Fighting Back Tennessee 24/7 Sues Tennessee Officials Over Fraud Allegations

• The company has filed a counter lawsuit contesting fraud & money-laundering allegations
• TN 24/7 Action says the Lottery’s claims are “not accurate” & the agency “acted prematurely”
• The ultimate verdict may take time to decide against small, underdog sportsbook operator

While wagering action ensues on the NBA and NCAA basketball court, much more important bets will need to be settled soon in a Tennessee courtroom.

Tennessee Action 24/7, the local Tennessee sportsbook that had its license suspended by the Tennessee Education Lottery last week, issuing to have the license reinstated immediately.

The suit, filed Monday in the 20th Judicial District Chancery Court in Nashville (Davidson County), is seeking a temporary injunction to reinstate the company’s sports betting license. A hearing has been scheduled for Wednesday before Chancellor Patricia Head Moskal.

Tennessee Action 24/7 filed the lawsuit against Tennessee Lottery officials for the suspension that came just as the Men’s NCAA Basketball Tournament was beginning. A giant sports betting event that will continue for two weeks. The company is challenging the regulatory process used to suspend them and is calling into question the level of debit card fraud an investigator suspects occurred.

As William Hill just began operating in March, the company is among six sportsbook operators licensed to participate in Tennessee’s online-only business, which first started last November.

Fraud Allegations

Danny DiRienzo, a sports wagering investigator for the Tennessee Lottery, said last week the activity could have been prevented early on with fewer victims and fewer financial losses if Tennessee 24/7 Action would have adhered to internal controls stated within their sportsbook operator application.

As an example, DiRienzo said a player made a $10 deposit, then immediately followed with 184 attempted deposits from seven credit cards with seven different names. Of them 124 were unsuccessful, with minimal wagers placed, followed by multiple withdrawals to an account with the player’s name. DiRienzo called it a clear case of credit card fraud, money laundering, aggravated identity theft, or wire fraud.

In response, the lawsuit filed by Tennessee Action 24/7 says the lottery acted outside of its authority as top officials suspended the license last week. Within the lawsuit, the company is claiming they were on the phone during the meeting but the board “refused to hear their position.” Also, that discussions between the parties occurred via emails ahead of the meeting.

Tennessee Action 24/7 is claiming it self-reported the suspicious activity March 17, forwarding the lottery 23 incident reports of activity that occurred March 9 through 12, of which DiRienzo said he had read through three or four as of last week’s lottery meeting.

According to the company, the total amount of fraudulent deposits was approximately $37,362, which they have recovered $14,701, with $22,661 in fraudulent withdrawals successfully made by seven individuals to four bank accounts.

Report “Not Accurate and Premature”

In contesting the suspension, the company is stating it had already frozen the accounts in question at the time it reported the issues and implemented other measures. They firmly say there is no evidence that the sportsbook’s internal controls were inadequate.

Within the lawsuit, Tennessee Action 24/7 said were “an inadequate or sometimes lack of review of the evidence”. A pure unwillingness to hear their side of the story and a complete rush to judgment in an attempt to destroy their business.

A passage in the lawsuit against Tennessee 24/7 threatens DiRienzo’s experience and credibility acting:

Mr. DiRienzo heavily faulted Action for not identifying that debit card holders’ names were different from the names on players’ accounts. However, Action only has the information entered by the player, which does not include the card holder’s name. Mr. DiRienzo’s statements show that he lacks sufficient understanding of such transactions and has unreasonable expectations regarding the level of diligence expected of Action and the other licensees in combating player debit card fraud.

Ultimate Verdict

The conclusion of this story will likely take time to decide. Tennessee 24/7 was a major underdog going in, battling against sportsbook competitors represented and advertised in several US states and known throughout the world.

This is a unique situation and currently several bettors, unfortunately, have funds tied-up as victims. When Tennessee 24/7 potentially will or will not re-enter the market in Tennessee remains in question pending a court ruling. But ultimately sports bettors in the state wagering online may wind-up being the true judge.