Southern Ute Tribe Sues Colorado Over Sports Betting Rights

The Southern Ute Indian Tribe has initiated legal action against Governor Jared Polis and the Colorado state gaming officials, accusing them of mishandling the Tribe’s online sports betting operations. Tribal Chairman Melvin J. Baker announced the lawsuit on Monday during a session of the American Indian Affairs Interim Study Committee, which focuses on issues significant to American Indian communities.

Long-standing commitments unhonored:

“Today, for the first time in decades, the Southern Ute Indian Tribe has been forced to file a lawsuit in federal court against the state of Colorado because the administration refuses to honor express commitments the state made to the Tribe,” Baker stated.

The Tribe argues that existing laws permit them to engage in any gaming activity authorized in Colorado, provided their activities mirror state bet amounts. Proposition DD, passed in 2019, added sports gambling to Colorado’s list of permissible gaming activities. However, the Tribe encountered resistance from state officials when they attempted to establish their own sportsbook. The complaint suggests this opposition arose because the Tribe would not be subject to the 10% tax levied on other gaming providers.

“The State’s disregard for the binding Gaming Compact is motivated by money,” the complaint asserts. “Sports betting regulated by Colorado is subject to a 10% tax, whereas no such tax could ever apply to Tribal gaming under federal law. Therefore, the State sought to freeze the Tribe out of internet sports betting.”

The complaint references recent court rulings related to the Seminole Tribe in Florida, noting that a Southern Ute sportsbook could accept on-reservation bets from online gamblers anywhere in Colorado.

Baker criticized the state’s handling of the situation, stating that officials “waited until the last minute” to inform the Southern Ute Tribe that their online sportsbook would require state licensing. The Tribe alleges that Colorado demanded they pay 10% of revenues from bets placed outside reservation boundaries.

“The key is market share, and by waiting until sports betting became legal in Colorado to challenge the ability of the Tribes to engage in sports betting, the Colorado Division of Gaming ensured that Tribal gaming enterprises would have no opportunity to achieve any degree of market share,” Baker told the committee, as CPR News reports. “The state had the opportunity to reach out to the Tribal Council on a government-to-government basis while the legislation was being drafted and considered. It never did.”

David Smith, legal services director for the Southern Ute Indian Tribe, emphasized that Tribes are not subject to state gaming taxes, a principle established by federal law. “Under federal law, the tribe can only use that money for governmental operations and the welfare of tribal members. The reason is that Tribes have very limited taxing authority, and so Congress set this up as a means for tribes to support governmental operations,” Smith explained.

Seeking judicial and legislative resolution:

The complaint requests the federal district court for the district of Colorado to review the legality of the Sky Ute SportsBook, which ceased operations in July 2023. The Tribe seeks injunctions against the state and reimbursement for expenses incurred in filing the case.

Beyond the courtroom, the Tribe urges the Colorado Legislature to address the issue legislatively. “Most states that have implemented sports betting talked to their Tribes at the time they implemented it to make sure there was an even playing field. And Colorado didn’t,” Smith noted. He referenced Kansas, which passed legislation to ensure fair sports betting practices for Tribes after initially failing to do so.