The powerful owners of a payday loan company faced a crisis in March 2021 when their other business, a now-defunct sports gaming operation, was under investigation by Tennessee regulators.
The couple, Michael and Tina Hodges, previously turned to Tennessee House Speaker Cameron Sexton in 2014 to create a new triple-digit interest rate loan called the Flex Loan. The couple’s company, Advance Financial, through the Flex Loan, then loaned hundreds of millions of dollars to the state’s most financially vulnerable people.
They now needed Sexton’s help to keep their fledgling gambling company, Action 247, afloat as it tried to compete with sportsbooks like FanDuel and DraftKings, which dominated the market in Tennessee and across the country.
In many states, regulators attempt to separate lending and betting; Virginia, for example, prohibits gambling operators from offering loans to their customers. But in Tennessee, it’s different. A payday lender and a gambling company may have the same owners and operate out of the same stores.
From November 2020 to January 16, the closing date of Action 247, this happened. A person can walk into any Advance Financial storefront and borrow up to $4,000 at an interest rate of 279.5%. Then, at the same counter, the customer could legally ask the store employee to deposit money into an Action 247 account, through which he could bet his money on something like a football match.
Members of the Tennessee Education Lottery Corp., which oversaw gambling at the time, were concerned about the deal and the company, but the agency’s board was blocked from doing anything by its attorney in January 2021. Two months later, the board attempted to assert its power over Action 247 by suspending its license for violations related to its failure to ensure customers followed the laws of the State on games of chance; Ultimately, Action 247 went to court, where a judge lifted the stay but allowed the agency to continue its investigation.
That’s when Sexton intervened.
The Hodges own a majority of Action 247 and Advance Financial. The payday lender is one of the largest donors to Sexton and his political action committee, having given about $105,000 over the past decade.
ProPublica and Tennessee Lookout previously reported how, after creating the new type of payday loan, Advance continued to sue more than 110,000 Tennesseansmaking the company one of the largest plaintiffs in the state.
Through Action, the Hodges also attracted dozens of investors, including two with political ties to Sexton and other powerful state lawmakers, according to an investor document obtained by Tennessee Lookout and ProPublica.
A month after the suspension, Sexton met with two lottery board members. The Legislature “made it clear that they were not satisfied” with the decision to suspend Action 247, said Susan Lanigan, chairwoman of the Tennessee Education Lottery Corp. board of directors. at the time.
When it appeared that lottery officials were not going to abandon their ongoing investigation into Action, Sexton pushed through legislation to remove the board’s control over sports betting. Less than a month after the closed-door meeting with Lanigan, the state lottery was no longer involved in sports gaming and a new regulator, over which members of the Legislature could exercise more control, was in place.
Sexton responded to media questions in a statement in which he said the creation of the new regulatory body was a political decision including lottery members.
After the lottery lost control of sports gambling, it ended the investigation into Action. The company survived, but as one of the smallest sportsbooks in Tennessee. National brands have dominated sports betting in the state.
Action announced on its website on January 16 its closure. Cullen Earnest, senior vice president of public policy at Advance Financial and former lobbyist for Action 247, sent a statement from Tina Hodges, who said: “The current state-licensed online sports gambling landscape in the United States has proven unsustainable and unprofitable for all operators in the industry.
The Tennessee Lookout and ProPublica have been investigating Advance and Action for more than a year. In December 2025, a reporter sent Earnest and Sexton a list of questions about the company’s politically connected investors and the connections between the gambling and lending activities. Sexton said in an emailed statement: “I am not privy to every investment of people I know. » Earnest did not respond to specific questions.
Earnest, when asked about the lottery investigation, said via email that the agency “clearly isn’t up to the task” of regulating sports betting.
With Action’s closure, no payday lender is tied to a gambling company, but Tennessee law still allows it.
Brianne Doura-Schawohl, former legislative director of the gambling risk advocacy organization the National Council on Problem Gambling, said the mix of high-interest loans and gambling is problematic because studies show that people addicted to gambling are more likely to struggle with financial decisions and borrow money they can’t afford to repay through products like payday loans.
Doura-Schawohl said no other state has a scenario where a high-interest lender owns a gaming operation and can use its storefronts to attract customers.
“It’s really unhealthy and frankly predatory,” she said.
In Tennessee, however, Advance Financial has about 80 stores and Action 247 has been there for more than six years.
“We were alarmed”
In April 2020, the Tennessee Lottery Board opened applications for businesses to apply for licenses to operate online sports betting operations. Action 247 had been founded a year earlier, the day after the legalization of sports betting by the legislator, in the hope of being one of the first companies to launch into this new sector. All companies seeking a sports betting license had to undergo vetting before receiving approval, and during that process, Lanigan said lottery officials believed at the time that Action would operate independently of Advance.
Regulators approved Action’s license and the company launched its online sports betting operations in November and began offering all Advance Financial stores as a place to deposit or withdraw an Action betting account.
At the time, Tennessee law said nothing about payday lenders working with betting companies. The lottery had no rules prohibiting this practice. But in its regulations on lottery and scratch-off tickets, it blocked stores like Advance from selling those products, recognizing the dangers of mixing loans and this form of gambling.
