Sportsbook Tennessee Action 24/7 on Friday won an injunction against the Tennessee Education Lottery Corp., and will have its license reinstated immediately, according to a decision from the Chancery Court for the State of Tennessee, 20th Judicial Circuit, Davidson County. Chancellor Patricia Head Moskal called the TELC’s decision to suspend the license “erroneous, or arbitrary and capricious under the Act and Rules,” and further wrote that the TELC “short-circuited” the process by which to handle disputes.
Tennessee Action 24/7 will be permitted to make its site live after posting a $25,000 injunction bond. The company did not specify when, exactly, the site would be up and running. The TELC also could not specifically say when the license would be reinstated, but a spokesperson did tell Sports Handle via e-mail, “We will continue to work with Action 247 to implement appropriate minimum internal control standards that protect the public interest and minimize risk to the integrity of sports gaming in Tennessee.”
Tennessee Action 24/7 on March 17 self-reported suspicious activity on its site, which it said took place beginning March 8. One day later — on the day of the start of the biggest sports betting event of the year, March Madness — the TELC’s Sports Wagering Committee suspended Tennessee Action 24/7’s operating license. On March 19, the TELC Board of Directors and Sports Wagering Committee held an emergency meeting via phone to “ratify” the decision to suspend the license and made the suspension indefinite while it investigated violations. Representatives from Action 24/7 were on the phone during the meeting, but were not permitted to speak.
Court says TELC broke its own rules
According to the court decision, the TELC broke its own rules in holding the emergency meeting, and wrote that the TELC cannot make “a final decision without conducting a hearing, or at a minimum, allowing the licensee to address the TEL board upon request.”
“We are proud to report that the Emergency Motion for Temporary Injunction seeking reinstatement of the suspension of the sports gaming operator license of Tennessee Action 24/7, LLC has been granted. The Court found that ‘Action 24/7 has a likelihood of success on the merits that the action of the TEL Board was clearly erroneous or arbitrary and capricious under the Act and the Rules,'” Tennessee Acton 24/7 owner Tina Hodges said in a statement to the media Friday afternoon.
At that time of the emergency meeting, TELC investigator Danny DiRienzo told board members that Action 24/7 did not have the “minimum internal controls” in place to prevent criminal behavior on the site and that “This is clearly a case of credit card fraud. Clearly a case of money laundering. Clearly a case of wire fraud. There are tens if not hundreds of thousands of dollars of damage done here to many victims.”
Tennessee Action 24/7 argued to the court that its rights were violated by the “immediate suspension,” which it says was based “solely” on DiRienzo’s findings. According to Tennessee Action 24/7’s filing, DiRienzo reviewed only “three or four” of 23 incident reports that the company filed. In addition, it was clear on the call that not all board members had received or reviewed DiRienzo’s report, and that the TELC “could have received additional facts before making its decision, but opted not to do so.”
Timing of suspension costly
In the court filing, Tennessee Action 24/7 claimed that it would suffer “immediate and irreparable harm” due to the suspension, and the court agreed on Friday, writing that “it will suffer immediate and irreparable losses of its customers, good will, and reputation by having its license suspended indefinitely and all wagering operations stopped.”
The timing of the suspension will be particularly costly for Tennessee Action 24/7, and the company could potentially seek legal recourse against the TELC for the lost business. Though it appears that Tennessee Action 24/7 is cleared to be back online in time for at least some of this weekend’s NCAA men’s basketball tournament games, it lost all betting for the first four days, and froze customer accounts. As a result, at least one customer withdrew his initial $5,000 deposit and will likely wager elsewhere.