Tennessee lawmakers suspend flex loan and sports books bill

The decision whether or not to allow high interest short term lenders and sports betting to coexist in the same retail space at Tennessee will have to wait at least another week. Days after the Tennessee Education Lottery Corporation suspension of Tennessee Action 24/7 sports betting license for a vast list of violations, including numerous cases of credit card fraud and money laundering on its platform, the Senate and House committees have decided to pause on legislation that could also affect the business, which is in partnership with the lender Advance Financial.

A Senate hearing in the Committee on State and Local Governments was cut short on Tuesday after the introduction of SB 1029 and a the expert witness explained how dangerous it can be to match a high interest lender with a bookie. A House hearing scheduled by the Departments and Agencies Subcommittee on the same issue was postponed before it even began.

The invoices were filed last month following the vote by the TELC Sports Betting Committee to award Advance Financial Money Transmission Company LLC (Advance Financial) a sports betting seller’s license. The 2-0-1 vote in January allowed Advance Financial institutions to process cash deposits and withdrawals for TN Action sports betting accounts 24/7.

The committee was tentative in its decision, with at least one board member expressing concern about the proximity of high interest loans and gambling. But neither of the two members of the voting committee – the third has a business relationship with Advance Financial and abstained – could find a legal reason not to allow it.

“It seems a little awkward that someone could so easily use borrowed money to put money into a sports betting account,” board and committee member. Will carver, a partner at the Kramer Rayson LLP law firm in Knoxville, said at the time. “Due to its location, there is a pause. “

What is in the invoices

Weeks later, lawmakers began to prepare to fill an apparent loophole in the law with a pair of bills. HB 824 and SB 1029 would prohibit a sports betting operator from offering “flexible” loans to bettors in the same building, and they further prohibit the operator from requiring winnings to be credited to the balance of a flexible loan, which may carry annual interest rates of up to 279.5%. The bills would require TELC’s board of directors to notify the Ministry of Financial Institutions of any violation, and that ministry would impose penalties.

Brianne Doura-Schawohl, the vice president of U.S. policy and strategic development for Epic risk management, testified to the myriad reasons why the two types of businesses should not operate side by side. Among other things, Doura-Schawohl called the couple a “dangerous concoction” and criticized the state of Tennessee in general for being irresponsible when it comes to funding programs for the prevention or treatment of gambling addiction. .

“Any suggestion that gambling is a way to pay off a loan, earn money or solve financial problems is predatory. It is never advisable to gamble with borrowed money. This act of gambling with loaned funds is not only a wake-up call from experts, but remains one of the nine criteria listed for gambling addiction in DSM V.

Tina Hodges, CEO of TN Action 24/7, who is also CEO of Advance Financial, denied in February in correspondence with the Tennessee that Advance Financial had offered a loan to any sports betting patron.

“It is the policy and practice of Advance Financial not to offer loans to customers who visit retail stores for sports game deposit or withdrawal transactions,” Hodges said. “To date, we have no record of any violation of this policy anywhere in Tennessee. “

The delay will allow opponents to testify

Immediately after Doura-Schawohl’s testimony, Senator Ken Yager asked that the committee postpone discussions and a possible vote on the bill until next week in order to allow testimony from opponents, who he said no were not present. The sponsor of the bill, Richard Briggs, was amendable for the delay, and he insisted that he was not sure Tennessee Action 24/7 was responsible for the current situation – “This may be criminal elements. outside of this company. ” But he is still very much in favor of moving his bill forward and amending the existing law.

“It is the first sports betting organization in the United States to have its license suspended,” Briggs said. “Really, this is something that has gone very wrong. We need to put more stringent controls. … We need to put in place better safeguards over this whole process, because it has led to something that is not good.

“I consider [the delay] a friendly suggestion. … Our goal is not to do something to hurt sports betting in Tennessee. It’s a legitimate business that benefits millions of Tennessees, and I don’t want to hurt any Tennessee business … but it’s gone wrong.

Committees from both chambers were also due to hear a second round of sports betting related bills. HB 1267 and SB 588 would require the Sports Betting Advisory Board to meet jointly with the TELC board to set rules and hold hearings, and allow the board and council to call special meetings rather than just the board, like this is currently the law.

Both committees also postponed these bills until March 30.

Since the bills were filed and TELC issued its indefinite suspension last week, Tennessee Action 24/7 has taken its own action by filing a temporary restraining order with the Nashville Chancellery Court. The company will be heard on Wednesday afternoon, in the hope of being able to resume betting.

The suspension was imposed on March 18, the first day of one of the most popular sporting events on the betting calendar, March Madness. The timing could have been different – in a meeting last week to discuss the suspension, TELC investigator Danny DiRienzo told board members that the violations started as early as the 8th. March, but Tennessee Action 24/7 waited until March 17 to report the violations. at TELC.

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