Tennessee Bill Would Prevent Sports Betting At High-Interest Loan Locations

A controversial business model by one of Tennessee’s four state-sanctioned online/mobile sportsbooks is apparently the target of a proposed new law.

About a month ago, sports betting regulators with the Tennessee Education Lottery Corporation gave vendor approval to Advance Financial Money Transmission Company, LLC (“AFMTC”), which operates within Advance Financial locations where patrons can obtain high-interest “flexible” loans that can run borrowers up to a 279.5% annual interest rate.

At these 100 brick-and-mortar Advance Financial locations in the state, people can fund and withdraw cash from sportsbook accounts with TN Action 24/7, a locally-owned, licensed sportsbook. Tina Hodges is both the CEO of Advance Financial, and president of the licensed sportsbook Action 24/7.

[Disclosure: Better Collective Tennessee, LLC owns the website TN Bets and is a registered vendor in Tennessee. It is an affiliate marketing company that receives commissions when persons sign up for legal sportsbooks that include, among others, BetMGM, DraftKings, and FanDuel, which are in-state competitors of Action 24/7.]

On its social media account, TN Action 24/7 has encouraged patrons to avail themselves of the opportunity to fund sportsbook accounts at these Advance Financial storefronts, where it has also distributed flyers promoting the sportsbook.

The “innovative practice” raised the eyebrows of regulators who ultimately approved AFMTC’s application for registration, determining that its registration would not violate the 2019 Sports Gaming Act. The 2019 law does not allow for retail sportsbook locations, but the Advance Financial locations don’t meet the threshold of a retail sportsbook.

Tennessee isn’t home to any casinos or racetracks.

Legislation filed Tuesday in Nashville appears to try to contain the business practice.

What’s in the short, two-page bill

House Bill 824, introduced by Rep. Darren Jernigan, a Democrat, would “prohibit a licensee that offers interactive sports wagering from allowing a person to place a bet or wager at the same location as where the person entered into a flex loan plan, a title pledge agreement, a deferred presentment services agreement, or a check cashing transaction.”

These various financial services are typically associated with distressed borrowers and/or low-income individuals. Some people in Tennessee are apparently concerned with possible combination of distressed borrowing and gambling in one shop, but the law on the books doesn’t prohibit it.

While there are apparently ways to deposit cash into all sportsbooks live in Tennessee (i.e. not using a bank account), Action 24/7 has the advantage of giving bettors a chance to withdraw in cash as well at the Advanced Financial locations, which only serve customers of Action 24/7.

The synergy between the Action 24/7 gambling platform and the Advanced Financial locations is apparently too close for comfort for some. HB 824 would create some space between the two separate business entities.

Furthermore, the bill would mandate that “a [sports betting] licensee shall not include in a contract, agreement, or similar document for a transaction [those financial services mentioned above] … with a person placing a bet or wager[,] a provision that requires the application of the proceeds of a winning bet or wager to an outstanding amount owed to the licensee by the person for a transaction.”

The bill doesn’t mention Action 24/7 by name. A hearing on the bill hasn’t been scheduled yet.

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