Southern Ute Tribe Suing CO Governor After Being ‘Frozen Out’ Of Sports Betting Market

The Southern Ute Indian Tribe has filed a federal lawsuit against Colorado Governor Jared Polis and the Colorado Division of Gaming Director Christopher Schroder, claiming its Sky Ute Sportsbook had been “frozen out” of the Colorado sports betting industry after officials attempted to control and impose a tax upon it.

The conflict between the Southern Ute tribe and Colorado state officials has been ongoing since Colorado first legalized sports betting in May 2020, following a successful public referendum to legalize it in November 2019.

In the lawsuit, the tribe refers to a 1993 agreement formed under the Indian Gaming Regulatory Act (IGRA), arguing that it permits the tribe to conduct gaming activity if consistent with those permitted elsewhere in Colorado. However, the Southern Ute tribe was met with resistance when it established a sportsbook of its own. 

“The State’s disregard for the binding Gaming Compact is motivated by money,” says the complaint. “Sports betting regulated by Colorado is subject to a 10% tax, whereas no such tax could ever apply to Tribal gaming under federal law. Therefore, the State sought to freeze the Tribe out of internet sports betting.” 

The allegations

Southern Ute Tribal Chairman Melvin J. Baker added that the state “waited until the last minute” to inform the tribe that an online sportsbook of their own would need a license from the state. 

Baker implied that this was a strategic move taken by Colorado sports betting officials.

“The key is market share and by waiting until sports betting became legal in Colorado to challenge the ability of the Tribes to engage in sports betting, (The Colorado Division of Gaming) ensured that Tribal gaming enterprises would have no opportunity to achieve any degree of market share,” Baker said, per Colorado Public Radio. “The state had the opportunity to reach out to the Tribal Council on a government-to-government basis while the legislation was being drafted and considered. It never did.” 

As tribes are sovereign nations exempt from state taxes, state officials are concerned that if tribes allowed commercial gaming companies to operate on tribal land, their revenues would also be considered tax-free. 

“When the legislature referred the sports betting initiative to voters in 2019, a key part was the state collecting tax on the revenues and dedicating 90% of that money to water projects,” said State Representative Dylan Roberts. “Now there is a concern that if the physical locations moved to tribal lands, we would lose most of the funding for water.”

Through its complaint, the Tribe is seeking an injunction “requiring the State to cease and desist from its efforts to interfere with the Sky Ute SportsBook Betting Enterprise and its business relationships,” among other forms of injunctive relief.

Ultimately, the Tribe has requested a final judgment in favor of Plaintiff declaring that the Sky Ute Sportsbook operations are lawful.

“The anti-sovereignty approach of Defendants—seeking to unlawfully control the Tribe’s governmental activities and control the use of the Tribe’s money—is shocking and entirely unjustified,” the complaint reads. “Upon information and belief, the Polis Administration has disregarded the legal advice of the Colorado Attorney General in maintaining this position. Governor Polis is seriously and clearly wrong.”