Red coloration in multicoloured or polymorphic species has been associated with dominance in a number of case studies, including probability of winning in human sports. However, it is not clear at what stage during ontogeny the association between red and the probability of winning contests occurs (or being perceived as more threatening by a contradistinct rival), for example, at conception, early ontogeny or at maturation. We analysed such coloration effects in a polymorphic (red versus yellow) species of lizard, the Australian painted dragon, Ctenophonts pictus. Red males were more likely to win dyadic contests with yellow males when competing for receptive females. When contestants were repainted with a rival's colour, there was a more than 30-fold increase in contest duration. Furthermore, when we tested for red-enhanced contest success in immature males, red was still significantly associated with winning. Thus, the association between red coloration and dominance seems to be set long before a male is naturally involved in sexual contests and could be an innate response to aid facultative fight or submission decisions, particularly in young males. To assess in situ selective benefits of the polymorphism, we released males in polymorphic and monomorphic groups. Males from polymorphic groups survived better, implying that polymorphism among neighbouring territorial males in the wild results in selective benefits.