Colorado moved closer to a May 1 target for launching legal sports wagering across the state following two key stakeholder meetings on Friday.
The stakeholders tackled issues related to integrity monitoring, suspicious wagering and prohibitions on certain sports events and bet types during the two lengthy sessions. The Colorado Department of Revenue’s Division of Gaming convened the meetings on Friday amid reports that the division has received more than 50 applications for sports betting licenses as of Jan. 31.
The division held Friday’s sessions following a series of five working group meetings in December. Much like last month’s working groups, a wide range of industrywide leaders from prominent sportsbook operators, professional sports leagues and sports betting data providers attended the meetings.
As of Jan. 31, the department received 33 master license applications, 10 operator license applications and 19 internet operator license applications, a division spokesperson told Sports Handle. Under Colorado bill HB 19-1327, existing casino properties can apply for a master license, while brick-and-mortar partners have the option of applying for a sports betting operator license.
Prohibited sports pool participants
Stakeholders devoted a considerable amount of time during the morning session to discussing proposed rules that prohibit athletes, coaches and referees from placing a wager on an event they are participating in.
Several stakeholders expressed concern that the proposed regulations could present unrealistic expectations on operators to detect the presence of prohibited bettors before their wagers are accepted. Although some potential licensees already maintain robust Know Your Customer (KYC) protocols inside their casinos, the operators articulated the challenges of spotting a prohibited athlete at a betting window.
Edward Weisel, an executive at Jacobs Entertainment’s Lodge and Gilpin Casinos in Black Hawk, Colo., explained the difficulties of identifying obscure players and employees inside a retail environment. While a player such as Colorado Rockies outfielder Charlie Blackmon can be identified immediately with unique characteristics like a bushy beard, the task becomes more difficult for less recognizable athletes, he said. Weisel claimed that if a Rockies’ player entered a sportsbook where his wife served as an employee, that she would be unable to recognize a single one.
“If she was behind the counter, she would just take the bet,” Weisel said.
The state recognizes that it is virtually impossible for an operator to know the identity of every person who enters a sportsbook, said Dan Hartman, director of the department’s Gaming Enforcement Division. Hartman urged stakeholders to work collaboratively as part of a “three-legged process among operators, leagues and regulators to respond expeditiously to incidents of suspicious activity.
New language for prohibited players
New language inserted into the proposed regulations requires prohibited sports pool participants to disclose their status to all “relevant persons,” and/or “governing bodies.” Colorado Rockies General Counsel Brian Gaffney advised the working group that guidelines restricting players from wagering are explicitly stated in Major League Baseball’s Collective Bargaining Agreement, while the players have already undergone comprehensive training on the league’s anti-gambling policy.
Hartman also emphasized that violations of the statute could carry criminal penalties for participating athletes.
Prohibited Sports Pool Participant must refrain from engaging is sports wagering in the state of Colorado and must disclose his or her status as a Prohibited Sports Pool Participant to all relevant persons and/or governing bodies. Failure to comply with the provisions of this rule may result in disciplinary action up to and including criminal prosecution. — Colo. Dept. Of Revenue, Div. Of Gaming Sports Betting Regulations — Section 6.12
Some operators enumerated the challenges of cross-referencing lists of prohibited bettors provided from the leagues with their own customer databases. In some cases, data points on a customer’s name and date of birth are not unique enough to identify certain bettors, according to the stakeholders. Other data points, most notably the last four digits of a customer’s Social Security number, could help expedite the process, they suggested. However, Marquest Meeks, senior counsel at Major League Baseball, cautioned that data requirements regarding an athlete’s Social Security number invite privacy concerns.
The NFL suspended Josh Shaw through at least the 2020 season in November after a league investigation determined that the Arizona Cardinals cornerback placed multiple wagers on an NFL contest earlier that month. Shaw, according to ESPN, listed his employment as a professional football player while completing an application for a players’ account at a Caesars Entertainment property.
From Schlichter to Shaw, the latest cautionary tale on the pitfalls of players sports gambling.
— Sports Handle (@sports_handle) December 2, 2019
With the Super Bowl less than 72 hours away, both groups discussed regulations pertaining to proposition betting on Friday. Several sportsbooks nationwide, including PointsBet Sportsbook USA, have offered an expansive menu of hundreds of prop bets for the Super Bowl.
PointsBet Chief Innovation Officer Seth Young indicated that regulations requiring operators to provide hundreds of prop bets to the Division for review could be too onerous. Instead, he suggested that regulators “single out one or two” prop bets for review, rather than 600. One popular wager across the country asks bettors to predict whether the pre-game coin flip at the Super Bowl will land on heads or tails.
Since Hartman regards the coin toss as an event that is “completely determined by chance,” he said the prop likely would not be accepted in Colorado. Earlier this week, PointsBet accepted at $2,000 wager on tails, and handle for the coin toss has nearly reached six figures, as of Thursday afternoon.
#SuperBowlLIV PROP MANIA:
— Sports Handle (@sports_handle) January 31, 2020
Timeline for finalization of regulations
The Division hopes to inform the stakeholders of the results of Friday’s session within the next week, Hartman said. This will allow the stakeholders to review the changes ahead of the Colorado Limited Gaming Control Commission’s next meeting on Feb. 20, he added.
At the hearing, the Division intends to make a formal request for the permanent adoption of the rules.
Colorado regulators are hopeful the final regulations can be enforced by the start of May.
“The Division is working hard with developing the rules and accepting applications so that those who are ready to take bets on May 1 may do so,” the spokesperson told Sports Handle.