Tennessee-based operator Action 24/7 has filed a lawsuit appealing the license suspension handed down by the Tennessee Education Lottery in Davidson County Chancery Court, arguing the suspension was “erroneous and arbitrary”, and that its timing caused “irreparable harm”.
The operator’s license was suspended last week after it reported cases of credit and debit card fraud and proxy betting from player accounts. It became the first online sportsbook operator to have its licence suspended in the US.
However, Action 24/7 contests that its operations were initially suspended by Susan Lanigan, chair of the Lottery’s board, before the board met as a whole to vote on the motion. This, it said, was not within Lanigan’s authority.
“Despite the fact that there was no ongoing internal control failure at the time of the suspension, the license was suspended due to supposed ‘exigent circumstances’ which, to date, TEL cannot articulate,” Action 24/7 said.
It noted that the timing of the suspension, just before the NCAA Basketball Tournament, meant the business “has suffered and will continue to suffer irreparable harm”.
The operator added that it was not given the opportunity to speak when the board did meet.
“Clearly, this decision is both clearly erroneous and arbitrary and capricious because, among other reasons, the board did not adhere to its own procedures and regulations in making its final decision,” it said.
In addition, Action 24/7 argued that the Lottery’s sports betting investigator, Daniel DiRienzo, misrepresented the scale of scale of damage caused by the fraudulent activity on Action 24/7 accounts, by claiming it may represent “hundreds of thousands of dollars” before fully viewing all of the incidents that the operator reported. Action 24/7 said the fraudulent deposits totaled $37,362, of which $14,701 was recovered.
It added that when the full board did meet, other board members did not have time to review all of the materials submitted.
The lawsuit will be heard at 14:00 Central Daylight Time today (March 24) by Patricia Head Moskal.