Approval Given for Blend of Sports Wagering and High-Risk Borrowing in Tennessee
In a shocking twist reminiscent of a liquor store near a rehab center, Tennessee sports betting regulators on Wednesday gave their stamp of approval to a high-risk lending firm, Advance Financial, to also serve as a cash deposit spot for their sportsbook, Action 24/7.
With a whopping 279.5% annual interest rate, Advance Financial, based in Nashville, Tennessee, operates in 13 states, finding a particularly welcoming environment in Tennessee, where the payday and "flexible" lending regulatory climate is more favorable than in other states.
Tina Hodges, both the CEO of Advance Financial and the president of the licensed sportsbook Action 24/7, launched online in Tennessee on November 1 alongside major players like BetMGM, DraftKings, and FanDuel. However, unlike its competitors, Action 24/7 allows customers to fund a sports gambling account in the same location where they can apply for the high-interest loans commonly sought by desperates teetering on the edge of a debt spiral.
The approval came after a two-hour meeting of the Tennessee Education Lottery Corporation's (TELC) sports wagering committee, where Advance Financial's application received seven minutes of careful consideration before being approved in a 2-0-1 vote. While the full board boasts seven members, the committee only includes three.
The Advance Financial-Action 24/7 relationship didn't start on Wednesday; since at least November of last year, the company has been distributing flyers advertising cash deposit/withdrawal services for its affiliated sportsbook.
What sets Action 24/7 apart
Sports Handle obtained a copy of one such flyer, which seems to have been distributed at several, if not most, of Advance Financial's 100-plus locations across the state. To the casual observer, it seems that the company acted first in distributing the flyers and then sought a regulatory blessing, or perhaps it was prompted to register as an official vendor. Based on the language at the bottom of this flyer, it appears that the company has been using its storefronts as deposit and withdrawal locations since legal sports gambling began in Tennessee in November 2020. ("Advance Financial is not a licensed sports gaming operator and does not offer gambling services. Advance Financial offers account load and withdrawal services only.")
Action 24/7 has also dominated local radio and TV, emphasizing the ability to deposit and withdraw cash at their numerous physical locations—a characteristic not shared by other Tennessee sportsbooks licensed by the TELC. A search reveals that the sportsbook's social media account has not explicitly referenced Advance Financial by name.
Action 24/7 President Tina Hodges discussed their app, same-day pay, and the launch of sports betting in Tennessee with @michaelpleahy, emphasizing their local roots and the convenience of cash deposits and withdrawals at their lending locations.
In various media interviews, Hodges has touted the sportsbook's local roots and the ability to make cash deposits and withdrawals at their partner locations. Hodges told ESPN in December:
"One of the biggest things that our players have started to really love lately, especially in the last two or three weeks, is our cash deposits and cash withdrawals. We're the only sportsbook in Tennessee that doesn't require you to have a bank account. I didn't realize how unique that was. It just seems a no-brainer that some people like to use their bank account for these sorts of things, some people don't.
We have over 100 partner locations across Tennessee, where people can go load and unload their sports gambling account in cash."
Online sportsbook visitors, whether logged in or not, can find any of these Advance Financial locations directly on the Action 24/7 website. "Cash Locations" is the central tab on the sportsbook's homepage, which generates the map shown at the top.
In other interviews, Hodges has pointed out the ability to deposit cash at the sportsbook's partner locations, acknowledging that some people may prefer not to link a bank account with their sportsbook account. "If you don't want to link it to your bank account, that's okay," Hodges told the Tennessee Star in December. "We understand that. You can do it in cash."
There are also individuals who don't have a bank account, or who have no funds in their bank account, or who might wish to hide transactions from spouses or others with access to their account.
Contrasting lending and gambling policies
When the Tennessee legislature legalized sports betting in 2019, they tasked the TELC with its regulation, including the ability to approve operators and vendors. The lottery gained this responsibility in part because there are no casinos in the state, and thus no prior gaming entity existed to potentially manage the newly approved gambling.
When compared to the old days, where the TELC was responsible for selling traditional lottery tickets, scratch-offs, drawings, and the like, the agency has licensed numerous businesses across the state to sell these tickets, secured a 6.5% commission for themselves, per state law.
However, the same Tennessee code states that the corporation shall not issue, sell, or authorize the sale of lottery tickets at any location licensed to provide "deferred presentment services," also known as payday lenders, where people who are typically in financial distress, perhaps due to medical emergencies, take high-interest loans with high fees and often get trapped in never-ending debt. Similarly, in Tennessee, as in 28 other states, the law expressly forbids the purchase of lottery tickets with credit cards.
