Southern Utes Sue Colorado Over Online Sports Betting Dispute

The governor of Colorado, Jared Polis, and state gaming officials have been sued by the Southern Ute Indian Tribe for what they say is unfair exclusion from the sports betting market. The tribe claims that Sky Ute SportsBook was improperly blocked by the state which wanted to collect taxes not applicable to tribal gaming under federal law.

Tribal Chairman Blasts State’s Backtracking on Tribal Compact

A compact signed in 1993 allows the Southern Utes to offer any games legal in Colorado so long as they are similar to those authorized elsewhere in the state. This agreement permitted them to open Sky Ute Casino Resort, managed independently from state oversight. 

When Colorado voters approved sports betting in 2019 through Proposition DD, the tribe sought to create their own online sportsbook. However, just before the statewide legalization of sports betting in May 2020, state officials demanded that the tribe apply for a state license, subjecting them to a 10% tax, which the tribe contends is unlawful under their compact and federal law.

Tribal chairman Melvin J. Baker expressed his frustrations about what he called backtracking from previous commitments on behalf of representatives within Governor Polis’ administration saying that the tribe had no choice but to file a lawsuit, reported local media CPR. 

Baker noted also that while waiting for the State’s response about online sports book locations several competing companies were able to take advantage due to the delay damaging the tribe’s economic prospects. 

Southern Utes Seek Judicial Intervention to Protect Their Right to Operate Online Sportsbook

The lawsuit, filed in the US District Court of Colorado, asserts that the state acted in bad faith, aiming to maximize tax revenues at the tribe’s expense. The tribe argues that they are exempt from paying state taxes on gambling establishments and that their revenues are dedicated to tribal welfare and governmental operations, as stipulated by Congress. Legal services director David Smith noted that tribal gaming profits support essential services for tribal members due to limited taxing authority.

The tribe said that the state’s treatment of them was unfair. It drove them out of business. They allege that Colorado threatened US Bookmaking’s license if Sky Ute SportsBook did not shut down by 2023. Similar tactics were supposedly used regarding another sports book provider that served the Ute Mountain Ute Tribe.

The tribe’s complaint highlights that other states have worked collaboratively with tribal nations when implementing sports betting laws, ensuring fair competition. For example, Kansas amended its legislation to support tribal sports betting after initially failing to consult with tribes. The Southern Ute Tribe seeks a judicial declaration affirming the legality of their sportsbook and an injunction to prevent the state from imposing revenue-sharing requirements.

The lawsuit cites a recent US Supreme Court decision supporting the Seminole Tribe in Florida, which upheld the tribe’s right to offer online sports betting under similar circumstances. The Southern Ute Tribe hopes for a similar ruling, enabling them to operate their sportsbook free from state interference.