When the coronavirus pandemic shut down major sports in the U.S. and around the world this spring, Peter Jennings felt the sting as more than just a fan. Entrepreneurial since high school and with a head for numbers that helped earn him a degree in finance, he parlayed his love for sports into an unconventional career.
The 32-year-old former stockbroker shifted his attention in 2012 from what he calls “the biggest casino in the world” — the stock market — to making big money playing daily fantasy sports, and then into developing data tools and services for other players. He’d been eagerly awaiting the legalization of sports betting in Colorado because it offered a much-anticipated chance to grow the industry for which he has offered online content while also making a good living with his own analytical approach to wagering.
Suddenly, just as Colorado’s new law went into effect, he found himself looking overseas and to relatively obscure competitions for action. Not that he was bored. There was still Korean pro baseball in full swing, though he could never bring himself to bet the high-level table tennis or darts that surfaced as wagering options. Golf came back slowly. The shutdown also opened his eyes to the possibilities of esports, the video-game competitions that, he notes, are by their very nature pandemic proof. He’s bullish on that market.
“It was a strange time, with so much uncertainty,” says Jennings, who now runs sports-related business ventures — including his personal bets — from an array of TV and computer screens in the home office of his Greenwood Village condo. “A lot of times during recessions, gambling goes up. And people always love sports, so it’s a great escape during bad times. But I didn’t project a pandemic.”
Now, with major pro sports returning, under a protective bubble in some cases and with fans socially distanced to their living room couches, Colorado’s foray into legalized betting has finally launched in earnest.
Sports bets officially emerged from the shadows on May 1, and like many other businesses suddenly pivoting during the shutdown, this one initially featured a limited menu. That first month, bettors laid down only $25.6 million before a surge to $38.1 million in June — nearly a 50% increase that, under the circumstances, encouraged state officials and supporters.
Still, early estimates of more than $1 billion in annual wagering seemed eons away.
But after July, that projection doesn’t seem so far-fetched. With major U.S. sports like baseball slowly returning to play, the action kicked up a notch.
The state Department of Revenue reported on Wednesday that more than $59 million was wagered in July, just over a 55% increase from June and more than double May’s relatively modest number. After payouts to winners, operators reported more than $2.4 million in net sports betting proceeds and almost $242,000 in taxes due to the state.
And that still doesn’t reflect the full schedule of hockey and basketball playoffs, at a time when the NHL and NBA are normally dormant, that got underway in August. Baseball, at 15.6%, accounted for the most betting on a single sport in July.
On Wednesday night, some sports halted again — this time in a powerful gesture seeking to draw attention to racial injustice. In the aftermath of a white police officer shooting Jacob Blake, a Black man in Kenosha, Wisconsin, players for the NBA’s Milwaukee Bucks announced they would not take the floor for their playoff game.
The NBA playoffs already have been making strong statements on the issue of police violence, but this latest police incident — aggravated by the fatal shooting of two protesters by a civilian — prompted the players to take additional action.
“Despite the overwhelming plea for change, there has been no action, so our focus today cannot be on basketball,” the players said in a statement.
Within hours, all three NBA playoff games Wednesday night had been postponed, and players met to discuss possible further steps that could include additional postponements or even canceling the season. The Milwaukee Brewers also postponed their baseball game as the action by players continued to gain momentum by the minute.
Having already been buffeted by the pandemic, sports took a back seat to the pressing issue of police violence in a year unlike any in memory.
Rep. Alec Garnett, a Denver Democrat, pushed for Colorado’s sports betting referendum with big bipartisan support, though voters then narrowly approved it last fall. He notes that even with growing revenues, accurate projections won’t come for a while yet. The “handle” (total amount bet) and the tax revenue earmarked for future water projects should become clearer once the pandemic has passed and the sports schedule resumes some semblance of routine.
Tax revenue from May fell just short of $100,000, while June brought in $217,023. That money will go toward repaying $1.73 million in startup costs before any revenue starts flowing to the Colorado Water Plan. Through July, there were 10 online operators and seven retail, or in-person, operators licensed in Colorado. Many more have been approved but haven’t yet begun operations. Only six online operators took bets in May.
Meanwhile, pro football has so far stuck to its plans to play — think of all the Denver Broncos fans in orange-tinted glasses eager to put their money where their heart is — even as the college game remains divided on a fall season. Garnett figures that while the rollout has been challenging, it’s hardly a worst-case scenario.
