New Legislation Wants To Limit Sportsbook Connections With Payday Loan Companies

Posted on February 16, 2021 - Last Updated on March 30, 2021

Tennessee is settling into its new role as an industry leader in sports betting after three months of operations.

Now, some lawmakers are calling for adjustments in the business.

Proposed separation between certain operators and vendors

HB 824, proposed by Rep. Darren Jernigan, and SB 1029, proposed by Senator Richard Briggs, take proposed regulations a step further.

This legislation would prohibit operators from offering interactive sports wagering at any location where a person can obtain financial services such as a:

  • Flex loan plan
  • Title pledge agreement
  • Deferred presentment services agreement
  • Check cashing transaction

Although the bill doesn’t refer to any specific Tennessee sportsbooks, it is clear that its efforts are pointed at locally-owned sportsbook Action 24/7.

Action 24/7 at the forefront of focus

Action 24/7 president Tina Hodges is also the CEO of Tennessee-based flex loan company Advance Financial.

The TEL approved Advance Financial Money Transmission Company, LLC as a vendor during its Jan. 6 committee meeting.

Committee members raised concerns during a discussion, though they ultimately concluded that the company does not explicitly violate any regulations within the 2019 Sports Gaming Act.

Although the law strictly prohibits retail sportsbook locations, Advance Financial does qualify as such a facility.

Customers can deposit money into their Action 24/7 sports betting account at any of Advance Financial’s over 100 Tennessee locations.

This ease of access acts as a double-edged sword. Being able to deposit and withdraw from these locations serves as a convenience for customers, but this is also where the issues arise.

A customer can deposit money into their sports betting account and acquire a high-interest short-term flex loan with an annual interest rate of up to 279.5% at the same cashier.

This type of high-risk borrowing is generally associated with emergency situations and low-income individuals.

Naturally, offering distressed borrowing and sports bet depositing under one roof poses some risks.

Such an arrangement, however, is not expressly illegal.

The two businesses operate as entirely different entities, but there is some undeniable overlap.

HB 824’s proposed legislation looks to provide some much-needed division between the two businesses.

The bill stipulates that no operator shall enter into a financial services agreement with any person placing a wager at their sportsbook.

This would safeguard customers from taking out a high-risk loan then turning around and placing a bet with the same funds.

Tennessee sports betting bills suggest increased fines

The payday loan legislation is not the only sports betting legislation making its way through Nashville. New proposed House Bill 133, filed by Rep. Johnny Garrett, seeks to amend the 2019 Sports Gaming Act.

The bill would require the Tennessee Education Lottery (TEL) to increase fines for any operator found to be accepting wagers from any ineligible person or from anyone under the age of 21.

Fines begin at $1,000 for the first offense and increase to a maximum of $10,000 for the third offense.

No operator has yet been fined for such a violation. That is not to say, however, that it couldn’t happen in the future.

Fines of this size are merely a pebble in the pond for Tennessee’s four operators. Together, the sportsbooks profited over $11 million in December alone.

Additionally, this new legislation seeks an increase in fines for any entity accepting wagers from a bettor without a license.

Fines would begin at $10,000 and increase to $50,000.

Even with the maximum fine, this is still a far cry from the $750,000 licensing fee operators pay to operate legally.

HB 133 is currently being considered by the House’s Departments & Agencies Subcommittee.

SB 272, the legislation’s companion bill introduced by State Senator Ken Yager (R), passed on both the First and Second Consideration.

Photo by Calvin L. Leake |
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Alec Cunningham

As a college athlete, Alec Cunningham played Division II golf at Tusculum University. She graduated in 2015 with a bachelor’s degree in Journalism and Professional Writing. She then returned to her love of written word in 2000 after working in the music industry as a concert promoter, tour manager and artist developer. As a journalist, she's covered a variety of topics and currently specializes in Tennessee online sports betting and Virginia casino news. She served as a panelist at this year's All American Sports Betting Summit, discussing the ever-evolving role of women in the gambling industry.

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