The local Tennessee sportsbook Action 24/7 has become the first US sportsbook to have its licence suspended.
The Tennessee Education Lottery (TEL) has suspended Action 24/7’s sports betting licence for failing to prevent multiple instances of suspected credit card fraud and money laundering.
The local sportsbook operator has become the first US sportsbook operator to have its license temporarily suspended since the fall of the Professional and Amateur Sports Protection Act (PASPA) paved the way for legal sports betting in 2018.
An audio recording of the TEL’s entire meeting from Friday 19 March, where Action 24/7’s licence suspension was announced, can be accessed here.
Action 24/7’s failings
During a meeting of the TEL board last week, Danny DiRienzo, the TEL’s sports gaming investigator spent 13 minutes outlining the local sportsbook’s failings.
The investigator explained that he had received an email from one of the operator’s employees on Wednesday and that he was unable to open it on his phone because it contained a .zip file.
After opening the file on Thursday, a day before the meeting, it was revealed that even though the incidents were reported on 17 March, the operator had known about them from 9 March.
The folder contained 23 separate incident reports about 23 player accounts with Action 24/7. DiRienzo has yet to fully examine the data due to how high the transaction volume is.
Speaking at the meeting last week, DiRienzo said it would take“quite a bit of time to analyze all the data.”
The first account examined by the investigator revealed that a customer made an initial small deposit using his own account information. DiRienzo then said: “That was almost immediately followed by 184 attempted deposits from seven different credit cards bearing seven different names.
“One hundred and twenty-four of those transactions, those deposits, were successful. We’re talking tens of thousands of dollars. There was very minimal gameplay, meaning betting. And then multiple withdrawals out to an account bearing the player’s name.”
According to DiRienzo each account had similar patterns and said that these were clearly cases of credit card fraud, wire fraud, aggravated identity theft and money laundering.
DiRienzo added: “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.”
The TEL’s investigator explained that the minimal control standards are there to make sure operators, vendors and suppliers are doing everything they can to stop illegal activity from occurring.
DiRienzo said: “If the minimal internal control standard had been met or implemented by Action 24/7, if they had implemented the internal controls that they represented to the TEL that they had in place prior to launch, this very activity would have been stopped very early on. And we would have many less victims and far less of a dollar amount in losses.”
Action 24/7 can appeal the decision
Almost immediately after the TEL voted to suspend the operator’s licence, Action 24/7 had its lawyers look to appeal the decision.
Following the decision Action 24/7’s CEO Tina Hodges said: “The Board today indefinitely suspended Action 24/7’s sports betting operator license for suspicious player deposit activity. This 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. Yet, the Board relied upon unfounded fears of future speculative recurrences of the activity, and took draconian action just as the NCAA Tournament is beginning.
“Obviously, we are disappointed in the Board’s decision, but will continue to work with TEL staff and seek all other avenues of relief to have the suspension lifted quickly so that the people of Tennessee may continue to enjoy wagering on the Action 24/7 sportsbook.”
More controversy for Action 24/7
During the meeting, DiRienzo pointed out that this was not the first instance of “ very serious criminal conduct occurring on Action 24/7’s platform within the past two months.”
According to DiRienzo, another issue involved a contracted employee opening 45 player accounts, of which 40 or 41 were for out of state residents, and placing hundreds of bets before the Super Bowl.
At that point, DiRienzo explained that he offered to help the company with any issues they might have had.
The sportsbook operator has also been accused of keeping customer winnings to pay off loans.
The Action 24/7 sportsbook is owned by the same people that own Advance Financial 24/7, a company that offers payday and other high-interest loans in several US states, including Tennessee.
This issue first came to light earlier this year when Representative Tim Jernigan started looking into the company when he discovered the TEL approved its loan shops to act as cash deposit points for sports betting accounts.
Jernigan found someone who was ready to testify that their winnings were kept to pay back debts.
Jernigan and Senator Richard Beiggs have since filed identical pieces of legislation that would make it illegal for a person to bet and have a loan through the same company. The bills, HB 824 and SB 1029 get their first committee hearings later this week.