The leaders of two Native American reservations in southern Colorado recently called the state’s ban on their ability to partake in online sports betting an extension of the “troubling legacy” of broken agreements between governments and the Tribes. 

A recent ruling by a federal court judge on the issue, along with a petroleum spill that has aggravated the relationship between the state and the Tribes, has apparently reopened old wounds. Healing them may happen in the coming weeks if the two sides can talk.

A money matter

Colorado voters narrowly approved legalized sports gambling here in November 2019. The amount of betting and the amount of tax paid to the state from it has grown substantially since then. In September alone, bettors from across the nation spent more than $99 million online with casinos in Central City, Black Hawk and Cripple Creek.  

Reservation-based casinos are important to Native American economies. In 2023, tribally owned gaming operations nationally generated about $42 billion in revenue. Understandably, those reservations seek to maximize that cash flow. 

In Colorado, both the Southern Ute and Ute Mountain Ute Indian Tribes started sports betting platforms through their own casinos six months after voters gave online gambling the green light. The Southern Ute Tribe launched the Sky Ute SportsBook through its Sky Ute Casino in Ignacio. The Ute Mountain Ute Tribe started its own platform at its Ute Mountain Casino in Towaoc. 

According to court documents, the vendor for the Sky Ute Sportsbook received a letter from the Colorado Division of Gaming (CODOG) two weeks after it started. 

“[W]e believe that your company is participating in sports betting in Colorado on behalf of the Southern Ute Indian Tribe without complying with Colorado gaming law,” the letter stated. 

Later, the vendor working for the Ute Mountain Utes’ operation received the same letter.  

The gaming division advised the Tribes to apply for the state betting license, the same license that all other Colorado casinos are required to obtain. With that license would come a promise to pay 10% of net sports betting revenue to the state. The casinos declined, shut down their sports books and sued instead.

“The Tribes claim that Colorado’s actions made their sports betting operations challenging and more expensive,” Judge Gordon Gallagher summarized in last month’s ruling, “effectively freezing them out of the sports betting market.”

Last month, Gallagher dismissed the case.  

“Colorado explicitly authorized sports betting, a Class III game, throughout the state,” the Tribes complained in a joint press release following the judge’s decision. “But the State immediately stymied the ability of the Tribes to engage in that activity despite clear authorization under the Gaming Compacts, and instead, elected to benefit out-of-state gaming interests over its relationship with the Tribes. When the Tribes sought to challenge that conduct, the Administration chose to hide behind its immunity. These actions by the Polis Administration in refusing to honor the Gaming Compacts entered into with Colorado’s two federally-recognized Tribes represents one of the lowest points in State-Tribal relations in recent history.”

History

The first gambling approved on a Native American reservation came in 1979 when the Florida Seminoles opened a high-stakes bingo hall. Its legality was challenged, but the U.S. Supreme Court eventually ruled it was a legal operation.

In 1988, the Indian Gaming Regulatory Act (IGRA) was enacted, giving way to the growth of casinos on reservation land. 

Much has changed since then. First, online sports gambling became legal in most states in 2018, thanks to a U.S. Supreme Court decision. 

That same year, the Supreme Court struck down a 1992 federal law that banned commercial sports betting in most states. This spurred most states to authorize sports wagering, as Colorado did one year later. This gave those states regulatory authority over such gambling outside reservation boundaries. 

Of course, one of the most significant changes to occur was in technology.

“[B]ecause of the ability to place an online bet from a cellular phone or other electronic device, bettors can engage in gambling from
almost anywhere,” Judge Gallagher stated in his ruling. “If the gambler and roulette wheel were on Indian land, IGRA applied. However, in 2025, a gambler can be in Denver and the electronic game processed through a computer server on Southern Ute Indian Tribe land or Ute Mountain Ute Tribe land. Where then does the gaming occur?”

“This is a legal determination for the Court to make,” he stated.

In the end, Gallagher determined that any bet placed off-reservation is regulated by the state. 

“That distinction is crucial in this action and fatal to the Tribes’ case,” Gallagher wrote. “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.” 

Anger Spills Over

“The Tribe respects Judge Gallagher and appreciates the time he has given this issue,” the Tribes stated in their recent press release. “We believe a different result is mandated by federal law and will be evaluating how to move forward in the coming weeks.” 

But after that expression of hope, the Tribes’ sentiments took a very different tone. The press release referred to the “bitter irony” of the situation – a legal setback over gambling funds, most of which are directed at the state’s effort to protect its water resources, while the Southern Ute Tribe deals with a nearly year-old gasoline spill that threatens the Animas River. Groundwater contamination has forced several residents from their properties. 

In the months since CBS Colorado first reported the spill, the company whose pipeline is responsible for it has upgraded the extent of it, from 23,000 gallons to nearly 97,000. The spill is now the largest spill of its kind in Colorado since the state began tracking such incidents in 2016. 

“We are confident that had this spill been in Denver instead of a remote, rural part of the state, the response would have been more robust,” the two Tribes stated in the press release. “The Southern Ute Indian Tribe has expended its own resources to ensure the local waterways and resources are protected in our region. It has done so without a single dollar of the millions of dollars in revenue the State has collected from sports betting, and without the benefit of additional revenue from tribally-run sports betting that could have been relied upon had the Gaming Compact been honored.”

The Tribes claimed Colorado Gov. Jared Polis failed to participate in a recent conference call with state and Indigenous leaders about the spill.

“Yesterday’s cancelled call between Governor Polis and (Southern Ute) Chairman (Melvin J.) 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,” they said. “The history of relations between Tribes and the state and federal governments is one of broken Treaties and agreements. The Polis Administration’s conduct is a reminder that those things we think are an artifact of a distant past still exist today.”

A spokesperson from Gov. Polis’s office responded with a statement: 

“We deeply respect the government-to-government relationship the state has with the Ute Mountain Ute and Southern Ute Indian Tribes. 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. We are dedicated to working together with the Tribes on gaming matters, and we look forward to ongoing conversations with the Ute Mountain Ute and Southern Ute Indian Tribes on this important issue.”  

Elsewhere

The issue is not Colorado’s alone. Today, Indian gaming, as it is called, is played in 29 states. There are 532 gaming operations, which include casinos, bingo halls, travel plazas and convenience stores. These are owned by 243 Tribes. In total, they grossed almost $44 billion in fiscal year 2024. 

However, according to Tribal Government Gaming, three of the 10 states containing the largest number of Tribes still do not have legal sports betting seven years after SCOTUS gave states the right to allow it. A ballot initiative is in the planning stages for 2028 in California. 

Congress could enact a national standard for online sports betting through tribal casinos, but has not taken up the issue. 

Adjacent to Colorado (from Tribal Government Gaming): 

• All of Arizona’s Tribes can offer in-person wagering and digital betting on the reservation. But off reservation, the 10 Tribes licensed to offer online sports betting are regulated by the state and pay the same 10% tax rate as commercial operators.  
• Nebraska voters agreed to legalize sports betting on the November 2020 ballot, and three years later, the first bets were taken. The Winnebago Tribe is a key player on the Nebraska gaming scene, but in this case, the Tribe is regulated and taxed by the state.
• Oklahoma Tribes are hoping to pursue legalizing sports betting when the current governor’s term limits are reached in 2027. 
• New Mexico’s Tribes have their own regulatory body and are not beholden to the state. They also do not pay taxes.