Tennessee Action 24/7, a local sportsbook, had its license suspended by state lottery regulators March 19. The suspension resulted from the company ties to Advance Financial, a payday lending firm. An investigator said he discovered evidence of money laundering and fraud on the app, according to Nashville Scene.
Investigator Danny DiRienzo recounted the details of one transaction. A player made a $10 deposit and then there were 184 attempted deposits using seven cards with seven names. Of those, 124 resulted in minimal bets but multiple withdrawals out to an account with the player’s name.
“It is serious, serious criminal activity, probably in the tens if not hundreds of thousands of dollars’ worth of damages done with multiple real individuals and business victims,” DiRienzo said.
Action 24/7 blamed a service outage on maintenance and technical issues for the situation. On March 22, the company responded with a lawsuit against Tennessee Lottery officials. The suit not only challenges the process but also questions the debit card fraud used to trigger the suspension, according to the Associated Press.
“This suspicious activity was detected quickly by Action staff, and Action swiftly suspended the involved player accounts,” said sportsbook co-founder Tina Hodges, who also runs Advance Financial along with her husband.
She accused the lottery board of making decisions based on unfounded fears of future recurrences of the activity, leaving Action out of action as the NCAA tournament began.
Suit aside, the suspension will only be lifted when the lottery accepts internal controls are in place. Such controls could have thwarted the activity before it resulted in as much damage, DiRienzo said.
The lawsuit accused the lottery of taking action they were unauthorized to take, that the board declined to hear the company’s point of view. The sportsbook operator informed the lottery of suspicious activity March 17, sending the lottery 23 incident reports that took place between March 9 and 12.
Tennessee Action 24/7 claims the amount of fraudulent deposits came to $37,362, of which the company recovered $14,701, leaving $22,661 in fraudulent withdrawals successfully made by seven individuals to four bank accounts. The company froze the questionable accounts at the same time it made its report and instituted measures to prevent a repeat.
But lottery CEO Rebecca Hargrove said Tennessee Action 24/7 waited too long to notify her office.
DiRienzo said this was not an isolated occurrence. He said 45 player accounts opened about the time of the Super Bowl, permitting 41 out-of-state residents to place hundreds of bets using someone in Tennessee, thus getting around the geolocation requirements that required bettors to be in the state.
While one sportsbook went dark in Tennessee for the time being, another one switched on. Churchill Downs Inc. launched TwinSpires Sports mobile app and desktop. In addition to the expected horse racing opportunity, the TwinSpires brand offers Tennesseans a way to bet on the NBA, NFL, MLB, NHL and PGA, as well as college and international sports.
“Just in time for March Madness,” said Bill Mudd, President and COO of CDI, “Tennessee sports enthusiasts will be eligible for our sign-up bonus, as well as continued promotions.”
TwinSpires also named former Green Bay QB, Brett Favre, as brand ambassador to their “Bet Dedicated” campaign, which celebrates the addition of sports betting.
The company’s retail, mobile and online sportsbooks in Colorado, Indiana, Michigan, Mississippi, New Jersey and Pennsylvania will fall under the TwinSpires brand in the first half of the year.
