Whether you suffered a huge loss because you have a gambling addiction, or just had bad luck in the casinos that one time, you now owe the casino money. The question is: what happens if you are unable to pay the casinos back? Can you file for bankruptcy to have the debt discharged? The answer depends on how the funds were obtained.
Credit card used to pay for gambling debt
If credit cards were used to pay for the gambling debt, especially with online gambling sites, then the question of whether that debt is dischargeable in bankruptcy depends on the totality of circumstances. The bankruptcy court can deny a discharge if they believe that filing the bankruptcy was an abuse of the bankruptcy process based on bad faith. A discharge can also be denied if the courts determined there was fraud involved. At that time that you used the credit card to pay for the gambling, did you have the intention of paying it back? Were you going to pocket the winnings, but try to discharge any losses incurred? There are a lot of factors to look at in determining whether the bankruptcy filing was an abuse of the bankruptcy process. The bankruptcy trustee will be bringing an action against the bankruptcy filer if they believe there was an abuse of the process. The credit card lender can file a non-dischargeability action against the bankruptcy filer if they believe that there was fraudulent activity in obtaining the credit to gamble on the credit card. If you pass the bad faith and fraud test, then the gambling debt should be dischargeable in bankruptcy.
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Casino markers/counter checks/post-dated checks
If you are gambling in Las Vegas and a casino issues you a marker, counter check, or if you are signing a post-dated check, what normally happens is the casino would give you credit for a certain dollar amount on the marker. The casinos will claim that you are promising to repay the amount at a later date and at the time that you sign the marker, counter check, or post-dated check, you are representing to the casino that you have the amount in your bank account. If you win the money, you pay them back and they rip up the marker, and you get to keep whatever the remaining winnings are. However, if you lose the money, a casino will still expect you to pay the amount that you received credit for. If you do not have the funds in your bank account, then the casinos would turn the case over to the District Attorney's office, where they could prosecute you for writing a bad check. If you do not respond, or if you are not from the Las Vegas area, there could be a felony warrant issued for your arrest. This would be a criminal prosecution, and not a civil matter that could be dischargeable in bankruptcy. Bankruptcy proceedings would not be able to stop criminal actions against you. Thus, even if you file for bankruptcy, it may wipe out the debts that you have, but the district attorney's office can still criminally prosecute you. In addition, if you file for bankruptcy, a casino, at their discretion, can pursue a non-dischargeability action under 11 U.S.C. §523(a)(2) or 11 U.S.C. §523(a)(4). If they win, and have the gambling debt deemed non-dischargeable, then you would still continue to owe the money even after you receive a discharge of your other debts.
Furthermore, Indian casinos are not subject to the Fair Debt Collection Practices Act (FDCPA). Indian tribes have sovereign immunity, so you cannot sue them under the FDCPA even if they are calling and harassing you.
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