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You’ve got most of it right. Two surveyors came through in the 1850s, one exclaimed that it would be a great place for a beer garden, the second said that is was a “fit for the Gods”, and was named Garden of the Gods. The land was later acquired by C.E. Perkins, a railroad man, who used that name for it. When the Garden was given to the city of Colorado Springs, one of the conditions was that it would be forever known as “Garden of the Gods”.
The Garden of the Gods is to remain forever free to the public, but it does close at night, and can be closed in case of emergency (like the Waldo Canyon Fire). It is also a city park, not state.