Members of the Tennessee Education Lottery (TEL) are still pursuing a case against Action 24/7, even though a Nashville judge last month restrained the regulatory agency from damaging the company’s revenue stream further.
TEL members are now maneuvering against the company in another way.
Action 24/7 officials operate an online sports-betting site based out of Tennessee. TEL members have indicated that they want to, once again, separate the company from its license and chip away at its ability to make a profit. This, as out-of-state-based competitors operating within Tennessee would thrive.
In legal papers filed this week, Action 24/7 officials said that the TEL’s continued attempts to harm their business are unjust and unwarranted.
As The Tennessee Star reported, the TEL had previously suspended Action 24/7’s license due to a self-reported incident of card fraud that company officials found and stopped. They have since seen no recurring incidents. Chancellor Patricia Moskal later ruled that members of the TEL did not give Action 24/7 the proper due process and that continued suspension of the license threatens the businesses’ continued financial livelihood. She ruled that the TEL must reinstate the company’s sports gaming operator license.
A Matter for the Courts to Decide
Legal documents filed at the 20th Judicial District Court in Nashville this week show TEL members want to hold a new hearing to discuss taking action against Action 24/7’s reinstated license. TEL members seem to want to “ratify” the suspension. Action 24/7 officials, however, said that’s a matter for the courts — and not the TEL — to decide.
According to one document on file with the court, TEL officials want to hold the hearing Wednesday, April 14.
Nashville-based attorney E. Steele Clayton IV said TEL attorneys wanted to schedule a hearing. But Clayton said “the hearing would be a violation of the Order on Temporary Injunction and that Action 24/7 intended to seek emergency relief from the Court.”
Clayton, in the documents, cites TEL counsel J.P. Urban.
“I asked Mr. Urban what the specific subject of the hearing would be and informed him that Action 24/7 had not been notified of any new incidents of fraud or otherwise of concern to TEL. He stated that the hearing would address the events that led to the license suspension of March 18 and 19. Mr. Urban did not state that there were any new violations or that this was a hearing for any purpose other than to consider the license suspension that was a final action of the Board,” according to one document Clayton filed.
“Mr. Urban was also advised that Action 24/7’s position was that the Court’s Order indicated that the Board’s previous suspension of Action 24/7’s license was considered a final action by the Board and that the Court had exclusive jurisdiction now. Mr. Urban replied that he believed that holding the hearing would not be in contempt of the Court’s Order on Temporary Injunction because the Court’s Order required TEL to continue to regulate Action 24/7 and that Action 24/7 was required to continue adhering to TEL’s rules. He further explained that, while the Court’s Order required the parties to maintain the status quo, he understood that TEL would not be changing the status quo without consulting the Court.”
Clayton said Action 24/7 would seek relief by requesting an emergency hearing from the Court.
Urban, in a letter to Clayton, said Action could appeal to a court again “creating a record for the Court to review.”
“On April 5, 2021, Mr. Urban replied that Defendants would agree to move the hearing a week only if Action 24/7 would grant Defendants 30 additional days to respond to its Verified Complaint. On behalf of Action 24/7, I agreed to this proposal but again restated Action 24/7’s objection to the hearing taking place at all and advised that Action 24/7 still intended to seek relief from the Court,” Clayton wrote.
A ’Whitewash’
As reported, Action 24/7’s license suspension caused the company to lose revenue during the National Collegiate Athletic Association’s “March Madness” basketball tournament.
Clayton, in this week’s documents, said TEL members are acting inappropriately.
“Defendants may not now seek to create a record after the fact. Defendants should not be allowed to whitewash the prior violations of Action 24/7’s due process, which are on appeal to the Court, in an unlawful hearing on April 14, 2021 that constitutes a further due process violation in an effort to create a record for the Court to review,” Clayton wrote.
“Such a result is not only unfair but is a clear violation of the temporary injunction requiring the parties to maintain the status quo.”
As The Star reported last month, when TEL Board members took away Action 24/7’s they did so remotely while occupied with other things. Some were driving their vehicles during the meeting. Others were on spring break. TEL board members acted against Action 24/7 while taking the word of one investigator who said the company didn’t follow through on the necessary security protocols.
Resources:
– Emergency Motion to Compel Compliance
– Proposed Order
– Declaration of T. Hodges
– Declaration of S. Clayton with Exhibits A to G
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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected].
Editors Note: Action 24/7 is an advertiser with The Tennessee Star and The Tennessee Star Report.
Okay, I give up.
What is the actual beef TEL has against Action 24/7? It’s obviously not about the card fraud incident, so what’s REALLY going on? Who on TEL’s board has a problem with whom at Action 24/7?