Tucson Sugar Skulls sue law firms over failed licence bid
The Tucson Sugar Skulls, a professional indoor football team in the Indoor Football League, have filed a lawsuit against two major law firms, Snell & Wilmer LLP and Duane Morris LLP, along with attorneys Heidi Staudenmaier and Adam Berger, as reported by Next.io. The lawsuit, filed in Pima County Superior Court on 30 October, alleges legal malpractice and breach of fiduciary duty in connection with the team’s unsuccessful attempt to secure an Arizona sports betting licence between 2023 and 2025.
Overview of lawsuit
The complaint, lodged in Pima County, accuses the attorneys of prioritising existing relationships with gaming and tribal clients over the interests of the Sugar Skulls. It claims the team lost a potential partnership with Fanatics Betting & Gaming, which included a proposed payment of $5 million upon approval and a share of future profits.
The lawsuit attributes this outcome to flawed legal decisions and conflicts of interest. Allegations include pursuing a retail and online application strategy without the team’s informed consent, failing to disclose and manage conflicts arising from joint representation, making litigation decisions such as requesting a continuance against the client’s wishes, and redirecting Fanatics towards a tribal partnership perceived as more favourable to regulators, while neglecting to support the team’s preferred approach.
The Sugar Skulls are seeking compensatory damages for the lost contract value and projected profit shares, estimated at over $15 million across five years and potentially up to $50 million over a decade. They are also pursuing punitive damages and other relief under Arizona law.
Arizona sports betting landscape
Under Arizona’s Event Wagering Act, professional sports teams and tribal gambling organisations may apply for sports betting licences. However, the number of permits available statewide is limited, making the process highly competitive. Securing a licence could open up significant financial and business opportunities for organisations like the Sugar Skulls. According to the complaint, the team believes the legal and strategic guidance required to navigate this process was mishandled.
Licence denial
In August 2023, the Arizona Department of Gaming (ADOG) rejected the Sugar Skulls’ application, stating that the team’s venue did not meet the 10,000-seat minimum required under state law for retail sportsbook eligibility. The Sugar Skulls argue that their legal team failed to clearly present an online-only licencing strategy, which they believe could have bypassed the seat-count requirement.
Following the licence denial, disagreements emerged over whether to appeal or restart the application process. Fanatics eventually opted to pursue a tribal partnership. The Sugar Skulls allege that their attorneys did not adequately represent their interests during this period, allowing Fanatics to exit the partnership without challenge.
October 2023 settlement conference
During a settlement conference, the attorneys allegedly separated the clients and held private discussions with Fanatics. The Sugar Skulls claim these discussions led to a delayed appeal and allowed Fanatics to quietly withdraw from the partnership.
Shortly after the conference, Staudenmaier withdrew from representing the Sugar Skulls but continued advising Fanatics. Duane Morris is also alleged to have maintained communication with both parties, which the team claims was unauthorised.
In March 2024, Fanatics and the Tonto Apache Tribe were awarded a sports betting licence and began operations statewide. The Sugar Skulls’ appeal was dismissed in July 2025.
What happens next in court
The case may begin with motions to dismiss under Rule 12, which will assess whether the complaint meets the required legal standards. If the case proceeds, the discovery phase will likely involve reviewing documents such as engagement letters, conflict waivers, internal communications, settlement notes and draft filings.
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