Tennessee Education Lottery officials must reinstate the sports betting licence of Action 24/7 after it was accused of lacking the proper safeguards to stop debit card fraud, a Nashville judge has ruled.
Davidson County Chancery Court Judge Patricia Head Moskal held an emergency hearing on Wednesday last week where attorneys for Action 24/7 argued that the problems with the gaming operator had been exaggerated.
The suspension was put in place after the company reported several instances of debit card fraud to lottery investigators. In one case, a person made 124 deposits into a gaming account using seven different cards, placed minimal bets, and then withdrew the majority of the money.
Attorney E Steele Clayton IV commented that the timing of the suspension couldn’t have been worse, coming as it did at the start of college basketball’s March Madness.
“I get that there’s a learning curve,” he said, but while lottery officials are learning, “our business is being destroyed.”
Clayton filed a lawsuit to overturn the suspension on Monday, telling the court on Wednesday that a lottery investigator had claimed during a hastily called meeting last week that the fraud caused ‘tens if not hundreds of thousands of dollars worth of damages,’ when the actual figure was $22,601.
He explained that the company quickly spotted the fraud and took steps to prevent future occurrences. He added that lottery officials did not get to hear Action 24/7’s side of the story as they were not allowed to speak during the meeting where board members voted to ratify a suspension put in place the previous day by staff. The lawsuit claims this was a violation of due process.
Assistant Attorney General Lindsay Sisco argued at the hearing that the board had acted within its rights to immediately protect the public and the integrity of the sports betting system, accepting that the state’s sports betting system is new and there is a learning curve.
Clayton claimed that the harm was both immediate and long term since bettors are likely to stay with whatever company they first place a bet with.
The judge acknowledged the need for urgency, saying: “I appreciate the timing, with the basketball tournament this weekend.”
In her Friday ruling, Moskal wrote that: “Action 24/7 has clearly shown the likelihood that its rights are being violated and it will suffer immediate and irreparable injury.” She ordered that the company’s license be reinstated while it appeals.
The lottery issued a statement after the ruling, saying: “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.”