During An Emergency Meeting On Friday, The Tennessee Lottery’s Sports Wagering Committee Confirmed That The Sports Betting License Of Action 24/7 Would Be Indefinitely Suspended Due To A Report Of Money Laundering, Proxy Betting, And Credit Card Fraud That Occurred Through The Site.
Photo Credit: Action 24/7
Published March 22, 2021
During an emergency meeting on Friday, the Tennessee Lottery’s Sports Wagering Committee confirmed that the sports betting license of Action 24/7 would be indefinitely suspended.
The suspension was initially handed down on Thursday, but the board made the decision on Friday to ratify the suspension after an investigator gave a report of money laundering, proxy betting, and credit card fraud that occurred through the site.
“This is clearly a case of credit card fraud,” Investigator Danny DiRienzo said. “Clearly a case of money laundering. Clearly a case of wire fraud. There are tens if not hundreds of thousands of dollars of damage done here to many victims.”
According to DiRienzo, he received an email from an employee of Action 24/7, which contained a number of incident reports for several player accounts. Each incident started with a $10 deposit matching the personal information for the account, but then these initial deposits were followed up with hundreds of credit card transactions that did not match with the accounts.
In addition to those violations, DiRienzo also told of a number of proxy accounts registered to out-of-state residents. Someone in the state would log in and place bets for the account holders to get around the location identification technology. According to DiRienzo, an individual admitted to being paid by Action 24/7 to place those proxy wagers.
The violations took place on March 8, but the Tennessee sportsbook did not self-report them until March 17. Because sites are required to report suspicious activity immediately, this alone is a regulatory violation.
Tennessee Lottery CEO Rebecca Hargrove did acknowledge the “awful timing” of the suspension, considering the fact that March Madness is a major sports betting event.
“But [Action 24/7] has known about the activity,” Hargrove stated. “Had they told us March 9 instead of waiting to March 17, maybe we could have worked through all of this before the tournament. I feel bad for them, but that’s the timeline.”
Action 24/7 CEO Tina Hodges issued a statement saying that after detecting the suspicious activity, “Suspicious activity was detected quickly by Action staff and Action swiftly suspended the involved player accounts. Action instituted additional controls to curb the activity, and no further such activity has occurred since.”
However, lottery officials noted that there was no evidence that Action 24/7 has the appropriate controls in place to prevent something like this from happening in the future. This is the second time Action 24/7 has had violations since being allowed to operate online in November 2020.
DiRienzo continued, “If we don’t take a holistic approach to this, Lord knows what the next round is going to entail. The internal controls in place right now, in my opinion, will not prevent future criminal activity from occurring on this website.”
Hodges does not believe the suspension is fair.
She stated, “The Board relied upon unfounded fears of future speculative recurrences of the activity, and took draconian action just as the NCAA Tournament is beginning.”
“Any platform that wants to operate in Tennessee needs to have standards in place because it’s imperative to protect the citizens of Tennessee from any kind of criminal harm through any gaming site,” Representative Darren Jernigan said. “I’m not against friendly betting and wagering with cash, with standards in place, but obviously this has failed.”
Some analysts feel this is a necessary step in maintaining the regulation of sports betting in Tennessee.
“This is the first time an online sportsbook operator has had its license suspended in the U.S., making it a sad milepost in the sports betting industry,” said PlayTenn.com lead analyst Dustin Gouker. “If all these allegations are true, Tennessee regulators can’t let the status quo at Tennessee Action 24/7 continue. We can only hope that this decision improves the future of sports betting in the state.”
Jessica Welman, from PlayTenn.com, said, “It’s the first time that we’ve actually seen a U.S.-related sportsbook have such drastic action taken against them. When I heard that somebody was starting a sportsbook from scratch in Nashville these were the kinds of questions that I had: how do you make sure that all of this stuff of a highly, highly regulated industry is getting done? And what we’re seeing is it’s a very hard thing to do especially when you’re not a gigantic corporation.”
The site has been offline since the initial suspension on Thursday night. Action 24/7 originally claimed they were down for site maintenance before updating later saying that they were working through technical issues.
Action 24/7 will be required to prove through independent verification that they have minimum controls in place to prevent future occurrences to have the suspension lifted. It is possible that the company could appeal and a court could order Tennessee Lottery to allow them to continue to operate.