Tribal Tribes Challenge Colorado's Online Sports Betting Restrictions

The Ute Mountain Ute Tribe has joined the Southern Ute Tribe in a lawsuit against the state of Colorado, alleging that the state is unlawfully blocking Tribes from engaging in online sports betting. The lawsuit claims that the state's interpretation of a 1995 gaming agreement is preventing Tribes from offering online sports betting to residents, a violation of the terms that govern Tribal gaming in the state.

Unlocking the Potential of Tribal Online Sports Betting

Tribes Seek to Expand Gambling Offerings

The Ute Mountain Ute Tribe and the Southern Ute Tribe have both explored the possibility of launching their own online sportsbooks, as authorized under Tribal law. However, they claim that they have been unable to do so due to interference from the state. The amended complaint filed with the U.S. District Court for the District of Colorado outlines how potential vendors have declined to work with the Tribes after receiving communication from the Colorado Division of Gaming, suggesting that such participation could result in enforcement action by the state.

State's Interpretation of Gaming Agreement Challenged

At the heart of the dispute is the interpretation of a 1995 agreement related to gaming between the Tribes and the state. The Tribes argue that the state is improperly interpreting the agreement, which they claim allows for online sports betting that extends beyond reservation boundaries. The state, on the other hand, maintains that the Tribes can only handle wagers on reservation lands, a position that the Tribes believe is a violation of the terms that govern Tribal gaming in Colorado.

Precedent from Florida Cited by Tribes

The Tribes' complaint points to federal court decisions in Florida that sided with the Seminole Tribe's "hub-and-spoke" argument, which held that wagers placed within the state but processed on Tribal lands constituted a bet on Tribal land. The Tribes believe that this precedent supports their position and demonstrates that the state's interpretation of the 1995 agreement is flawed.

Potential Compromise Discussed

Emails included in the Tribes' lawsuit show that the state has suggested a compromise agreement, whereby wagers placed by people on Tribal land would remain untaxed, while wagers placed through Tribal sportsbooks but elsewhere in Colorado would be subject to some form of fee. However, the Tribes have rejected this proposal, arguing that it does not fully address their concerns.

Significant Financial Implications

The dispute over online sports betting has significant financial implications for both the Tribes and the state. Sports wagers in Colorado are subject to a 10 percent tax, which is intended to fund state water projects. In July 2024, sportsbooks operating in Colorado took in more than $320 million in wagers, highlighting the potential revenue at stake.

Legal Experts Weigh In

Legal experts have weighed in on the Tribes' claims, with Vanessa Racehorse, an associate professor of law at the University of Colorado law school, stating that the Southern Ute Tribe's arguments seem "in line with existing law." Racehorse noted that the Tribes have made "pretty clear cut and compelling arguments" that are rooted in the Indian Gaming Regulatory Act and the language within their compact with the state.As the legal battle continues, the outcome of this dispute will have significant implications for the future of Tribal gaming and online sports betting in Colorado. The Tribes' pursuit of their right to offer online sports betting reflects their desire to expand their gambling offerings and generate additional revenue for their communities, while the state's position highlights the complex regulatory landscape surrounding this emerging industry.