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.  

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After months of tense negotiations, Utah and six other western states are running up against the clock to broker a deal over the drought-stricken Colorado River.

The federal government gave the Colorado River Basin states a Nov. 11 deadline to reach an agreement on how to manage the water supply for 40 million people after the current guidelines expire next year. If they fail, the federal government may come up with a plan for them.

“We’re making steady progress on key issues the federal government has identified, aiming to reach broad alignment by November 11—even if the finer details come later,” Gene Shawcroft, Utah’s Colorado River commissioner, said in a statement. “If we can get there, it may allow the states to retain control of the process and avoid federal intervention.”

The states are still struggling to reach a consensus on key sticking points, though, and Arizona Gov. Katie Hobbs on Wednesday called on the Trump administration to “step in, exert leadership and broker a deal,” the Arizona Daily Star reported.

Hobbs said the Upper Basin states have held an “extreme negotiating position” in refusing to agree to cuts on their share of the river.

“Without consensus among all seven states, Interior’s management options would be more limited and less beneficial than what could be achieved through a collaborative approach,” a spokesperson for the Interior Department said. “We are optimistic that, through continued collaboration and good-faith efforts, the seven states can develop the level of detail and consensus needed to meet the initial November deadline.”

The river and its upstream tributaries are the lifeblood of the U.S. Southwest and northern Mexico. It supports farms, 30 federally-recognized tribes, habitat for endangered fish and booming metropolises from the Wasatch Front to Phoenix.

The critical waterway is being stretched thin, though, and has been dwindling as hot and dry conditions have plagued the Western U.S. for the past two decades. The entire Colorado River Basin was in drought this year, with large chunks in extreme or exceptional drought, according to the U.S. Drought Monitor.

“We’re in just a very dry period over the last 20 years,” said Mark Stilson, the principal engineer for the Colorado River Authority of Utah.

What states are negotiating

For over a century, the states across the Colorado River Basin have managed the river according to the Colorado River Compact. That law divided the region into the Upper Basin — Colorado, New Mexico, Utah and Wyoming — and the Lower Basin — Arizona, California and Nevada.

The compact did not account for the historic drought the region has been experiencing, though. The states and Interior adopted temporary guidelines in 2007, 2019 and 2024 that implemented increasing cuts to lower basin states as water levels at Lake Mead drop.

Those agreements expire at the end of 2026, though, and states are now working on a new agreement to manage the river during years of low flows.

Tensions have flared, particularly over one major sticking point: who takes cuts during dry times.

“We need to figure out a way to withdraw less water over the long term from the Colorado River … and fundamentally it comes down to sharing the pain of shortage,” said Sarah Porter, director of the Kyl Center for Water Policy at Arizona State University.

The argument over water cuts

Because Lower Basin states have agreed to take cuts during times of shortage, they argue Upper Basin states must agree to reduce their use, too.

Utah and its Upper Basin neighbors have said that they already reduce their water use each year based on the actual flows of the river. “We scale water use according to the water availability every single year, every week of the year,” said Michael Drake, deputy state engineer at the Utah Division of Water Rights.

While Lower Basin states fall downstream of the country’s two largest reservoirs, Lake Powell and Lake Mead, many upstream communities lack such long-term water storage and must adapt according to snow runoff.

“We’re always on the brink of disaster, so to speak, if we don’t have good winters,” Stilson said.

Utah’s state engineer has the power to cut water rights when needed. Those with the newest, or most junior, water rights receive cuts first. But even farmers with some of the oldest rights in the state have had to reduce use.

“In Utah, even the 1860 rights were cut by 30 to 40% this year,” Shawcroft said at a meeting of the Upper Colorado River Commission in September.

In neighboring Colorado, the Dolores Project, which provides water to the Ute Mountain Ute Tribe, received a 70% cut, and the Ute Farm and Ranch Enterprises operated on a 50% supply, Becky Mitchell, the Colorado River Commissioner for Colorado, said at the UCRC meeting two months ago.

While some water users have faced cuts in dry years, researchers have found that the Upper Basin has actually used more water in dry years.

“I just don’t think the claim of these shortages being taken is a legitimate claim,” said John Fleck, a writer and member of the Colorado River Research Group that conducted the study. “It misstates the hydrologic reality of the way water is moved around in the Upper Basin.”

The four northern states used an average of 4.6 million acre-feet of Colorado River water per year from 2016-2020, according to a Bureau of Reclamation report. That’s roughly 3 million acre-feet short of their annual allotment under the compact.

What matters to the Lower Basin, though, is how much water flows downstream to their states. As part of the original compact, the Upper Basin is required to “not cause the flow of the river” at Lees Ferry to fall below an average of 7.5 million acre-feet over a 10-year period.

“We’re perilously close to the point where the Lower Basin will assert that the Upper Basin has not delivered the amount of water that it’s required to under the compact and all of the related agreements,” Porter said. “It’s hard to imagine that unless we have a new agreement, this won’t occur in the next couple of years.”

The tense debate boils down to whether or not the Upper Basin has a “non-depletion obligation” or a “delivery obligation,” Porter added.

If the compact just requires the Upper Basin states to not deplete the river, then they may be able to make an argument that forces such as climate change are causing the reduced flow. If it’s a delivery obligation, then Utah and the three other states may have to cut their own use to make sure the Lower Basin’s and part of Mexico’s allocation flows past Glen Canyon Dam.

The different interpretations are at the crux of what states are hashing out right now.

“When we get less water, it makes it harder for us to be able to honor those commitments in the future,” Stilson said. “And that’s the heart of what the negotiations are about.”

The reality of the river

If negotiators were to agree on cuts for the Upper Basin, Utah’s cities and agricultural communities may not be too happy about having to reduce their water use for farmers and booming metropolitan areas downstream. “[Farmers] struggle with closing down their farms in favor of farms down in California and Arizona,” Drake said.

Lower Basin states have made strides in cutting use, though. The Lower Basin historically used their full allotment of the river, even going beyond their full share at times. But recent data compiled by Fleck shows that those states are projected to cut their take of the Colorado River down to 5.9 million acre-feet in 2025, the lowest level since 1983.

“You have seen these … really significant reductions in water use, and the economies of these communities just keep chugging along,” Fleck said. “Even if you look at the agricultural productivity in places like Imperial, Yuma, they’re doing great with less water.”

While communities would prefer to not cut their water use, Fleck said, desert cities and farms can survive with less. “The alternative is not acceptable,” he added.

Climate change projections show the Colorado River will continue to have less than it did when the seven basin states negotiated the compact over a century ago. While the current drought has been referred to as a “crisis,” Porter said that word has become overused and “doesn’t have any meaning anymore.” The real crisis may be how managers respond to the new water reality.

“It’s been recognized for a very long time that essentially the Colorado River is over allocated, and that we were going to drive down the reservoir levels. … Where we are now is because the states can’t come to agreement,” Porter said.

If the states reach consensus by Tuesday, they will have until mid-February to hash out the finer details of a plan, according to the Bureau of Reclamation.

“Utah remains fully committed to defending every drop of Colorado River water to protect our communities and water users,” Shawcroft said, “and we’re hopeful that the Basin States can unite around a workable framework before the February deadline.”