Tennessee Action 24/7 Shuts Down Amid License Suspension for Fraud & Money Laundering

• Ordered shutdown for wire fraud & money laundering was a first for any US sportsbook
• Initially, maximum website traffic was thought the cause but not the case in Tennessee
• The next steps for Tennessee Action 24/7 are unsure pending further investigation by the board

It was true “March Madness” for their customers and the shocked sports wagering industry last Thursday as local sportsbook operator Tennessee Action 24/7 was ordered to shut down by state authorities.

Action 24/7, a locally owned Tennessee sportsbook, had its license temporarily suspended after an investigation by the Tennessee state lottery revealed signs of money laundering and credit card fraud. Several instances were included in the charges including bets allegedly placed on the Super Bowl by a proxy for out-of-state customers, indicating a violation of federal law.

The move to suspend the licenses for Tennessee Action 24/7 was confirmed by the Tennessee Education Lottery (TEL) during a special board meeting that took place the following day. Operations were ordered to cease by investigators Thursday evening. Tennessee Action 24/7’s Twitter account posted a message “the website has shut down for maintenance”. On Friday it was posted that it was unavailable.

Mistaken Reasoning

It was initially thought that Tennessee Action 24/7 was experiencing technical software snafus similar to what the other major sportsbooks were having due to the immense website traffic created by the NCAA Men’s Basketball Tournament. Various popular US sportsbooks were having temporary problems on Thursday when an avalanche of bettors was beginning to place wagers and accessing their accounts.

For example, some BetMGM bettors began their tournament wagering day to discover their accounts were empty and their existing bets were not being displayed. Customers from BetMGM in Nevada were alarmed before the situation was rectified.

The problem for these occurrences is nothing new and happened recently in a few areas during the Super Bowl. It is similar in nature to major traffic on a highway during a rush-hour experience. There is only so much a DraftKings Sportsbook or FanDuel can process while the backend software operators work to improve the process during these major wagering events.

Investigation Details

Following the meeting by the Tennessee state lottery and the board’s decision on Friday, Tennessee Action 24/7’s CEO Tina Hodges provided media outlets with the following statement:

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. An 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

Subsequently, the lead investigator, Danny DiRienzo said Tennessee Action 24/7 self-reported the violation and he received a file from employees of the company pointing toward three individual situations identifying violations. DiRienzo further said the violations occurred on March 8 the sportsbook self-reported them on March 17. He went on to mention that if Tennessee Action 24/7 had instituted “minimum internal controls” the situation may have been contained and discovered sooner.

In disclosing further details of the investigation DiRienzo said:

This is clearly a case of credit card fraud. Clearly a case of money laundering. Clearly a case of wire fraud. There are tens if not hundreds of thousands of dollars of damage done here to many victims. The internal controls, in my opinion, based on the facts, are not in place to prevent future criminal conduct on this website.

Next Steps Unsure

It does not seem that Tennessee Action 24/7’s suspension will have a critical effect on the Tennessee sports wagering market as a whole. Being that the company has achieved a modest 3% share of the handle as a local operator competing against national giants including DraftKings, FanDuel, and BetMGM. Last week William Hill was approved and began a mobile gaming operation in Tennessee.

Thus far BetMGM has publicly stated that it is not under investigation in Tennessee. FanDuel and DraftKings have not offered comments on the investigation or any prior investigation involved in the state.

The lesson learned again for sports bettors is the mandatory best practices policy to be prepared for these occurrences happening. Whether it is any state investigation shutdown or software breakdown, it is certain to signup to become a member of at least two sportsbooks to ensure safety and maximize all opportunities.