The powerful owners of a payday lending company faced a crisis in March 2021 when their other business, a now-defunct sports gambling operation, was under investigation by Tennessee regulators.
The couple, Michael and Tina Hodges, had already turned to Tennessee Speaker of the House Cameron Sexton in 2014 to create a new triple-digit interest loan called a “Flex Loan.” The couple’s company, Advance Financial, through the Flex Loan, went on to make hundreds of millions of dollars lending to the state’s most financially vulnerable.
Now they needed Sexton’s help keeping their fledgling gambling business, Action 247, afloat as it tried to compete with sportsbooks like FanDuel and DraftKings, which were dominating the market in Tennessee and around the country.
In many states, regulators try to keep lending and betting separate; Virginia, for example, bans gambling operators from offering loans to customers. But in Tennessee, it’s different. A payday lender and a gambling company can have the same owners and operate out of the same storefronts.
From November 2020 through Jan. 16, when Action 247 closed, this was happening. A person could walk into any Advance Financial storefront and borrow up to $4,000 at a 279.5% interest rate. Then, at the same window, the customer could legally tell the store’s employee to deposit cash into an Action 247 account, through which they could gamble the money on something like a football game.
Members of the Tennessee Education Lottery Corp., which oversaw sports gambling at the time, were concerned by the arrangement and the company, but the agency’s board was prevented from doing anything about it 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 that customers adhered to state gambling laws; ultimately, Action 247 went to court, where a judge lifted the suspension but allowed the agency to continue its investigation.
That’s when Sexton stepped in.
The Hodges own the majority of both Action 247 and Advance Financial. The payday lender is one of the largest donors to Sexton and his political action committee, giving around $105,000 over the past decade.
ProPublica and the Tennessee Lookout previously reported how, after creating the new type of payday loan, Advance has gone on to sue more than 110,000 Tennesseans, making the company one of the single largest plaintiffs in the state.
Through Action, the Hodges also brought in dozens of investors, including two with political ties to Sexton and other powerful state lawmakers, according to an investor document obtained by the Tennessee Lookout and ProPublica.
A month after the suspension, Sexton met with two members of the lottery board. The legislator “made it clear he was not happy” with the decision to suspend Action 247, said Susan Lanigan, the chair of the Tennessee Education Lottery Corp.’s board at the time.
When it appeared lottery officials weren’t going to drop 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 out of sports gaming and a new regulator, over whom members of the legislature could wield more control, was in.
Sexton responded to the news outlets’ questions in a statement in which he said that creating the new regulatory body was a policy decision that included members of the lottery.
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 Jan. 16 that it was shutting down. Cullen Earnest, the senior vice president of public policy at Advance Financial and a onetime lobbyist for Action 247, sent a statement from Tina Hodges, who said, “The current landscape for state-licensed online sports gambling in the United States has proven to be unviable and unprofitable for all operators in the industry.”
The Tennessee Lookout and ProPublica have been investigating Advance and Action for over a year. In December 2025, a reporter sent Earnest and Sexton a list of questions about the company’s politically tied investors and the connections between the gambling and lending businesses. Sexton said, in an emailed statement, “I don’t keep up with each and every investment of people I know.” Earnest didn’t respond to the specific questions.
Earnest, when asked about the lottery investigation, said by email that the agency “was obviously not up to the task” of regulating sports betting.
With Action’s closure, no payday lender is tied to a gambling company, but under Tennessee law it’s still allowed.
Brianne Doura-Schawohl, the former legislative director for the gambling harm-reduction advocacy organization National Council on Problem Gambling, said the mixing of high-interest lending and gambling is problematic because studies show people with a gambling addiction are more likely to struggle with their financial decisions and to borrow money they can’t afford to pay back through products like payday loans.
Doura-Schawohl said no other state had a scenario where a high-interest lender owns a gambling operation and can use its storefronts to attract customers.
“It’s just really unhealthy and, frankly, predatory,” she said.
In Tennessee, however, Advance Financial has around 80 storefronts, and Action 247 had operations at all of them for over six years.
“We Were Alarmed”
In April 2020, the Tennessee lottery board opened applications for businesses to apply for licenses to run online sports betting operations. Action 247 had been founded a year earlier, the day after lawmakers legalized sports betting, hoping to be one of the first companies to enter the new business. All companies seeking a sports betting license were required 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 into or cash out of an Action betting account.
At the time, Tennessee law said nothing about payday lenders working with betting companies. The lottery had no rules banning the practice. But in its regulations of lottery and scratch tickets, it prevented stores like Advance from selling the products, acknowledging the dangers of mixing lending and that form of gambling.
But almost two weeks after the launch of online sports betting, regulators grew concerned. A gambling investigator for the lottery, working off a tip, entered an Advance store in Nashville and found brochures advertising Action 247.
