a competitive sports betting industry.
Colorado Sports Betting Net Revenue
Net revenue is gross revenue with promotional credits subtracted out. Site credits are amounts of money that sportsbooks give bettors to wager with. So, site credits inflate the amount of money that customers spend on sports betting. Net revenue accurately shows how much money sportsbooks are getting from their bettors.
2022 net sports betting revenue is also on track to eclipse 2021 net revenue in September or October. The next revenue boost in the fall will be several million dollars over the previous month. It’ll be an exciting period of growth for Colorado.
Especially because net revenue is taxable revenue.
Colorado Sports Betting Tax Revenue
Colorado taxes net sportsbook revenue at 10%. That money goes toward water conservation projects that help manage the water Colorado shares with surrounding states. Colorado also has a bill in the works to fix Colorado’s underfunding of problem gambling programs. So, this tax revenue goes toward important projects.
Colorado has made just under $6 million in taxes from sports betting in the first five months of 2022. The lowest tax revenue months were February 2021 and 2022 because of the Super Bowl. A lot of money is bet on the Super Bowl. But a lot of it is in the form of site credits.
Major events like the Super Bowl are when sportsbooks acquire many of their new customers. New customers are often attracted to the large bonuses that accompany major events. So, it’s normal to see low or negative tax revenue in February, even in mature markets.
FAQs: Colorado Sports Betting Revenue
Fees to operate a legal sports betting business in Colorado differ depending if you intend to run a retail or online operation. Effective July 2020, an Internet Sports Betting Operator license costs $77,000. To obtain a license for a retail sportsbook, the license fee is $17,900.
Colorado’s tax rate is 10% of gross gaming revenue (GGR), which means 10 cents of every dollar made by casinos and sportsbooks goes into state coffers.
According to Colorado gaming regulations, the first $130,000 in sports betting tax revenue collected is set aside by the state to pay for gambling addiction services.
Six percent of the tax, up to a $1.7 million maximum, is put into a hold harmless fund, which is meant to compensate casino or other gambling companies who experience financial losses that are provably linked to sports betting.
The balance of tax revenue, 66% for fiscal year 2020-2021, goes to fund Colorado’s state water plan, which aims to conserve and preserve water in the state to support its growing population.
On average, Colorado sports betting generates just over $1 million per month. That average comes from January 2021 to May 2022. However, there’s wide variability across key months. February 2021 and 2022 saw just over $300,000 in tax revenue. In contrast, November 2021 saw just under $2 million in tax revenue.
Colorado has over two dozen online and retail sportsbooks. However, they’re poorly regulated. An April 2022 audit found that the Division of Gaming had neglected to do proper due diligence on certain sportsbook brands. (The audit didn’t name the brands or executives that were investigated improperly.) Bettors should judge Colorado sportsbooks by their reputations in other states rather than by the Colorado Division of Gaming’s opinion.