But nearly two weeks after online sports betting launched, regulators have grown concerned. A gambling investigator for the lottery, working on a tip, walked into an Advance store in Nashville and found pamphlets advertising Action 247.
“Action 24/7 is Tennessee’s first locally owned and operated sportsbook offering convenient cash deposits and withdrawals,” the brochures state. “It’s so simple. For a $2 fee, any Advance Financial store can help you withdraw your money or reload your account.”
With the pamphlet in hand, officials began drafting an infringement notice.
Regulators sent an email to Tina Hodges in December 2020, claiming the company was using Advance as an “unregistered vendor” and asking her to explain how the companies worked together. “It is apparent that our licensing decision may have been based on an incomplete picture of your business model,” lottery officials said in the notice.
At a meeting in January 2021, the lottery board learned from its attorney that there was no law specifically prohibiting the Action and Advance agreement.
“We were alarmed,” said Lanigan, the president at the time.
Lanigan made it clear during the meeting that the lottery committee itself could not stop this practice. But regulators continued to examine the company, finding that it lacked proper internal controls to enforce state gambling laws. In March 2021, the lottery board followed regulators’ recommendations to suspend the company until it could correct them.
A week later, a judge ruled that the company must continue operating while the investigation continues. But now lottery officials had caught Sexton’s attention.
In March 2021 – the same month the board suspended Action 247 operations – Sexton co-sponsored legislation to entirely remove the Lottery Board’s control over sports betting. fs online received its first committee hearing at the State House.
As of 2021, Sexton had served as the state’s most powerful legislative official for two years, and his rise had been aided in part by campaign donations from the Hodges. The steps he took to remove regulators should help not only the couple, but also some politically connected investors in Action 247, according to an investor document.
One of them was John “Chip” Saltsman, who accepted the job as Sexton’s senior campaign adviser when he became president in 2019. The other was Ward Baker, campaign adviser to Tennessee’s two U.S. senators and majority leader in the state Senate. Saltsman initially invested $150,000 and Baker $100,000, but Advance’s owners returned part of the investment, leaving Saltsman with $18,000 invested in the company and Baker with $12,000.
Saltsman and Baker did not respond to calls, text messages and questions sent by media outlets. Sexton, in an emailed statement, said: “Despite what you imply, my focus and decisions remain on the issues that matter to our state, our communities and Tennesseans. My team manages campaign logistics, provides transparency and ensures compliance with campaign laws.”
In April, as Sexton’s bill moved through the state legislature, Lanigan, the lottery board chairman, and William Carver, the vice chairman, met with Sexton. Lanigan said she came to the meeting hoping to have an in-depth conversation about the future of sports betting and which regulatory body should oversee it. Instead, she said, Sexton only wanted to talk about the suspension of Action 247 and his frustration with lottery officials. Surprised, she resigned shortly after the meeting.
In May 2021, in the final days of the legislative session, Sexton pushed his bill into law.
When Tennessee passed its law giving the lottery control of sports betting and oversight from a sports betting advisory board, Sexton was not Speaker of the House. Two years later, at Sexton’s urging, lawmakers reversed that decision by creating a sports betting-specific agency that Doura-Schawohl said doesn’t exist in any other state.
In his emailed statement, Sexton said some members of the sports betting advisory board “had serious concerns” with how the lottery conducted its sports betting business. He said the decision to create the new entity was taken “after much discussion and deliberation with board members.”
William Orgel, a member of the sports betting advisory board since 2019 and current chair of the new body, said the board does not get involved in legislative politics, adding that if lawmakers felt a new agency was needed, the committee would “say fine.”
“I think our bodies have been pretty indifferent, at least me,” Orgel said. “I’m not trying to make or push for rules or policies, and I’ve never heard of anyone else doing that either.”
As Sexton worked to remove control of the lottery, former Democratic state Rep. Darren Jernigan of Nashville said he saw news of Advance and Action mixing and decided to propose legislation to ban it.
Jernigan found a Republican sponsor in the state Senate and built a bipartisan coalition of nearly a third of the members of the state House of Representatives to co-sponsor the bill.
Jernigan said the legislation was a “no-brainer.” The American Gaming Association reported in July 2025 that 35 of the 38 states that have legalized gambling, plus Washington, D.C., impose limits on gaming operators allowing bettors to use borrowed money. That includes Tennessee, where lawmakers banned players from using a credit card to load money into an account.
Jernigan told the Tennessee Lookout and ProPublica that he thinks it’s dangerous to locate any type of gambling operations in places that also offer fast, high-interest loans.
“There was no way to check if someone was borrowing and betting money,” Jernigan said.
However, once the bill moved forward, the lobbying began. Jernigan said Earnest, the Advance vice president, working on behalf of the two Hodges-owned companies as a lobbyist, tried to persuade his co-sponsors to drop their support for the bill. Former state Rep. Sam Whitson, a Republican, said the lobbyist approached him in an attempt to get him to withdraw his support.
The bill faced delay after delay to get out of committee. In April 2021, when the State House Banking Subcommittee appeared poised to vote against the bill, Jernigan withdrew it.
Jernigan said that looking back, he wished he had tried to bring the bill back before leaving the State House three years later, and that it was a gap in the law that needed to be filled.
