DENVER — Sports betting became legal in Colorado on May 1, with one minor issue: There were no sports, at least none familiar to most Americans.
The major sports leagues had shut down amid the COVID-19 pandemic, and Colorado casinos, by that point, were also closed.
Still, the early data showed that Colorado bettors found plenty of ways to stay busy online: Table tennis matches — mostly held in Russia — were the most-bet sport, with more than $15 million in wages placed in May and June.
The Korean Baseball Organization, which returned to play in April, was another favorite among bettors, along with the Ultimate Fighting Championship, which held several fights and eventually opened a "Fight Island" in Abu Dhabi.
With U.S. baseball and basketball back in action, those numbers are expected to be higher for July and likely higher in August.
This week, we talked with David Farahi, chief operating officer of the Monarch Casino in Black Hawk, about the first few months of sports betting in Colorado and what operators are anticipating as major sports return.
Watch our conversation with Farahi:
Here's a transcript of the interview:
Denver7: With sports just now beginning to return, how were the first few months of sports betting in Colorado?
David Farahi: It was an interesting start. We didn’t have any of the major leagues going when we launched in May. So that drove people to betting things that I think most Americans had no interest in, prior to May 1. Things like Russian table tennis. South Korean baseball. And it honestly was — we'll call it a soft launch. It allowed us to open the market up, make sure all the technology worked, get people used to betting through our apps. It’s been a great start and we’re looking for a lot more growth now that US sports have started — baseball, basketball, hockey and hopefully they’ll be able to continue.
Denver7: MLB and NBA are both back now. Have you already seen an uptick in bets placed over the last week?
Farahi: What’s really interesting is, baseball isn’t one of the biggest-bet sports. The NFL is No. 1. That is the biggest-bet sport, by far. Baseball is really 3rd or 4th. But with baseball being the first one to launch again, we saw a lot more bets on baseball than we’re used to. And there’s some new dynamics to it, because the rosters are more fluid than you’re used to seeing.
For example, usually the case, when you place a bet on a baseball game, you’re locking in the pitcher for that game. But because rosters are so fluid in this new environment, when you bet on the bet on the Monarch app, for example, you’re just betting the team, irregardless of who the pitcher is. So there are some adjustments being made because of this new world.
Denver7: We'll touch back on some of those more obscure sports here in a bit. But Monarch's sportsbook is fully in-house — what was it like to launch a sportsbook from scratch?
Farahi: We weren’t starting exactly from scratch, because we’ve been running our own sportsbook at the Reno, Nev., property for almost a decade. And we have a great team of linemakers, risk management folks, that can set the lines and run the most important part of the business, frankly, which is setting those lines.
Putting the technology stacked together — and it’s not just one technology — you’ve got almost a half-dozen different businesses you’re working with with the whole technology stack. Which goes from the user interface, the player sees when they’re placing the bet. But then you have to have age verification, know-your-user verification, payment processors, several different layers of that. Geo-location services.
So there’s a lot of different businesses that help on the back end to make sure the system works properly and regulatory sound. But our ability to run the business in-house, in terms of operations and risk management, it allows us to have a lower cost structure. It costs less to run the business. So we’re able to have a less expensive product for the better. And the way someone who is betting sees that is through the lines. Our odds are better than other sportsbooks out there because our costs are less.
For example, we have 8-cent baseball lines, whereas other books will have 10- or 15-cent baseball lines. It’s less expensive to bet with BetMonarch than it is with some of these other guys.
[The sports betting news website, Colorado Sharp, compared BetMonarch's odds to other Colorado sports books and found it offered better odds on the favorite to win. For example, in a June 3 Korean baseball game between the SK Wyverns and NC Dinos, BetMonarch offered -190 odds on the favorite, the NC Dinos, while odds from BetRivers and DraftKings were at -195.]
Denver7: In May and June, table tennis was far and away the most-bet sport in Colorado. More than $15 million in wagers placed over those two months. And these are usually obscure matches held somewhere in Russia. Why do you think table tennis was so popular among bettors here?
Farahi: I’ll be honest with you, I’m going to tell you something controversial. We didn’t offer any table tennis bets. We haven’t offered any table tennis bets. And I’ll tell you why — we could not ensure the outcomes of those games. If we can’t offer a clean product, we’re not going to offer it at all. And that’s why Monarch has decided not to offer table tennis.
Denver7: You think it lacked that stability or integrity you're looking for in a game?
Farahi: That's certainly where we landed on it. And that's why we don't offer it.
Denver7: What has been the most popular sport for you?
Farahi: For us, it was South Korean baseball. That’s a highly regulated league. The challenge is it’s not well distributed. There are teams that are really popular and really good and there are other teams that are not so much. As with any league — it happens with U.S. leagues as well — people generally bet on the favorites. So if the favorite always wins, the house general loses. That was challenging as we got into the South Korean baseball market. But kudos to those guys for getting their league open in a safe way and offering their product and we were happy to make it available.
There was some concern that Colorado might not generate as much sports betting business as states like New Jersey, which is close to several big population centers in New York and Pennsylvania. Why do you see sports betting as viable in Colorado?
Farahi: New Jersey was second after Nevada. They certainly had the benefit of having a lot of large population centers right along their borders, and so people were literally driving from Manhattan, through the tunnel, they get on the other side, they place a bet and they drive back to New York. They were making the trip, really, just to make a bet from their car. And they've benefited from that in the short term. I think that's going to change over time as more states allow sports betting. Pennsylvania has allowed it. New York is talking about it. And so each state will kind of have their own rules and people will probably end up staying in their home state to place their bets.
There's a lot of talk in the sports betting industry that Colorado is actually one of the best states to be in, to launch in. We have a stable regulatory environment. I think the Colorado Division of Gaming did an outstanding job of getting the regulatory framework approved and in place in the timeframe that Colorado voters asked to, which was May 1, despite COVID shutting everything down from the middle of March, all the way through the launch. That was not an easy task and the Colorado Division of Gaming did a great job.
They've also been open to lots of different types of bets, which has attracted different sports betting operators. So I think there's enough of a population in Colorado, enough of a sports fan base in Colorado for the industry to be successful here. And I think a lot of industry operators are interested in coming to Colorado because of that. It's going to be a viable market, a competitive market. It might not even be a profitable market for many operators for a lot of years. But that's really, frankly, to the benefit of Coloradans.
Denver7: Colorado has a 10% tax rate on sports betting revenue — is that rate attractive to sportsbooks?
Farahi: It’s higher than Nevada, but less than New Jersey, less than Pennsylvania. It’s certainly plays a part in the attractiveness of the market. It allows operators to do promotions that they can’t do in other markets because it’s too expensive with the tax rate.
You’ve gotta remember that those numbers that you were throwing out there earlier about the amount bet in May and June, around $25 million and $38 million. That’s right — that’s the amount bet. That’s not the amount the casinos won. The way that the numbers are being published right now, it’s hard to actually know the end of the day win, because so many of the bets are what’s called futures. So they’re a bet placed today, but you don’t know the outcome of that bet for some time.
On May 1, somebody could have placed a bet that the Broncos are going to win the super bowl. The casino holds on to that money until the end of the football season to see who wins, and then that really gets counted as a win or a loss at that time. So right now, when you look at the numbers that came out in may and June, it looks like the casinos are winning about 10% of what was bet. But we actually don’t know if that’s the case, and we won’t know for some time. Historically, casinos usually hold — win — about 5% of the total amount bet. And I would suspect Colorado would be in that same ballpark longterm.
[While full data on "futures" are not available, Colorado bettors in May and June combined to place at least $900,000 on football, hockey and basketball, indicating most of those bets were futures as those sports had not returned to play.]
Denver7: Do you expect those NFL futures to really take a jump in the next few weeks?
Farahi: Oh sure. As the season gets picked up, people will understand who’s playing, who’s not playing. I think people will bet more.
Once football starts, it will be a huge growth. Assuming football starts, that first month of football, I think we’ll see very significant growth in terms of handle or amount bet — different words for saying the same thing. I think it will grow in a very big way once football season starts.
Denver7: What do you think the breakdown will be between online vs. in-person betting? Clearly, here in Colorado casinos weren't open in May, so bettors had no choice but go online.
Farahi: I think here in Colorado, the casinos aren’t far. We’re only 45 minutes from the Denver metro. But it’s still 45 minutes. So the majority of play continues to be online. We’ll probably continue to see that until the casinos can have dedicated areas for sports viewing and sports betting. At the Monarch we’re in the final phases of our resort development. We’re going to have our resort with 516 rooms, four restaurants, a spa. The final phase of the project is we’ll be adding a sports betting area. It won’t be the size of our Nevada sportsbook because we don’t have as much space and land here. But we’re going to have a pretty dynamic place to come place bets, watch the games, hang out with your friends. And so we won’t have that this year for this football season, but the design is complete, it’s pretty spectacular, and we’re excited to bring that to Colorado.
Denver7: Anything else that has stood out to you about the first few months of sports betting here?
Farahi: I definitely didn’t expect Russian table tennis to be getting the betting volume it’s been getting. I think that’s been the biggest surprise.
Not at all surprised that people are excited about sports betting. I’m guessing they’re downloading multiple apps. I don’t think it’s going to take long for Coloradans, and Americans in general, frankly, to start price shopping. Sports betting is a market just like any other market, whether it’s the Nasdaq exchange or the New York Stock Exchange. Sports betting is kind of the same. People are going to start shopping around for the best price. I think people are going to be excited at what they see at BetMonarch, because we’re going to have the best prices out there.
Denver7: The table tennis thing is almost funny when you think about it, with how much has been placed on those matches. Did you just have to stay on the sidelines for that?
Farahi: That’s right. At the end of the day, if we don’t feel like we can deliver a clean product, it’s not worth it to deliver that product.