New Sports Betting Businesses: Rules and Regs for Operating in Colorado

New Sports Betting Businesses: Rules and Regs for Operating in Colorado
06 Jul 2020

July 6, 2020 – Colorado entered a new era May 1, 2020, when sports betting became legal for the first time in the state’s history.

In May 2018, the U.S. Supreme Court ruled in Murphy v. NCAA that the primary federal law governing sports betting for decades, the Professional and Amateur Sports Protection Act (PASPA), was unconstitutional. Previously, PASPA prohibited most states from allowing sports betting. With the elimination of the federal ban, states are now free to authorize sports betting within their borders, and already more than a dozen states have entered the fray.

Colorado voters approved sports betting in November 2019 and once COVID-19 restrictions are lifted and major sports leagues resume, the state expects to see tax receipts of about $20 million annually.

As with cannabis, Colorado has been on the forefront of setting up a legal structure for consumers to participate in a popular activity that once operated in the shadows. The state’s previous experience with legalizing cannabis consumption has resulted in a tested approach that creates ethical standards for businesses, protects consumers and raises tax revenue.

Colorado’s sports betting program relies heavily on consumer-friendly technology and creating a marketplace that is open to everyone. Unlike some states where a bettor has to first set up an account in-person at a casino to bet on sports, Colorado has mobile apps that allow anyone within the borders of the state to place wagers with just a few key strokes. (Apps use location technology to prevent anyone outside the state from placing bets, which is not legal.) Some states have capped the number of licenses that can be issued, but Colorado has no caps, which means this is a business opportunity that is open to anyone who satisfies regulatory requirements.

Colorado’s thoughtful rollout of easy-to-use apps likely is the reason sports wagering is off to a fast start. The state saw $25.5 million in sports bets in May, a phenomenal number at a time when most U.S. sports have been shut down due to COVID-19. This suggests that Colorado will be a hot spot for business opportunities in sports betting once major sports return to action.

Three primary categories of sports betting licenses are available in Colorado. The master license allows in-state casinos to offer sports books, betting lounges and mobile platforms. The operator license is for public-facing app developers and gaming brands that allow consumers to bet using their phones or computers. Vendor licenses are for those who support betting with services or products. A detailed explanation of licenses can be found on the Colorado Department of Revenue website.

Ireland Stapleton attorneys are well-positioned to advise clients who want to enter the sports betting arena and other emerging industries that fall under the umbrella of Colorado regulatory agencies. We not only have existing relationships with many of the gatekeepers at regulatory agencies, but we know what questions to ask, how to prepare applications and avoid errors that slow down approvals. In short, we know the regulatory process.

Compliance also is critical in industries like legal sports betting where one mistake can have crippling consequences for a business. We provide ongoing counsel to keep regulated businesses from running afoul of these rules. Our regulatory acumen was earned from years of experience advising clients across a range of industries and we have the added advantage of having attorneys on our roster who once worked as officials in these government agencies.

Ireland Stapleton’s Government Relations & Regulatory Law practice group is made up of attorneys who have practiced law both in government and before governments. Our group includes former state officials, including a former Colorado secretary of state, a former assistant secretary of state, a former commissioner of the Colorado Public Utilities Commission, and Denver city directors and hearings officers. We provide legal advice to corporate clients in administrative and enforcement actions related to all licenses issued by the Colorado Department of Regulatory Agencies, the Colorado Department of Revenue, the Colorado Public Utilities Commission, environmental agencies, a wide range of products regulated by the U.S. Food and Drug Administration (FDA), and in real estate and local zoning and land use matters.

Sports betting is open for business in Colorado and our regulatory law attorneys can answer your questions on this and all regulated businesses.

What is written here is intended as general information and is not to be construed as legal advice. If legal advice is needed, you should consult an attorney.

Sean JenningsSean Jennings is a regulatory law attorney at Ireland Stapleton. He represents businesses in regulatory, government relations, and corporate matters, including licensing, permitting, zoning, compliance, government enforcement actions and investigations. Mr. Jennings works with clients in diverse industries such as alcohol beverages, cannabis, hemp/CBD, transportation, gaming, energy, public utilities, and short-term rentals. He can be reached at jjennings@irelandstapleton.com or 303-628-3636.

Tom DowneyTom Downey is a regulatory law attorney at Ireland Stapleton. With his significant experience as both a government official and private attorney, Mr. Downey helps his clients navigate all aspects of regulatory law. The majority of his practice consists of advising and representing corporate clients in the administrative, transactional and disciplinary processes related to liquor licensing, legalized marijuana and licenses governed by the Colorado Department of Regulatory Agencies. He can be reached at tdowney@irelandstapleton.com or 303-628-3639.