In an recent emergency hearing in Nashville, Davidson County Chancery Court Judge Patricia Head Moskal ruled the Tennessee Education Lottery must reinstate the license of the sports betting company Tennessee Action 24/7, which was suspended as the company was accused of not doing enough to prevent debit card fraud.
Attorney E. Steele Clayton IV, representing Action 24/7, said the timing of the suspension could not have caused more damage, coinciding with the start of college basketball’s March Madness.
Clayton said Action 24/7’s problems were exaggerated and he filed a lawsuit to overturn the company’s license suspension. Clayton told the court a lottery investigator said the fraud caused “tens if not hundreds of thousands of dollars’ worth of damages,” however, the actual figure was $22,601. He stated the company quickly realized the fraud and took steps to prevent future occurrences.
Clayton’s lawsuit claims Action 24/7’s rights of due process were violated because lottery officials weren’t allowed to hear the company’s testimony during the meeting when the lottery board voted to ratify the suspension.
Clayton noted the company recently had reported numerous cases of debit card fraud to lottery investigators, including one case where an individual made 124 deposits into a gaming account using seven different cards, then placed minimal bets and withdrew most of the money.
At the hearing, Assistant Attorney General Lindsay Sisco argued the board had acted within its rights to immediately protect the public and the integrity of the sports betting system. She also acknowledged that the state’s sports betting system only began in November and there is a learning curve. Clayton said, “I get that there’s a learning curve but while lottery officials are learning our business is being destroyed.” Moskal said, “I appreciate the timing, with the basketball tournament this weekend.”
Clayton noted the damage caused by the suspension could have both immediate and long term impact, since bettors are more likely to stick with the company where they make their first wagers.
In her ruling, Moskal wrote, “Action 24/7 has clearly shown the likelihood that its rights are being violated and it will suffer immediate and irreparable injury.” She ordered that the company’s license to be reinstated while it appeals.
Following the ruling, lottery officials issued a statement noting, “We will continue to work with Action 247 to implement appropriate minimum internal control standards that protect the public interest and minimize risk to the integrity of sports gaming in Tennessee.”
