One Colorado sportsbook is calling it quits. Carousel Group, which owns MaximBet, announced last week it would start shuttering its sportsbook business operations.
MaximBet made headlines in Colorado back in 2021 when it replaced SportsBetting.com. It advertised itself as a connection between the Maxim community and sports bettors across the country.
The sportsbook also made history when it partnered with Colorado Rockies outfielder Charlie Blackmon. Blackmon became the first active MLB player with a sportsbook endorsement when he inked the partnership in April.
MaximBet also called Indiana home and had plans to operate in Iowa, New Jersey, Pennsylvania, Ohio and Ontario.
Why is Carousel Group shutting down MaximBet?
To put it simply, money is an issue. A statement from MaximBet said:
“It is with sincere anguish that we have informed our incredibly loyal customers that the current macroeconomic conditions have caused MaximBet to cease operations. MaximBet launched in 2021 with a desire to bring sports, entertainment, and betting together, all inside a lifestyle brand with a complete focus on the end user.
While making great strides in offering customers a completely unique player experience, our ability as an early-stage company to compete in a market where operating costs far exceed revenue, even among the top operators, is not sustainable.
Maxim Bet attempted to raise funds earlier this year. A Yahoo Sports report noted it’s unclear if the sportsbook accomplished that goal.
MaximBet spent more than it was taking in
An investor deck viewed by Sportico revealed information on the company’s first six months of operation in Colorado.
MaximBet brought in a handle of $18.7 million dollars. But its marketing spend totaled $3.7 million, which far outpaced its revenue of $1.8 million.
“Our ability as an early-stage company to compete in a market where operating costs far exceed revenue, even among the top operators, is not sustainable,” MaximBet said in a statement.
MaximBet is just the latest in the line of sportsbooks shuttering their operations due to the inability to compete with the industry’s biggest names. FuboTV announced in October it was shutting down its sportsbook after less than a year of operation.
Additionally, Churchill Downs Inc. closed its TwinSpires online sports betting operations earlier this year.
“You need hundreds of millions, if not a billion dollars, to aggressively compete to be a major player with more than a few percent of market share in sports betting,” Dave VanEgmond, managing partner at gaming VC firm Bettor Capital, told Yahoo Sports.
“With the capital markets tightening, smaller companies and startups aren’t able to raise the necessary capital to compete, and I’d expect to see more exits or sales amongst smaller operators who don’t have access to capital to keep investing in the US market opportunity.”
What’s next for MaximBet customers in Colorado?
In a statement to its customers, MaximBet said players can withdraw funds through Dec. 15. Patrons have until that date to settle open bets at “fair market pricing.”
“Our priority now, in consultation with state regulators, is to wind down operations and help active customers in Colorado and Indiana withdraw their funds and close their accounts,” the company’s statement read.
Coloradoans still have plenty of sportsbook options to choose from. MaximBet’s departure leaves 25 other sportsbooks available to those in Colorado.
Colorado’s gaming commission fined MaximBet earlier this year
In April, the Colorado Limited Gaming Control Commission fined the Carousel Group $80,000. The penalty came after missed location checks allowed bettors to place sports bets outside Colorado borders – violations of the Colorado Limited Gaming Act and Sports Betting Regulations.
MaximBet’s geolocation services didn’t work during a 16-day period in 2021. From Dec. 1 to Dec. 16 that year, customers were able to gamble without being inside the state of Colorado.
A customer call initially raised red flags. One customer claimed he was unable to place a bet outside Colorado. Officials told the man he must be within the state borders to place his bet. According to case documents, the man replied that it hadn’t been an issue previously.
At the time of the Carousel Group’s punishment, CEO Daniel Graetzer released a statement. He thanked the Colorado Division of Gaming for working with the sportsbook to reach a “fair” conclusion. Additionally, he dropped a note about the company’s future.
“We look forward to continuing to expand our presence and operation in Colorado,” Gratzer said at the time.