The Most Valuable City in Sports Gambling

Details: Category: Gambling Industry; Created: Thursday, 18 May 2023 19:49

It’s the most valuable city in sports gambling. There are so few people outside on a spring afternoon in this little Colorado town that you can hear the North Clear Creek, which runs through it, flowing with water. And yet, this community of just 100 people, who reside in 61 homes, is the most expensive in all of America's regulated sports betting regions.

Key Points

– Sports gambling thrives in a small Colorado town.

– Black Hawk has a rich, interesting history that has led to its link to sports betting.

Sports Gambling, Meet Black Hawk, Colorado

Black Hawk, Colorado stands alone as the sports gambling center of this new world as we mark the fifth anniversary of a Supreme Court ruling that permitted states to determine their own sports gambling fate.

There are more valuable states than Colorado in the era following the repeal of the Professional and Amateur Sports Protection Act of 1992. Over the past five years, wagers totaling more than $20 billion have been placed in five different states: Illinois, New Jersey, Nevada, New York, and New Jersey.

Though Colorado is the 13th most populous state among those that have legalized sports betting, it has taken in a staggering $11.6 billion in wagers since May 2020, ranking eighth nationally.

Black Hawk is its leading city.

There are 15 casinos along the less than two-mile road in Black Hawk. According to the American Gaming Association, slightly under $900 million in gambling revenue was generated inside these casinos in 2022, ranking it as the 13th-most lucrative city for gambling. Many of these casinos are meant to emulate a "Sin City" ambiance.

In fact, little Black Hawk produced 14% more gaming revenue last year than rebuilt downtown Las Vegas. Black Hawk's value in terms of sports betting comes from being the physical location for internet sportsbooks. As we know, the overwhelming majority of gamblers place their bets through mobile gambling.

Online Betting in Colorado

Additionally, the sports bookmaker that runs on mobile devices must be connected to a physical casino, as is the situation in the majority of states.

Thus, the Barstool Sportsbook was added to the Penn's Ameristar hotel in Black Hawk. The venerable Las Vegas company SuperBook and The Lodge Casino have a partnership. The Isle Casino was renamed Horseshoe once Caesars entered the market.

And so on.

Colorado boasts 24 mobile sportsbooks, which is evidence of one of the country's least restrictive tax policies on sports betting. Compare Colorado's 10 percent share of sportsbook earnings to New York and Pennsylvania's 51 and 36 percent, respectively.

Black Hawk is connected to half of Colorado's sportsbooks. These bookies also host some of the industry's biggest names like DraftKings and Caesars. Accordingly, the Black Hawk connection accounts for nearly 70% of Colorado's total sports betting transaction on a monthly average.

Here’s where the embarrassing part of all of this is about to start. The city with the highest revenue from sports betting doesn't actually profit from it.

Why?

Black Hawk & Profits

Black Hawk only receives money from bets made at casinos since agreements relating to mobile sports betting are only made between the sportsbook and the venue.

And it gets worse from there. The city does not receive a cut of the action if a bettor approaches the window. Sportsbooks' kiosk count is the only source of revenue for Black Hawk, which charges the city $4,200 a year for each kiosk.

The Barstool Sportsbook at the Ameristar is one of the biggest physical sportsbooks at about 3,700 square feet, but with only six kiosks, the book is only generating $25,200 in revenue for the city this year. The same price is paid by the city for each slot machine, and that will bring in over $4.2 million.

In some ways, you could say that sports gambling has affected the city financially, despite the fact that the relationships have aided the growth of the industry. City councilman David Spellman has been the city’s mayor for the past 17 years. He said at the city’s peak, they had 10,000 slot machines. Now, they are at 6,200. Sportsbooks take up space and 98 percent of sports betting is done online. Online bookmakers don’t take up space.

When sports betting became legal in Colorado, Black Hawk proposed to receive a portion of the handle placed locally. The idea was rejected. The major players in the industry did not want to set a precedent.

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Black Hawk in a Sports Gambling Black Hole

The fact that Black Hawk is in Colorado is more important to online sports betting than its precise location. As it stands, Colorado is geographically located within one of the largest online sports betting black holes outside of California and Texas.

Why does this matter? Idaho and Utah are to its west, and New Mexico is to its south. Online sports betting is not legal in any of these states. Montana, North Dakota, and South Dakota, which are located north of Colorado, do not have any internet shopping outlets.

Even in Nevada, a bettor must open an account at a physical sportsbook before they can place a wager online. That makes Colorado a destination for many sports bettors.

Before moving on, get ready for the Preakness Stakes, the next leg of the Triple Crown.

History of Black Hawk

You would need to travel back more than 160 years to understand how Black Hawk arrived here. Georgia native John H. Gregory discovered the first quartz vein containing gold at that time in nearby Central City. During the following 20 years, from 1880 to 1900, the region earned the moniker "The Richest Square Mile on Earth." At today's values, the quantity of gold discovered in the restricted area during those two decades would be worth $3.4 billion.

Additionally, Black Hawk and Central City saw an influx and outflow of gold, which ultimately contributed to Colorado's secession as a territory and eventual statehood. However, almost everyone fled when the situation dried up.

Organized crime discovered that the Colorado mountain villages were ideal for seclusion in the 1940s. Gambling on gold quickly changed to illegal table games until things were uncovered.

For the following 40 years, Black Hawk was sterile and on the verge of extinction. The situation was so bad in the late 1980s that Roy Romer, the governor of Colorado, proposed that the only way to save the state was to agree to his proposal to erect a jail there. Instead, Black Hawk held out for the gaming experience.

Black Hawk modeled itself after Las Vegas. The casinos in Black Hawk were the perfect partners to have when table game limits increased to $100 and sports betting was legalized in Colorado in May 2020.

When sports betting became legal, predictions suggested that the state would place $1 billion worth of bets annually. Colorado is expected to bring in $6 billion this year, and the city, whose inhabitants could all fit within one of the town's sportsbooks, is now challenging the Las Vegas Strip for the title of "the richest square mile on Earth."