Tennessee-based sportsbook Action 24/7 has become the first US online betting operator to have its license suspended, after the Tennessee Education Lottery took action following suspicious player activity including proxy betting and credit card fraud.
The decision was made at an emergency meeting of the Tennessee Education Lottery, which acts as the state’s regulator.
The operator informed the Lottery of suspicious activity from Action 24/7 accounts. The Lottery’s sports betting investigator Danny DiRienzo looked into this activity, and found evidence of one player who made 184 different deposits – some of more than $10,000 – from seven credit cards, none of which used his name, before withdrawing after “very little gameplay”.
“This was clearly a case of money laundering,” he said. “It was clearly a case of aggravated identity theft, clearly a case of wire fraud.”
Files received by DiRienzo also contained 22 other incidence reports, including “very serious” cases of proxy betting. DiRienzo said he couldn’t be certain whether failings applied only to Action 24/7 or also its suppliers.
The board considered allowing the operator to accept wagers while it continued to investigate the activity, but said it “lacked adequate internal controls to prevent more players or citizens being harmed”. As a result, it suspended the license.
“Due to the circumstances we have identified, the risk to players, the risk to non-player victims as a result of fraud, the fact we did have a week’s delay in receiving notice, the fact that minimum internal controls are in suspicion, I would make a motion to indefinitely suspend the license of Action 24/7”, board member William Carver said, putting forward the notice to suspend the license.
Three members of the board voted in favor and none against, while one abstained.
The suspension will last until the Lottery can be confident that adequate controls have been put in place.
While it noted that Action 24/7 self-reported the failings, it also considered that these were only reported eight days after occurring.
Tennessee Education lottery chair Susain Lanigan said it was unfortunate that the license was suspended immediately before the NCAA men’s basketball tournament started, but that it did not have a choice as it was only informed of the suspicious activity on March 17, despite Action 24/7 becoming aware of this activity on March 9.
“The board today indefinitely suspended Action 24/7’s sports betting operator license for suspicious player deposit activity,” Action24/7 chief executive Tina Hodges said. “This suspicious activity was detected quickly by Action staff and Action swiftly suspended the involved player accounts.
“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.”
Action 24/7 received its license to operate in Tennessee in October 2020. It currently does not operate in any other jurisdictions.