Colorado Tribe Sues State, Governor Over Sports Betting Rollout

A Native American tribe in Colorado that holds a Class III gaming compact with the state is suing Gov. Jared Polis (D) and Colorado Gaming Division Director Christopher Schroder for how they rolled out sports betting in The Centennial State.

Colorado tribe online sports betting Southern Ute — An advertisement for the now-defunct online Sky Ute Sportsbook. The tribe behind the internet wagering platform is suing Colorado Gov. Jared Polis and the state’s gaming regulatory agency for not negotiating in good faith with the tribe for it to gain online sports betting market access. (Image: Southern Ute Casino Resort)

In a federal lawsuit filed in Colorado’s US District Court, the Southern Ute Indian Tribe alleges that Polis and Schroder, and their respective administration and agency, failed to negotiate in good faith as required by the Indian Gaming Regulatory Act (IGRA).

After Colorado voters narrowly approved a sports betting referendum in November 2019, the tribe said it began developing its sports betting strategy. Attorneys for the Southern Utes contend in the complaint that the tribe sought to work with Polis and the gaming regulatory agency in preparation for its retail and online sportsbook debut.

The litigation claims the state presented no concerns to the tribe in the months leading up to the May 2020, start of online sports gambling. But just weeks later, the Colorado Division of Gaming (CODOG) sent a letter dated June 16, 2020, to US Bookmaking, the tribe’s business-to-business sportsbook partner that powered its odds and operations, that its facilitating of online bets on the tribe’s behalf was illegal.

Threatened with revocation of its vendor operating license in the state, US Bookmaking suspended the online Sky Ute Sportsbook. The tribe shuttered its retail sportsbook at its Sky Ute Casino Resort in July 2023, after determining that it wasn’t making enough money.

Litigation Claims Money Fueled State’s Actions

The Southern Ute Indian Tribe’s lawsuit says Polis’ motivation to cut the tribe out of the Colorado online sports betting market was because of tax revenue.

While Colorado’s 19 licensed sportsbooks have agreed to pay 10% of their gross sportsbook revenue to the state, the Southern Utes argued that they’re legally entitled to retain 100% of their online sportsbook income. Unlike most other states that have entered into Class III gaming compacts with their federally recognized tribes to allow their Indian casinos to offer Las Vegas-style slot machines and live dealer table games, Colorado’s compacts haven’t included revenue-sharing provisions.

CODOG sent a similar letter to the Ute Mountain Ute’s online sportsbook provider, IGT, on the same date. IGT also shuttered the online sportsbook it had run on the tribe’s behalf.

Southern Ute lawyers say the governor and Colorado Commission of Indian Affairs in October 2021, finally agreed to sit down with the tribe and Ute Mountain Ute Tribe for a “formal consultation” regarding statewide tribal sports betting. But by that time, the Southern Ute Indian Tribe says the online sports betting platforms had secured the market and solidified their customer bases.

At that point, the Colorado sports betting market was already saturated and the Tribe had been wrongly frozen out of the opportunity to participate in it by the Polis Administration,” the lawsuit contends. “The consultation was an after-the-fact charade put on by the State after the Governor had secured a monopoly of non-Tribal gaming enterprises.”

The Polis administration and CODOG, the Southern Ute lawsuit says, were fine with allowing the tribes to operate in-person sportsbooks at their tribal casinos but demanded 10% of their online sportsbook revenue. The governor and gaming agency also told the tribes that a condition of running an online sportsbook with bets being accepted from nonsovereign lands would be that they’d be subjected to CODOG’s regulatory oversight.

“The Tribe has been successfully operating its own gaming for 30 years without incident, along with its other successful, highly regulated commercial enterprises,” the suit declared. “There is no basis for the State to imply that the Tribe is not fully capable of regulating its own businesses pursuant to Tribal and federal laws.”

Seminole Ruling Cited

The Southern Ute’s sports betting lawsuit comes after the US Supreme Court in June upheld lower courts’ rulings that Florida Gov. Ron DeSantis’ (R) Class III compact reached in 2021 with the Seminole Tribe that provided the Hard Rock owner with the exclusive rights to online sports betting in the Sunshine State didn’t violate the IGRA. Plaintiffs argued that the Seminoles’ accepting of sports bets online violated the federal Indian gaming law, which regulates gaming activities on tribal lands.

Lower federal courts agreed with the US Department of the Interior that since the bet isn’t accepted until the data is transmitted to a sportsbook computer server residing on Seminole land, the bet isn’t in violation of the IGRA. The Southern Ute’s complaint cites the federal court’s rulings.

There is nothing in the text or structure of IGRA that would prohibit a tribal-state gaming compact from authorizing online sports betting that would enable customers to access sports betting facilities located on a tribe’s reservation from personal devices located elsewhere or to otherwise expand tribal sovereignty and authority beyond what is mandated by IGRA,” the lawsuit read with a citation to the Seminole case.

The lawsuit asks the federal district court to declare the tribe’s online sportsbook lawful, to direct the state to stop violating the Southern Ute’s Gaming Compact, and to award financial damages.

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