A U.S. District Court Judge ruled in October that Colorado is immune from a lawsuit over online sports betting, citing the Eleventh Amendment.
The tribes argue that they should have been able to launch an online sportsbook after Colorado voters approved Proposition DD in 2019, which legalized sports betting statewide.
However, the state told tribes they had to comply with new rules for wagers placed off-reservation, including a 10% tax that funds Colorado water projects. Tribal leaders argued they aren’t subject to state taxes under federal law, and the state’s requirements infringe upon their sovereign rights.
At the center of the lawsuit is a question that has become complicated with modern technology: where exactly does an online bet take place? The court ruled that the determining factor is the location of the bettor, not the location of the tribes’ servers.
“If the bettor is on Indian land, the gaming activity is on Indian land,” Gallagher wrote. “If the bettor is off Indian land — for example, in Denver — [The Indian Gaming Regulatory Act] does not apply.”
In a statement, the Southern Ute Indian Tribe responded to the dismissal, saying the state had damaged its relationship with the tribe and that it’s evaluating how to move forward.
Southern Ute Chairman Melvin Baker spoke about the lack of communication from the state at a tribal council meeting in 2024.
“The state had the opportunity to reach out to the tribal council on a government-to-government basis. While the legislation was being drafted and considered, it never did. The administration waited until the last minute to raise objections to tribal sports betting, inhibiting our ability to compete. That is bad faith,” said Baker.
The Southern Ute Indian Tribe also pointed to what they call a “bitter irony,” that sports betting taxes fund water protection, but the state has struggled to respond to a massive gasoline spill on the Southern Ute Reservation last year.
The spill was estimated at 97,000 gallons, contaminating groundwater and threatening the Animas River. Tribal leaders say they’ve used their own resources to protect local water, while receiving none of the millions the state has collected from online betting.
Sports betting has become a major revenue source for Colorado. According to the state Department of Revenue, Last fiscal year, more than $6 billion in wagers generated about $37 million for state water projects.
