A very quick decision also put some unprepared, shocked bettors out of business
In case you may not have heard, the U.S. sports wagering industry was rocked last week learning Tennessee sports betting regulators indefinitely suspended local sportsbook Tennessee Action 24/7 and suspended their license after the company self-reported alleged incidents of credit card fraud, money laundering and illegal proxy betting on its platform.
The Tennessee Education Lottery's Sports Advisory Council (TEL) confirmed Action 24/7's indefinite suspension during a special session, called last Friday afternoon. They reported that the sportsbook will be offline until it can provide independently verified proof that sufficient internal controls are in place to prevent future illegal activity.
The decision marked the first time an online sportsbook has been suspended in the United States. But hardly the first time a sportsbook servicing customers within the U.S. has been called to task.
Thick Line or Fine Line?
The overriding cloud will begin the debate of whether there is truly a thick judicial difference between the new judicial world of "legalized U.S. sports wagering" in comparison to the often unfairly criticized world of offshore gambling, an option that has been made available for U.S. sports bettors for over two decades.
Perhaps there is a fine line separating the two. And as the events play-out in the case against Tennessee Action 24/7 we may indeed find out.
On Monday, Tennessee Action 24/7 filed a lawsuit against Tennessee Lottery officials for the suspension that came right after the outset of the Men's NCAA Basketball Tournament. Obviously, March Madness is a huge opportunity for all sportsbooks that encompasses a three-week span. The company is challenging the regulatory process used to suspend them and is calling into question the level of debit card fraud an investigator suspects occurred.
Tennessee Action 24/7 is one of six operators in the state that is "online-only". They are by far the smallest sportsbook operator taking approximately 3% of handle thus far. Giant international operator William Hill began ten days ago.
Danny DiRienzo, a sports betting investigator for TEL, said the activity could have been stopped early on, with fewer victims and with less money in loss damage, if the company had implemented the internal controls spelled out in their application as a sportsbook operator.
DiRienzo is claiming in one example, a player made a $10 deposit almost immediately followed by 184 attempted deposits from seven different cards with seven different names, 124 of which were successful, with minimal bets placed and then multiple withdrawals out to an account with the player's name. He’s calling it a clear case of credit card fraud, money laundering, aggravated identity theft or wire fraud.
Tennessee Action 24/7 is disputing that and said that it had already frozen the accounts in question at the time it reported the issues. That there is no evidence their internal controls were inadequate.
They are most disturbed by the "immediate action" that DiRienzo employed in suspending their license. Also, that it crippled their business at a most inopportune time, plus unnecessarily damaged the "credibility of their reputation in the market", according to their attorney Steele Clayton.
Fighting back against any personal charges, DiRienzo said it is not the first case of serious criminal conduct at Tennessee Action 24/7. He reported they had 45 new accounts opened at Super Bowl time made by about 41 out-of-state residents. The person placing wagers was under contract with Tennessee Action 24/7.
Looking Back on History
There are several ironies to this story that are coming to shoot the new roaring "legal" U.S. sports wagering industry in the foot.
First, in comparison to other historical cases against offshore sportsbooks they had one thing in common in they all took weeks if not months to gather evidence before proceeding into action. From Bovada to Legendz Sportsbook to 5Dimes and PokerStars to many others, all cases were patiently built by prosecutors before going forward. This action against Tennessee Action 24/7 seemed to happen overnight.
If anything, a state government seems to be saying we can shutdown a licensed sportsbook faster than a LeBron breakaway dunk, but the U.S. federal government required careful, organized time before considering closing down on operators outside the country's borders.
Who Got Hurt the Morst
No doubt who will take the worst of this ruling by the TEL, especially this week.
Apart from many victims of potential widespread credit card fraud and money laundering happening within Tennessee Action 24/7’s database, there are the many account holders who simply deposit into accounts. Many are new accounts.
As of this writing, most cannot log into the sportsbook or otherwise get access to their frozen account funds. The latest news learned is that Action 24/7 can refund customers their requested funds "as long as they can PROVE they are the owner of their account and there is no suspicious activity on the account."
Ultimate Lesson Learned
No handicapping advice here whether Gonzaga will cover their next game or will remain undefeated to win it all. Can't tell you to keep backing Oral with the points or go Over in Villanova-Baylor.
But, I will use this ultimate example to beg you again to join at least three top online sportsbooks to not only get best line opportunity, but avoid a potential disaster like this happening.
How much more proof do you need? Suppose your sportsbook operator has a technical software meltdown ten minutes before your Pick of the Year? What happens if the federal government or local state regulators decide to shut down DraftKings or FanDuel? You gotta have a back-up QB, somebody on the bench ready.
It must have been a shocking, empty feeling last weekend for those depending on Action 24/7 and winding up with NO Action. I wonder how many new TN accounts William Hill got in one day and how many Vols went back to their "local" or BetOnline.
Glenn Greene covers the games from a betting angle every week exclusively at OSGA.com. For weekly betting insights, including previews and picks from Glenn, click here.