James Eklund offers an apt metaphor for Colorado residents wondering if the launch of sports betting there five years ago has had the promised effect.
“Every time you turn on a tap and fresh, clean water from our snow pack hits your glass, you’re enjoying this money being collected and spent on your water supply infrastructure,” Eklund, the architect of the Colorado water plan used to justify the legalization of sports betting in 2019, told InGame.
With Thursday marking the five-year anniversary of the launch of online sports betting in Colorado, the plan is still working, Eklund said.
Then the director of the Colorado Water Conservation Board and now a partner at the Taft/Sherman & Howard law firm, Eklund and sports betting bill sponsor Alec Garnett, now the House speaker, were able to attract a disparate coalition of environmentalists and gambling industry proponents to narrowly propel Proposition DD to victory.
“In short, it’s been excellent,” Eklund said of sports betting’s impact on the state. “It’s been a great revenue stream for water projects that otherwise would have faced a pretty uncertain future at best, and at worst wouldn’t have been funded at all, given that the only other source of revenue for the state is collecting taxes on severance tax, which is oil and gas taxation. Then, obviously, the state income tax that most of the state budget is relying on.
“It was really important that we had another revenue stream, not just to add to the total, but to diversify. We were hoping we could make the revenue for water projects a little bit inflation proof, and diversifying those revenue streams is really important.”
Under Colorado law, 90% of sports betting revenue is tapped for conservation projects in one of the most important and stressed hydrologic systems in the nation.
Colorado bettors keep them flowing. In January, the state set a record with $657 million wagered, breaking the handle record for the third consecutive month. According to the state Department of Revenue, more than $26.7 million in taxes has been collected for the current fiscal year. Since 2022, when the sports betting plan began sending money to state water projects, more than $100 million has been contributed.
“Colorado has quietly punched above its weight as a sports betting market,” Chris Grove, partner emeritus at Eilers & Krejcik Gaming, told InGame.
“Handle per adult ranks near the top nationally, thanks to a rare mix of smart policy and real competition. With a reasonable tax rate, light-touch licensing, and generous treatment of promos, the state created a market where over a dozen operators could actually compete, and where consumers have responded in kind. Five years in, Colorado’s model remains a case study in how the right rules can unlock a thriving, high-engagement market.”
Colorado sports betting market unique, peculiar
Colorado has inspired opportunists and dreamers from Coronado to gold prospectors to sports betting company PointsBet opening its national headquarters in Denver in 2019.
Some find gold. For others, it doesn’t pan out.
It stands to reason that Colorado’s legal sports betting market, which launched on May 1, 2020, would be shaped by this land of outlandish beauty and a willingness to launch down a steep slope and see what happens.
Five years after Colorado began taking legal sports bets in retail sportsbooks and online, with the enterprise now legal in one format or the other in 41 jurisdictions, InGame examines a unique marketplace in the United States.
In the beginning …
Coloradans have long exhibited an affinity for gambling. They partook of it in saloons and mining camps in the 1800s and voted to approve the Colorado Gambling on Horse and Animal Races Act in 1948. They voted for charitable gaming and bingo in 1958, then a state lottery in 1982, then for casinos in Black Hawk, Central City, and Cripple Creek in 1990.
But Proposition DD, a sports betting legalization bill that projected revenue up to $29 million annually — predominantly for water projects — narrowly passed (51.4% to 48.6%) in 2019.
The authorization of Prop DD empowered HB 19-1327 to establish the Colorado Limited Gaming Control Commission, the Colorado Division of Gaming, and a 10% tax on net proceeds tabbed to benefit water projects in the state. Veteran regulator Dan Hartman was named the gaming division’s first director and helped shepherd the industry to the starting line, eventually winning the International Masters of Gaming Law Regulator of the Year Award in 2022. Christopher Schroder replaced him upon his retirement in 2023.
BetMGM, BetRivers, DraftKings, and FanDuel all launched May 1, 2020.
The 10% rate set up Colorado — a state of nearly six million — as a fertile ground for operators, who by law were required to partner with a retail casino. With other states brandishing much higher tax rates — Pennsylvania was then at a national high 36% — Colorado became somewhat of a national incubator with more than 20 options at one point.
“Colorado got the fundamentals right early,” Grove said. “Mobile access, competitive licensing, and policy choices that encouraged innovation helped the market grow quickly and sustainably. There’s a lesson here for other states: If you want a market that works for both consumers and the state, the rules matter just as much as the revenue.”
Thirteen online operators and nine retail sportsbooks are doing business there.
Last year, the passage of Proposition JJ allowed the state to keep all sports betting revenue tax. Previously, the state was allowed to collect up to $29 million in sports betting tax revenue. The rest had to be returned to taxpayers. The state is considering ending deductions for promotions.
“Fiscal year ’23-’24, we collected just over $900,000 over the cap,” Eklund said. “And that $900,000 had to be essentially returned to the taxpayer. And the delta between what’s needed and what we had to spend on water projects is in the hundreds of millions of dollars. Prop DD wasn’t going to solve all of our water funding problems. But we definitely needed to be able to keep any amount that we collected in the overage.
“So we passed Prop JJ in 2024. And that basically got rid of that cap. So now whatever we collect, we get to keep.”