“The worst case would’ve been if we’d abandoned the vision of where this market is going and followed the lead of some and did nothing online and just do (in-person) betting windows across the state,” he says. “If we’d done that model, we’d be looking at a market not delivering on any level the way people expected it to. I don’t know who would’ve thought $25 million would be bet in May when no sports were available. It shows we captured the 21st-century model of sports betting.”
While in-person sports books still play a role — electronic signs tout them outside Colorado casinos in Central City, Black Hawk and Cripple Creek — the new model Garnett describes employs apps to make online betting easy from anywhere within the state. Turn on a television and you’re bound to see commercials for companies like DraftKings and FanDuel, two of the most popular sites, as they jockey to bring on new customers.
Together, those operators spent $1.5 million backing the ballot measure.
With the major U.S. sports shutdown happening just as they were set to cultivate Colorado’s new market for betting, both needed to pivot quickly to provide alternatives. Spokesman Kevin Hennessy notes that because FanDuel is an international company, it had a relatively easy time setting up new betting markets for overseas sports.
“We’d been dealing with South American soccer because it’s popular, so it was just a matter of regulators approving it,” Hennessy says. “For a couple weeks, we had Korean baseball available. Darts we have on a regular basis, and table tennis is popular in some parts of the U.S., though ‘popular’ is relative in a pandemic.”
In May, table tennis actually accounted for the most money wagered on a single sport in Colorado at nearly $6.6 million, and did so again in June with $9.1 million. But in July some of that action was suspended by the Division of Gaming, which must approve all leagues and events for legal betting.
The state received “credible information” from its integrity monitoring organizations of potential match-fixing and inconsistent betting patterns in at least one foreign country on Ukrainian table tennis. Though there were no known betting issues in the U.S., the state Division of Gaming suspended betting on the Ukrainian matches.
“The division uses multiple sources of information, including data from integrity monitoring associations, along with some of the operators that have internal integrity monitoring departments, to monitor the sports betting market,” Suzanne Karrer, a Department of Revenue spokeswoman, said in an email. “Colorado is one of the first in the nation to set up a system of sports betting integrity and reporting, as established in our sports betting rules. We have an entire rule on this specific issue.”
Rule 8 in Colorado sports betting regulations requires licensed operators in the state to provide aggregate data as well as have internal controls in place to identify unusual betting activities. Operators must routinely report information on wagers including time, amount, odds, type of bet, winning payout and team to the Division of Gaming and the state’s independent integrity monitors, including U.S. Integrity and the Sports Wagering Integrity Monitoring Association.
Although table tennis had its moment in the Colorado spotlight, the return of major sporting events has been momentous. FanDuel’s Hennessy reports that ice hockey bets right now — in the sweltering middle of August — are four times what they were in February. And the NBA, as it begins its playoffs, ranks at the top of the list, which in a normal year would never happen as Major League Baseball dominates the summer schedule.
But this is no normal year. Not only has the usual sports schedule been rearranged by the coronavirus, but those sports once largely ignored by U.S. bettors haven’t gone away.
“We’re still offering the Premier League of Darts” says Johnny Avello, Las Vegas-based director of race and sportsbook operations for DraftKings. “KBO (Korean baseball), that’s still going. Cricket is going. That menu that we were using is still around. I learned a lot myself. As oddsmakers, we had to learn more about how to make offerings for it. And we got better at it.
“Some people have learned to like those sports.”
Peter Jennings’ first legal sports bet in Colorado did not go well.
On May 24, golf legends Tiger Woods and Phil Mickelson paired with superstar NFL quarterbacks Peyton Manning and Tom Brady, respectively, for a charity match, with the pandemic-tinged telecast offering the intimacy of mic’d-up players and broadcasters delivering a running, often humorous, commentary.
Jennings, an avid golfer himself, couldn’t resist — he bets his highest volume on golf — and became one of the millions who made “The Match” the highest-drawing cable golf event in history.
“People were dying for something live with the lack of real sports,” he says. “It was a great concept. Peyton and Brady were a good dynamic.”
But strictly speaking, it was a low-stakes event. The only money on the line went to COVID-19 relief, and with various celebrities chiming in with side bets during the telecast, the total grew to $20 million. But while it was great entertainment and raised money for a good cause, how do you intelligently bet on the outcome when you can only guess at how seriously the participants take the competition?
“My thought was to get as much information as I could on Brady and Peyton, get their handicaps,” Jennings says. “But I think Phil Mickelson definitely wanted to win. He was so stoked about the match, talking trash. Tiger has a ton of pride, but I was thinking Phil was a little more motivated. But still, there was a randomness to it.”
