Colorado’s sports betting market may be in for a major change.

The Southern Ute Indian Tribe has filed a lawsuit against the state of Colorado over its gaming compact. The lawsuit argues that the state did not correctly interpret the Indian Gaming Regulatory Act (IGRA) when it updated its gaming compact. The error led to the tribe being denied rights for online sports betting, which went live in May 2020.

“Today, for the first time in decades, the Southern Ute Indian Tribe has been forced to file a lawsuit in federal court against the state of Colorado because the administration refuses to honor express commitments the state made to the tribe,” Tribal Chairman Melvin J. Baker told the American Indian Affairs Interim Study Committee after the lawsuit was filed.

Colorado formed its original gaming compact in 1993, paving the way for tribal casinos to operate in the state. However, the Southern Ute Indian Tribe claims it was not consulted when the state updated the gaming compact to allow online sports betting. They argue that IGRA should have given the tribe sole rights to the industry.

The lawsuit marks the beginning of what is expected to be a long and arduous process. If the tribe is successful, it will force Colorado to update its gaming compact and hand them sole rights to the industry.

The Southern Ute Indian Tribe’s lawsuit was inspired by a similar legal battle in Florida that ended last month. The state’s gaming compact gave the Seminole Tribe sole rights to the online sports betting industry, referencing IGRA in its decision. The state said that since the servers for online sports betting would reside on tribal land, online sports betting would fall under IGRA.

Florida’s gaming compact faced legal challenges that stretched over two years. West Flagler Associates filed lawsuits in state and federal courts arguing that Florida’s interpretation of IGRA was incorrect, meaning the gaming compact should be made void.

West Flagler’s legal challenges ended when the US Supreme Court decided against taking their case. That decision set a precedent for how IGRA should be applied to online sports betting and led to the new lawsuit filed in Colorado. 

Colorado is the first state to see a legal challenge since the decision from SCOTUS, but it is expected more states will see similar lawsuits in the near future.