Action 24/7 claimed Wednesday is court that its business is being destroyed by the indefinite suspension of its Tennessee sports betting license.
The company publicly defended itself for the first time since the suspension in the Davidson County (TN) Chancery Court. Action 24/7 wants a temporary injunction to get its sportsbook back up in time for Saturday‘s March Madness games.
The suspended operator’s case pins to a few main arguments:
- The Tennessee Education Lottery (TEL) Board acted improperly when it suspended Action’s license, given there were no emergency circumstances to do so.
- That unlawful suspension led to a lack of due process for Action.
- The suspension is destroying the business, according to attorney Steele Clayton.
“While the learning curve on due process is going on, our business is being destroyed. Literally, not dramatically, truthfully. Without question.”
TEL investigators describe a dire situation of continual self-regulatory inaction by the operator. That inaction led to potentially hundreds of thousands of dollars in damages from alleged credit card fraud and money laundering.
Chancellor Patricia Moskal said she was aware of the March Madness games this weekend and would work to make a decision on the TN sportsbook license as quickly as possible. The court could allow the suspension to continue, overturn it or send it back to the TEL Board of Directors for a hearing.
TEL: Additional Action 24/7 hearing would be ‘futile’
There was much debate over whether Action 24/7 actually deserved a hearing or if it got a hearing at all before the Board ratified and upheld its indefinite suspension last Friday.
There is no point in the court remanding the issue back to the board for a hearing, though, according to Lindsay Sisco of the Tennessee Attorney General‘s office.
“The court was asking what that could mean for a remand and I think the plaintiffs are right: that is potentially futile. The Board has considered the evidence and was able to hear from Action 24/7’s CEO and president. I don’t expect any additional or differing evidence to be presented at a formal hearing before the same board members because if that evidence was available and presented then TEL staff would have the assurances they need to lift the temporary suspension.”
Clayton said it was amazing the state would call a remand futile. That is further reason the court should grant the injunction, he argued.
In situations without emergency circumstances, the due process could take more than two months to complete. Action 24/7 needs to be able to operate while that process is ongoing, Clayton added.
Clayton additionally claimed the TEL had not provided in writing what Action 24/7 needs to do to get its license back. Sisco challenged that, saying a letter was sent March 22.
Action wasn’t monitoring for fraud 24/7
At some point on the evening of March 8, the first of the 23 suspected fraud cases began. Action did not find out until staff arrived in the office at 10 am the next day, though.
That’s because Action 24/7 wasn’t monitoring around the clock. It then took the company until the final reported incident on March 16 to decide it needed 24-hour monitoring.
Action then turned the information over to TEL Sports Betting Investigator Daniel DiRienzo on March 17. That wasn’t discovered until the March 18 as DiRienzo had the previous day off.
Turning on that 24/7 monitoring avoided an emergency situation, Clayton contended. The suspension was not based on what was done after the fact, Sisco countered, and added those steps should have been taken before the sportsbook launched in November.
No need to turn in suspected fraud?
The most surprising part of the hearing came when the court asked why Action 24/7 didn’t report those 23 suspected fraud cases before March 17.
The answer: Action 24/7 didn’t think it had to, Clayton said:
“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?’
“But your honor, in hindsight and now understanding the position of TEL, we’ll certainly do that immediately. But again, your honor, all they had to do is say that or give us a chance to have a discussion or be heard.”
Sisco, in her view of the evidence, said it seems like Action 24/7 didn’t want to admit they had another issue. DiRienzo also outlined how an employee under contract with Action 24/7 had opened 45 accounts and aided in proxy betting before the Super Bowl at Friday’s meeting.
Is sports betting like shopping for fishing gear?
Clayton used some personal experience when explaining how the suspension caused “enormous and catastrophic irreparable harm.”
When he started fishing, he went to the internet and used the first website he found that sold fishing equipment. He stuck with that website for the last eight to 10 years because he has an account already and had a good experience with the site.
Action 24/7 has the reverse happening now. Anyone that searched for the site in an attempt to make a March Madness bet saw the website was down. That led them to move onto one of the other licensed operators in Tennessee. Bettors that already had an Action account, meanwhile, had a tough time too because they couldn’t withdrawal their funds.
“When you have customers that are unhappy, they’re unlikely to come back,” Clayton said.
Action still marketing while suspended
Another twist to Action’s story came Tuesday night when it sent a promotional email.
The email offered a chance to win a $50 free bet.
— Matthew Waters (@ByMatthewWaters) March 23, 2021
The TEL has yet to clarify whether a suspended sportsbook operator can continue to market to its customers.
Action 24/7 also states on its iOS app that it is accepting withdrawal requests through Wednesday.