Jennings bet the moneyline on the underdogs, Mickelson and Brady. That type of bet lays out how much he would win on a bet of $100, and Jennings shopped around and found a sportsbook that paid close to $200 for every $100 he risked.
“By no means did I deem that a wildly profitable bet,” he says. “But of course I was going to bet it. I fell into the camp where the best part of betting is that it makes any sporting event that much more entertaining. You’re that much more engaged in any sporting event you have money on.”
The match was, indeed, entertaining, as the viewership indicated. But the pair of Woods and Manning won.
“Yes, I lost my first bet,” Jennings chuckles. “One of many, many losing bets that I’ll make.”
He can smile when he says this, because unlike the occasional, recreational bettor, those who bank their livelihood on the outcome of their wagers tend to approach betting from a big-picture, analytical system that disregards distractions like fan allegiance and strips down the process to math and probability.
For Jennings, there were few better teachers of the analytical approach than online poker, which he started playing in high school. He continued to hone his game through college at Colorado State University, where he managed to win “in the low six figures, which at the time seemed like all the money in the world.”
“By no means was I the best poker player, but I was certainly good enough to win,” he says. “I was playing at a good time, working hard on my game, trying to take an analytical approach.”
In 2011, when the U.S. Department of Justice indicted the top online poker sites and froze their assets in what players dubbed Black Friday, he gave up his “entrepreneurial aspirations” with regard to poker and, armed with a degree in finance and his Series 63 license, found work as a stockbroker at Charles Schwab. But the same federal law that shut down online poker created an opening for daily fantasy sports.
“You had to be on the phone a good percentage of the day at Schwab,” Jennings recalls. “I’d front load, be on the phone early in an effort to free up time to play daily fantasy sports — basically take a long dinner break ahead of the sports schedule. That started to become more lucrative than my job.”
Daily fantasy sports is a variation on traditional fantasy leagues, in which groups of fans draft teams in various sports and usually compete against each other through a point system over the course of a season, with the winners taking various shares of a prize pool. The daily version operates online and with a drastically shorter timeline — as short as a single day to determine winners and losers and provide quicker payoff.
Because daily fantasy sports is considered skill-based, playing it for money is not gambling under federal law, although a handful of states consider it illegal. Colorado passed a law that explicitly designated it legal in 2016. Fans can still play a free version of daily fantasy sports that often features prize money but carries no risk for the player.
Garnett didn’t carry Colorado’s bill to legalize pay-for-play daily fantasy sports, but he was involved with amending it and got to know Jennings along the way. They still interact on Twitter and share an occasional text.
“The amendments I put on were all for consumer protection,” Garnett says, “making sure skilled gaming operators identify who are the ‘whales’ and the ‘fish,’ so there are spots for beginners to play each other. I shouldn’t feel like I have to play Peter Jennings. A lot of the work I did was to carve out space for people like me who just do this on the side for fun.”
Companies like FanDuel and DraftKings emerged to take advantage of the growing popularity of daily fantasy sports. FanDuel’s Hennessy says the company noticed that its daily fantasy sports customers throughout most U.S. states were looking to place legal wagers. So when it goes into a new state like Colorado, it already has a database of potential customers.
Jennings’ methodical approach to daily fantasy sports led to enough success that he quit his job as a stockbroker in 2012. Two months later, he qualified for a FanDuel championship and won $150,000, the first six-figure prize. Three years later he banked $1 million in a fantasy baseball tournament. But it was that first big win that he calls “a life-changing moment” that led him to pursue a career in the industry.
For him, that meant becoming involved in aspects other than betting on sports outcomes. He was co-founder of a company called FantasyLabs, a one-stop site for sports analytics and tools for playing daily fantasy sports that attracted investment from Mark Cuban, owner of the NBA’s Dallas Mavericks and an investor on the show “Shark Tank.” That and his other ventures now exist under the umbrella of the Action Network.
Jennings appears on podcasts and live stream interviews, including a weekly look at the PGA Tour, and also does business development to grow the industry, including some current planning for products to assist the serious bettor. But the new sports betting landscape in Colorado means that even recreational bettors among his friends and acquaintances often seek his counsel.
He shies away from telling people what to bet. He prefers the “teach a man to fish” approach and offers advice on how to make smart bets that may not yield a quick windfall, but can keep the recreational bettor from courting disaster.
“What people need to talk about is price — helping people find the best price,” he says of shopping sportsbooks for the best terms, such as odds or point spread. “I’m not saying that’s a guaranteed winner, but make sure you check everywhere you can bet and bet at the best price. That’s going to help a lot of people go from very bad bettors to maybe slight losers or even break-even bettors.
