Key Moments:
- The Tucson Sugar Skulls have filed a lawsuit against Snell & Wilmer LLP and Duane Morris LLP for legal malpractice and breach of fiduciary duty.
- The team alleges it lost a partnership with Fanatics Betting & Gaming, which could have included a $5 million payment and future profit shares.
- The Sugar Skulls are seeking compensatory and punitive damages under Arizona law, totaling over $15 million across five years and possibly up to $50 million over a decade.
Background of the Lawsuit
The Tucson Sugar Skulls, an Indoor Football League team, have taken legal action against law firms Snell & Wilmer LLP and Duane Morris LLP, as well as attorneys Heidi Staudenmaier and Adam Berger. According to documents filed in Pima County Superior Court on October 30, the team accuses their former counsel of mishandling efforts to secure an Arizona sports betting license between 2023 and 2025.
The complaint asserts that the attorneys prioritized existing clients in the gaming and tribal sectors rather than the Sugar Skulls’ interests. As outlined by the team, alleged malpractice led to the loss of a potential deal with Fanatics Betting & Gaming, which included a proposed $5 million payment upon license approval and an ongoing share of future profits.
Claims of Conflict and Mishandling
The Sugar Skulls contend that flawed legal advice and unmanaged conflicts of interest resulted in strategic missteps. Among the allegations are the pursuit of a dual retail and online application without the team’s informed consent, failure to disclose and address conflicts from representing multiple parties, making significant legal decisions such as requesting a continuance without client approval, and directing Fanatics toward a tribal partnership deemed more attractive to regulators at the expense of the Sugar Skulls’ interests.
As a result, the team claims they lost a contract opportunity worth more than $15 million over five years, with the potential to reach $50 million in ten years. Their lawsuit aims to recover these amounts as compensatory damages, in addition to punitive damages and further relief under state law.
Arizona Sports Betting Regulatory Environment
Arizona’s Event Wagering Act permits professional teams and tribal gaming entities to apply for a limited number of sports betting licenses, making the acquisition process intensely competitive. In its filings, the Sugar Skulls argue that crucial legal advice for navigating this complex environment was inadequately provided, leading to their failed bid.
Chronology of the License Denial and Aftermath
In August 2023, the Arizona Department of Gaming denied the Sugar Skulls’ application, explaining that their venue failed to meet the state’s requirement of a minimum 10,000-seat capacity for retail sportsbook eligibility. The team contends that their legal representatives did not sufficiently present or advocate for an online-only licensing strategy that could have avoided this restriction.
After the denial, disagreement arose over legal strategy, specifically whether to appeal or begin a new application. Ultimately, Fanatics opted for a tribal partnership. The Sugar Skulls claim their lawyers did not properly defend their interests during this period, resulting in Fanatics leaving the agreement unopposed.
Events During Settlement Negotiations
At a settlement conference in October 2023, the legal team reportedly separated clients and held private talks with Fanatics. The Sugar Skulls assert that these confidential meetings delayed their appeal and facilitated Fanatics’ withdrawal without challenge.
Not long after, Staudenmaier ended her representation of the Sugar Skulls but remained as Fanatics’ advisor. The team alleges that Duane Morris continued corresponding with both sides without authorization.
| Event | Date/Timeframe | Outcome |
|---|---|---|
| License Application Denial | August 2023 | Venue did not meet 10,000-seat minimum |
| Settlement Conference | October 2023 | Fanatics withdrew; attorneys separated clients |
| Fanatics & Tonto Apache Tribe Awarded License | March 2024 | Launched statewide operations |
| Sugar Skulls Appeal Dismissed | July 2025 | Appeal unsuccessful |
Next Steps for Legal Proceedings
The legal process is expected to begin with motions to dismiss under Rule 12, examining whether the complaint meets all necessary legal standards. Should the case proceed, discovery will likely focus on materials such as engagement letters, conflict waivers, internal communications, settlement documentation, and draft legal filings.
- Author
Daniel Williams