Revenue from sports betting officially began flowing to water projects in 2022 and has raised more than $100 million, according to Water for Colorado.
“They created this really interesting coalition of interested entities and constituents that all seized on,” Eklund said. “And any of them by themselves, if the gaming industry would have tried to push this through without that tie, then probably it doesn’t pass.
“It only passed by the kind of skin of its teeth. JJ fared much better. And I think that’s part and parcel attributable to the state water plan.
“People don’t like opening their wallets out here in the rugged individualistic West unless there’s a compelling strategic plan in place about how those dollars are going to be spent. Luckily, we had the water plan and everybody kind of saw that as being a value add. So it worked out well.”
No backspin on Colorado’s table tennis taste
Every story that begins in 2020 is inevitably a COVID-19 story. Colorado sports betting is no different. Launched when reported cases first began reaching a million per week, Colorado’s digital market was positioned to become a guilty pleasure pastime for a population increasingly isolated.
The trouble was, with the exception of horse racing, mixed martial arts, and esports, there wasn’t initially much fodder for those newly funded sportsbook accounts.
And then Colorado discovered table tennis.
Dr. Timothy Fong, co-director of the UCLA Gambling Studies Program, described table tennis betting to the Denver Gazette as an “internet phenomenon” that rose to prominence in Colorado in part because of its availability during hours when other sports were not being played.
Today, the Colorado Division of Gaming allows residents to bet on several series and federations in Armenia, Asia, Germany, Australia, and Latin America. And they’re still into it.
According to data released by the division, Colorado bettors in January wagered $31,718,384.39 on table tennis, more than soccer and the National Hockey League.
That figure was down slightly to $23,282,232.20 in March, but still outpaced the NHL, where the three-time champion Colorado Avalanche are currently embroiled in the first round of the Western Conference playoffs.
“What we’re surprised by is the staying power past the pandemic,” Fong told the Denver Gazette.
In all sports tastes, Groves said, Colorado provides unique insights.
“Colorado’s by-sport reporting is a hidden gem,” Grove said. “It offers one of the clearest windows into what Americans actually bet on, from the NFL and NBA all the way down to college baseball and table tennis. That kind of transparency doesn’t just inform. It empowers sharper policy, smarter products, and a deeper read on the modern sports bettors.”
On second thought … bad idea
In September of 2020, PointsBet, an online sports betting company whose U.S. assets were bought by Fanatics in 2024, announced a landmark deal to become the official sports betting partner of the University of Colorado. It was a first for any university in the U.S. and preceded similar deals at the University of Denver, LSU, Maryland, and Michigan State.
The lines between athletics and companies offering bets on these athletics became blurred. That this deal involved intercollegiate athletics made for even worse optics and unease in the general public — and therefore state houses — even though Denver-based PointsBet pitched its $1.625 million investment, scheduled to run through 2026, in part as a tech innovation incubation project for the Boulder school.
But a $30 referral fee for the school for each new customer using a special Buffs promo code assured that no one ever thought about the apparently benevolent part of the partnership.
Amid backlash from the gambling industry and massive negative public reaction, PointsBet and the school first ended the referral program and then terminated what they deemed their “mutually beneficial“ deal in 2023.
Every such partnership nationally soon dissolved.
On second thought …. another bad idea
Active Major League Baseball players gaining the right through a new collective bargaining agreement in 2022 to shill for sportsbooks was stunning. That no stars took up the opportunity because of potential reputational cost or maybe just the additional harassment from the horrible parlay makers in the bleachers wasn’t.
That Colorado Rockies workaday outfielder Charlie Blackmon became the one — and the only — player to cash that check was stunning yet again. That the sportsbook MaximBet, a regional boutique lifestyle magazine spinoff, soon went defunct just added another ghost-town gambling hall to the Colorado dust.
Colorado sports betting legacy flows on
Mile-high ambitions have yielded winners and losers in Colorado, as with any state with legal sports betting.
“We’re proud of the strong, transparent, and resilient industry we’ve built with our partners,” Schroder told InGame in an email. “For the current fiscal year, bettors wagered $4,925,154,891.98, an increase of 4.65% over the previous fiscal year to date wagers of $4,706,516,619.37. Sports betting tax revenue soared in January 2024, rising to over $4 million — a first for the industry in Colorado.
“We’re dedicated to keeping sports betting in Colorado safe, fair, and responsible. We’re excited to keep this momentum going and to be a national example for regulated gaming.”
Sportsbooks must be doing fine, judging by how many offer their wares there. But also among the winners in Colorado are Gross Reservoir, the Upper Colorado River Endangered Fish Recovery Program, and, by extension, all those Razorback suckers and bonytail chubs blissfully oblivious to tax rates and promo codes.
That was the idea all along.
“If we are able to solve the Colorado River crisis, it will be in no small part due to the funding of sources like [sports betting] for water projects,” Eklund concluded. “If we do a good job up here and Prop DD helps us do a good job under the water plan and our strategic plan for deploying that capital, there are a lot of people that benefit from that, not just the six million people that live in Colorado.
“There are 40 million people that depend on the Colorado River just alone. So it’s definitely a big, big part of the country’s economic gross domestic product. And you don’t have to squint too hard to get from these dollars that were created through this program and the benefits to all those people.”
