Ute Mountain Ute Tribe joins lawsuit against Colorado over sports betting

The Ute Mountain Ute Tribe has signed on to a lawsuit filed earlier this year alleging the state of Colorado is blocking the ability of Tribes to engage in online sports betting, a violation of the terms that govern Tribal gaming in the state. 

An amended complaint filed with the U.S. District Court for the District of Colorado adds the Ute Mountain Tribe to the complaint and outlines a similar list of claims made by the Southern Ute Tribe. 

“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.” 

That mirrors a claim made in the Southern Ute Tribe’s initial filing that the Tribe had contacted vendors to provide online sports betting, but those vendors were warned by the state that they could not operate online betting with the Tribe that went beyond reservation boundaries. 

Online sports betting was narrowly approved by voters in 2019, paving the way for residents to wager on games via the Internet. At the heart of the dispute between the Tribes and the state is how a 1995 agreement related to gaming is interpreted in the era of being able to place wagers anywhere in the state. The Tribe claims the state is improperly interpreting the agreement when they say that the Tribes can only handle wagers on reservation lands. 

A 2020 email from the state to the Ute Mountain Ute Tribe and a Nevada-based vendor that was included in the court filings highlights the state’s concerns. 

“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,” wrote Dan Hartman, then-director of the Colorado Division of Gaming. Christopher Schroder, who is named in the lawsuit, is the current director of the division. 

The Tribes’ complaint says that’s not the case, pointing to federal court decisions in Florida that sided with the Seminole Tribe’s “hub-and-spoke” argument that wagers placed within the state, but processed on Tribal lands, constituted a bet on Tribal land.

Vanessa Racehorse, an associate professor of law at the University of Colorado law school, told CPR news in August the claims made by the Southern Ute seemed in line with existing law. 

“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. 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,” Racehorse said. 

Sports wagers in Colorado are subject to a 10 percent tax, while Tribal gambling is not. Money from that tax is intended to fund state water projects. In July this year, sportsbooks operating in Colorado took in more than $320 million in wagers. 

Emails included in the Tribe’s lawsuit show the State suggested a compromise agreement whereby wagers placed by people on Tribal land would remain untaxed, while wagers placed through Tribal sportsbooks but elsewhere in Colorado would be subject to some form of fee. 

In the email, Hartman proposed that “in lieu of a tax” the Tribe would instead pay 10 percent of net proceeds for bets off Tribal lands, which would go toward a “designated fund dedicated to water projects impacting tribal lands.” 

The initial lawsuit by the Southern Ute was filed in July. The state has filed for an extension of time to respond to the complaint. 

The lawsuit asks the federal court to declare the Southern Ute and Ute Mountain Ute’s efforts legal within existing law, to prevent the state of Colorado from further interfering with the Tribe’s efforts as well as legal fees. 

Racehorse, with the CU law school, said online sports betting has opened up these issues elsewhere in the country, and that the easiest path for most Tribes and states would likely be at the negotiating table. 

“We do have a growing number of examples of states like Florida, like Kansas, Connecticut, Washington, that are successfully negotiating amendments to the compacts to clarify how both the state and the tribes are perceiving online sports betting and facilitating that success,” she said. “So I guess the main takeaway is that it’s beneficial when states engage in a meaningful government-to-government conversation with tribes to avoid what is going to be very costly litigation.”