For the past two years, legalized sports betting has permeated the country. State-regulated industries have cropped up in bunches along the east coast and in the heart of the Midwest.
Forgotten, it seems, is the West. The American frontier. But soon, a gateway will open to what is otherwise an untapped region.
The western United States “has a very different vibe” from the east coast, as Eddie Motl, vice president of communications for Fox Bet, put it. Within a month, Fox Bet, along with several other sportsbooks, will experience that vibe firsthand. Because that gateway — that long-sought-after, ever attractive gateway — is set to open Friday, May 1 with the debut of Colorado sports betting.
Yet the pomp and circumstance will certainly be understated when the first legal sportsbooks go online. The coronavirus pandemic has sidelined sports and closed casinos. So how can incoming operators maintain such a rosy outlook when uncertainty looms like a storm cloud?
Because, as FanDuel CMO Mike Raffensperger said: “Entertainment is important, particularly in challenging times.
“People need opportunities to entertain themselves. And frankly, a diversion in difficult times is something that’s important for mental health.”
Significance of Colorado sports betting not lost on operators
The addition of Colorado sports betting carries weight that extends beyond its own boundaries.
Robert Walker, the director of sportsbook operations at Nevada firm USBookmaking, told Legal Sports Report that, more than New Jersey, “Colorado is the first real battleground for US sports betting.”
Johnny Aitken, CEO of the Denver-based PointsBet, added that “Colorado could be a domino state. They’ve listened to operators about what we need to successfully compete with the black market. Hopefully, new states take notice as they open up.”
“Expansion into any new state is exciting because it’s an opportunity for us to showcase our unique approach to gaming and engage with sports fans,” Motl said. “Sports in America are tribal and so anytime we get to communicate with a new community, in this case Colorado, it’s an opportunity to learn from those fans and serve them with content tailored to their style.”
Sustainable tax rate sets up successful future
Even only within state lines, Colorado going live means much more than padding an operator’s portfolio.
For the likes of FanDuel Sportsbook, which expects to go live May 1, the Centennial State will become its fifth state in which it operates regulated wagering. But there’s much more significance with Colorado.
Specifically, as laid out by Raffensperger, the state “enacted legislation that we feel is conducive to a healthy and productive legal and regulated sports betting marketplace.”
That means a sustainable tax rate (10%) that sets up a competitive industry while also helping fund state initiatives. It means all-inclusive access to online wagering, from sign-up to cashing out, for the public. Such traits have helped New Jersey, where FanDuel remains a sports betting power, truly flourish.
As a result, New Jersey has become something of a template, one that operators are thrilled to see followed by Colorado.
Original outlook of Colorado sports betting
When New Jersey first went online, its model closely resembled one that paid dividends in Europe. By focusing on the everyday players, by capitalizing on digital marketing, and by offering in-play wagering and a wide array of markets, said model sets the table for a thriving industry.
The 18th state to introduce some form of legal sports betting, and whether purposefully or not, Colorado set itself up for success by following that model.
“For us, the regulators have been great to work with,” said Jamie Shea, head of sportsbook digital for DraftKings Sportsbook. “It’s just been really some good back and forth, working together. We all want to see the sports betting industry flourish in every way. … We all have the same goal. Working with the legislators and regulators in Colorado, it’s been great to see their enthusiasm.”
Its 10% tax rate allures, like a radiant light that leads one out of the darkness and into the promised land. It sets Colorado up to potentially accept as much as $6 billion in wagers, according to PlayColorado projections, in addition to $400 million in gross operator revenue and $40 million in tax revenue.
New Jersey, for perspective, taxes retail operations at a 9.75% rate and levies a 13% tax on mobile wagering.
The tax rate alone, Raffensperger said, “incentivized our investment.” But then you add in online access; a state that features franchises from MLB, NBA, NFL and NHL; a reasonably large population total; and a culture, as he put it, that features “a great independent spirit” that pairs well with sports betting.
Indeed, Raffensperger emphasized, “we get really excited about the commercial opportunity.”
Coronavirus pandemic has shifted plans of operators
The launch of Colorado sports betting, at least commercially, obviously comes during an inopportune time.
The COVID-19 crisis essentially sidelined sports entirely, aside from a few niche markets. It’s not lost on incoming operators that sports betting offerings will remain slim once they go live.
