NASHVILLE, Tenn. (AP) - A Nashville judge ruled Friday that Tennessee Education Lottery officials must reinstate the license of a sports betting company that was accused of lacking the proper safeguards to stop debit card fraud.
Davidson County Chancery Court Judge Patricia Head Moskal held an emergency hearing on Wednesday where attorneys for Tennessee Action 24/7 argued the problems with the gaming operator had been exaggerated.
The suspension came late last week 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.
The timing of the suspension, at the start of college basketball’s March Madness, could not have been worse, Attorney E. Steele Clayton IV said.
“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. He told 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 argued that the company quickly spotted the fraud and took steps to prevent future occurrences.
Clayton said lottery officials did not get to hear the company’s side of the story because 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 Wednesday hearing that the board had acted within its rights to immediately protect the public and the integrity of the sports betting system. She also acknowledged that the state’s sports betting system is new, with the first books opening in November, and there is a learning curve.
Clayton argued that the harm was both immediate and long term, as bettors are likely to stick 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.”
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