Tennessee’s sports betting regulators have recently sanctioned two sportsbooks with significant fines due to compliance issues, including one operator failing to maintain adequate funds to cover outstanding bets.

During its meeting in May, the Tennessee Sports Wagering Council (SWC) approved a substantial $60,000 fine against ZenSports. This penalty was imposed because ZenSports did not uphold the required reserve account balance for its Tennessee sports betting operations.

In Tennessee, sportsbooks must keep sufficient funds in a reserve account to meet their outstanding financial obligations. The SWC discovered that ZenSports fell short of this requirement on three separate occasions in December 2023.

In the same meeting, the SWC also levied a $50,000 fine against Fanatics, stemming from self-reported violations involving their self-exclusion list.

An SWC spokesperson clarified the regulation by stating: “Licensees shall maintain a reserve in the form of cash, cash equivalents, or an irrevocable letter of credit, in addition to the aforementioned bond. This reserve must be at least the amount needed to cover the outstanding liability related to patron accounts. The outstanding liability is the total of the following: 1. Amounts held by the licensee for sports gaming patron accounts; 2. Aggregate amounts accepted by the licensee as wagers on sporting events with outcomes yet to be determined; and 3. Amounts owed but unpaid by the licensee on winning wagers.”

Following the notification of this issue, ZenSports has since maintained an adequate balance. However, ZenSports has not responded to requests for comment made by Legal Sports Report.

Coding Error at Fanatics

Meanwhile, Fanatics reported that it had allowed eight betting accounts to place wagers despite these accounts being on a self-exclusion list. Consequently, the SWC imposed eight Level 2 fines, each amounting to $6,250, bringing the total fine to $50,000. Fanatics has opted not to comment on this matter.

The self-excluded bettors were inherited from a statewide self-exclusion list after Fanatics took over PointsBet’s Tennessee operations. Although these bettors were removed from the statewide list, they remained on Fanatics’ internal self-exclusion list covering 20 states.

Fanatics informed the SWC that a coding error caused these accounts to become active. They also assured that the error has been rectified. Out of the eight accounts, six placed wagers, and Fanatics has since refunded any losses incurred by those affected.

Tennessee’s sports betting industry commenced operations in November 2020. In March 2021, Tennessee regulators made history by suspending Action 24/7’s license due to its failure to prevent suspected credit card fraud and money laundering. However, a Tennessee court later ruled that the Tennessee Education Lottery, which was then the regulatory body, could not conduct a hearing regarding the fraud allegations against Action 24/7. Despite these issues, Action 24/7 continues to operate.

Also in March 2021, the Tennessee Education Lottery reviewed an incident involving William Hill, where a college prop bet, a type not allowed in Tennessee, was allegedly accepted.