Colorado‘s Limited Gaming Control Commission opted not to vote Thursday on a set of proposed rules around exchange wagering that would have allowed companies like Sporttrade and Prophet Exchange to offer alternatives to traditional sports wagering options in the state. The commission discussed the rules for several hours and raised concerns about “external market makers” that it would like addressed.
An external market maker, as defined in the proposed regulations, is “an entity or authorized person with the State of Colorado, other than an individual acting in their personal name within the State of Colorado, that has funds on deposit with an internet sports betting operator or sports betting operator by placing wagers, and buying and selling wagers on the exchange.”
Discussion around external market makers centered in part around how they would be taxed, what level of licensure they would be required to have, and exactly what kind of entities would qualify as external market makers.
Exchange wagering is a form of peer-to-peer betting, and external market makers are often used to create liquidity and ensure that the opposite side of a customer’s wager is taken.
Sporttrade still moving forward
Exchange wagering is permissible under current state law, but the LGCC wants to develop rules specific to it. In the current scenario, operators can offer exchange wagering as long as the regulator approves a commission rate.
The decision won’t keep Sporttrade from continuing to pursue an internet sports betting operator license in Colorado, as the company has massaged and expanded its offerings since its September launch in New Jersey to include more traditional sports betting. Company CEO Alex Kane told Sports Handle this week that it would move forward in Colorado no matter Thursday’s outcome.
According to LGCC staff, four operators are interested in offering exchange wagering in Colorado, including one operator already operating in New Jersey, one operator already licensed in Colorado, one startup company, and one that is “slightly different” than all the rest. Those that would offer only exchange wagering are now in a holding pattern in the state until the commission next discusses the subject.
After the 3-1 decision not to vote Thursday, the commission did not set another date on which to continue the talks.
Colorado is among the most open, competitive wagering marketplaces in the U.S., with about 25 live platforms. The state’s regulators are widely considered in the industry to be easy to work with and more open to stakeholder participation than in most other jurisdictions.