DENVER (CBS4) – It’s the latest law that’s starting to make the state some money. Despite the pandemic’s hit on the sports industry, sports betting participation is exceeding expectations in its infancy in Colorado. But even with millions on the line, you might be surprised to learn how little the state is actually making from the new revenue source.
Since sports betting became legal in May, the state has made $814,661.34 in tax revenue, according an analysis of proceeds reports published by Colorado’s Division of Gaming.READ MORE: Colorado Department Of Labor Writing Off $61 Million In Overpayments Made During Pandemic
The monthly revenues the state saw in the early summer months were comparable to that of monthly medical marijuana tax revenue garnered back in 2013, according to an analysis of state records. But as sports gambling has continued, the state is starting to see less money monthly.
In July, people wagered a total of $59,183,619.73, and the state made $241,866.91. In August, betters wagered $128,646,209.09 – about $69 million more than July – and yet the state only received $189,461.84.
In September, there was an even bigger gap. Betters wagered $207,655,942.72, but Colorado only received $69,771.64.
This is mainly due to the large amount of promotional free bets sports books have been offering, according to the head of Colorado’s Division of Gaming, Dan Hartman. He says operators are not taxed on those promotions.
“When the legislation was crafted, the operators, they certainly pay the tax on the net betting proceeds, but the net betting proceeds comes from the money that’s bet, the money that’s returned to players, and then the operators get to take off their promotional money, and their excise tax that they pay to the federal government before we get to the net proceeds,” Hartman explained.
Mark Kizhner, of Lakewood, says he made more than $2,000 on free bets alone.
“Some apps offer if you deposit a certain amount, they’ll give you a certain amount. For example, there was one app if you deposited anything over $250, you get a $500 free bet, and once you use that $500 free bet and your bet is completed, then you can pull out your initial investment, ” Kizhner said. “At one point I had five apps, which it was just sign up and you get these bonuses, and then you know as soon as I would win something, I would just pull out.”
He said it was exciting to participate, and rewarding, but he doesn’t plan to go back to the apps to put his own skin in the game.
“For me it was free fun, first and foremost, and in some sense, free money,” Kizhner said. “For anyone who gets involved, definitely make sure you read the fine print, and make sure anytime you’re doing anything you know exactly what’s going on.”
Jeff Wojtowicz, of Lone Tree, isn’t on board with sports betting. He says he won’t even take advantage of those free bets.
“It’s kind of like a zero-sum game, it’s actually less than a zero-sum game,” he said. “You’re wasting a lot of time that you could be doing something else, if you look at the time benefit, how much time are you spending and how much money are you making?”
He added, “Vegas was not built on the winners, all of those hotels, they’re made on the people who lose money there.”
But some experts in the industry, like Ben Cary, who owns a sports betting education website called CapWize, anticipate many others will come back for more, especially once more fans are allowed to attend games again.READ MORE: COVID In Colorado: Denver Health Doctor Eager For New Pfizer Vaccine Authorization
“I think that’s really going to help the market with people engaging, at the game, placing bets, because right now I think there’s still an opportunity for this to grow even more,” Cary said. “I have subscribers to my site who are in other states where it’s not legal yet, and they’re all waiting for that opportunity, and they’re jealous of states like Colorado who have it.”
Cary says Colorado’s legislation was well-written and carefully planned by several stakeholders and state officials.
“Other states that went before us, like New Jersey, we got to see what worked and what didn’t, so we weren’t necessarily the guinea pigs, so that was a good situation to be in for Colorado,” Cary said.
For example, he says some other states that legalized sports betting early didn’t create mobile betting app capabilities.
“Having the opportunity to download the app on your phone and place a bet is one thing that’s really helped out so far,” Cary said.
Indeed, most wagers placed in September were online, according to state documents. Only about $3 million in wagers were placed in retail, and a little more than $203 million in wagers were placed online.
Due to the pandemic, an interest has spiked in more obscure sports, like table tennis. Even in September, when NFL teams had returned to play, table tennis wagers still totaled a little more than $5 million.
“Getting to know those sports, and getting to enjoy them, and knowing they’re out there, we’re seeing that they’re still playing them,” Hartman said.
Cary and Hartman both agreed that the numbers are showing people are moving away from the black market to place their bets legally.
“I think most people in Colorado don’t even touch any of the offshore gambling sites now, because you have a market that is legal and works well, you get paid out quickly and everything’s running pretty smoothly,” Cary said.
So, what will the state do with the revenue it gleans from this new law?
The initial $1.7 million will go to the general fund. After that, revenues will go to some gambling addiction nonprofits and Colorado’s Water Plan, a detailed program designed to preserve Colorado’s strained water resources.
As Cary explains, technically when the better loses, the state makes more money – more money for the water plan.
“The more money lost, the more money that’s able to be taxed for some of those water projects,” Cary said. “So at least if you don’t win, at least you know your money is going to a good cause.”MORE NEWS: Denver City Council Approves Loretto Heights Rezoning Agreement
A spokesperson for Colorado’s Water Plan said the program won’t be able to use the money until at least 2022, and it’s too early to tell how the money will be used or what kind of a difference it will make for the plan.