Nashville Chancellor Patricia Head Moskal on Friday lifted the state Lottery’s suspension of sportsbook Action 24/7 due to fraudulent activity on its platform.

“We applaud the Court’s decision and look forward to working with state officials to ensure public safety and trust in our regulatory system while maintaining an environment for businesses to thrive in Tennessee,” Action 24/7 president Tina Hodges said in a statement. “Thank you to our loyal players and friends across the state for your confidence, support and encouragement. We’ll be Back in Action soon!”

The ruling sends the case back for further hearings before the Lottery.

“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,” Lottery spokesman David Smith said in a statement.

Here is the order for Chancellor Moskal:

ORDER ON TEMPORARY INJUNCTION

This matter came before the Court for hearing on March 24, 2021, by videoconference, on Plaintiff Tennessee Action 24/7, LLC’s (“Action 24/7”) Emergency Motion for Temporary Injunction, seeking reinstatement of Plaintiffs sports gaming operator’s license temporarily suspended by Defendants Tennessee Education Lottery Corporation and members of its Board of Directors and President and CEO, in their official capacities (collectively, “TEL”). Participating in the hearing were Attorney E. Steele Clayton IV, Sarah B. Miller, and Nicholas J. Goldin, representing Action 24/7, and Assistant Attorney General Lindsay H. Sisco, Deputy Attorney General Justin Urban, and Assistant Attorney General Jonathan Shirley, representing Defendants. Also attending were Tina Hodges, Action 24/7’s President, and Andrew Jack, Action 24/7’s Chief Operating Officer.

Action 24/7 filed a Verified Complaint, with exhibits, against Defendants on March 22, 2021, seeking judicial review of Defendants’ action indefinitely suspending Plaintiffs sports gaming operator’s license under Tenn. Code Ann. § 4-51-328. Plaintiff contemporaneously filed an Emergency Motion for Temporary Injunction supported by a Memorandum of Law. The Court entered an Order setting the Motion for a temporary injunction hearing on March 24, 2021 at 2:00 p.m./central, pursuant to Rule 65.04 of the Tennessee Rules of Civil Procedure and Davidson County Local Rules of Practice § 19.03. See March 22, 2021 Order. Defendants filed a response in opposition to the Motion, with exhibits, on March 24, 2021.

I. FINDINGS OF FACT

The Court makes the following preliminary findings of fact for purposes of the pending request for a temporary injunction, only, based upon the Court’s record at this early stage of the proceedings.

As of November 1, 2020, Tennessee residents are allowed to place online sports wagers under the recently enacted Tennessee Sports Gaming Act (the “Act”). Tenn. Code Ann. § 4-51- 301, et seq. Action 24/7 is licensed by the State of Tennessee ·as an online sports wagering business under the Act. The Act authorizes the Tennessee Education Lottery Board of Directors (the “TEL Board”) to enforce and supervise compliance with the provisions of the Act. Id.,§ 4-51-306. The Act au-thorizes the TEL Board to control the licensing of sports wagering operators in Tennessee. Id., § 4-51-317, -326. The Act also authorizes the TEL Board to promulgate rules in accordance with the Act. Id., § 4-51-306. Further, the TEL Board is authorized to “investigate and conduct a hearing with respect to a licensee” that has violated the Act, in accordance with rules adopted by the TEL Board. Id.,§ 4-51-326(a). Upon finding a violation of the Act or rule, the TEL Board may suspend, revoke or refuse to renew a license for violations.of any provision of the Act or rules
promulgated by the Board. Id., 4-51-326(b).

The Board promulgated rules and regulations under the Act, referred to as “Chapter 15 – Sports Gaming Rules, Regulations and Standards” (“Rules”). The Rules recognize a “Sports Wagering Committee” of the TEL Board. The Rules, in tum, authorize the Sports Wagering Committee to suspend, revoke, or not renew a license for any of the reasons set forth under the Act or the Rules, upon recommendation by the CEO. Rule 15.2.3.A. The Rules grant the Sports Wagering Committee the discretion to revoke, suspend or not renew a license when it determines it is “in the best interests of the TEL, its Board, or the public policy or welfare of the State of Tennessee,” after notice and a right to a hearing in accordance with the Act and the Rules. Rule 15.2.3.B. The Rules additionally authorize the Sports Wagering Committee, or its designee, to suspend a license upon “exigent circumstances without prior notice pending any prosecution, hearing or investigation.” Rule 15.2.3.B. The Rules do not describe or provide for the size or composition of the Sports Wagering Committee, and do not specifically define what constitutes “exigent circumstances.”

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