After trading Huston Street this winter, Betancourt was the obvious solution to the Rockies hole at the back end of the bullpen. The original deal that Betancourt signed guaranteed him to be with the Rockies in 2012, but had a mutual option for 2013, which the club essentially guaranteed in giving him this extension.
Now, given Betancourt's age (he turns 37 at the end of April) you might be wondering why the Rockies were so quick to guarantee money for seasons that aren't even going to be played according to the Mayans. Well, that's because few pitchers in baseball have been as consistently good as Betancourt the last few years. In 180.2 IP over the last three seasons, Betancourt has a 11.1 K/9 rate, 1.8 BB/9 rate, 6.19 K/BB, 1.0 HR/9 rate, 0.97 WHIP, and 147 adjusted-ERA (ERA+). Only 11 other relievers have posted an ERA+ of 147 or better since the start of 2009.
It also didn't hurt that Betancourt was downright untouchable after the All-Star break in 2011. In 27 IP in the second half last year, Betancourt dominated allowing only eight base runners (seven hits and a walk, good for a 0.29 WHIP) and just one earned run (good for a 0.33 ERA). Those weren't the only video game numbers he put up as he struck out 39 batters in those 27 innings, making his K/9 a ridiculous 13.0 and his SO/BB an absolutely comical 39/1.
The lone blemish on his second half record was a James Loney game-tying homer in Los Angeles on August 27th in a game the Rockies eventually lost. Needless to say, Betancourt did more than enough to earn the closer job for 2012 and the contract that he was given reflects the job he's done in years prior.