As Colorado officials counted the ballots on a measure that could bring mobile sports betting to the Rocky Mountains, a closer than expected vote on Proposition DD produced an evening full of anxiety for Ron Shell.
Shell, vice president of customer & insights at PointsBet USA, recently moved to Colorado, home of the company’s new technology-focused hub in downtown Denver. A defeat of the measure on election night would have represented a considerable setback for the Australian-based company that has made steady inroads throughout the U.S. market over the last 18 months.
To Shell’s relief, Proposition DD passed narrowly by a 51.4% to 48.6% margin, or a mere 43,982 votes. Now that the dust has settled from the contentious battle, top sportsbooks nationwide are jockeying for positioning in the new market.
— The Denver Post (@denverpost) November 6, 2019
The Colorado Division of Gaming is in the process of establishing emergency licensing rules that will be presented to the state’s Limited Gaming Control Commission, a spokesperson for the Colorado Department of Revenue told Sports Handle. With the Commission’s approval of the emergency rules, the Division believes it will begin accepting license applications before the end of the month, she added.
“Persons, operators, and businesses applying for licenses will be thoroughly vetted with the highest standards established by the Division of Gaming for its licensees in Colorado,” the Division of Gaming said in a statement.
Colorado is expected to see licensed operators launch their platforms by May 1, 2020.
A critical marketplace
Although 13 metropolitan areas have franchises in all four U.S. major professional sports leagues, only four are located west of the Gateway Arch — Denver, Los Angeles, Phoenix and the Bay Area. For PointsBet, the Denver hub will serve as the base of its Western operations.
Colorado stands to become one of the first Western states since the repeal of PASPA to launch a new, robust marketplace, one that compares favorably with a burgeoning market in New Jersey. The rollout of mobile in the Centennial State could be viewed as a trial balloon for interest in online sports gambling beyond the Midwest. Though mobile betting has been popular in Nevada for a decade, the figures are skewed somewhat due to the influx of tourists that flock to Las Vegas to wager on sports. And while an app from the Oregon State Lottery went live earlier this fall, the Lottery sole-sourced mobile betting to European provider SBTech, limiting competition in the market. Much like New Jersey, Colorado could eventually have more than a dozen mobile operators statewide.
“Colorado is a model state for sports wagers, and will likely be the first state in the West, outside Nevada,” FanDuel Sportsbook said in a statement. “We look forward to bringing America’s favorite sportsbook to the great sports fans of Colorado pending licensure.”
The rush to expand to Colorado by a number of prominent operators should not come as a surprise. In the run-up to Election Day, FanDuel and chief rival DraftKings spent more than $1.5 mm in lobbying and advertising costs to support Proposition DD, the Associated Press reported.
“The Yes on DD coalition did an outstanding job educating voters but it was the broad bipartisan, diverse cross-section of support throughout Colorado that ultimately won the day,” DraftKings Chief Legal Officer R. Stanton Dodge said in a statement. “DraftKings looks forward to working in collaboration with the Division of Gaming to take the next step towards bringing our best-in-class mobile and online Sportsbook to Colorado’s sports fans.”
Mobile betting environment
Per Colorado bill HB 19-1327, licensees will be given the option of applying for license types under three classifications: a master license (for existing casino properties), an operator license (brick-and-mortar partners), and an internet license. According to the law, only existing Colorado casinos in Cripple Creek, Black Hawk and Central City will be eligible to apply for a master license. In total, 33 casinos statewide could begin accepting sports wagers if licensed.
Based on the current gaming structure in Colorado, state officials expect the licensing process to be fairly straightforward. As part of the sports wagering internet betting operator license, an operator will be tied to an existing casino licensee through a master license. Each operator will receive one online skin, or brand.
While some states are hesitant to adopt mobile, New Jersey has produced a remarkable case for holdouts indicating consumer demand for mobile platforms and the windfall that could be generated. Of the Garden State’s record monthly handle of $487.9 mm in October, 85.4% came from online/mobile sports wagering. For 2019 year-to-date, more than $2.85 billion of the state’s $3.46 billion in handle derives from online wagers.
New record sports betting handle for a month: $487.9 million.
Online/mobile handle? $416.9 — 85.4% pic.twitter.com/x1gM7Jufh5
— Sports Handle (@sports_handle) November 14, 2019
“People just need that ease of access where they can be watching a game live, they can pull out their phone and within 10 seconds they can place a bet,” Shell said. “There’s always room for a retail sportsbook where you can watch 10 screens at once, but really mobile is the trend of the future.”
PointsBet’s hub in downtown Denver is located more than 100 miles north of Double Eagle Hotel and Casino in Cripple Creek. In July, PointsBet and Double Eagle announced a multi-year partnership that will include the launch of a mobile sportsbook and retail operations inside the casino, pending regulatory approval. Meanwhile, Black Hawk and Central City are both more than 30 miles outside of Denver, furthering the need for mobile betting in the state’s largest city.
While Shell did not comment on whether the sportsbook has engaged in discussions with any of Denver’s pro teams on a potential commercial relationship, he emphasized that the company will explore any partnership that helps push its brand as the “local Colorado sportsbook.”
“We want to be synonymous with Colorado,” Shell said.
Although demand for in Colorado is unclear, local economists estimate that it could bring about $11 million to the state in Fiscal Year 2020-2021 through a 10% tax rate. The bill also earmarks $130,000 annually to address problem gambling concerns. Ahead of Election Night, Denver Post columnist Mark Kiszla questioned if recreational bettors in Colorado will be able to handle the sting of a bad beat.
Kiszla cited an ugly incident in 2013 involving Broncos quarterback Brandon Allen to illustrate his point. Following Allen’s game-ending interception against Mississippi State, several Arkansas fans expressed their dismay by vandalizing his truck with eggs.
“When a Broncomaniac loses rent money on a dumb bet, the Denver quarterback who threw an interception in the fourth quarter is not only going to get blamed but hear about it as he jogs to the locker room,” — Denver Post columnist Mark Kiszla.
Just last week, the Broncos squandered a 20-point halftime lead in a 27-23 defeat to the Vikings. It marked the first time the Vikings rallied from a 20-0 deficit in more than 25 years.
The Vikings overcame a 20-0 deficit for the first time since October 4, 1992, scoring three touchdowns in the fourth quarter to beat the Bears 21-20.
Mike Ditka and Jim Harbaugh likely don't reflect fondly on that game. https://t.co/xhJRxlb9LJ
— Chris Emma (@CEmma670) November 17, 2019
As with numerous other jurisdictions across the nation, Colorado will provide another test on a state’s ability to curb the influence of the illegal, underground market for sports wagers. According to the American Gaming Association, about $150 billion is wagered illegally on U.S. sports each year.
“It’s great to see another state legalize sports wagers,” William Hill CEO Joe Asher said in a statement on Proposition DD. “Providing a licensed and regulated alternative to the black market creates jobs and raises vital tax revenue. I think we’ll see more states choosing this path in the months and years ahead.”