Southern Ute Tribe Sues Colorado Citing Precedents to Secure Statewide Digital Sports Betting Rights

In a bold legal maneuver, the Southern Ute Indian Tribe has taken significant steps to secure its right to offer statewide digital sports betting in Colorado. This move comes in light of a recent decision by the US Supreme Court not to hear the West Flagler v. US Department of the Interior case, a decision that effectively clears the path for the tribe’s lawsuit.

Tribal chairman Melvin J. Baker invoked the Supreme Court’s decision, which he claims supports the tribe’s stance. “The West Flagler case held that the Seminole Tribe was entitled to engage in statewide sports betting in Florida. Any legal objection to the Southern Ute and Ute Mountain from engaging in statewide sports betting is gone,” Baker stated. This legal precedent forms the crux of the tribe’s argument as they filed suit in the US District Court for the District of Colorado this Monday.

The court has scheduled an initial planning and scheduling conference for October 10. If an agreement is not reached between the parties by then, the case is set to move forward in court. The tribe aims to rectify what it perceives as an inequity in the state’s treatment of tribal gaming enterprises compared to commercial operators.

Colorado launched statewide digital sports betting in May 2020, with major platforms like BetMGM, BetRivers, DraftKings, and FanDuel going live on the same day. The market has since expanded to more than 20 commercial platforms. Under the Indian Gaming Regulatory Act (IGRA), activities legal in a state are likewise legal on reservations within that state, provided that the tribe and state reach a new compact or amend the existing one to include new forms of gaming. However, Baker lamented that Colorado has repeatedly failed to initiate negotiations, leaving the tribe no choice but to resort to litigation.

The tribe’s 1995 gaming compact, which is still in effect, allows for gaming activities and betting amounts identical to those authorized in the state. The Southern Ute currently operates a brick-and-mortar casino on its reservation near the New Mexico border, while the neighboring Ute Mountain Ute Tribe also offers in-person casino gaming. According to Baker, the state’s refusal to accommodate the tribe’s request to include digital sports betting has placed them at a significant economic disadvantage.

“Through actions by the state, we have been prohibited from successfully engaging in this new economic opportunity,” Baker said.

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. “Because of these actions, non-tribal gaming enterprises have had a significant advantage. The key is market share, and by waiting until sports betting became legal in Colorado, the state ensured that tribal gaming enterprises would have no opportunity to reach any kind of market share.”

To establish its footing in the digital sports betting arena, the Southern Ute Tribe partnered with US Bookmaking in 2020 to launch its Sky Ute digital sportsbook. The digital sportsbook, which was free from the 10% tax levied on other operators because its server was located on tribal lands, was pulled offline in July 2023. Following the Supreme Court’s decision to pass on hearing the West Flagler case, the lower-court ruling stands, meaning bets placed in Florida are considered to be placed on Seminole land if they run through a tribal server. Baker aims to apply this legal precedent to Colorado.

Baker’s is the first attempt to apply the appellate court’s ruling in another state. While the West Flagler case specifically pertains to the 2021 Seminole-Florida compact, it sets a precedent for other states and tribes. However, legal experts caution that the precedent only holds if both the state and the tribe are amenable to negotiation. As noted by tribal attorney Scott Crowell, “The Florida-Seminole compact provides a clear example of how a willing state and a willing tribe may structure a compact for statewide mobile gaming under IGRA. It clearly strengthens the position of tribes confronted by states that have approved expanded mobile sports wagering for non-Indian entities. But the question of whether a tribe can compel a recalcitrant state to enter into a compact amendment for statewide mobile gaming remains unresolved.”

The legal complaint underscores the tribe’s claim that the state’s actions are “motivated by money.” Unlike commercial sports betting operations, tribal gaming isn’t subject to state taxes under federal law. Consequently, the tribe argues that the state has financially incentivized reasons to exclude it from internet sports betting.

Baker emphasized that while the tribe has little appetite for legal action, it felt compelled to defend its sovereign rights. “We have been forced to take critical action to uphold equal and fair treatment of our sovereign rights,” he said.

As the October 10 date approaches, all eyes will be on the US District Court for the District of Colorado to see whether this case will proceed to trial or if an agreement will be reached. The outcome could have significant implications not just for the Southern Ute Tribe, but potentially for other tribes across the United States seeking to expand their gaming operations in the digital age.

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