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A Colorado judge has dismissed a lawsuit from the Southern Ute and Ute Mountain tribes challenging the state’s sports betting framework.
The court found that the tribes’ argument, which claimed that a bet occurs where the server is located, lacked merit. The judge ruled that the location of the bettor determines where the bet takes place.
The tribes had sued Colorado Governor Jared Polis and Director of the Colorado Division of Gaming, Christopher Schroder, last year. They alleged that the governor and the gaming commission obstructed their legal efforts to offer sports betting within their jurisdictions.
The story so far
Following the legalisation of sports betting in Colorado in 2019, the Southern Ute tribe partnered with US Bookmaking to develop and launch the Sky Ute Sportsbook.
The tribe contended that their compact allowed them to offer any gaming on tribal lands that is legal elsewhere in the state, making their June 2020 launch lawful.
Schroder, the Director of the Colorado Division of Gaming, informed the tribe in May 2021 that their sportsbook was believed to be violating state law. He suggested that the tribe could apply for a sports betting license from the state and pay taxes on the revenue generated by the betting app.
The lawsuit also claimed that the Colorado regulators contacted US Bookmaking and the Ute Mountain tribe’s prospective partner, IGT. They warned that involvement in operating a tribal sportsbook could jeopardize these companies’ supplier licenses.
Bettors’ location matters, not servers
The tribes strongly believed that their interpretation of the gaming compact was correct, but Colorado District Judge Gordon Gallagher disagreed.
He rejected the hub and spoke argument regarding wager locations, stating that the critical factor is where the bettor is physically situated. Gallagher stated:
“Online bets placed outside of reservation boundaries are not placed ‘on Indian lands’ because online betting occurs where the bettor is located.”
He referenced several cases related to traditional gambling, emphasizing that in those instances, the definition of where gambling occurs focused on the bettor’s actions rather than the house’s operations. He concluded by saying:
“In online gaming, the most closely analogous activity to rolling dice, betting chips, spinning a wheel, or playing cards is clicking a button to place a wager, setting the wager in motion. Therefore, the Court holds that online class III gaming activity occurs where the bettor, not the server, is located when he or she initiates the wager”
Southern Ute Indian Tribe to keep fighting
In a statement released last Friday (Oct 24), the Southern Ute Indian Tribe announced its plans to continue pushing the issue.
“The Tribe respects Judge Gallagher and appreciates the time he has given this issue. We believe a different result is mandated by federal law and will be evaluating how to move forward in the coming weeks,” the tribe wrote.
It also mentioned its gaming compact with the state that allows it to engage in all Class III games allowed by Colorado law, which includes sports betting.
“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,” the tribe concluded.
Mixed opinions about the validity of ‘hub and spoke’ nationwide
The hub and spoke model continues to face skepticism beyond the Colorado court.
In North Dakota, Doug Burgum, the current Secretary of the Interior, turned down a proposal from state tribes that aimed to amend the state’s gaming compact to expand online gambling using this model. At the time, he expressed doubts about finding a “clear, legal path” for such changes.
Now overseeing the Department of the Interior, Burgum has stated that while tribal compacts can include hub and spoke language, his department has not clarified whether this interpretation applies to existing agreements, creating a cloud of uncertainty around its validity.
Source: SBC Americas
