Sportsbooks seeing record returns – revenue windfall for Colorado
In the 2019 election, Colorado voters approved, by a 51.41% to 48.59% margin, Proposition DD which legalized sports betting and subsequent distribution of tax revenue in the state. The measure came to the ballot following almost six years of legal maneuvering and was ultimately settled by the U.S. Supreme Court, which ruled in a case that originated in New Jersey, that bans on states creating a sports betting market were unconstitutional.
Proposition DD was put before the voters 13 months ago because, under the stipulations of the Taxpayer Bill of Rights (TABOR), voters must approve any new tax levied within the state.
With sports betting legal via the Supreme Court decision, voters had to approve or reject taxing the proceeds – which they did by the aforementioned, relatively small margin – to provide proceeds to water-related infrastructure projects throughout the state.
The state is now reaping the rewards.
According to a press release provided by PlayColorado, a part of the PlayUSA.com Network which is “a leading source for news, analysis, and research related to the market for regulated online gaming in the United States,” the state’s online and retail sportsbooks enjoyed a record month in October, receiving over $210.7 million in October alone.
The COVID-19 pandemic threw a monkey wrench into the sports gambling market last spring as the professional leagues, most notably Major League Baseball (MLB), the National Hockey League (NHL) and the National Basketball Association (NBA), all faced the temporary suspension of their on-going, or in MLB’s case, soon to begin, seasons.
The months of May and June are big for betting on the NBA and NHL playoffs but those were delayed until mid-summer. Furthermore, then NCAA men’s basketball tournament, a seminal event for both sports fans and sports gamblers alike, was canceled outright.
Yet as the calendar turned to autumn, a greater sense of normalcy returned in the sports world. The National Football League (NFL), by far the biggest American sport in terms of both viewership and betting interest, returned with an at least somewhat normal-looking format. College football also began, in some parts of the country, and the NBA, NHL and MLB playoffs, all began.
The result was a windfall of revenue.
Online sportsbooks FanDuel and DraftKings, both of which offer many traditional wagers as well as the increasingly popular daily fantasy gambling, have thrived. The pair of online sportsbooks, which began operating in the state in May, generated 84% of Colorado’s gross gaming revenue, per the press release.
According to PlayColorado, “October’s data shows that Colorado’s market is able to thrive even as the sports schedule normalizes and able to overcome a local team struggling, such as the Denver Broncos,” said Jessica Welman, analyst for PlayColorado. “Another sign that the market is marching toward maturity is that DraftKings and FanDuel have firmed up their market leads in the state, something we’ve seen in every legal market that has launched since 2018 while attracting a large number of competitors to push innovation in the market.”
With the return of some normalcy to the sports world, the revenues from October generated $17.4 million in gross gaming revenue, up from just $4.2 million in September. With the pandemic keeping a lot of people at home and in front of the TV, online wagering has increased at an extraordinary rate.
“Online betting produced 98%, or $206.4 million, of October’s wagers. That was up from $203.9 million, or 98.2%, of September’s handle. All retail and online bets netted $9.6 million in betting proceeds, a jump from a $3.4 million loss in September. October’s winnings yielded $824,700 in taxes,” said the PlayColorado press release.
Unsurprisingly, interest in the behemoth that is the NFL plays a big part. “The NFL was easily the most popular bet in October, attracting $68 million in action, up from $38.6 million in September. With the World Series, baseball managed to draw $23 million in bets. And college football, aided by the return of Colorado State and Air Force, jumped to $16.5 million in October from just $3.8 million in September,” the press release stated.
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