A Case for Tribal Sports Betting
This tribal lawsuit could set a precedent beyond the West Flagler decision
BY JILL R . DORSON
Akey date in the Colorado Ute tribes ’ sports betting lawsuit against the state is looming . In October , Governor Jared Polis ’ team filed a motion to have the case dismissed . By March 7 , after multiple extensions , the Southern Utes and Ute Mountain Utes must respond .
How the court rules on the motion will determine whether the tribes ’ claim that the state has cut them out of digital sports betting will move forward . If it does , the ultimate decision could be a game-changer for tribes around the U . S .
Per the Indian Gaming Regulatory Act ( IGRA ), the tribes have the right to offer in-person sports betting on their reservations . In May 2020 , the state of Colorado launched digital sports betting for commercial companies . Every major online sports betting company is live in the state , as well as some unique offerings , including BetMonarch , Circa Sports and Sporttrade . Missing are two tribal platforms , at least one of which was live for several years .
Days after the the U . S . Supreme Court declined to hear West Flagler v . Haaland , the Southern Ute tribe filed against the state . The West Flagler case , decided in the U . S . Circuit Court of Appeals for the District of Columbia Circuit , made it legal for the Florida Seminoles to offer statewide mobile betting .
The Ute Mountain Utes joined the Colorado lawsuit in September . The case is in the U . S . District Court for the District of Colorado . As it unfolds , tribes around the country will be watching , and one tribal attorney who wished to remain anonymous said if the court finds in the Ute tribes ’ favor , the decision could be more far-reaching than the West Flagler decision .
‘ Magic Language ’ Needed ?
At issue in Colorado — as it was in Florida — is whether or not the tribes can offer digital sports betting off the reservation . The difference is that there is specific language in the Seminoles ’ 2021 compact that essentially deems a bet taken anywhere in the state is considered to have been placed in Indian Country if it flows through a server on tribal land .
“ The Colorado compacts do not have that potentially magic language that deems that a bet is considered placed where received ,” the lawyer said . “ Whether or not you need that language is not clear , and this lawsuit may clarify that .”
If the court decides that the language is not needed in compacts , it could clear the way for tribes in other states to have an easier path toward offering online sports betting — and eventually iGaming .
State Wants Tribes to Pay Taxes
Another key issue in the case is whether or not the Ute tribes should be subject to the same 10 percent tax on gross gaming revenue that commercial operators pay . But tribes don ’ t generally pay taxes to the states in which they are located . Many do , however , pay a revenue share to the state .
For example , the 2021 Seminole-Florida compact requires that tribe to pay the state $ 500 million per year for the first five years of its 30-year deal . In total , the tribe committed to paying the state $ 2.5 billion for those five years .
In Colorado , the Ute tribes were offering digital betting without paying a tax or revenue share . Their compacts do not contemplate this and they don ’ t appear to address the issue in the lawsuit . Should the tribes agree to pay a tax , they would also be regulated by the state . Another option is to recompact and create a revenue share .
The West Flagler decision coupled with the U . S . Department of the Interior ’ s Bureau of Indian Affairs draft final rules changed the landscape for tribal betting . The BIA specifically addresses digital wagering off tribal land . And it ultimately interprets IGRA to mean that tribes can take bets from anywhere in a state , if the bets run through tribal servers . But those are federal laws and regulations — tribes must still compact with their states .
“ States and tribes are allowed to negotiate compacting solutions to offreservation gaming ,” former National Indian Gaming Commission chair Jonodev O . Chaudhuri said during a panel at the Global Gaming Expo in October . “ That doesn ’ t automatically legalize all off-reservation gaming or all hub-and-spoke models .”
In Colorado , the Ute compacts , which date to 1995 , do not directly contemplate digital gaming . And they don ’ t include the “ magic wording .” The looming question is : Will that matter ?
“ In Part 293 , ( the BIA ) was careful to use the word ‘ may ,’” the lawyer who requested anonymity said . “ But the D . C . Circuit seemed to only be concerned that the person making the wager on state lands is complying with state law . I think the right reading of the D . C . Circuit is that you don ’ t need that language . You do need state law to make the wager lawful . But you don ’ t need to go so far as deeming the wager as placed at the site of the server .”
In Colorado , the Ute tribes were offering digital betting without paying a tax or revenue share . Their compacts do not contemplate this and they don ’ t appear to address the issue in the lawsuit . Should the tribes agree to pay a tax , they would also be regulated by the state . Another option is to recompact and create a revenue share .
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