Colorado State Attorneys Ask Federal Court to Toss Tribal Sports Betting Lawsuit
Colorado State Attorneys Ask Federal Court to Toss Tribal Sports Betting Lawsuit
Colorado state attorneys have requested a federal court to reject a lawsuit brought by two federally recognized tribes disputing the implementation of sports betting in The Centennial State.
In July, the Southern Ute Indian Tribe initiated a lawsuit in Colorado's US District Court alleging that the state and Governor Jared Polis (D) did not engage in good faith negotiations as mandated by the federal Indian Gaming Regulatory Act (IGRA). The Ute Mountain Ute Tribe became part of the case in September.
The legal action contests the way Polis and the Colorado Division of Gaming completed the state’s sports betting rules following voter approval of sports gambling in a 2019 statewide referendum.
“The Tribes’ position is substantively incorrect,” the state’s filing read. “However, this Court need not address the merits of this case because it lacks subject matter jurisdiction over the Tribes’ claims and the Tribes fail to state a claim.”
The tribes claim they were unaware of the state's decision to not extend their Class III gaming compacts to permit online sports betting. The sovereign nations report that in June 2020, they got cease-and-desist notices from the state gaming agency—just a month after commercial mobile sportsbooks launched—directing them to remove their online sports betting sites.
State Requests Dismissal
As Colorado's online sportsbooks overseen by the Gaming Division began accepting their initial bets in May 2020, the mobile Sky Ute Sportsbook did as well. The next month, as the Ute Mountain Ute Tribe prepared to initiate its mobile sports betting operation, the state warned that it might cancel the operator licenses of the tribe's sportsbook associates, US Bookmaking and IGT.
The state informed the tribes that although their Class III gaming compacts were broadened to encompass retail sports betting rights after the 2019 referendum, the constitutional amendment did not extend tribal gaming to online platforms.
"As the Tribes argue that they have a sovereignty interest in their right to control gaming on Indian lands, so too does the State possess a sovereignty interest in the ability to regulate sports betting in Colorado,” the motion to dismiss continued.
The tribes think the state aims to generate as much income from sports betting as it can. And because their Class III gaming agreements lack revenue-sharing clauses, which is unusual among states that have formed compacts with tribal nations, permitting online tribal sportsbooks would likely reduce the state’s financial gains.
State officials informed the tribes that they could only run online sportsbooks if they consented to share 10% of the sports betting profits with the state. Another requirement was consenting to have their online sports betting platforms overseen by the Gaming Division.
The tribes claim they attempted to initiate conversations with the state prior to the launch of online commercial sportsbooks, but those appeals were not addressed.
The Sky Ute Casino Resort closed its retail sportsbook in July 2023 after finding the operation to be unprofitable. A retail book is located at the Ute Mountain Casino Hotel.
Seminole Consequences
The core of the Colorado tribes' lawsuit appears to rely on a recent federal decision in Florida that determined the Seminole Tribe’s operation of an online sportsbook does not breach the IGRA as long as the tribe's internet sportsbook servers stay on the tribe's sovereign territory.
The Southern Ute and Ute Mountain Ute tribes are pursuing financial compensation and asking the court to affirm that their agreements grant online sportsbook rights.
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