Gamblers almost always think the next game will be a winner for them. That’s what keeps them coming back for more, even when they’re sinking in debt. With the construction of many casinos throughout the Philadelphia area, the ease of online gambling, and the latest leniency in sports betting regulations, it’s ever so easy to gamble away hard-earned income and get into a bad debt situation.
But gamblers may actually have some luck on their side if they take advantage of current bankruptcy laws. Chapter 7 bankruptcy, in most cases, will enable the gambler to discharge most gambling debts.
Wynn Las Vegas recently tested the law, filing a two count adversary action against a debtor who was in debt exceeding $350,000, arguing that the debtor intended on deceiving the casino. The court entered judgment in favor of the debtor, noting that the defendant had a history of using markers and paying off his gambling debts in a timely manner. In this case, unbeknownst to the debtor, his wife had withdrawn funds from his marital bank account to prevent him from continuing to gamble. The court noted that a broken promise to pay a debt does not satisfy a creditor’s burden of proof under section 523(a)(2)(A).
Gambling debt is not like other Debt
Creditors have to work harder to challenge dischargeability. Creditors must prove false pretenses. They must establish four elements: false representation — that the gambler made a false representation through which they obtained money such as lying on a credit application; knowledge —that the gambler knew the representation was false; scienter — that the gambler intended to deceive; and justifiable reliance — that the creditor relied on the gambler’s false representation.
Timing of Gambling and Filing for Bankruptcy
The timing of the bet is important, too, and can serious endanger the discharge. The court will look down upon a bet made just before a bankruptcy filing (within 60-90 days). There’s no guarantee that a gambling debt will be discharged, but there isn’t a specific law for or against gambling. The court may decide that the debt was accumulated with no intention of ever paying it back; however, gambling is an addiction and a problem gambler cannot stop despite the recognition of ever-increasing debt and serious consequences.
Acceptance of Gambling Reaches New Heights
The country’s policies toward gambling have shifted and grown lenient through the last decade, making it harder for creditors and easier for debtors. Certain forms of gambling are not only legal, they are promoted as jobs (i.e. casinos) and used as a source of revenue for government purposes (i.e. lottery proceeds used for education).
Besides advising a gambler to seek professional help for gambling addiction, it is important they seek the help of an experienced attorney to clear them of their lenders.