Sports Betting Sure Is Popular In Colorado
The first in a series featuring data and trends from the state’s Department of Revenue
With 2024 behind us and the NFL playoffs underway (hey, at least the Broncos made it this time), I thought it would be a good time to dig into the sports betting statistics that are published by the Colorado Department of Revenue. Sports betting became legal in Colorado after voters supported Proposition DD in 2019 and went into effect in May 2020. At of the start of this year, Colorado is one of 39 states (and D.C.) with legalized sports betting, a three-fold increase in nationwide participation compared to 2019. Let’s jump into some stats!
How Much Money Are We Talking About?
Through November 2024, a total of $21.3 billion(!) has been wagered on sports in Colorado over the past four and a half years. Betting figures exceeded $5.5 billion in 2023, representing about 2.5% of statewide total household income. Wagers last year will likely surpass $6.3 billion, growing by almost 14% compared to 2023.
Bettors in Colorado can wager through either online or retail (i.e. brick and mortar) licensed sportsbooks and operators. There are 8 physical locations, all concentrated in Gilpin County, while 13 online options enable individuals to bet from the comfort of their home. However, nearly all sports bets have been placed online since mid-2020, as retail establishments represent only $1 out of every $100 wagered. Now it shouldn’t come as a surprise, but not everyone comes out a winner when betting on the outcome of sports. Colorado’s sportsbooks and operators (referred to as the “house” hereafter) have paid back $19.8 billion out of the $21.3 billion in total wagers, thus retaining $1.5 billion in bets. As a share of all wagers, that $1.5 billion translates to 7.1%, which is defined as a “total win percentage” within the Department of Revenue reports. The house total win percentage can vacillate wildly from month-to-month, but has notably risen on an annualized basis since 2020, as shown below. This increase, which favors the house, is likely due to the influx of inexperienced players as the popularity in sports betting has surged.
Is There Any Seasonality With Sports Betting?
Absolutely! Wagers are driven by the most popular sports in play at the time: baseball = summer (June – August); football = fall/early winter (September – December); and basketball = winter/spring (January – May). The following chart displays the average distribution of total sports wagers in Colorado by month, during the three-year period between June 2021 and May 2024. The obvious low-point of betting interest is between June and August, which represents only 15% of total wagers, while the remaining months have much higher shares due to the popularity of football and basketball.
Within each monthly sports betting report the Department of Revenue publishes, there is a breakout of the top 10 sports by total wagers. The table below presents the top four most popular sports that are wagered on monthly in Colorado. This information is helpful in further understanding the seasonal nature of sports betting, as there are simply more options for high-profile wagers between early fall and mid-spring due to the overlapping nature of various league calendars.
So The NFL Dominates Sports Wagers In Colorado, Right?
Surprisingly no, that title definitively belongs to professional basketball. For instance, between August 2023 and July 2024 a little under $900 million was wagered on the NFL, while that total exceeded $1.5 billion for professional basketball (note: this amount likely includes the WNBA and basketball leagues located outside of the U.S., but the NBA will primarily dictate betting activity). Another way to think about that is professional basketball made up a quarter of total sports wagers during that 12-month period, compared to the NFL share of 14%.
To get a better sense of which sports receive the most betting attention over time, I scored each sport by their respective ranking in the monthly top 10 wager list (if applicable) and summed up the totals for the 54 months spanning May 2020 and November 2024 (methodology detailed in the caption below). Professional basketball had the highest total wager score, far outpacing any other sport. In an unexpected result, tennis ranked 2nd, edging out professional baseball, soccer, and the NFL. Apparently table tennis is way more popular than anticipated, as that sport ranked 6th. Hockey, NCAA basketball, NCAA football, golf, and MMA (mixed martial arts) were the other sports that had relatively high scores, rounding out the top 11.
Besides placing wagers on the outcome of a single sporting event, bettors can also choose riskier and more complex options called parlays. Essentially, a parlay is comprised of two or more individual wagers, but the catch is that you have to win on all bets to receive a payout. Since the legalization of Colorado sports betting in 2020, parlay/combination bets have become gradually more popular, representing a higher share of overall wager totals. For the six-month period ending November 2024, parlay/combination bets made up over 23% of total wagers in Colorado, a meaningful change from three years prior when the ratio hovered around 18%. The increase in these types of bets over the past few years may also help partially explain why the house total win percentage has recently surged.
Does Sports Betting Generate Tax Revenue For Colorado?
Per Proposition DD, retail and online net sports betting proceeds are subject to a 10% tax, with a limit of $29 million in total revenue during each state fiscal year (June-July). This money is designed to fund water projects (through the Water Plan Implementation Cash Fund) and cover the expenses related to the administration and regulation of sports betting in Colorado. However, it became clear that the fiscal year cap of $29 million would quickly be surpassed due to the popularity of sports betting, so Proposition JJ was introduced on the 2024 ballot. Proposition JJ simply allowed the state to retain more than $29 million in collected tax revenue each fiscal year, with the excess appropriated to the Water Plan Implementation Cash Fund. Voters overwhelming approved Proposition JJ, by a 3-to-1 margin. The table below shows actual and forecast tax revenue amounts since 2020. Over $92 million in total tax revenue was collected between May 2020 and November 2024. Trends like the continued popularity of sports betting, the house total win percentage, and the share of wagers dedicated to parlays will be useful in determining tax revenue in the future.
This seems like a net positive for the state (if not the citizens who are losing money here). But it makes me wonder how sport betting impacts states that have relied on lottos and gaming for a substantial portion of their revenue (thinking about South Dakota and West Virginia).