Colorado Gears Up to Launch Sports Betting on May 1

Colorado Gears Up to Launch Sports Betting on May 1

Dec 19, 2019

Client Alert

Brownstein Client Alert, December 18, 2019

With voters having legalized sports betting, the Colorado Division of Gaming (“Division”) is gearing up to launch the industry on May 1, 2020. In order to meet this aggressive deadline, licensing and rulemaking have already begun.
 

Licensing

On November 27, the Division released the licensing application for the five types of sports betting licenses: (1) master; (2) sports betting operator; (3) internet sports betting; (4) vendor major; and (5) vendor minor. The application is the same for each license type and can be found here, though the license fees and background deposits differ.

License
Type

License
Fee

Background Deposit

Master

$2,000

None

Sports Betting Operator

$1,200

$10,000

Internet Sports Betting Operator

$1,200

$10,000

Vendor Major

$1,200

$10,000

Vendor Minor

$350

None

 

Master License: Because Colorado’s law ties the sports betting operator and internet sports betting operator licenses to the state-licensed casinos, the master license is the sports betting license held by the casino. Casinos holding a master license may conduct sports betting operations on their own, or may contract with third parties to do so. Given that there are currently 33 casinos, the maximum number of master licenses is also 33.

Sports Betting Operator and Internet Sports Betting Operator Licenses: The sports betting operator license is held by the operator of the brick-and-mortar retail sportsbook located in the casino. This license may be held by the casino itself or by a third party with whom the casino has contracted to undertake the operations. The internet sports betting operator is held by the operator of the individually branded sports betting website, known as a skin. This license, likewise, may be held by the casino itself or by a third party with whom the casino has contracted to undertake the operations.

Vendor Major and Vendor Minor License: The emergency rules require that vendors who are employed for, contracted with, or acting on behalf of a sports betting operator or an internet sports betting operator must also be licensed. Vendors are divided into two categories: major and minor. Major vendors are those who: (1) manage, administer, or control wagers that are initiated, received, or made on the sports betting system; (2) manage, administer, or control the games with which the wagers are initiated, received, or made on the sports betting gaming system are associated; (3) maintains or operates the software or hardware of the sports betting gaming system; or (4) provides products, services, information or assets to a sports betting operator or an internet sports betting operator, and/or receives a percentage of gaming revenue from the operator’s sports betting gaming system. Minor vendors are those who provide services for or act on behalf of a sports betting operator or internet sports betting operator, and is not otherwise classified as a major vendor.
 

Application Deadline

To be eligible to go live by May 1, 2020—with grant of a temporary license—applicants must submit complete applications to the Division no later than Jan. 15, 2020. Applications for a third-party sports betting operator or internet sports betting operator license must also include the contract between the third-party operator and the master licensee. Complete applications include not only the sports betting application, but also any and all other associated business applications, associated person applications, limited ownership applications, and institutional investor certifications, as required by the Division. In lieu of an associated person application, the Division will accept the IAGR multijurisdictional personal history form accompanied by the Division’s Colorado rider.

 

License
Type

License
Fee

Background Deposit

Associated Business

None

None

Associated Person

None

$1,000

Limited Ownership Application

None

None

Institutional Investor Certification

N/A

None

 

 

Rulemaking

On December 7, the Division released its draft sports betting rules, which can be found here. On December 9, the Division began two and a half days of stakeholder work groups, the members of which can be found here. The Division split the stakeholder work groups into five topics: (1) general rules; (2) compliance; (3) technology; (4) integrity and information; and (5) responsible gaming.

The draft rules cover the following topics:

  • Rule 1 – general rules and regulations
  • Rule 2 – powers and duties of commission and director
  • Rule 3 – applications, investigations, and licensure
  • Rule 4 – taxes, fees, and distributions
  • Rule 5 – authorized sports betting activities
  • Rule 6 – rights and duties of licensees
  • Rule 7 – requirements of sports betting operators

The Division is accepting comments on the draft rules from stakeholder work group members and members of the general public until December 20. Comments from members of the general public may be submitted to the following email address: dor_gamingweb@state.co.us.
 

Our Team

With backgrounds that include everything from gaming regulatory agency service to former in-house counsel, we bring significant experience working with gaming regulators and we have long represented clients before the Division. Learn more about our team and how our strong working relationships with Colorado’s regulators can assist your company in making the most of your one shot at go in the licensing process here.

Meet The Team

William J. Downey Shareholder T 609.916.5745 wdowney@bhfs.com
Sarah M. Mercer Shareholder T 303.223.1139 smercer@bhfs.com
Mark R. Starr Associate T 702.464.7093 mstarr@bhfs.com
Melissa L. Thevenot Associate T 609.916.5749 mthevenot@bhfs.com
Scott E. Wiegand Shareholder T 702.464.7095 swiegand@bhfs.com