“And anyone who’s taking it more seriously, working hard at it and talented, it can make them a winning bettor. The majority of professional bettors, 99%-plus, are taking advantage of line shopping.”
Jennings contends that Colorado has some of the best legislation from both the operator and bettor standpoint, which is why he says so many operators have come here.
“Multiple options are fantastic for the bettor,” he explains. “The biggest advantage you have as a bettor is you get to choose when to bet. If you have multiple operators, you get the best price. Having options, the ability to line shop, is paramount and Colorado is set up well for that.”
Jennings’ income is weighted toward his own plays — in daily fantasy sports and now regular sports betting. Generally speaking, he’s able to invest six figures on specific sporting events — particularly golf tournaments or NFL Sundays — through those two avenues in anticipation of a 5% return on investment.
“The power of betting, playing daily fantasy sports relative to other investments, is that you have shorter time horizons for compounding, which can be really powerful,” he says. “Results are up and down, but the goal is to have that trend, and historically that’s been able to play out in my favor.
“If you can win 55% of your bets, you’re doing great,” he adds. “High 50s you’re doing amazing. Even if you’re winning 58%, you’re losing the other 42%. So there’s a lot of losses.”
Virtually all of Jennings’ plays happen online.
Garnett says that part of the reason Colorado’s law paid such attention to the online model had to do with the proliferation of marijuana dispensaries “that have overtaken some communities.” To avoid that with sports betting, the proposed legislation focused on an online model that would protect consumers, “geo-fence” the state so that online bets could only be placed within its borders and foster competition so that one or two operators wouldn’t dominate the market.
But in-person betting still has its place. At this point, the state’s monthly report doesn’t reflect the volume of bets that happen online vs. in person because of the relatively small number of operators. But casinos like the Monarch in Black Hawk have plans to expand their sports betting space considerably from the current pair of kiosks tucked into a corner by an exit.
Erica Ferris, director of casino marketing for the Monarch, says the pandemic pause provided time for the company to perfect its mobile app, even as it completes what it touts as a state-of-the-art sportsbook space.
“I think what is great about an app is it allows you to bet from absolutely anywhere in our state,” she says. “I don’t think it diminishes how people enjoy coming to a sportsbook from time to time. And I think as we get into big fantasy drafts and things like that next year people will still be interested in coming to a sportsbook. Watching a great game is watching a great game, and being able to place a sports wager with knowledgeable professionals is the goal.”
Still, in relative terms, she describes the sportsbook as “an add on. It’s a delightful amenity that we can offer our guests in conjunction with the other slots and table games that we already offer.”
DraftKings’ Avello, noting “big plans” for what’s now a temporary sportsbook at the Mardi Gras casino in Black Hawk, echoed that physical spaces are important for lots of bettors who like the camaraderie of a retail location.
“Mobile and digital is the future, but bricks-and-mortar is important for people who want to make a bet or talk to a ticket writer about a bet,” he says. “Those places are still important.”
Garnett contends that the future may actually be in giving sports bars a “face lift,” with amenities that let fans enjoy the group dynamic, have relevant information at their fingertips, watch multiple events at once and place their bets through the apps on their phones.
For serious bettors like Jennings, the only time he might place a bet at a retail sportsbook is “a total one-off, if I’m ever in Blackhawk and want to bet in cash. But the online conveniences, that’s my business. Cash is just a nuisance more than anything.”
And on those very occasional times when he makes an entertainment bet — like say, if his CSU Rams were playing the University of Colorado — and he wanted to go with his heart rather than his strategic model, he would at the very least shop around for the best terms, whether it be odds, point spread or moneyline.
“I don’t really need that in my life,” he says of betting sports just for fun. “I’m betting all the time. In the instance I do, I’d feel better and justified if I find an outlier price.”
Whether the bettor is a professional like Jennings or one of the many recreational bettors willing to put a few bucks on the home team, one principle applies. Gambling, like investing, is all about risk tolerance. Jennings figures he probably has higher risk tolerance than the average person, but when it comes to protecting his assets in the market, he calls himself a “buy and hold” kind of guy.
Once he got married and started to build a financial foundation, he says, he’s become “hyperaware” of managing what he has, and suspects his risk tolerance will recede as he gets older. That said, he’s excited to see where sports betting goes in Colorado.
“I couldn’t be more bullish on this space,” Jennings says. “Part of the legalization that’s great is the stigma around being a sports bettor or ‘gambler’ is being eroded. The stock market is the biggest casino in the world. It’s just a different value proposition. The majority of the collective value of group betting is entertainment.”