“It has presented us and many other sportsbooks planning to launch in Colorado with added challenges,” Motl said of the coronavirus. “We’ve spent this additional time learning about our future customers in Colorado, understanding their tendencies and appetite for sports betting content as a whole. Operationally, we’ve worked to ensure that our infrastructure and process with state regulators is seamless once sports return.”
Operators remain bullish on Colorado sports betting future
Therein lies the optimism and persistence of bookmakers: This pandemic will not disrupt our plans.
Like Henry Ford said: “When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.”
“We’re very optimistic on Colorado,” Shea said. “We’re so excited to be launching in that state. Nobody can predict how long this (the coronavirus pandemic) is going to take. But what we can say is we will be there. … We are very cognizant of the seriousness of the nature of the world. We don’t want to take that away at all.
“We want to make sure everyone’s staying safe and following the guidelines of the government. We’re just an entertainment company but we hope to provide that little bit of light in the day.”
Flexibility is key during a time of zero sports
Fox Bet still intends to make its Colorado debut in May, though after the state’s go-live date. And, like many of its counterparts, it continues to exhibit flexibility in this time of uncertainty.
“As leagues and sanctions adapt to this new environment, so do sportsbook operators like us,” Motl said. “We’ve offered NASCAR’s iRacing, the NFL draft, as well as other smaller sports and competitions in accordance with (New Jersey Division of Gaming Enforcement) via the Fox Bet app. We’ve also gotten creative, for example coming up with the best sports movie bracket challenge. As sports leagues and governing bodies across the globe re-open competition, we will have more to offer.”
It appeared as if the coronavirus pandemic really hit home for the public when sports went off the air. When the NBA postponed its season, Raffensperger said, “it felt pivotal in a lot of ways in how this crisis came to bear for this country.”
For the FanDuel CMO, when sports return, the healing can begin. The light at the end of the tunnel becomes more clear.
“I think that’s an important moment of feeling like it’s a step forward for the country,” Raffensperger said, “a moment of catharsis. … I think it’s going to be, not to be too highfalutin about it, the start of a moment of healing and something we’re really excited about certainly commercially but also just our role within sports culture at large.”
When leagues and event organizers postponed and even canceled seasons and events, operators did not sway from their Colorado plans.
If anything, at least for FanDuel, there was more of an obligation to move forward as planned.
“I would say the reaction was we need to stay the course,” Raffensperger said. “I think we recognized we needed to shift our plans a little bit, in the manner and the means in which we launched. … I think whether it’s free-to-play gaming, some of the things that we’re doing on our fantasy sports platform, I do think it’s important. I think it’s the role that FanDuel Group plays, kind of in our commercial role at large.”
Plans to launch in Colorado remain on track
Before COVID-19, some incoming Colorado bookmakers — such as FanDuel, DraftKings, BetMGM and BetRivers — circled May 1 as launch date. Others, like Fox Bet, sometime that month.
Those plans have gone unchanged.
“We are of course giving full consideration to the current circumstances regarding the disruption to the sports calendar, but our pre-existing timelines and goals for the multi-state expansion of theScore Bet remain on schedule,” John Levy, CEO of theScore, said. “We are pressing ahead with product development and regulatory initiatives and — subject to receiving all relevant licenses and approvals — are excited to introduce theScore’s unique integration of media and gaming to sports fans in both Colorado and Indiana later this year.”
Perhaps now more than ever, Shea noted, the public needs some kind of respite. And platforms such as DraftKings provide just that.
“Especially now, people need entertainment,” Shea said. “We are a sports company, a gaming company, an entertainment company. People need to be able to blow off some steam. … I think it’s nice to have that stability, that confidence that not everything has shut down, that there are still some movements going on. Some new and exciting things. It’s nice for the fans to have some levity at this time.”
Obviously operators will not have many betting markets to offer customers right away. Hopefully, though, the sports calendar will fill out in short order. That would certainly benefit bookmakers. But it would also provide a sense of normalcy for bettors, fans and the general public.
Companies like FanDuel are hoping to fast-track the latter.
“The reason that we’re launching on May 1 relative to the plan we had prior,” Raffensperger said, “is because we think it is important to demonstrate to Colorado our innovative spirit. … I think we’re still really optimistic and eager to introduce ourselves to Colorado, to do it in a way that adds value to consumers and bettors and fans. Again, we’re eagerly awaiting the return of major American sports alongside every other sports fan in Colorado and frankly around the country.”