Tipico Shutting Down Colorado Sports Betting Operations

Tipico, an international online gaming provider, will be shutting down their Colorado sports betting operations after selling the United States portion of their business to BetMGM.

Financial terms of this agreement were not public knowledge as of Wednesday, June 26. However, both companies have confirmed the transaction.

Why is Tipico, which has 6,000 employees and has been in business since 2004, selling their domestic operations now? Especially at a time when online sports betting in the United States has never been more popular? What is BetMGM, one of the biggest online betting sites in the USA, hoping to accomplish with the purchase? And of course, what does all of this mean for sports betting in Colorado moving forward?

These questions deserve answers. And we are here to find them.

Why is Tipico Selling to BetMGM

As many may have guessed given the language attached to the sale, Tipico isn’t just selling their right to provide Colorado sports betting services. They are getting rid of their entire USA sports betting footprint. And they’re doing so roughly 18 months after outlining plans to aggressively invest in building up their market share.

However, those attempts to expand their influence in the Colorado sports betting market as well as a handful of other states ultimately failed. As Legal Sports Report’s Matthew Waters wrote:

“Tipico is the latest brand to exit after failing to establish significant US market share. The German sports betting leader announced its US plans in July 2020. Tipico said it would launch in New Jersey with its own platform. US CEO Adrian Vella told LSR in January 2023 that it was ready to speed up its progress. Tipico tried to appeal to locals through partnerships with live music venues and even a Cincinnati brewery. ‘We’re taking a cautious approach but an aggressive approach, investing heavily in the product, VIP and the customer. We really want to have something where the customer, they have no reason to churn,’ Vella said at the time.”

Despite Tipico’s attempts to broaden their influence, it’s not particularly surprising they failed. We have seen multiple international online sportsbooks struggle to establish and maintain a foothold. Too much of the United States online sports betting industry is already accounted for by a number of brands.

Chief among these USA online sportsbooks: DraftKings and FanDuel. Looking at the latest Colorado sports betting revenue report, online wagers accounted for over 99 percent of the most recent monthly handle. The vast majority of that business, meanwhile, was funneled through DraftKings or FanDuel.

Tipico isn’t Just Leaving the Colorado Sports Betting Market

Tipico will not just be leaving one state. Their deal with BetMGM will require them to shut down in the following markets:

• Sports betting in Colorado
• Sports betting in Iowa
• Sports betting in New Jersey
• Sports betting in Ohio

Though this isn’t an extensive catalog of states, Tipico did manage to crack four good sports betting markets in the USA. But much like the Colorado sports betting trends, wagering in Iowa, New Jersey and Ohio heavily favors more veteran online websites like DraftKings and FanDuel—and, of course, BetMGM.

Yet, while BetMGM is considered a direct competitor to FanDuel and Draftkings, they own a noticeably smaller market share. That is at least part of the impetus behind this transaction: catching the operators in front of them.

Sure, this requires taking some chances. This transaction is one. BetMGM isn’t just acquiring Tipico’s rights for sports betting in Colorado, Iowa, New Jersey and Ohio. They’re procuring part of the company’s technological services as well as some of their employees.

“This acquisition gives us control of our entire technology ecosystem, and we are delighted to bring Tipico’s U.S. team, with their track record of developing high quality product and pricing capabilities, into our business,” MGM International Interactive President Gary Fritz said. “By controlling our own sportsbook technology, we ensure that we will deliver the world’s greatest iGaming experience to customers across all our markets and brands,” added Gustaf Hagman, the CEO of LeoVegas, which is a subsidiary of BetMGM.

This is a pretty bold move by the veteran operator. The question is: Will it work?

Can BetMGM Ever Outpace FanDuel and DraftKings?

This is an impossible question to answer. We would need more exact data on how much of the United States sports betting handle belongs to each of FanDuel, DraftKings and BetMGM. Still, based on the data in the Colorado sports betting market, we can all understand that BetMGM, while remaining among the top online sportsbooks in the USA, has serious ground to bridge.

Whether the company will be able to shoot these gaps is a matter of course. We have to see how this purchase of Tipico’s international betting software impacts BetMGM. They have said it will not influence their USA operations. But that’s standard speak when your acquisition is so focused on back-end upgrades. If the software’s doing its job, you shouldn’t actually know about it.

Really, this is about optimizing the BetMGM sportsbook product at every level: front facing, back end, user inexperience, perhaps even design—you name it, and it’ll probably apply to the logic behind this purpose. And theoretically, the better the product, the more competitive it’ll stand to be.

Let’s also not forget that BetMGM is so much bigger than just another Colorado online sportsbook. They are an international company with a strong imprint in the United States—one sizable enough that they can roll the dice on purchase like this because the potential payoff could, in all actuality, help shake up a sports betting industry that can sometimes feel like a two-operator monopoly.

Take a look at this list of the top online sportsbooks so you can find one that works for all of your sports betting needs: