Tribal Battle Heats Up! Ute Mountain Ute Tribe Challenges Colorado's Online Betting Laws

The Ute Mountain Ute Tribe has stepped into a legal battle initiated earlier this year, claiming that Colorado is obstructing their efforts to engage in online sports betting, violating the state’s gaming agreements with Tribal entities.

Expanded Legal Case

The U.S. District Court for the District of Colorado received an updated lawsuit, which now includes the Ute Mountain Ute Tribe alongside the Southern Ute Tribe, who initially filed the case. The primary allegation is that Colorado’s interpretation of its gaming laws prevents the Tribes from offering online sports betting, despite their right to do so under Tribal law.

“The Ute Mountain Ute Tribe explored launching its own online sportsbook, as authorized under Tribal law, but was unable to do so,” the new complaint reads. “One of the primary reasons why it was unable to proceed was that its potential vendors declined to do business with it after receiving communication from (Colorado Division of Gaming) suggesting that participation could result in an enforcement action by the State.”

This mirrors the experience of the Southern Ute Tribe, whose vendors similarly backed away from negotiations after the state warned them against facilitating online betting that exceeded the Tribe’s reservation boundaries.

Disagreement Over 1995 Gaming Compact

In 2019, Colorado voters barely approved online sports betting, opening the door for locals to put bets on sporting events from their mobile phones or computers. However, a major point of contention between the Tribes and the state stems from how the of a 1995 gaming compact are interpreted in the digital age.

The Tribes assert that Colorado is misusing this agreement by declaring that Tribal online sports betting operations are limited solely to reservation lands. They argue that the compact should allow them to process wagers from across the state, as long as the bets are processed on Tribal lands.

An important piece of evidence included in the lawsuit is a 2020 email sent by the Colorado Division of Gaming to the Ute Mountain Ute Tribe and a Nevada-based vendor. This email outlines the state’s concerns about off-reservation online sports betting activities.

“The Division recognizes the Tribe’s freedom to govern Tribal sports betting on Tribal lands. However, the Division considers such gaming occurring off Tribal lands but within the state of Colorado, and the facilitation of such gaming, to be illegal,” composed Dan Hartman, who was the director of the Colorado Division of Gaming at the time. The current director, Christopher Schroder, has also been named in the lawsuit.

Federal Precedent s Tribes’ Claims

The Tribes base much of their legal argument on federal court rulings from Florida, which ed the Seminole Tribe’s “hub-and-spoke” model. This model allows bets put throughout the state to be processed on Tribal lands, making them legally considered as placed on Tribal property. The Ute Mountain and Southern Ute Tribes argue that this ruling should apply to their operations in Colorado.

Legal experts have weighed in on the case, with Vanessa Racehorse, an associate law professor at the University of Colorado, noting that the Tribes’ claims appear well-grounded. “The tribes made some pretty clear-cut and compelling arguments that are really just rooted in the plain text of the Indian Gaming Regulatory Act, as well as the plain language within their compact,” Racehorse told Colorado Public Radio. “So it seemed very straightforward at this point. I’m very curious as to what the state’s reply will look like and what they’ll cite,” she added.

A key issue in the lawsuit is the tax structure surrounding online sports betting. In Colorado, sports wagers outside of Tribal lands are subject to a 10 percent tax, which helps fund state water projects. In contrast, Tribal gaming operations are not subject to state taxes, which complicates the state’s position.

In July 2023, sportsbooks operating in Colorado processed more than $320 million in bets, generating significant revenue for the state through taxes.

As part of the lawsuit, emails from state officials reveal an attempt to find a middle ground. The state proposed a compromise where wagers placed by individuals physically located on Tribal land would remain untaxed. However, bets made through Tribal online sportsbooks by people outside of the reservations could be subject to a fee.

Although this compromise hasn’t been solidified, it signals that the state is open to negotiation. With both sides preparing for a prolonged legal process, the future of online sports betting in Colorado—particularly as it relates to Tribal gaming—hangs in the balance.

Source:

”Ute Mountain Ute Tribe s lawsuit against Colorado over sports betting”, r.org, September 27, 2024.