Judge blocks state hearing on Tennessee sportsbook’s status

April 14, 2021 8:15 PM
  • Associated Press
April 14, 2021 8:15 PM
  • Associated Press

NASHVILLE, Tenn. (AP) – A Tennessee judge who allowed a sportsbook to resume taking bets after questioning the process used to suspend its license has blocked state regulators from holding a new suspension hearing this week.

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In Davidson County Chancery Court, Chancellor Patricia Head Moskal wrote that the Tennessee Lottery couldn’t hold a planned administrative hearing Wednesday on the suspension of Tennessee Action 24/7. The judge took that step Tuesday, citing the court’s “exclusive jurisdiction over Action 24/7’s appeal on judicial review.”

Lottery officials suspended the company’s sportsbook license last month over suspected user debit card fraud on the platform. Action 24/7 sued over the suspension, and the judge ordered the reinstatement of the license while the case proceeds.

In a recent letter to the sportsbook’s attorneys, the state attorney general’s office wrote that any action taken at a new lottery suspension hearing “would not go into effect without further direction of the Court,” acknowledging that Action 24/7’s license would remain active while the lawsuit continues.

But the judge wrote in her order that state regulators do not have “unilateral authority” to hold more administrative proceedings about Action 24/7’s license suspension after the company properly brought the issue to court.

Action 24/7 is one of several companies approved to date to run online-only sportsbooks in Tennessee, where the first bets were allowed starting in November.

“The Court appreciates that online sports wagering in Tennessee is a newly emerging business, the Act and Board Rules are newly implemented, and (the lottery’s) compliance and supervisory responsibilities are newly undertaken,” the judge wrote. “Nevertheless, the Court must enforce the provisions of the Act and Rules as written.”

Through a spokesperson, lottery officials declined to comment on the ruling about the hearing.

Last month, top lottery officials temporarily suspended Action 24/7’s license and the lottery board affirmed the move in a vote a day later. The company had reported several instances of debit card fraud to lottery investigators. In one case, a person made 124 deposits into a gaming account using seven different cards, placed minimal bets, and then withdrew the majority of the money. A lottery investigator said the activity would have stopped earlier if the company had proper internal controls in place.

Action 24/7 officials said the timing of the suspension, at the start of college basketball’s March Madness, could not have been worse. The company’s attorneys said the lottery’s investigator claimed “tens if not hundreds of thousands of dollars worth of damages,” when the actual figure was $22,601. They argued that the company quickly spotted the fraud and took steps to prevent future occurrences.

Additionally, the company said it wasn’t given a chance to speak at the meeting where the lottery board ratified the suspension.

The judge ruled in favor of Action 24/7, ordering that the lottery reinstate the company’s sportsbook license while the legal case proceeds.

Copyright 2021 The Associated Press.