Payday lending has long been a target of consumer protection agencies and is not allowed in certain states. For this reason, in around 2016, Advance Financial deliberately moved away from payday lending in favor of issuing "flex loans," carrying terms structured differently but still often taken by people in financial emergencies. While loan caps are lower with payday loans, Advance Financial can offer up to $4,000 in a flex loan to certain borrowers who may be deemed at lower risk to default.
Competitors like Ace Cash Express offer payday, installment, and title loans, but not flex loans, to borrowers in Tennessee. At Ace Cash Express, customers can use the PayNearMe service for a same-day payment transaction, similar to services like MoneyGram and Western Union. Some multi-state sportsbooks like BetMGM, FanDuel, and FOX Bet in certain states enable their customers to use PayNearMe stations, located at large chains like 7-Eleven convenience stores and CVS, to deposit cash funds into their legal sportsbook accounts. So, in contrast to what seems to be unique to Action 24/7, there are no physical casinos in Tennessee, and yet, the ability to use cash to deposit money into a modern online sportsbook is not entirely unique.
What is unique to Action 24/7 is the ability to withdraw funds directly from a sports betting account at their Advance Financial locations, even on the same day that bets are placed. While there are no physical sportsbooks in Tennessee, the same convenience can be found in states with physical sportsbooks, like Iowa and Nevada.
A cause for concern and regulatory dilemma
During the brief discussion on Wednesday on whether to issue the Advance Financial vendor registration, thus legitimizing the deposit and withdrawal of funds to Action 24/7 sportsbook, both committee members Will Carver and Susan Lanigan seemed hesitant about endorsing the application.
Lanigan noted the contrast between Tennessee's stance on payday lending and its stance on sports betting:
"There's nothing like that with regard to sports betting."
Carver pointed out that there is little that can stop someone from taking a payday loan and using it to fund an account at any of Tennessee's sportsbooks.
"This is something that happens with mobile sports wagering already," Carver said. "Someone can go to Advance, then to CVS and PayNearMe, and do the exact same thing. From a responsible gaming [perspective], it feels a little off, but it complies with statute."
Carver and Lanigan appeared to be uncomfortable with the arrangement, expressing a "funny feeling" but acknowledging they were not empowered to halt or reject the application.
"I don't think the concern is one that we are to be the arbiters of," Carver said, referring to the TELC's role in regulation. "It complies with statute."
As Tennessee's sports betting market evolves, so too may this unusual relationship between high-risk lending and sports gambling, particularly concerning to many, including Lanigan and Carver, as well as Brianne Doura-Schawohl, vice president of US Policy and Strategic Development for EPIC Risk Management, which provides advice on problem and responsible gambling strategies:
"I have grave concerns around the implications of any relationship between a flex or payday lender and gambling. Gambling is meant to be enjoyed as a form of entertainment and accessed only by the utilization of disposable and discretionary income," Doura-Schawohl said.
"Individuals seeking to borrow money are already struggling to make ends meet and meet their basic needs. Any insinuation that gambling is a way to solve these problems or make money is predatory and misleading. It is never advisable to be gambling on borrowed money and remains a red flag within the addiction community that someone using borrowed funds, especially at incredibly high interest rates, has an unhealthy relationship with their gambling."
The Advance Financial-Action 24/7 partnership remains a topic of ongoing debate, sensitivity, and regulatory scrutiny as the sports betting landscape in Tennessee continues to unfold.
- Advance Financial, a high-risk lending firm based in Nashville, Tennessee, finds a welcoming environment in Tennessee due to its payday and flexible lending regulatory climate being more favorable than in other states.
- Tina Hodges, the CEO of Advance Financial and the president of the licensed sportsbook Action 24/7, launched online in Tennessee on November 1 alongside major players like BetMGM, DraftKings, and FanDuel.
- Unlike its competitors, Action 24/7 allows customers to fund a sports gambling account in the same location where they can apply for high-interest loans.
- In the meeting of the Tennessee Education Lottery Corporation's (TELC) sports wagering committee, Advance Financial's application received seven minutes of careful consideration before being approved in a 2-0-1 vote.
- There are no physical sportsbooks in Tennessee, but Action 24/7 allows withdrawals of funds directly from a sports betting account at their Advance Financial locations, even on the same day that bets are placed.
- Brianne Doura-Schawohl, vice president of US Policy and Strategic Development for EPIC Risk Management, has expressed grave concerns about any relationship between a flex or payday lender and gambling due to its potential to exploit individuals already struggling to make ends meet.
