Rovell: Colorado’s Sports Betting Market Could Easily Top $2 Billion Annually
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The expectations for legal sports betting in Colorado are a mile high.
The Rocky Mountain State is set to become the 18th state in the US to offer legal sports betting, and, when sports return, it could become one of the most bettor-friendly states in the land.
In fact, it very well could hit $2 billion in bets in its first full year of operating, which would net Colorado approximately $12 million in tax revenue. (This is assuming sportsbooks net a 6% profit off the total handle, which is what we've seen in New Jersey and Pennsylvania so far.)
It starts and ends with this: The state's law allows for full online betting, meaning you can register, deposit and bet without ever having to step foot in a casino.
Operators have great access to the state and the cost to play (a $54,000 operating fee for 2020 and a 10% tax rate) is more than reasonable, especially compared to the terms and stipulations some other states have put in place. New Jersey is often cited as the best model for new states to follow when they go legal and Colorado's betting legislation has a lot in common with The Garden State.
It isn't apples to apples since New Jersey has a bigger population (8.8 million to 5.7 million) and is bordered by New York City, which has no mobile betting so people from The Big Apple cross the river to bet in New Jersey all the time, but it does give us an easy path to follow for Colorado's first full year of legal betting in 2021 (assuming a normal sports calendar).
Given that Colorado's betting population will be about 50% of Jersey's (when you add in NYC), let's just assume that the Mile High State does half the business that New Jersey did in 2019 — a whopping $4.6 billion in total bets. That would mean that hitting the two-billion-dollar mark is not out of the question for Colorado in its first full year of legalization.
That would put it behind only Nevada ($5.3 billion in 2019) and New Jersey ($4.6 billion) but right on par with Pennsylvania's first full year with mobile betting ($1.9 billion in 2019). It's a lofty goal, but we've already seen the type of dollars sports betting can bring in when lawmakers step aside and let the market do the work.
The lack of sports isn't stopping four sportsbooks from launching in Colorado right away: DraftKings, FanDuel, BetRivers and BetMGM are all expected to go live on Friday and fight for consumers right away.
[For more on the best Colorado sites and apps to use, check out our CO sports betting hub.]
Aside from those four operators, there are at least 13 others lined up, including a few that have a significant slice of the market in New Jersey, the second-largest sports betting state after Nevada.
Two of Las Vegas' leading outfits, the Westgate SuperBook, home of the SuperContest, and Circa Sports, which garnered attention in the industry for beating offshore books in being the first to post odds for college football and basketball games, also recently announced that Colorado would be their first brand extensions outside of Nevada.
In other words, all the biggest names in sports betting are coming to Colorado, in large part because of the bettor- and bookmaker-friendly laws and licensing fees.
It's also worth mentioning that Colorado is not thumbing its nose at some of the smaller, more exotic sports. Not only will The Centennial State allow betting on sports like futsal, floorball and pesapallo, but it will also boast the widest menu of wagering options for eSports punters. Call of Duty, Counter-Strike: Global Offensive, DOTA2, E-Nascar, League of Legends, NBA2K, Overwatch and Rainbow Six have all been given the green light by the powers that be in Colorado.
And finally, we arrive at Colorado’s current geographic advantage.
There are 24 states west of the Mississippi River and Colorado will become only the second of those states in which you can bet on your phone without ever having to walk into a casino.
In Iowa and Nevada, you have to first register at a sportsbook, leaving only Oregon and Colorado as states that allow virtual registration and online betting. (Oregon, by comparison, is the anti-Colorado in many ways, as the lone sportsbook in the state is run by the lottery.)
Sports betting prospectors have spent more time pushing and plotting out their paths along the Eastern Seaboard for a reason. Population density gives them the best bang for their buck.
But much like the prospectors who came to Colorado in search of riches in the 1860's, this land could prove to be very attractive, even to professional gamblers.
Some pro gamblers have moved to New Jersey from Nevada thanks to competition and Jersey's easy-to-use mobile offerings. Colorado may be a simpler move in the future, as intense competition should lead to better lines in a state with a lower cost of living and a flat income tax.
Colorado might have come online two years after the Supreme Court reversed PASPA, but it’s a good bet that it will leap frog many states in gambling relevance as soon as sports return.