Colorado’s Southern Ute and Ute Mountain Ute tribes have filed an appeal in federal court against a ruling that denies them the right to offer online sports betting through their tribal compacts. 

In October, U.S. District Court Judge Gordon Gallagher dismissed a lawsuit brought by the two tribes, arguing that bets placed online are not part of the compact the tribes have with the state. 

Colorado charges licensed sportsbooks a 10% tax on revenue. However, the tribes claim they should be exempt from paying this due to the terms of the Indian Gaming Regulatory Act (IGRA). 

The argument boils down to where a bet is considered to be placed. If bets are placed on tribal lands, then the compact applies, and the wagers are not subjected to state regulations and taxes. However, if the bets are not being placed on tribal lands, then state laws apply. 

Judge Gallacher said he believes a bet is placed where the bettor is physically located and that “the distinction is crucial in this action and fatal to the tribes’ case.”

The tribes continue to argue that the location should be determined by the server used to process the bets. As the servers are located on tribal lands, the bets should also be considered as being placed on tribal lands. 

The appeal was filed in the U.S. Court of Appeals for the Ninth Circuit earlier this month. As yet, no briefs have been filed in the case. 

Tribe’s Esports Betting Site Forced To Shut Down

The Southern Ute tribe launched online sports betting in 2020. At the time, they created the “first-ever dedicated esports sportsbook in the United States” at the Sky Ute Casino Resort through a partnership with gaming-technology firm GameCo LLC.

However, the state directed the tribe to shut down its online platform, arguing that the tribe was not regulated by the state. It shut down its platform in July 2023 before filing a lawsuit against the state last year. 

The lawsuit is against Governor Jared Polis and Christopher Schroder, in his official capacity as Director of the Colorado Division of Gaming. Southern Ute Tribal Chairman Melvin J. Baker says the tribe took unprecedented legal action “because the administration refuses to honor express commitments the state made to the Tribe.”

Tribes Want Seminole Model

The Colorado tribes want a similar agreement to the one the Seminole Tribe of Florida has. The Seminole Tribe signed a compact with Florida Gov. Ron DeSantis in 2021 that allowed the tribe to offer online sports betting. 

Despite an initial legal setback, the agreement has been validated, and the tribe operates an online sports betting platform through Hard Rock Bet. This is allowed as their compact contains the language that “bets are considered placed where received.”

The tribe relaunched its platform in 2023 after winning an appeal and has been expanding its online betting options. It launched new games powered by past motor racing earlier this year and followed that by agreeing a deal with esports content and betting provider Beter this week. 

Other states do not follow the Seminole model, however, which could make it difficult for Colorado’s tribes to win in their appeal. In states with legal sports betting, including Arizona, Connecticut, and Michigan, tribes have given up exclusivity and are subject to state regulation for all online bets made off tribal land.

As the Colorado case progresses, tribes in other states will be watching. A win for the Utes could help to inform what sports betting will look like in states with big tribal presences, including Oklahoma and Minnesota.