Analysis

Colorado handle grows strongly but margins take hit

Colorado operators enjoyed a record sports betting handle of $284.6m in December.

It represents a rise of 21.3% on the previous monthly record of $231.2m set in November.

However, the rise in handle was offset by a 6.5% drop in revenues to $17.1m. This compares with $18.4m recorded during November.

The official figures come from the state’s Department of Revenue.

They showed that when factoring in bonus promotions and a 0.25% federal excise tax on betting handle, net revenues for the month were down a whopping 43.3% to $5.1m.

Online platforms brought in $16.6m of the gross revenues total and all of the net revenues. 

Margin impacts

The data shows the impact bonuses and promotions have on operators’ margins as they compete fiercely for customers.

This was evidenced recently in Pennsylvania.

There DraftKings and FanDuel recorded much higher handles than third-placed Barstool Sportsbook.

The company led by CEO Dave Portnoy, however, managed to generate much higher revenues.

It did this thanks largely to a recreational customer base that is apparently not price sensitive or as demanding when it comes to promotions and free bets.

Successful regulation

Colorado regulated its sports-betting market in May and is riding high in 4th place on the Wedge Index of gaming friendliness. 

It has grown consistently during that time. Bettors in the state staked $1.2bn between May and December 2020 with taxes collected totaling $3,4m.

Football was the sport that most Coloradans bet on, with $88m wagered via retail and online operators. The NBA was second with $42.8m and NCAA Basketball came in third at $35.2m.

Table tennis – one of the few sports punters were able to bet on during the first lockdown in Spring 2020 – retained its top five spot.

Clearly, Coloradans have taken to the sport with $10.9m staked in December.

Gross revenues since the start of regulated betting have reached $75.8m and net revenues $28.3m.

Dan Hartman, director of the Colorado Division of Gaming, said hitting the $1bn mark in total handle was a “milestone event.”

He said the department felt the “trust and competition in the industry” are leading bettors from the black market to the regulated market.

“We believe the legal marketplace is having and will continue to have a positive impact on Colorado.”

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Jake Pollard

Jake Pollard is an experienced journalist and editor who has covered the online gaming and betting industry for many years. He has written for the leading media outlets as well as operators and suppliers in the igaming space. His current areas of focus are wide-ranging and include regulatory developments in the US, emerging markets in South America and how European countries are adapting to a decade of igaming regulation.

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