In October 2025, a federal judge dismissed a lawsuit brought by the Southern Ute and Ute Mountain Ute Tribes against Colorado, challenging the state’s regulation of online sports betting. This ruling marks the conclusion of a contentious debate over the distribution of millions in tax revenue generated by Colorado’s burgeoning sports betting industry.
The lawsuit, filed in July 2024, stemmed from the Tribes’ assertion that, following the 2019 approval of Proposition DD, which legalized sports betting in Colorado, they should have the right to operate online sportsbooks. The Tribes argued that bets placed on Tribal servers should be classified under the Indian Gaming Regulatory Act (IGRA), regardless of where the bettor is physically located.
Judge Gordon Gallagher’s decision hinged on the location of the bettor, stating that the place where the bettor is located determines the jurisdiction of the gaming activity. According to Gallagher, if a bettor is situated on Indian land, IGRA applies; conversely, if the bettor is off Indian land, such as in a city like Denver, IGRA does not govern that activity.
The ruling was welcomed by Colorado Governor Jared Polis. A spokesperson for the governor expressed satisfaction, emphasizing that the decision allows Colorado to continue managing sports betting effectively, ensuring that the funds generated will support vital state projects, particularly those related to water infrastructure. The spokesperson reiterated a commitment to collaborating with the Tribes on future gaming issues.
The dispute initially erupted after Colorado insisted on applying the standard tax regulations to bets placed beyond reservation boundaries. This policy included a 10% tax rate, which contributes to the state’s water project initiatives. The Tribes contested this, referencing a “spoke-and-hub” model, which they believed justified treating online bets processed through Tribal servers as being placed on Tribal land.
Judge Gallagher recognized the complexities introduced by modern technology to the IGRA framework, which dates back to 1988. He noted that the original law did not account for today’s digital landscape, where the separation of physical location from gaming activity is commonplace. Yet, his ruling emphasized that, while the technology may have evolved, the principle of jurisdiction based on bettor location remains clear and enforceable.
The ruling delineates that while Colorado retains the authority to regulate bets made off Tribal lands, it cannot interfere with wagers placed within the reservations. This clarity allows both Colorado and the Tribes to continue their respective operations, with the state managing a significant portion of its sports betting sector.
The financial impact of sports betting on Colorado’s economy has been noteworthy. In the last fiscal year, residents wagered over $6 billion, resulting in nearly $37 million in tax revenue. Online betting alone, in August, accounted for over $3 million from $38 million in wagers, significantly surpassing retail betting figures.
The decision was not entirely unchallenged, as some industry analysts and stakeholders voiced concerns about the implications for Tribal sovereignty and revenue opportunities. They argued that the ruling could restrict the Tribes’ ability to fully capitalize on the lucrative online betting market, potentially stunting their economic growth and self-sufficiency efforts.
On the other side of the spectrum, Colorado officials assert that the decision ensures a level playing field and maintains regulatory consistency across the state. They contend that this approach is crucial for sustaining public trust and maximizing the benefits of sports betting for all residents, particularly through the funding of essential public projects.
As this legal chapter closes, both the state and the Tribes are expected to continue dialogues to explore mutually beneficial avenues in the gaming arena. Future discussions and potential collaborations could reshape the landscape of gambling in Colorado, balancing state interests with Tribal rights and economic aspirations.
Thus, while the dismissal of the lawsuit secures a victory for Colorado, it underscores the ongoing evolution and negotiation inherent in gambling policy and Tribal-state relations, reflecting broader trends in the gaming industry’s intersection with legal and technological challenges.
David Garato is a luminary in gaming journalism, renowned for peeling back the curtain on the gaming world with his witty and insightful commentary. A decade into weaving stories from the pixelated edges of indie games to the expansive universes of AAA titles, David’s work is a thrilling blend of analysis and adventure. When not writing, he’s live-streaming, sharing his gaming exploits with an engaged and growing audience. David doesn’t just write about games; he lives them, making him a trusted guide in the gaming community.
