Colorado online sports betting has been dealt a blow with the regulator delaying the introduction of new rules which would see the legalization of sports betting exchanges.

The Colorado Limited Gaming Control Commission voted 3-1 in its last monthly meeting to delay and take no action on previously advocated proposals that would have seen Colorado join New Jersey in the offering of legalized betting exchanges.

What led to the delay?

The CLGCC also had concerns over the taxation structure surrounding exchanges. Given the margin taken by exchanges is considerably lower (it’s a percentage of bet commission, rather than an overall margin on win/loss), there are grand concerns the net benefit to the state would be lower than without exchanges.

In New Jersey, where the only two US licensed exchange operators trade, there are no formal rules concerning the operation of the different type of sportsbook.

The Colorado Division of Gaming, the state regulator, has proposed a specific set of betting exchange rules and as such the Colorado Limited Gaming Commission has voted to delay to grant more time to consider the rules, given the lack of historic precedent in the US.

According to reporting from the Denver Post, the majority of the commissioners were concerned that exchanges may create a large tax loophole should they be ill-regulated.

Commissioner Justin Davis commented: “There aren’t any rules in place in the nation, or probably the world yet, so we need to proceed carefully.” He continued: “I know the division has done a lot of research to make that happen. But we’ve had a lot of issues raised. I think it’s important to proceed carefully.

What other legislative changes have taken place in Colorado?

Colorado has continued to be busy with legislation, signing a bill considering wagering into law as recently as 2 June 2023. HB23-1041 prohibits all and any wagering on Greyhounds in the state of Colorado. There has not been a greyhound race since 2008, and the sport was officially banned in 2014.

There are now just two greyhound tracks remaining across the entire United States of America, both situated in West Virginia. There are now blanket bans on dog racing in over 40 US states as concerns over animal welfare continue to be at the forefront of conversation.

The law regarding greyhound racing will take effect on Colorado sports betting on 1 October 2024

Colorado as a state has been a long-term adopter of sports betting, with state law approved by voters at the end of 2019. At the end of 2022, 23 CO online sports betting platforms were operational and available in the state.

Given Colorado’s track record for quick adoption, plus another record year for commercial gross casino gaming revenue in 2022 at $1.14 billion, it would be of no surprise to analysts if the proposals to go live with exchanges were pushed through before the end of 2024.

It could be a timely boost for commercial operators, who have seen efforts for legalized California sports betting and legal Texas online sports gaming quashed in recent months.