With Colorado cutting the ribbon for the state’s first legal sports bets on May 1, it’s becoming easier to compare it to sports betting markets across the country. Including Colorado, seven new sports betting markets will open in 2020, joining the 14 states where it’s already legal. Thanks to its favorable policies, tax rate, and fees, Colorado is shaping up to be one of the most hottest sports betting markets in the country.
Colorado’s Place in the Big Picture
Consulting firm Eilers and Krejcik published a market report outlining the policies across the states that have already legalized sports betting. Two groups emerge from the data, each with their own unique patterns. The first group is made up of states that legalized sports betting before 2020. The states within this group have a broad variance of policy differences. For example, Nevada’s annual operator license fees are $500. Compare that to Pennsylvania’s $10 million one-time operator license fee. Tax rates range from 6.75% in Nevada to 51% in Rhode Island. The states legalizing sports betting in 2020 tend to have more closely aligned policies (except for Illinois’ operator fees). The reduced variation suggests that industry standards are emerging along with the new markets. The 2020 states have had time to observe other states’ legal sports betting legislation and vet those laws to create more informed gaming guidelines.
Introduced Sports Betting Operations Before 2020
- New Jersey
- West Virginia
- New Mexico
- Rhode Island
- New York
- New Hampshire
Introducing Sports Betting Operations During 2020
- Washington DC
- North Carolina
But what is it about Colorado’s policies that make the state such a ripe sports betting environment? There are standout similarities–and key differences in the state’s latest gaming expansion–that make it such an exciting emerging market.
Colorado’s Low Tax Rate
One of the biggest advantages Colorado has created for sportsbooks and casinos is a relatively low tax rate. Colorado taxes 10% of Gross Gaming Revenue (GGR). That means that $.10 for every dollar casinos and sportsbooks make will go to the State of Colorado. Specifically, those taxes will fund Colorado’s water conservation and drought preparation projects. Colorado’s GGR tax rate is among the lowest in the country. It may be disappointing for environmentalists who want more money to go toward Colorado’s water programs, but it is a boon for casinos and sportsbooks.
2020 States’ GGR Tax Rates
Colorado’s (Relatively) Low Annual Operators License Fees
Applying for a sports betting license costs money. We’ve already seen how wide the range of fees can vary, from Nevada’s paltry $500 annual fee to Pennsylvania’s eye-popping $10 million fee. While Pennsylvania is an outlier among the sports betting states, how much lower is Colorado’s? DraftKings’ application provides insight into Colorado’s application fees. Applying for a license cost DraftKings $10,000 and their license fee upon approval will be $125,000. That’s a total of $135,000 to secure a sports betting license and $125,000 every two years to renew it. This puts Colorado’s fees around the middle of the pack compared to other legal states. That’s great for casinos and online platforms like DraftKings, but it’s a significant obstacle for aspiring independent sports betting operators. Entrepreneurs looking to start a small sports betting operation are probably out of luck in Colorado. Colorado’s licensing fees aren’t insignificant, but they’re still considerably cheaper compared to some other states:
Licensing Fees For States With Operator Fees
|State||License Fee||Payment Frequency|
|Illinois||$10,000,000 ($20M online only)||Annually|
|Washington DC||$500,000 ($5-$500k)||Every 5 Years|
|Arkansas||$250,000 (or less)||Annually|
|Michigan||$150,000 + $50k renewal||Annually|
|Indiana||$150,000 + $50k renewal||Annually|
|Colorado||$125,000||Every 2 years|
|West Virginia||$100,000||Every 5 years|
|Iowa||$45,000 + $10k renewal||Annually|
What About The Bettors?
Casinos and sportsbooks have much to look forward to, but Colorado bettors have plenty to be optimistic about. Besides beautiful casinos tucked into the mountains, online betting is available from anywhere in the state.
Online And In-Person Betting In Colorado
Colorado bettors are among the luckiest in the country. They can bet in casinos, they can bet online, and they don’t even have to register for online betting in person. These are easy benefits to take for granted. Other states’ bettors aren’t so lucky. North Carolina, for example, doesn’t allow online betting at all. Bettors have to visit one of the state’s six casinos in person to place a bet. That’s inconvenient for aspiring bettors living on North Carolina’s east coast, since the casinos are clustered in the western and central regions of the state. Tennessee bettors have the inverse problem. They can only bet online, because there are no licensed land casinos for placing sports bets in person. Tennessee lawmakers are still ironing out regulations for licensed sportsbooks. Since the legislature doesn’t have the regulations written, sports betting licenses can’t be issued to casinos. Tennessee stands alone among the 21 sports betting states in allowing online sports betting but disallowing land-based sports betting. So, Coloradans can rejoice that their state’s regulations provide the widest range of betting options. The state is in good company: two-thirds of sports betting states allow online betting. However, bettors in other states have one more inconvenience to put up with: lack of remote registration.
Do You Have To Register In Person To Bet Online?
The sports betting states broadly agree that online services are a necessary complement to land-based betting. However, some states are split about the proper sign up processes. Colorado makes registering for online sports betting easy. Bettors can do it remotely from anywhere in the state by simply going to a licensed sportsbook’s website and registering for an account.
Remote Registration In States With Online Sports Betting
- New Jersey
- West Virginia
- New Hampshire
- Nevada (No remote)
- Rhode Island (No remote)
- Michigan (No remote)
- Illinois (No remote until first online-only licensed issued – 18 months)
- Iowa (No remote until 1/1/2021)
Strangely, just over one-third of states with online betting make would-be customers register for an account in person at a licensed outlet. Even Nevada, home of the Las Vegas Strip, doesn’t allow remote registration. However, there’s a powerful incentive for refusing remote registration. By requiring in-person registration for online betting, casinos can increase foot traffic. Once customers are inside, casinos can tempt them with everything else they have to offer. It’s a two-pronged strategy targeting both foot traffic and customer loyalty. The states that don’t allow remote registration likely do so because of agreements with existing casinos. Thankfully, Colorado is ahead of the curve with online registration procedures. It’s just one in a long line of perks that Colorado bettors will get to enjoy starting this summer.
Colorado’s Strong Emerging Sports Betting Industry
Sports betting overcame strong opposition to become legal in Colorado, but the industry is shaping up to be one of the most attractive in the country. The four main factors that make the Colorado sports betting industry particularly exciting include:
- Low GGR tax rates
- Low annual license fees
- Online betting
- Remote registration for online betting
Colorado’s new legislation and gaming guidelines have cleared a path for a profitable online sports betting market. Some of its policies are more favorable than some of the oldest gaming markets in the country. Front Range bettors have a lot to look forward to in May, and Colorado’s sports betting market will be one worth watching.