Colorado Experiences Sharp Sports Betting Drop-Off in February

Those that follow the U.S. sports betting industry are by now keenly aware of the month-over-month wagering activity drop-offs that legal states experienced in February.

We can officially add Colorado sports betting into the mix of markets that had a poor February, despite the fact that the Super Bowl was relatively late in the month and provided nearly two full weeks with which customers could place their wager.

The Colorado legal sports betting scene experienced dips in not only its overall handle in February, but revenues as well. It all led to a sharp decrease in tax contributions from sports betting providers to the state.

The good news for the overall Colorado legal sports betting industry: March is expected to be better, thanks to the annual NCAA Basketball tournament bump. A major sportsbook/pro sports team partnership was also announced last week to mitigate some of the negative February sports betting activity news.

Let’s break it down.

Colorado's February handle sags ...

Colorado, like the rest of the U.S. legal sports betting industry, is heavily reliant on the NFL. That fact is best proven by the realization that having just one game during a given month, albeit the biggest one on the calendar, hurts the overall bottom line of sports betting providers and the state, which benefits from tax contributions from those companies.

Bettors spent $425.9 million at Colorado sports betting sites in February, which represents a month-over-month 22.3% drop from the $547.2 million spent in January. February 2023's sports betting handle was also 3.5% less than was reported in February 2022 when bettors in the Centennial State spent $440.5 million at their retail and mobile sports betting outlets.

...And so do the revenues

It was a good news/bad news situation for the Colorado sports betting industry in terms of February’s revenues. Gross gaming revenues for Colorado sportsbooks came in at $22.6 million in February - an eye-opening 36.3% drop from the $35.5 million in profits reported in January.

The drop is largely due to the disappointing 5.3% hold rate for the state's sports betting providers in February. The hold rate in January was 6.5%, was 7.9% in December and 6.8% in November. Colorado’s February hold rate was the lowest since 2.2% in June.

Taxes collected from Colorado sportsbooks in February totalled $1.25 million - an incredible 51.4% month-over-month drop from January’s $2.59 million in taxes.

The good news comes in the form of year-over-year revenue growth. February 2022 saw Colorado sportsbooks make $19.6 million in profits, about 15.3% less than the $22.6 million generated in February 2023. The $1.25 million in taxes collected was 300% higher than the $314,741 in February 2022.

Basketball reigns supreme in CO

The Colorado Division of Gaming doesn't give us a sense of the most successful sportsbooks there during a given month, but they do identify the top performing sports. In February it was basketball that outpaced all other sports by a wide margin by contributing $155.6 million to the state's overall handle.

College basketball was second with $68.1 million in wagers, pro football was third with $27.5 million in contributions, tennis followed with $25.4 million, and hockey and soccer rounded out the top six revenue generating sports.

Bet365, Rockies sign partnership deal

Other news out of the Colorado legal sports betting market was the announcement late last week that global behemoth, U.K.-based sportsbook bet365 and MLB's Colorado Rockies agreed to a three-year partnership deal.

bet365 will gain valuable brand exposure in the uber-competitive Colorado legal sports betting market and will be a visible brand at the Rockies' home stadium, Coors Field, as well as during Rockies TV. Social media, and radio broadcasts.

Bet365 has been a middling brand in the Colorado market since their September 2022 launch and hopes to dramatically expand their client-base through the high-leverage, high-visibility relationship with Colorado’s MLB team.