You Wild Colorado: Reflecting on a year of legal betting in the Centennial State

In May, Colorado reached its first 12-months of legal sports betting as total wagers since launch hit $2.3bn, an impressive feat considering the Centennial State got underway in the grips of the Covid-19 outbreak and its subsequent sports shutdown. The Colorado Division of Gaming (CDG) has been hailed by the industry for its open and welcoming approach to operators, including a particularly low tax rate of 10% on net revenue. Here, director for the CDG Dan Hartman reflects on some of state’s key betting data for the past 12 months, including the continued success of table tennis, the stark retail and online revenue split, as well as the likelihood of igaming being added to the ballot in the near-term.

EGR North America (NA): How has the last year of online and retail sports betting operation been in Colorado, particularly considering you launched during the Covid-19 pandemic?

Dan Hartman (DH): Overall, I’m really pleased with the way the year has gone. When we opened up last year in May, launching sports betting seemed really insignificant with all the things that were going on with the pandemic. But sticking to the mandate, or the date that the legislature gave us, and getting the operators live all seemed to work out really well.

It put the operators in a position where, if they were ready to go, they could go. If they were having issues or didn’t want to go at that time with no sports, then they could wait a little while too. That seemed to go well for us and really let us ramp up at a rate that kept up with what we needed to do instead of everybody going live at one time.

[Before the Covid-related sports shutdown came about] we thought that we had a pretty diverse sports catalog and players would find something to bet on. Little did we know it was going to be largely table tennis and how well the sport would do. I think the diversity of the sports catalog was shown to the customers and the fans early on. The popularity of those non-traditional sports really stayed on everybody’s mind, and there’s a depth to the catalog whereby they’re able to find something they really want to bet on even if it’s the slow period of the year where there’s just basketball, baseball, and hockey.

Overall, I think we’ve had a really successful year. Hitting a billion dollars [in handle] was a big milestone for us that came within eight months of launching and then we had another billion added on in the next three or four months. We picked up slowly, but it really was embraced during the football season and March Madness and those sports really added to that next quick billion dollars. It’s a market we didn’t think would be this big this fast, but it really lends itself to how fast Colorado bettors have picked up on it, enjoyed it, and embraced it.

EGR NA: You mentioned table tennis’ popularity during the pandemic, but March figures showed it made up almost 3% of all wagers for the month, higher than golf and MMA combined. Why do you think that interest has remained so high? 

DH: I wasn’t sure what was going to happen [with table tennis]. I mean, we thought it would wane a little bit but it goes back to the players seeing the depth of the sports catalog, and with all the action that goes on in game during table tennis and regular tennis matches, I think people have found that they can really engage.

I didn’t think it would stay among the top five or six sports where it’s consistently been all year. When you look at golf and MMA, they have their own days during the week, but they’re not as consistent as table tennis and regular tennis. Fans can also watch it on their phone and stay constantly engaged.

EGR NA: Has there been any discussion about raising the current 10% tax rate on net betting proceeds as it has faced some criticism about being too low with $6.6m going into state coffers over the last year?

DH: Again, the tax rate is a public policy matter and if they wanted to raise it, it would have to go in front of the people of the state with a public vote. I haven’t heard any conversations about whether or not that’s something that lawmakers are talking about. Everybody that I’ve talked to in government is happy with the way things are going now. The numbers are pretty sizable and the success of the program has been pretty good, so I haven’t heard anything about changing that. I think that 10% is a good number. That’s right in that sweet spot [of] where it should be.

EGR NA: Are you expecting another influx of new betting licenses this year?

DH: We have a limit of 33 master licenses based on the number of casinos in the state, but we have had some interest from a couple of companies in opening a casino. We’ve got some areas in the gaming towns where they could do that if they wanted to. We have 20 operators now and I suspect that we’re going to see that grow in the next year. By the end of next year, we’ll probably be up around 28 operators in total, maybe a couple more. There have been a couple of companies that have come in and feel that their way to market is to build their own casino and then bring a sports betting partner along with them.

EGR NA: Which other state regulatory frameworks did you look to for guidance when establishing Colorado’s, and are there any of the more recently launched or legalized states whose frameworks you’re particularly interested in?

DH: When we came on a year ago, and even further back than that, we really looked at the states that were launching betting at the time. There were only a handful of states that were doing it and we took the best of those regulations and then put them in front of stakeholders back in December of last year. We got a lot of feedback and changed the guidelines to suit us.

Looking at states that have come on after us, I think they’re doing the same thing. But everybody’s also got to look at the other legislation that’s passed in their own state, because I think that really drives some of the things that you can and can’t do with gaming regulation. Some states are a little bit more open to having the regulator shape the market. They gave me general guidelines and I could steer the regulations the way I wanted to. That was the way that Colorado was set up with its betting legislation. It was very open and lawmakers let us make some of the key determinations which, with the pandemic, made it really good for us.

They could have said we needed to launch with retail betting first, but by May 1, 2020 all of our casinos were closed. We made the decision early on to go with online and retail at the same time as that seemed to be what the industry wanted. I think new states have to look at the nuances of their own legislative mandate. It’s always nice not to be the first one out of the gate and to have regulations already out there that you can pick and choose from.

EGR NA: Is the retail/online revenue split as you’d expected it to be at this point? In March 2021 retail only accounted for around 2% of bets?

DH: Online is higher than I thought it was going to be. And I think that lends to the kind of year we’ve had with the pandemic and people not being out as much, so they certainly have gravitated to online. Because of where the mountain towns and casinos are located for our retail books, we’re always going to be a little bit higher in that online percentage. When we settle down, we’ll probably be around 93% online and 7% retail. That’s what I always thought it would be. We’re a little bit higher than that now at about 98% online. Although the more retail books that open up in the mountain towns, the more action we’re seeing. I suspect it will level out somewhere but we’re always going to be much higher on the online percentage.

EGR NA: What sort of feedback have you gotten from operators over the last year?

DH: They’ve always looked at Colorado as being a really good market, based on states that we learned from at the start. They always thought we had a lot of potential as we’ve got the big four sports here. I think that given the partnership we’ve had with the industry since we crafted our regulations and set up the framework we have here, we’ve become a much bigger market faster [than we expected]. The feedback from them has been very positive.

The last year has been, I want to say, a challenge. It’s been kind of a rollercoaster as we’ve come to where we are now. I really look forward to the next year when sports and sports leagues really settle back into their normal seasons and their normal number of games. Here in Colorado, we’ve just allowed fans back into basketball and hockey games, with occupancy now going up from about 20% to 40%, so that’s exciting.

EGR NA: What is the next step in terms of regulation for Colorado, and is igaming on the horizon?

DH: We’ve had folks talk a little bit about igaming but it’s not something we can just turn on. In Colorado gaming in general is a constitutional referendum, so in order to offer igaming they’d have to have a state-wide vote to make that happen. There is a little bit of talk to it just as every other state is talking about it. We’re the instruments of public policy and if public policy wants to go in that direction, we’ve shown that all the things that need to be in place, we can do.

There hasn’t been any discussion yet and we’re about done with the legislative session this year but I think that, like every other state, it’s a conversation that’s being had. I just don’t know how long it will take.