Despite a wide bandgap of 4.8 eV, Ga2O3 has good electrical conductivity and thus has a wide range of potential applications. We previously reported that the bandgap of ϵ-Ga2O3 is widened by Co-doping; here, we present a theoretical discussion of the changes in the electronic state induced by Co impurities. By comparing calculated and experimental absorptions, the experimentally observed optical bandgap was assigned to a transition from a bulk peak (1.0 eV below the valence band maximum) to the conduction band minimum. The photoabsorption of Ga2O3:Co is not readily explained simply in terms of the bandgap of Ga2O3. However, the adjustable shift of the cutoff in its photoabsorption spectrum can be explained in terms of midgap impurity levels due to Co-doping, while the bandgap of Ga2O3 was almost unchanged even when the Co-impurity concentration was high. In addition, the work function, which was determined experimentally by photoemission spectroscopy, increased with the content of Co impurities. This was attributed to a lowering of the Fermi level induced by Co-doping.