Federal Judge Dismisses Southern Ute and Ute Mountain Ute Tribes’ Lawsuit on Colorado Sports Betting
A federal court has dismissed the lawsuit brought by the Southern Ute and Ute Mountain Ute Tribes that challenged Colorado’s regulation of online sports betting. This decision marks the conclusion of a prolonged dispute concerning the state’s management of taxes derived from its burgeoning sports betting industry.
Focus on Bettor’s Location
The Tribes claimed that under federal gaming regulations they were entitled to run online sportsbooks after the legalization of sports betting in Colorado through Proposition DD in 2019. Their legal challenge sought to determine if bets placed online from locations off Tribal lands should fall under the Indian Gaming Regulatory Act (IGRA).
Judge Gordon Gallagher clarified that the critical factor is the physical location of the bettor at the time of wagering. He stated that gaming is considered to take place where the bettor is physically present.
He explained, if the bettor is on Tribal land, IGRA applies. If the bettor is outside Tribal land, such as in Denver, the gaming activity is not governed by IGRA.
Response from Colorado’s Government
The state, represented by a spokesperson for Governor Jared Polis, expressed satisfaction with the ruling. The state emphasized that this verdict allows Colorado to regulate sports betting effectively while continuing to fund key water infrastructure projects. The state also highlighted its commitment to ongoing collaboration with the Tribes concerning gaming issues.
The lawsuit was initiated in July 2024, following the state’s request that the Tribes adhere to the standard tax policies applicable to bets placed outside reservation boundaries, including a 10% tax that supports statewide water initiatives.
The Tribes countered with an argument based on a “spoke-and-hub” interpretation, claiming that all online wagers routed through Tribal servers should be treated as if they occur on Tribal land.
Judge Gallagher acknowledged the complexities introduced by modern technology since IGRA’s enactment in 1988, noting that at that time, gambling activities typically occurred at physically localized venues.
Implications of the Ruling
The ruling reiterates that Colorado cannot control betting activities that occur directly on Tribal lands but retains the authority to regulate wagers originating off Tribal reservations. Sports betting remains a significant source of state revenue.
In the previous fiscal year, Coloradans wagered more than $6 billion statewide, generating close to $37 million in tax income. Online sports betting has shown robust growth, with over $38 million wagered in August alone, bringing in more than $3 million in tax revenues, substantially surpassing revenue from retail betting venues.
With the case dismissed, Colorado retains the ability to oversee online sports betting activities statewide, while the Tribes continue their operations within their lands.
