Colorado hesitant about betting exchanges

The state of Colorado has been happy to offer local punters access to mobile, retail, and online sports betting markets. Yet, one matter has been the subject of much debate, and particularly – whether betting exchanges should be allowed to operate and in what capacity.

Presently, the Colorado Limited Gaming Commission (CLGC) and its representatives are caught on the horns of a dilemma. Should the state expand its gambling coverage to betting exchanges or should it take more time to study the matter before it arrives at a final decision?

CLGC commissioners found reason to temporarily pause efforts to pass exchange betting as one of the supported sports betting markets with a 3-1 votelastweek. This is not a simple matter of allowing college sports – it’s more or less a brand-new form of gambling.

Popular in the United Kingdom and Europe, exchange betting is essentially a form of wagering where oddsmakers do not get to set the lines. Rather, individual sports fans will host a selection and pick the odds themselves. They will then wait for someone to take them up on those odds and bet against them.

The role of the oddsmaker is to take a cut – usually between 2% and 2.5%. From that cut, tax is being paid back to the state. This form of betting is also known to attract more advanced sports bettors and may perhaps have a slightly smaller appeal to the general public of bettors.

In the United States, sports betting is not necessarily available. In fact, only one state has tried to run it successfully – this is New Jersey. A similar initiative by Nevada misfired as the company that ran the activity had inroads with the US Securities and Exchange Commission and was forced to shut down.

So, what’s the matter with exchanges then? For the most part, the CLGC is not quite sure how taxation would work and whether there won’t be some loopholes that could make it so that sports betting companies pay less tax. This is a genuine concern.

The decision to therefore pause the proposal with the 3-1 vote is to give the Colorado Division of Gaming (CDG) more time to look at the matter from different angles. Both CLGC’s chairman, Richard Nathan, and commissioner Justin Davis said that the CDG has done a good amount of research, but some issues still need to be addressed before Colorado can give its blessing to betting exchanges.

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