The Southern Ute Indian Tribe of Colorado is suing Governor Jared Polis and the state Gaming Department, alleging the administration refused to allow the tribe to operate its own online sports betting platform after the state legalized gambling.
The lawsuit, filed Tuesday in U.S. District Court in Colorado, argues that the administration’s actions have effectively shut tribes out of the sports betting market due to disagreements over how existing tribal gaming compacts relate to the recently legalized type of gambling.
“Because the state has no authority to tax tribes or require tribes to pay revenues to the state, Governor Polis has wrongfully attempted to exclude tribes from Colorado’s sports betting market,” the lawsuit states. “Governor Polis has attempted to manipulate the market in order to collect maximum taxes from sports betting activities without any regard for, concern for or respect for the adverse economic impacts on Colorado’s tribal communities.”
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A 1995 compact allowed the tribal nation to conduct legal gambling in Colorado as long as the activities and amounts wagered were similar to others in the state. The compact also allowed the tribe to open the Sky Ute Casino Resort in southwest Colorado, which is managed by the Southern Ute Tribe Gambling Division, not the state.
Colorado voters approved sports betting in 2019 through Proposition DD, which resulted in tribes deciding to set up their own sportsbooks that would allow bets to be placed on reservations from anywhere in the state.
The lawsuit alleges that officials didn’t raise concerns about the plan until just before statewide legalization in May 2020. Officials wanted the tribe to apply for a state license, which would have subject the tribe to taxation. It also says the state pressured the tribe’s sportsbook operators with “threatening” letters alleging the tribe wasn’t complying with state law because it allowed bets to be placed off the reservation.
“This attempt to subject tribal gaming to state regulation is unlawful, offensive, and nonsensical,” the lawsuit reads. “The Tribes are sovereign Indian nations that have occupied their homelands since time immemorial and, as such, enjoy the sovereign right to conduct their commercial activities as they see fit, pursuant to a binding gaming compact with the State of Colorado.”
Polis’ office said it does not comment on pending litigation.
The crux of the issue, according to the lawsuit, is that a 1995 compact means tribes don’t have to pay a 10% tax like other sports betting entities. Because the state can’t get that revenue from tribes’ new sports betting operations, the Polis administration tried to delay tribes’ entry into the sports betting market until the market was saturated with other businesses that would be subject to the tax.
Sky Ute Sportsbook closed in 2023.
“The state’s actions have prohibited us from successfully participating in this new economic opportunity. This is unfair,” tribe Chairman Melvin J. Baker told the Colorado Interim Study Commission on American Indian Affairs on Monday. He asked the commission to consider a bill that would grant tribes the right to participate in sports betting.
The lawsuit asks the court to consider the legality of tribal sports betting and seeks an injunction ordering the state to stop interfering with tribal sports betting.
