Sports Betting Revenue Projection If Okayed in Colorado: $259 Million

Could Las Vegas-style sports betting be coming to Colorado soon?
Could Las Vegas-style sports betting be coming to Colorado soon? YouTube
The U.S. Supreme Court has struck down the Professional and Amateur Sports Protection Act, the federal law that prohibits gambling on such sports as professional and collegiate football, baseball and basketball in most states. And while there's been no move in Colorado to embrace such a system of late, the smart money is betting that will change soon, and generate an eye-popping cash windfall.

This last wager has been placed by Eilers & Krejcik, a research firm that tracks state gambling legislation, among other things. The operation predicted last year that if the Supremes sided with New Jersey in its challenge to the aforementioned act, as they did, Colorado would join the states that allow gambling within two years, with revenue projections that top out at more than $259 million.

"My guess is that any state that has an existing, land-based casino-market industry would stand to benefit from approving sports betting," says Todd Eilers, one of the principals at E&K, which is based in California. "And Colorado is in that bucket."

As for the lucre that could be spent in the state should sports betting be legalized, an E&K analysis from September 2017 offers four scenarios. The projection under the first, "land-based only, restricted supply," is $118,913,530; the second, "land-based only, liberal supply," is $129,314,785; the third, "restricted online access/product," is $153,682,478; and the fourth, "full online access, robust product," is $259,283,819.

For that to happen, plenty of changes must be made. A page on the Colorado Department of Revenue's website makes it clear that "the Colorado Constitution and Colorado law allow only certain types of 'gambling.'" In addition to "limited gaming in Colorado casinos," the state is also fine with the following forms, reproduced with DOR links:

Colorado Lottery
Colorado Division of Racing — Live and off-track betting on horse racing events
Secretary of State's Office — Licensing & Regulations for bingo, raffles and charitable games.
"Social" Gambling

The latter pastime, which encompasses activities such as March Madness pools, is defined in a 2005 statement from then-Colorado attorney general John Suthers: "For an activity to be considered 'social gambling,' all participants must have a 'bona fide social relationship,' meaning that they have an established social relationship based upon some other common interest other than the gambling activity, and no one other than the participants can profit from the game or activity in any manner, such as taking part of the pot in a poker game or a sports pool to be compensated for organizing the activity."

click to enlarge Limited gaming in casinos is among the handful of gambling allowed in Colorado right now. - FILE PHOTO
Limited gaming in casinos is among the handful of gambling allowed in Colorado right now.
File photo
The strictness of its statutes puts Colorado low on ESPN's recent list of states close to legalizing sports betting. Colorado appears on a roster of 24 states plus the District of Columbia under the heading "No Legalization Activity...Yet."

The piece elaborates by noting that in contrast to Nevada ("Already There"), New Jersey and Delaware ("Imminent"), Connecticut, Iowa, Mississippi, New York, Pennsylvania and West Virginia ("On-Deck Circle"), California, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Oklahoma, Rhode Island and South Carolina ("Moving Toward Legalization") and Oregon and Montana ("Existing Laws That Could Be Expanded"), Colorado has "laws that prohibit Nevada-style sports betting. Such laws would need to be repealed or amended before full-scale sports wagering would be permitted. These states do not have any publicly announced bills devoted to sports betting legalization."

True. During the just-completed 2018 legislative session, the closest thing to a gambling measure that went before the Colorado General Assembly was House Bill 18-1234, which passed with little hoopla because it mostly deals with technicalities related to what's dubbed the "Internet Sweepstakes Cafe." The document notes that "Section 1 of the bill amends the definitions of key terms such as 'electronic gaming machine,' 'gambling,' 'prize' and 'simulated gambling device' as used in the criminal statutes governing simulated gambling devices. Section 2 specifies that unlawful offering of a simulated gambling device occurs if a person receives payment indirectly or in a nonmonetary form for use of a simulated gambling device, and that the time of payment (i.e., before or after use of the device) is irrelevant."

But if Colorado is currently on the outside of the sports gambling market, the folks at Eilers & Krejcik don't think that will remain the case for long. In the aforementioned report, "Regulated Sports Betting: Defining the U.S. Opportunity," author Christopher Grove, the managing director of E&K's gaming division, predicted that 32 states would legalize sports gambling if the U.S. Supreme Court ruled in favor of New Jersey's efforts, with fourteen of them — Colorado, Connecticut, Delaware, Indiana, Massachusetts, Michigan, Mississippi, Montana, New Jersey, Ohio, Nevada, Pennsylvania, Virginia and West Virginia — expected to do so within two years.

In an update titled "Supreme Court Opens Door to State-Regulated Sports Betting," issued May 14, Grove doubled down on his forecast. "We’re sticking with our existing call of 32 states regulating for a market worth $6.03bn by 2023," he wrote. "We note that the landscape is incredibly dynamic and our projections could shift meaningfully based on how the landscape evolves. Our core assumptions include: leagues and gambling interests reach some sort of agreement that allows them to move forward in unison; tribal gaming interests reach a deeper and broader level of comfort with sports betting; tax rates/license fees stay within the 10 percent to 20 percent/sub $3mm range."

For his part, Eilers says that Colorado's pre-existing casino industry and the participation of corporations such as Ameristar, which also owns facilities in Iowa, Indiana, Mississippi, Missouri, Louisiana and Nevada, makes the state a likely legalizer, especially since "there aren't other external factors that would be abnormal or negative toward that happening — like in Utah, which has no gaming right now."

With that in mind, are the owners of local casinos even now seeking out Colorado representatives or senators who might sponsor a sports-betting bill in the 2019 legislative session? Eilers's reply: "I would suspect that would be the case."

Bet on it. Click to read the aforementioned U.S. Supreme Court decision, Murphy, et al., v. National Collegiate Athletic Association, et al.
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Michael Roberts has written for Westword since October 1990, serving stints as music editor and media columnist. He currently covers everything from breaking news and politics to sports and stories that defy categorization.
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