Tennessee regulators have issued their first set of disciplinary sanctions since sports betting began in November 2020, fining two companies a combined $162,000 for violations as part of a continuing trend of U.S. regulators beginning to crack down on operators.
The Tennessee Sports Wagering Advisory Council (SWAC) voted Wednesday (March 1) to fine Penn Entertainment’s Barstool Sportsbook $92,000 and Hard Rock Digital $70,000 for infractions that took place between September and November 2022.
SWAC officials said Barstool accepted 184 in-game proposition wagers on NCAA football games between September 22 and November 19, in violation of state law that prohibits proposition wagers on collegiate events.
Stephanie Maxwell, SWAC’s general counsel, said Barstool self-reported the violation, and that staff recommended a $500 fine for each of the illegal wagers.
“They have represented that it was unintentional; however, the violation was in clear violation of the public interest given the statutory prohibition against collegiate proposition wagers,” Maxwell said. “The violation was also ongoing for a couple of months.”
In addition, the council fined Hard Rock for two separate violations.
The first was permitting a state investigator to fund his account using a credit card, which is prohibited by state law, and upon inquiring with Hard Rock, the operator disclosed that it had allowed six credit card deposits since launching in the state in September.
During the investigation, the state official also discovered that the geolocation on his laptop was inaccurate, showing him to be in Mississippi rather than Tennessee, but that Hard Rock still permitted him to fund his account even though the geolocation was from outside the state.
“If this geolocation was inaccurate for others logging in to the Hard Rock sports wagering website from their laptop or desktop, all of the checks and balances that are used to monitor shared accounts and other integrity issues by comparing locations of players would not have worked because the location was wrong,” Maxwell said.
The council voted to levy a $10,000 fine for each credit-card deposit violation, and a $10,000 fine for the geolocation violation.
During its meeting, the council also discussed an ongoing issue regarding the state’s regulatory requirement that operators hold at least 10 percent of the wagering handle.
According to the council, nine operators failed to meet that requirement in 2022, which executive director Mary Beth Thomas said Wednesday cost the state $11.6m in tax revenue.
However, Thomas recommended that the board delay a decision on disciplinary action on the matter until after the current legislative session, saying that she believes a more permanent solution to what has been a persistent problem since Tennessee launched wagering in 2020 may be forthcoming.
“After multiple discussions over the past couple of weeks with representatives of the sports-betting industry and specifically with representatives of those who are in that category two years in a row, I feel confident and have been given appropriate assurances,” Thomas said. “I believe that the industry is willing to come to the table to work out the details of a legislative fix.
“I think they realize that the situation is not workable moving forward, and I've also had discussions with legislative leadership regarding the industry's willingness to cooperate in the solution.”
Thomas said that Republican Lieutenant Governor Randy McNally’s office is preparing an amendment to a pending clean-up bill that would codify a change to the tax structure.
“I do not know what form that will take at this time, and I recommend that we leave it to the policymakers to decide what they would like to do,” she said.
Thomas reminded the council that if a legislative solution is not reached by the end of the session, the council can still return and issue disciplinary sanctions for operators that did not meet the hold requirement.