A Nashville judge granted an injunction to Action 24/7 to reinstate its TN sports betting license pending the outcome of its regulatory issues with the Tennessee Education Lottery (TEL.)
Action 24/7’s TN sportsbook license was initially suspended March 18 – the day of the First Four March Madness games – by TEL Board Chair Susan Lanigan.
The board ratified and upheld that suspension in a special meeting Friday.
Background on Action 24/7 suspension
The trouble started for Action 24/7 more than two weeks ago when 23 instances of suspected fraud and money laundering began the evening of March 8, the sportsbook’s counsel Steele Clayton said at Tuesday‘s hearing.
The majority of the incidents ran through March 12 with the final attempt March 16. According to TEL sports betting investigator Danny DiRienzo, the initial cases he reviewed should have been flagged for review quickly based on deposit attempts from multiple cards or withdrawals with limited betting activity.
Action 24/7 couldn’t do that, though. The company wasn’t live monitoring activity on its platform meaning these instances weren’t found until employees got to the office in the morning. It wasn’t until after the 23rd and final reported instance on March 16, more than a week after the first issues were found, that Action 24/7 CEO Tina Hodges decided the monitoring should be 24/7 as well.
On March 17, Action 24/7 self-reported the incidents to the TEL – though that wasn’t its immediate intention.
Action ‘didn’t know’ it had to report suspected fraud
A .zip file of the incidents was sent to DiRienzo on the 17th but wasn’t opened until the next day when he returned to the office. The information was sent to find out whether Action should take the information to the Tennessee Bureau of Investigations or if that was the TEL’s job, Clayton said when asked about the delay in notifying the regulator:
“Really two reasons: One, you have to compile the reports, which we were doing. Two, to be honest your honor, it’s something we will definitely do going forward but when you look at the [regulations], respectively, it seems to contemplate reporting, to us, wagering activity, which we take to mean things like fixing a game, improper betting lines, changing betting lines. Things you would think of as wagering.
“Whereas we view this as debit card fraud that you would go to the [Tennessee Bureau of Investigations] with. And again that’s why we went to the investigator once we got the incident reports compiled to give these to him and say ‘We want to go to the TBI, is that something we would do or do you want to do that?’
Lindsay Sisco of the Tennessee Attorney General‘s office said there should have been no confusion over what should be reported. In her opinion of the evidence it seems that Action 24/7 didn’t want to admit there was another issue, she told the court.
Action 24/7 contractor involved in proxy betting
Action first ran afoul of the TEL around the Super Bowl. At the time the TEL only reported two operators had 74 accounts suspended with law enforcement investigating.
DiRienzo shared one of those operators was Action. An employee contracted by the company reportedly set up 45 accounts for the purposes of proxy betting, DiRienzo said.
Clayton mentioned the sportsbook hadn’t been fined for that issue. That’s because the investigation isn’t finished, TEL explained Thursday:
“It was immediately turned over to law enforcement, and any action on our part is pending the outcome of that investigation.”