Recently, a legal sports betting bombshell was dropped on the Tennessee online sports wagering industry. Instead of celebrating the introduction of William Hill into the Volunteer State, Tennessee’s own local sportsbook has had its license to trade suspended on the suspicion of fraud, money laundering and match-fixing. The Tennessee Education Lottery Corporation (TELC) immediately went to crisis mode, calling an emergency to discuss and investigate further the details of the suspension. The Tennessee Lottery held a board meeting on February 17 where it was determined that the illegal activity occurred during the Super Bowl. More than 70 sports betting accounts were closed as a result.
The timing could not be worse for Action 24/7
The TELC investigation into fraud and money laundering could have arrived at a worse possible time for Action 24/7. With the brand languishing well behind the other big national online sportsbook brands that dominate the nascent Tennessee sports betting market, an enforced shutdown in the middle of the NCAAB March Madness tournament could be catastrophic to Action 24/7’s survival.
After the NFL betting showpiece, the Super Bowl, March Madness is the second-largest sports betting event of the calendar year.
Investigators into the alleged illegal events determined that “Hundreds of bets were placed in violation of Federal Wire Act.” What that means is that at the time of Super Bowl LV, more than 45 payers created accounts and used the accounts for sports betting purposes outside of the state lines of Tennessee, and Tennessee Action 24/7 did little to prevent it. TELC investigators confirmed that there is clear evidence of money laundering, wire fraud, and credit card fraud.
Tennessee Action 24/7 has been used as a front for Advance Financial to use for payments and their customers to access a range of same-day loans and other forms of high-interest finance and loan options.
Rather than tone down the money laundering and wire fraud following the Super Bowl, Tennessee Action 24/7 doubled down, and continued to trade as usual, which spiked the interest of Federal investigators to look into the allegations further.
How it the allegations came to light
TELC inspector Danny DiRienzo announced that he had received an email from an Action 24/7 worker last week containing 23 incident reports for separate player accounts. After reviewing several of the suspect accounts, DiRienzo said he had enough evidence to determine that some in the region of tens to hundreds of thousands of dollars had been ‘washed’ through the Action 24/7 site in suspect criminal activity.
One betting account showed hundreds of credit card transactions from credit card numbers that did not correspond the information provided when the Action 24/7 account was created.
Another 45 accounts showed evidence of alleged proxy betting. Tennessee statute requires bettors to be physically located in Tennessee to place a bet. Of the 45 accounts, 40 were registered to out-of-state residents. Studying the IP addresses involved, it was discovered that one single person in physically located in Tennessee logged into those accounts on behalf of the out-of-state residents to place wagers on Super Bowl LV.
Dustin Gouker, lead analyst for the Tennessee sports betting industry went on record as saying this signposts “a sad milepost in the sports betting industry.”
“Tennessee’s sportsbooks are thriving, which makes news like this particularly unwelcome for anyone who has a stake in the success of regulated sports betting,” Gouker wrote in a prepared statement. “If all these allegations are true, Tennessee regulators can’t let the status quo at Action 24/7 continue”, he said.