Overview: Online Sports Betting In Colorado
The Rocky Mountain State is known for its three casino cities: Black Hawk, Central City, and Cripple Creek. However, Colorado also legalized online sports betting in 2019. It came online in 2020 and grew rapidly from there. Between the three casino cities, mobile sports betting, and the generous number of skins, Colorado became one of the most promising new sports betting markets. Here’s what bettors need to know about why Colorado has so much potential and why your state may be lagging behind or surging ahead.
What Makes Colorado’s Online Sports Betting Industry Unique?
When states began legalizing sports betting, some of them limited sportsbooks to retail locations. However, Colorado lawmakers made sure online options were available. When Coloradans voted to legalize sports betting, the bill included retail, online, and mobile sports betting. That set the sports betting industry up for success in a few different ways.
First, it allowed mobile sports betting from Day One, which is critical. 98% of October 2020’s sports betting wagers were placed online. Had Colorado only allowed retail sports betting, sports betting revenues would’ve been far lower. Especially since Colorado’s casino cities are isolated in different parts of the state. (Anyone who’s driven I-70 during ski season understands why Black Hawk needs tourists so badly.) But instead of braving long winter trips, Coloradans can visit sportsbooks from their sofas at home. It’s much easier for users and far safer than braving the pandemic in a stuffy casino hall.
Second, it allowed bettors to browse many different sportsbooks. Colorado has sixteen licensed online sportsbooks. (And it’ll doubtlessly increase after this article goes live.) You don’t need to browse every single one. However, if you’re interested in comparing odds or bonuses, you can find a competitive option easily.
Finally, it’s attractive to sports betting operators. Colorado’s tax rate is lower than other states. Colorado taxes 10% of sportsbooks’ net revenue – that’s money left over after excise taxes, promotions, and winnings. Compared to Tennessee’s 20% tax rate, Colorado is a steal.
Colorado struck the balance between bettor and business concerns. Consequently, it has propped up its sports betting industry for early success.
How Colorado Legalized Online Sports Betting
There used to be a federal law banning sports betting in all but a handful of states. But in 2018, the Supreme Court repealed that law, and Colorado lawmakers saw the opportunity to expand their gaming industry. In 2019, Colorado voters got to vote on Proposition DD, a bipartisan bill that passed with only 51.4% of the vote.
While it seems like sports betting was unpopular in Colorado, Proposition DD had quirks that made it hard to pass. Since the bill included the 10% tax on Colorado sportsbooks, it began as a tax bill. The bill’s supporters had their work cut out for them. They had to convince voters that the new tax was on sportsbooks and not ordinary Coloradans. They were successful, but only by 1.4% of the vote, as the new tax really confused voters (and the required bill language beginning with the new tax didn’t help.)
After that, the Colorado Gaming Commission got busy writing the rules that Colorado sportsbooks would follow. On May 1, 2020, sports betting went live in Colorado with four sportsbooks.
How Much Money Colorado Online Sports Betting Makes
Sports betting has quickly become a lucrative industry in Colorado since it began two months into the coronavirus lockdowns. The first month of sports betting saw $25.6 million in bets and about $96,500 in tax revenue. But by October, Coloradans wagered $210.7 million and the State earned $824,700 in taxes. That tax money goes to:
- Department of Revenue Division of Gaming administrative costs
- 6% to a Hold Harmless Fund
- $130,000 for Problem Gambling Services
- The rest to the Water Plan Implementation Cash Fund
Half of those bullet points are clear. But bullets two and four may need some explanation. The Hold Harmless Fund subsidizes businesses that may lose money from sports betting legalization. The final bullet point is just water conservation. Colorado provides water to a few different states, and the water conservation projects help ensure Colorado doesn’t run out of water in the coming decades.
If that tax bill seems low, it’s because Colorado sportsbook profit is the money that gets taxed. There were a few months where Colorado sportsbooks paid almost as much in winnings as it received in bets. September was the first month that online sports betting net revenue was negative. That means online sportsbooks lost money in September.
There are two possible reasons. One is that oddsmakers just had a bad month. Anyone can win on any day. And underdogs can suck the money straight out of a sportsbook. However, Colorado sportsbooks could’ve been running exceptionally aggressive promotions to win new customers. September was the first month of NFL games. Colorado sportsbooks were suddenly profitable again in October, making the promotions theory more likely. If that’s true, then Colorado is home to exceptionally shrewd sportsbooks.
Overview: Online Sports Betting in Colorado
Colorado made sure its bettors and businesses had their needs taken care of. Bettors got variety and robust regulations while sportsbooks got competitive tax rates. Since retail, mobile, and online options were available, Colorado also allowed many types of sportsbooks to cater to its bettors. While legalization almost failed because of unclear language in the bill, it ultimately passed and became a profitable industry with smart players.
If you’re in Colorado and interested in trying sports betting, you can check out our beginner’s guide to sports betting. Out-of-staters can visit to try Colorado sports betting for themselves. Otherwise, call your representatives and tell them whether you want sports betting legalized in your state.