Action 24/7 has filed a lawsuit against the Tennessee regulatory body over the decision made to suspend its licence.
The Tennessee-based sports betting operator Action 24/7 has filed a lawsuit appealing the license suspension handed down by the Tennessee Education Lottery (TEL) last week.
The lawsuit
Action’s lawsuit, which was filed in Davidson County Chancery Court yesterday, argued that the suspension was “erroneous and arbitrary” and the timing caused “irreparable harm.”
According to the lawsuit the “TEL unlawfully disabled Action’s ability to operate despite the fact, its license had not been lawfully suspended.”
One of the main points of the lawsuit was whether the TEL Board Chair Susan Lanigan had the authority to suspend the operator’s licence last week.
The operator argued that Lanigan had handed down the suspension before the board met as a whole to vote on the issue. Action 24/7 said that this was not within her authority.
Action 24/7 said: “Despite the fact that there was no ongoing internal control failure at the time of the suspension, the license was suspended due to supposed ‘exigent circumstances’ which, to date, TEL cannot articulate.”
The operator also explained that the timing of the suspension, which comes just before the NCAA Basketball Tournament, meant the operator had “suffered and will continue to suffer irreparable harm.”
Action 24/7 also said that it had not been given an opportunity to speak when the TEL board met to discuss the issue.
The operator said: “Clearly, this decision is both clearly erroneous and arbitrary and capricious because, among other reasons, the board did not adhere to its own procedures and regulations in making its final decision.”
Why was Action 24/7’s licence suspended?
Last week, Action 24/7 became the first US sportsbook to have its licence suspended due to multiple instances of alleged credit card fraud and money laundering.
The TEL board heard a report from the regulator’s sports betting investigator, Danny DiRienzo, who noted that the operator submitted 23 incident reports on 17 March. Although DiRienzo gave the operator credit for spotting the activity, he said the operator had known about them from 9 March.
According to DiRienzo each account had similar patterns and said that these were clearly cases of credit card fraud, wire fraud, aggravated identity theft and money laundering.
DiRienzo added: “It is serious, serious criminal activity. Probably in the tens, if not hundreds of thousands of dollars worth of damages done. With multiple real individuals and business victims.”
The investigator also explained that the operator had previously gotten into trouble for proxy betting. DiRienzo referred to another issue involving a contracted employee opening 45 player accounts, of which 40 were for out of state residents, and placing hundreds of bets before the Super Bowl.
Action 24/7 claims DiRienzo misrepresented the issue
The Tennessee betting operator also argued that DiRienzo misrepresented the size and scale of the damage caused by fraudulent activity on Action 24/7 accounts.
Action 24/7 said that when DiRienzo claimed the damages were in the “hundred of thousands of dollars” he made the claim before viewing all of the incident reports.
According to the operator, the fraudulent deposits amounted to $37,362, of which $14,701 was recovered.
The operator questioned DiRienzo’s experience by saying: “Mr. DiRienzo heavily faulted Action for not identifying that debit card holders’ names were different from the names on players’ accounts.
“However Action only has the information entered by the player, which does not include the card holder’s name. … Mr. DiRienzo’s statements show that he lacks sufficient understanding of such transactions and has unreasonable expectations regarding the level of diligence expected of Action and the other licensees in combating player debit card fraud.”
However, during the meeting of the TEL board, DiRienzo explained that he has 25 years of working in federal law enforcement as well as 22 years as a US Secret Service special agent. DiRienzo said that during this time he investigated illegal gambling operations and money laundering cases.
