Tennessee-based sports betting company Action 24/7 is suing Tennessee Education Lottery officials over the suspension of its license, stating that Lottery officials “unlawfully disabled” the company’s ability to operate.
The complaint is scheduled be heard on Wednesday at 2 p.m. in Davidson County Chancery Court. Action 24/7 is maintaining that Lottery Board Chair Susan Lanigan did not have the power to suspend its license last Thursday.
Action 24/7 stated by acting alone and not consulting the full board or the Sports Wagering Committee, Lanigan acted illegally. The full Lottery board voted to uphold her suspension in an emergency meeting the next day.
“It is serious, serious criminal activity, probably in the tens if not hundreds of thousands of dollars worth of damages done with multiple real individuals and business victims,” Lottery sports betting investigator Danny DiRienzo said during Friday’s lottery board meeting.
Action 24/7’s license was suspended amid accusations of money laundering and suspected fraud by the Tennessee Education Lottery’s Sports Wagering Advisory Council. Reports state the sportsbook was allowing players to register an account, make deposits using several credit card numbers, then withdraw the balance from said accounts quickly with very little actual sports betting taking place.
The suit alleged that the fraudulent accounts did not obtain as much money as the lottery’s report led on, stating the fraudulent deposits only amounted to $37,362 with the company recovering $14,701 of that.
“Obviously, we are disappointed in the Board’s decision,” Action 24/7 CEO Tina Hodges said in a statement last week. “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.”
The investigation also alluded to credit card fraud, wire fraud and identity theft as well as yielding proof that an employee of Action 24/7 was violating Tennessee law by assisting out-of-state tenants with placing bets.
Action 24/7, which is owned by the same team that owns Advance Financial, is the first U.S. sportsbook to have its license suspended. According to research firm Eilers & Krejcik Gaming, Action 24/7 had only a 3-percent market share during its first three months.
Follow Michael Gallagher on Twitter @MGsports_