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Fanatics fined $50K, Zen Sports $60K for Tennessee sports wagering violations

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(The Center Square) – Fanatics Sportsbook was fined $50,000 in Tennessee for allowing eight people who were on an in-app self-exclusion list to place bets during that exclusion. Zen Sports received a $60,000 for not maintaining a high enough balance in its reserve account to cover outstanding bets and obligations.

The issue was self-reported by Fanatics and the Tennessee Sports Wagering Council agreed with the fine, which worked out to eight violations with a Level 2 fine of $6,250 apiece.

Fanatics Senior Regulatory Counsel Michael Levine said the issue came from an inherited Tennessee statewide self-exclusion list, which the company received when it began operations in Tennessee in 2023. Bettors who came off the statewide list then had their accounts activated despite also being on Fanatics’ in-house 20-state self-exclusion list.

The list was created to allow bettors to give themselves a timeout from wagering.

Fanatics fixed the coding issue that led to the accounts being enabled and refunded the amount lost wagering to the individuals.

“We take it extremely seriously and we will ensure that if someone places themselves on whether in-app self-exclusion or Tennessee self-exclusion that we comply with those requests,” Levine said.

SWC Board Member Billy Orgel mentioned Fanatics has paid $650,000 in privilege tax in the past year. Tennessee taxes sportsbooks’ gross wagers at 1.85%, meaning individuals have place $35.1 million in bets with Fanatics through April.

Six of the eight individuals who had their accounts enabled ultimate placed wagers in Tennessee with Fanatics and a couple placed what was called a significant amount of wagers.

Zen Sports and other operators are required to keep a reserve account to cover all of the obligations or bets that were placed by sports wagerers.

The reserve issues were caught by the SWC in a review of reserve balances on Dec. 1, 11 and 29, 2023. The issue was brought to Zen Sports and the company has maintained an adequate reserve balance since.

“The capital wasn’t an issue but it was a calculation error,” Zen Sports Chief Commercial Officer Eddie Ponce told the SWC.

Zen Sports’ reserve account was “several thousand dollars” below the reserve requirement, Maxwell said.