Changes to how sports betting will be regulated are coming in Tennessee, but maybe not as quickly as some stakeholders would like.
A pair of bills that would prevent consumers from taking high-interest, high-risk loans and opening sports betting accounts in the same location were on committee agendas in both the Senate and House on Tuesday, but no action was yet taken. A second set of bills was approved and is moving forward in the House.
HB 1267 would essentially strip the Tennessee Education Lottery’s board of directors of power over sports betting regulation and enforcement. It would hand those to responsibilities the nine-member Sports Wagering Advisory Council.
“This allows the Sports Wagering Advisory Council to be autonomous and act in their scope of authority outside of the current TELC,” said bill sponsor John Gillespie during brief remarks.
The House Departments and Agencies Subcommittee voted to move the amended version of HB 1267 forward. The bill now moves to the State Government Committee in the House. In the Senate, SB 588 heads to the State and Local Government Committee, where it is on the April 13 agenda. That is the date of the final meetings for both committees this session.
The TELC is currently mired in a legal battle with one of its licensed sportsbooks, TN Action 24/7. The TELC’s sports wagering committee issued a suspension against the local operator during a haphazard hearing prior to March Madness, but the sportsbook was able to have it lifted by winning an injunction in court.
Amendment flips the script
The original legislative bills called for the TELC’s Sports Wagering Advisory Council to meet jointly with the lottery’s board to make rules and hold hearings, and they would have allowed for the council and the board to call for special meetings rather than just the board, as is currently the law. But the new amendment goes a step further, as it appears to flip the roles of advisory council and board. Previously, the council offered support to the board, but under the new amendment, it would be the board assisting the council.
The corporation shall promulgate bylaws to carry out this section, subject to approval by the council.
SECTION 3. Tennessee Code Annotated, Section 4-51-305(a), is amended by deleting the subsection and substituting instead the following:(a) There is created a sports wagering advisory council to enforce this part and supervise compliance with laws relating to the regulation and control of wagering on sporting events in this state. The board and its employees and staff shall assist the council with respect to its duties under this subsection (a) at the discretion of the council.
The Sports Wagering Advisory Council is a nine-member appointed panel, composed of representatives of law enforcement, lawyers, and business leaders from Tennessee. The council members were appointed by the governor, lieutenant governor, and House and Senate leadership in 2019. The idea of giving the council more power isn’t new — a similar bill was considered during the 2020 legislative session but did not get to the finish line.
The bills would have to move out of committee next week and onto the House and Senate floors to have a chance at passing this session. The Tennessee General Assembly is set to adjourn on April 30.
Responsible gambling bills stalled
SB 1029 and HB 884 are the bills that responsible gaming experts are carefully watching. The bills would prohibit consumers from funding and withdrawing from an Action 24/7 sports gambling account and opening a so-called “flex loan” in the same location, which is a practice that may now occur. The concern driving the legislation is that borrowed money might be used for gambling.
Previously, the sportsbook’s “partner,” Advance Financial, a lender of high-interest loans of up to 279.5% annually, distributed flyers advertising the sportsbook, a practice it says it has now stopped.
The bills have been on committee agendas for several weeks with no action yet. Sponsor of the House bill, Rep. Darren Jernigan, said on Tuesday he would take the bill off notice, stating that “there’s going to be an amendment in the Senate bill. They’re going to continue to run it. If it passes there, I can bring it up next year.”
Tennessee
"Sports betting regulators and law enforcement are still investigating 'significant anomalies' at two books for the Super Bowl."
Had not seen this. What I miss?
Over 70 Sports Betting Accounts In TN Closed Due To Illegal Super Bowl Wagering https://t.co/TZqme9tUBt
— Alfonso Straffon 🇨🇷🇺🇸🇲🇽 (@astraffon) February 20, 2021
Tennessee Action 24/7, which is currently in a legal fight with the Tennessee Education Lottery over illegal financial transactions occurring on its platform, had its license temporarily suspended last month. Sources say the company has hired multiple lobbyists to fight the bill, which problem gambling advocate Brianne Doura-Schawhol of Epic Risk Management testified in favor of at a Senate hearing last month.
“Any insinuation that gambling is a way to pay back a loan, make money, or solve financial problems is predatory,” she said at the time. “It is never advisable to be gambling on borrowed money. This act of gambling with lent funds is not only a red flag by experts but remains one of the nine criteria listed for gambling addiction in the DSM V.”
While one other Senate amendment to the bill has been filed, lawmakers declined to act on it. The amendment would require companies like Action 24/7 and Advance Financial to maintain databases of customers, which would then have to be cross-referenced when a customer wants to open a new account, either for sports wagering or for a loan. Under the proposed amendment, the penalty for offering both to a customer is license suspension, revocation, and up to a $25,000 fine.