“Action 24/7 is the first locally owned and operated sports book in Tennessee, offering convenient cash deposits and withdrawals,” the brochures read. “It’s so easy. For a $2 fee, any Advance Financial store location can help you withdraw your cash or load your account.”
With the brochure in hand, officials began drafting a violation notice.
Regulators emailed Tina Hodges in December 2020, asserting that the company was using Advance as an “unregistered vendor” and asking her to explain how the companies were working together. “It is evident that our licensing decision may have been based on an incomplete picture of your business model,” said lottery officials in the notice.
At a January 2021 meeting, the lottery board learned from its attorney that there was no law specifically banning the Action and Advance arrangement.
“We were alarmed,” said Lanigan, the chair at the time.
Lanigan made it clear at the meeting that the lottery board itself couldn’t stop the practice. But regulators continued to look into the company, finding it lacked proper internal controls to enforce the state’s gambling laws. By March 2021, the lottery board took the regulators’ recommendations to suspend the company until it could fix them.
A week later, a judge ruled the company should remain in business while the investigation continued. But now lottery officials had grabbed the attention of Sexton.
In March 2021 — the same month that the board suspended the Action 247 operations — legislation Sexton co-sponsored to remove the lottery board’s control of online sports betting entirely received its first committee hearing in the state House.
In 2021, Sexton was two years into his position as the state’s most powerful legislative official, and his rise had been in part aided by campaign donations from the Hodges. The steps he took to remove the regulators stood to help not just the couple but also some politically connected investors in Action 247, according to an investor document.
One of them was John “Chip” Saltsman, who took the job as Sexton’s senior campaign adviser when he became speaker in 2019. The other was Ward Baker, a campaign adviser for Tennessee’s two U.S. senators and the state Senate majority leader. Saltsman initially invested $150,000 and Baker $100,000, but Advance’s owners had returned some 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, texts and questions sent by the news outlets. Sexton, in an emailed statement, said: “Despite what you are insinuating, my focus and decisions remain on the issues that matter to our state, our communities and to Tennesseans. My team manages campaign logistics, provides transparency and ensures compliance to campaign laws.”
In April, as Sexton’s bill moved through the state legislature, Lanigan, the lottery board chair, and William Carver, the vice chair, met with Sexton. Lanigan said she came to the meeting expecting a thorough conversation about the future of sports betting and what regulatory body should oversee it. Instead, she said, Sexton only wanted to talk about the suspension of Action 247 and his frustration at lottery officials. Taken aback, she resigned shortly after the meeting.
In May 2021, in the final days of the legislative session, Sexton pushed his legislation through.
When Tennessee passed its law giving the lottery control of sports betting and oversight of a sports wagering advisory council, Sexton wasn’t the House speaker. Two years later, at Sexton’s behest, lawmakers reversed this decision by creating a sports-betting-specific agency that, according to Doura-Schawohl, doesn’t exist in any other state.
In his emailed statement, Sexton said that some members of the sports wagering advisory council “had serious issues” with how the lottery was conducting business when it came to sports betting. He said that the decision to create the new entity happened “after much discussion and deliberation with board members.”
William Orgel, a member of the sports wagering advisory council since 2019 and current chair of the new body, said the council doesn’t involve itself in legislative policy, adding if the lawmakers thought a new agency was necessary, the panel would “say fine.”
“I believe our body has been pretty hands-off, at least I have,” Orgel said. “I’m not in there trying to make or lobby for the rules or policy, and I’ve never heard of anyone else doing that either.”
While Sexton was working on removing the lottery’s control, former Democratic state Rep. Darren Jernigan of Nashville said he saw the news of Advance and Action’s co-mingling and decided to propose a law to ban it.
Jernigan found a Republican sponsor in the state Senate and built a bipartisan coalition of nearly one-third of the state’s House members to co-sponsor the bill.
Jernigan said that 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., have limits on gaming operators allowing bettors to use borrowed money. This includes Tennessee, where lawmakers have barred gamblers from using a credit card to load money into an account.
Jernigan told the Tennessee Lookout and ProPublica he thought it was dangerous to put any type of gambling operations in places that also offer quick, high-interest loans.
“There was no way to verify if someone was borrowing and betting the money away,” Jernigan said.
Once the bill was moving, however, the lobbying started. Jernigan said Earnest, the Advance vice president, working on behalf of both Hodges-owned companies as a lobbyist, went around trying to persuade his co-sponsors to drop their support of the bill. Former state Rep. Sam Whitson, a Republican, said the lobbyist approached him in an effort to get him to withdraw his backing.
The bill faced delay after delay in getting out of its committee. In April 2021, as the state House’s banking subcommittee looked poised to vote down the legislation, Jernigan withdrew it.
Jernigan said that with hindsight he wished he’d tried to bring the bill back up before he left the state House three years later, and that it’s a loophole in the law that needs to be closed.
