Legal sports betting is now less than two months away for Colorado.
The expected go-live date is May 1 for both retail and online sportsbooks, and the state says everything is ready on its end. Residents and visitors to the Mile High State should eventually have several dozen options for placing their bets.
By the time May rolls around, it will have taken Colorado just about a year to get from legalization to launch.
Its sports betting bill, H 1327, passed in April last year before receiving final approval from voters at the ballot box in November. The Colorado Limited Gambling Control Commission (CLGCC) has since finalized its sports betting rules and begun taking license applications.
The only question now is which operators will be ready for an immediate launch on day one.
The Colorado sports betting law established a system under which regulators could award up to 99 primary licenses.
First there are the master licenses, which are only available to the state’s land-based casinos. Securing one of these is the prerequisite for any sort of sports betting. There are 33 Colorado casinos eligible to apply.
Each master licensee can then choose up to two partners — one to operate its retail sportsbook and one to provide online betting. These partners must apply for an operator license or internet operator license. There are additionally major and minor vendor licenses for business-to-business companies providing services to those with operator licenses.
Since applications only opened in early February, that amounts to a lot of paperwork in not very much time. All but five of the eligible casinos have applied for master licenses, and seven have received their go-ahead.
Due to the high volume of applications received by the Division of Gaming (CDG), the CLGCC is holding a special meeting on Thursday to consider awarding three more master licenses and the state’s first three operator licenses.
Colorado’s casinos are located in three regions.
Four of the initial seven licenses went to Cripple Creek casinos: Double Eagle, Brass Ass, JP McGills and Midnight Rose. Two went to the Saratoga and Monarch casinos in Black Hawk, while Central City received only one for Dostal Alley.
All three of the master licenses being considered on Thursday are for Black Hawk casinos: Lady Luck, Ameristar and Isle Casino. No licenses have been awarded to the tribal casinos so far, though it’s probably safe to assume that they both applied.
The operator licenses being considered are all temporary. They include both a retail and an internet license for DraftKings Sportsbook and internet-only for theScore. The former has announced that it will partner with Twin River Holdings, while the latter will go with Jacobs Entertainment.
Twin River owns three casinos in Black Hawk, and Jacobs owns two. Oddly, none of the five are among those with licenses or applications up for consideration on Thursday. They may come up in the next meeting, however, assuming their chosen internet operators receive approval.
At the pace the CDG is setting, it should be able to approve most (if not all) of the applications by May 1. That’s assuming there isn’t a problem with any of them, of course.
Simply having a license doesn’t guarantee that a given sportsbook will be ready to launch. Each, whether retail or online, will still have to pass a final inspection.
Retail sportsbooks shouldn’t have much trouble in this regard. Most will rely on platforms already in use in other states, and Colorado’s law doesn’t contain any complicated or unusual restrictions.
Online might be another story. Sportsbook apps take a bit more state-by-state customization. Geolocation technology, required by law, can also take some effort to get working.
What we’ve seen in other states is that there tends to be only a few online sportsbooks ready for the go-live date, followed by the rest trickling in over the span of a few months. DraftKings, for instance, was the first to go online in New Jersey but took six months to launch in Pennsylvania and even longer in West Virginia.
Colorado legislators said that they expect sports betting to bring in $29 million in tax revenue per year. At the modest 10% tax rate established by the law, that would mean $290 million in gross operator revenue.
That won’t happen in 2020, since launch will come almost halfway through the year. Even for 2021, however, that figure seems pretty optimistic. It would mean that Colorado’s revenues would have to be higher per capita than any other legal sports betting state save for Nevada.
That’s not outside the realm of possibility given the large number of casinos, reasonable taxes, and operator-friendly laws. On the other hand, retail revenues will be hampered by the fact that there are no casinos nor any other provision for land-based betting in major cities like Denver, Colorado Springs, and Aurora.
It will likely take several years of growth to hit that lofty target.
With a well-established casino industry and a moderate political climate, Colorado seems like a good candidate for other forms of online gambling. Its voters skew slightly more liberal than either Pennsylvania or Michigan, both of which recently opted to go for the full package of online gambling options.
It’s a little disappointing, then, that its legislators opted for a sports-only bill.
Unlike other states, though, any new form of gambling in Colorado requires a referendum — at least if the state wants to get its cut. That’s because of a statute called the Tax-Payer Bill of Rights (TABOR), which requires a general vote on any legislation that implements new taxes.
When TABOR was introduced in 1992, the intent was mostly to prevent the state government from hiking existing taxes. Since the state will want to tax any form of gambling it authorizes, however, TABOR applies in practice to any gambling bill.
The referendum on H 137 passed by a margin of less than 3%. A more sweeping bill likely would have failed. That doesn’t mean that Colorado will never get online gambling options beyond sports betting. It does indicate, however, that legislators were probably sharp to propose one vertical at a time.
If online sports betting brings in anything close to the revenues the state is hoping for, it may look at online casino in coming years — possibly even poker.