A Tuesday Senate hearing on SB 1029, the bill that would make it illegal for a flex-loan lender to also transact cash deposits and withdrawals into sportsbook accounts in the same facility in Tennessee, was “rolled” to next week following introduction and the testimony of one witness.
A mirror bill introduced in the House was initially scheduled for a Tuesday hearing as well, but prior to the Departments and Agencies Subcommittee convening, the bill had been held to next week.
The bills, which were filed last week, have become of greater interest since the Tennessee Education Lottery Corporation (TELC) on March 18 suspended Tennessee Action 24/7’s sports betting license. The platform, which is the only locally owned sportsbook operating anywhere in the U.S., is also the first to be suspended since more than 20 states have legalized sports wagering in some form after the fall of the Professional and Amateur Sports Protection Action in May 2018.
Conceptually, the legislation surrounds potential problems from a high-interest, short-term lender being allowed to make such loans in concert with running a sports betting platform. The lender under scrutiny here is the Nashville-headquartered Advance Financial. Advance Financial’s CEO is Tina Hodges, who is also CEO of the licensed sportsbook TN Action 24/7. In January, storefronts for Advance Financial obtained a registration to allow of-age persons to deposit and withdraw cash funds from TN Action 24/7 accounts at Advance Financial’s physical locations.
Last week, a TELC investigator identified myriad problems, from money laundering to illegal proxy betting, that have cropped up in the four months since Tennessee Action 24/7 became one of the first four digital operators to launch sports betting in Tennessee.
Bill aims to protect ‘desperate’ people
Besides that, bill sponsor Sen. Richard Briggs pointed to a host of concerns from offering both high-interest loans and wagering in the same space.
“We have two sorts of individuals — one that has reached a point of hopelessness who thinks he can hit it big, and the second is one who has a sports gambling addiction,” Briggs said in introducing his bill Tuesday. “It can be as serious and destructive as an alcoholic, or opioid use.”
Briggs went on to say that the goal of his bill would be to keep those who are “desperate” from trying to make a quick buck, and to curb opportunities for those with addictions.
Briggs brought in problem gambling expert Brianne Doura-Schawohl, vice president of U.S. Policy and Strategic Development for Epic Risk Management, to explain the dangers of combinging a flex-loan lender and sportsbook.
“As I stated earlier, gambling is meant to be enjoyed as a form of entertainment and accessed only by the utilization of disposable and discretionary income, that can be lost. Individuals seeking to borrow money from a high interest lender are struggling to make ends meet and should not be gambling.
“In fact, the overwhelming majority of those that are at-risk or are grappling with a gambling addiction are likely the primary customers of payday lenders. It is incredibly irresponsible and risky to be increasing the ease of access to gambling and incentivizing the act of gambling after receiving a high interest/short term loan — actually it’s an incredibly dangerous concoction.”
Doura-Schawohl went on say that a sportsbook has a responsibility to “ensure the protection of its customers and to prevent harm.” In fact, in nearly every state with legal wagering, lawmakers have earmarked funds to address problem gambling programs, and operators are acutely aware of the issue — especially in March, which is Problem Gambling Awareness Month.
Opponents to testify next week
Doura-Schawohl gave passionate testimony and was the only witness. She flew into the Nashville for the hearings, only to have the House hearing postponed. There were no questions following her testimony, though it’s likely she’ll make an appearance next week on the House side.
Stakeholders say the extra week will give opponents of the new bill a chance to marshal forces. When Sen. Ken Yager asked that the bill be held over, he said that “someone from the other side wants to testify, but they are not here.” Sources say there could be multiple witnesses opposed to the bill, and that Action 24/7 will have a hand in opposing it.
The State and Local Government Committee has about three more weeks to meet, and the Tennessee State Legislature is set to adjourn on April 30.