A federal judge ruled Oct. 23 that sports betting overseen by Colorado’s two tribes must abide by the state’s laws, subjecting the sovereign nations to a possible 10% tax on online sports betting.
U.S. District Judge Gordon Gallagher dismissed a suit filed against the state in July 2024 by the Southern Ute Tribe, joined months later by the Ute Mountain Ute Tribe. The tribes alleged that Colorado had strayed from a decades-old gaming agreement.
The suit, naming Gov. Jared Polis and Colorado Division of Gaming Director Christopher Schroder as defendants, centered on whether digital sports betting managed by the tribes occurs on reservation land – even if the bet is placed on a smartphone in Denver.
Gallagher ruled that betting regulations apply to where the bet is placed, regardless of whether wagers are processed through servers on Ute lands.
Under Colorado’s gaming laws, sports betting tax revenue is allocated to fund water projects.
Colorado officials applauded the decision. But the Southern Ute Tribe says the ruling aligns with a dark legacy of broken treaties.
“The history of relations between Tribes and the state and federal governments is one of broken Treaties and agreements,” reads a statement released Oct. 24 from the Southern Ute Tribe. “The Polis Administration’s conduct is a reminder that those things we think are an artifact of a distant past still exist today.”
The ruling follows the 2019 passage of Proposition DD, which legalized online sports betting. That opened the door to regulating tribal gambling ventures in digital spaces.
According to the decision, the Ute Mountain Ute and Southern Ute Tribes entered the sports betting industry in 2021. Colorado told each tribe they were out of compliance with state regulations.
The tribes filed suit. Defendants claimed immunity under the 11th Amendment of the U.S. Constitution, which bars legal action by foreign nations.
Biden-appointed Judge Gallagher sided with Colorado, upholding the 11th Amendment and dismissing the case for lack of subject matter jurisdiction. The judge noted a path forward for the tribes.
“This Court is well aware of the significant financial implications of this decision,” the ruling reads. “A myriad of gambling houses offer legal sports betting in the State of Colorado. To engage in this service, they must remit 10% to the State. The State of Colorado has offered this possibility to the Tribes.”
“By making this comparison, the Court in no way suggests that the Tribes and the various companies engaging in sports betting are in any way similarly placed.”
Even as sovereign nations, the tribes remain subject to the 1988 Indian Gaming Regulatory Act, Gallagher wrote.
The decision by Gallagher suggested a divide between Colorado and its two federally recognized tribes.
“We deeply respect the government-to-government relationship the state has with the Ute Mountain Ute and Southern Ute Indian Tribes,” Shelby Wieman, press secretary for Gov. Polis, wrote in an email to The Journal. “We are glad that the court ruled in the state’s favor to ensure Colorado can continue to manage sports betting in a way that works best for Coloradans and our state and continue funding important water projects around the state.”
Wieman said the governor’s office looks forward to working with the tribes on gaming issues.
In a statement, the Southern Ute Tribe said they “believe a different result is mandated by federal law and will be evaluating how to move forward in the coming weeks.”
The tribe described an embittered situation with the state, describing the still unresolved Enterprise Project gasoline pipeline spill on the reservation, applicable dollars for water resource protection said to be unused from the state’s sport betting taxes and an apparent no-show call with Polis to address the environmental hazard.
“Yesterday’s canceled call between Governor Polis and (Southern Ute) Chairman Baker reflects an alarming lack of urgency on the Governor’s part to work cooperatively with the Tribe on this spill – it brings to mind the troubling legacy of how states have historically disregarded Tribal relations, an approach that is wholly unacceptable in today’s society.”
