It's not the first time Kelly has had trouble with the law. Responding officers then searched the area, police said.
Kelly was drafted by the Broncos in the seventh and final round of the 2017 NFL Draft with the last pick, the so-called "Mr".
Kelly posted $2,500 bond and was released from police custody.
Kelly - who is the nephew of famed Buffalo Bills quarterback Jim Kelly - had attended a Halloween party in Englewood Monday night, hosted by teammate Von Miller.
Kelly's dismissal leaves third-year pro Kevin Hogan as Keenum's backup with the Broncos (3-4) preparing to face the AFC West-leading Chiefs (6-1) in Kansas City on Sunday. Kelly was arrested in 2014 after a nightclub brawl where he allegedly told a bouncer that he was going to "get my AK-47 and spray this place".
It's hard to trust him even as a modest backup, but Kelly's preseason resume and college statistics will entice at least one organization. The Broncos issued the following statement regarding Kelly.
He was kicked off the Clemson team in 2014 after arguing with coaches during the spring game.
Although he didn't play in the Senior Bowl after his final season at Ole Miss because of a right knee injury, he was in attendance all week in Mobile, Alabama, so he could talk with National Football League teams about his off-field troubles.