Colorado Governor Jared Polis and the Colorado Division of Gaming (CDG) Director Christopher Schroder have filed a motion to dismiss a federal lawsuit brought by tribes in the state. The Southern Ute Indian Tribe and the Ute Mountain Ute Tribe brought the lawsuit last year. The two tribes claim online sports betting should follow the same rules as bets on tribal lands.
This would exempt online bets from state gaming taxes and oversight, as is the case with bets placed on tribal lands. The tribes argue that because the servers are on tribal territory, so are the bets.
Colorado rejects this claim and maintains that it holds authority over any wagering on non-tribal land. If customers place bets when they are not on tribal land, then the bets are subject to regulations and taxes.
The motion to dismiss was filed with prejudice, meaning if granted, the tribes could not refile the lawsuit. Colorado’s lawyers claim that the Eleventh Amendment should apply, which protects states from being sued in federal courts.
The US Supreme Court invoked this rule when judging against the Semiole Tribe of Florida in 1996. Gov. Polis will hope for a similar decision in this case.
Colorado sports betting
Sports betting in Colorado is a thriving industry. In the fiscal year to date, $4.3 billion has been wagered. The state has collected $24.5 million of that in taxes.
CDG Director Schroder commented on the figures, “A strong, safe, and fair sports betting industry is good for Colorado and its bettors. The funds they raise each month are helping Colorado fund water conservation efforts.”
If this lawsuit is successfully dismissed, it will protect the state’s taxes. The tribes, however, want to protect their own profits.
The Southern Ute Indian Tribe closed its online sportsbook, Sky Ute Sportsbook, in July 2023. They will surely reopen if the courts make a decision in their favor.
Future of online sports betting
This case could be pivotal in the future of online sports betting. Other states will be watching closely and the ruling could decide what happens to other tribal casinos and sportsbooks.
States are battling for authority over the sports betting industry. Legalized sports betting can be regulated and taxed, but more and more websites are finding ways around legislation.
Sweepstakes casinos, offshore gambling, and crypto betting sites all pose threats to state regulators. Prediction markets such as Kalshi have also incurred the wrath of states, but so far, they have avoided adverse rulings in court.
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