State attorneys in Colorado have asked a federal court to dismiss a lawsuit filed by two federally recognized tribes challenging how sports betting was rolled out in The Centennial State.
In July, the Southern Ute Indian Tribe filed a lawsuit in Colorado’s US District Court on claims that the state and Gov. Jared Polis (D) failed to negotiate in good faith as required by the federal Indian Gaming Regulatory Act (IGRA). The Ute Mountain Ute Tribe joined the case in September.
The lawsuit challenges how Polis and the Colorado Division of Gaming finalized the state’s sports betting regulations after voters authorized sports gambling during 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 allege they were kept in the dark about the state deciding not to expand their Class III gaming compacts to include online sports betting. The sovereign nations say they received cease-and-desist letters from the state gaming agency in June 2020 — a month after commercial mobile sportsbooks went live — ordering them to yank their online sports betting platforms.
State Seeks Dismissal
When Colorado’s online sportsbooks regulated by the Gaming Division took their first wagers in May 2020, so did the mobile Sky Ute Sportsbook. The following month, as the Ute Mountain Ute Tribe was readying to launch its mobile sports wagering operation, the state threatened to revoke the operator licenses of the tribes’ sportsbook partners, US Bookmaking and IGT.
The state told the tribes that while their Class III gaming compacts expanded to include retail sports betting privileges following the 2019 referendum, the constitutional amendment didn’t expand tribal gaming to the internet.
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 believe the state wants to reap as much revenue from sports betting as possible. And since their Class III gaming compacts don’t include revenue-sharing provisions, a rarity among states that have entered into compacts with their tribal nations, allowing online tribal sportsbooks would presumably cut into the state’s windfall.
State officials told the tribes that they could only operate online sportsbooks if they agreed to share 10% of the sports betting revenue with the state. Another condition was agreeing to have their online sports betting platforms regulated by the Gaming Division.
The tribes say they tried to engage in discussions with the state before the rollout of online commercial sportsbooks but those requests went unfulfilled.
The Sky Ute Casino Resort shuttered its retail sportsbook in July 2023 after determining the operation to be unfruitful. A retail book remains at the Ute Mountain Casino Hotel.
Seminole Repercussions
The crux of the Colorado tribes’ lawsuit seems to hang on a recent federal ruling in Florida that concluded the Seminole Tribe’s running of an online sportsbook doesn’t violate the IGRA so long as the tribe’s internet sportsbook computer servers remain on the tribe’s sovereign land.
The Southern Ute and Ute Mountain Ute tribes seek financial damages and for the court to declare that their compacts provide online sportsbook privileges.
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