Action 24/7, a locally owned Tennessee sportsbook, had its license temporarily suspended Thursday after an investigation by the state lottery revealed signs of money laundering and credit card fraud on multiple occasions, including bets allegedly placed on the Super Bowl by a proxy for out-of-state customers, a violation of federal law.
The Tennessee Education Lottery ratified its decision to suspend Action 24/7's sports betting license during a special board meeting of its sports wagering committee on Friday. Investigators ordered Action 24/7 to cease operations Thursday night. Action 24/7's Twitter account posted Thursday night that the site was down for maintenance, and on Friday the website showed a notice that it was unavailable.
Action 24/7 has the right to appeal, according to TEL officials.
Tina Hodges, Action 24/7's chief executive officer, issued a statement later Friday expressing disappointment over the suspension of Action 24/7's license, a decision that comes the week of the NCAA men's basketball tournament, one of the most popular betting events in the U.S.
"The Board relied upon unfounded fears of future speculative recurrences of the activity, and took draconian action just as the NCAA Tournament is beginning," the statement read. "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."
During Friday's meeting, lottery investigator Danny DiRienzo detailed the allegations, highlighting one Action 24/7 account that was opened with a $10 deposit and was immediately followed by 184 attempted deposits from seven different credit or debit cards bearing seven different names. DiRienzo said 124 of the deposits were successful.
"We're talking tens of thousands of dollars," DiRienzo told the TEL board members. "There was very little game play, meaning betting, and then multiple withdrawals out to an account to the player's name."
DiRienzo, who has extensive experience investigating gambling-related fraud and previously worked for the U.S. Secret Service, said the evidence was "100% typical of every credit card fraud case I've worked over the past 25 years."
DiRienzo said Action 24/7 identified the potential violations March 9 but did not notify TEL until March 17. He expressed concern that the minimal internal controls that Action 24/7 represented itself as having before launching were not in place.
"The internal controls, in my opinion, based on the facts, are not in place to prevent future criminal conduct on this website," DiRienzo added.
In February, the TEL disclosed that it had closed 74 betting accounts and canceled several bets on the Super Bowl due to alleged illegal activities at two of the state's licensed sportsbooks. For the Super Bowl, Action 24/7, BetMGM, DraftKings and FanDuel were the only sportsbooks operating in Tennessee.
DiRienzo identified Action 24/7 as one of the sites where the alleged illegal bets on Super Bowl took place.
"Forty-five player accounts were opened; 41 of those, I believe, speaking from memory, were all out-of-state residents and all placed proxy bets through an individual in Tennessee on Action 24/7's website to circumvent the geolocation requirements of being physically present in Tennessee, all in violation of the federal Wire Act," DiRienzo said. "Hundreds of bets were placed leading up to the Super Bowl, including open Super Bowl bets that we ultimately cancelled. That individual that was responsible for that, who confessed to me that he in fact did that, was under contract with Tennessee Action 24/7."
BetMGM has publicly stated that it is not under investigation in Tennessee. FanDuel and DraftKings have not offered comment on the investigation into the Super Bowl bets.