Gambling is a tricky form of entertainment that has very serious legal implications surrounding it despite all of the fun, lights and glamour surrounding these games of chance. One legal issue that is intrinsically tied to gambling is the idea of borrowing and/or the financial backing of a player in a game. Often, casinos extend lines of credit to individuals who are regular patrons at their establishment. This line of credit, however, must be used for gambling purposes at the issuing casino’s establishment. The purpose in doing this is to increase the amount of money in play and in return, so the casino hopes, result in higher winnings for the house. Because casino markers are often made for large amounts and are typically interest free, strict laws are in place to protect lending casino’s rights to collect on such markers.
These laws came to light when Ms. Strong, a Texas resident, was issued markers at a Shreveport riverboat casino totaling $60,000. After losing the entire amount, the casino tried to collect on the markers owed. However, the markers were returned to the casino by Ms. Strong’s bank marked “Not Sufficient Funds.” Louisiana law treats casino markers like checks, requiring the collector to make a written demand, sent through the mail, for payment to be made within fifteen working days after receipt of the demand before a suit can be filed. In this case, Ms. Strong failed to make payment within the fifteen days and suit was brought. Ms. Strong’s defense relied on her claim that the markers were not enforceable upon several grounds.
The first issue to consider in determining whether or not a casino marker is enforceable is to ask which state’s law applies, as some states do not recognize markers as a valid form of payment. This is especially relevant in the riverboat casino context, where several patrons come from out of state. Louisiana law provides that the issue is to be governed by the state whose policies are most seriously affected if its state laws are not applied. Here, if Texas law were used, the casino would not be able to collect its debt because Texas has strong policies against the enforcement of gaming debts. This would be more severe to Louisiana’s pro-gaming policies as it would allow those from states with policies similar to Texas to incur gaming debts in Louisiana and avoid them by returning to their home state. This would cause negative implications for both casino profits and state economic development. For this reason, in Ms. Strong’s case, Louisiana law applies.
Next, the issue of the markers’ enforceability comes to light. Louisiana courts tend to view casino markers as a type of loan rather than a “gambling debt.” The reasoning behind this distinction is simple. Whereas a gambling debt accrues when one places a bet and then fails to pay on that debt, a marker is simply an instrument given in exchange for a patron’s promise to repay the amount on the marker. The casion does not require that the entire marker amount be spent on gambling, only that if that money is to be used, then it must be used in the casino. In essence, the patron has the option to use the marker funds or not and is the sole decision maker in whether or not to gamble with those funds. Because of Louisiana’s pro-gaming laws, casinos are allowed to extend these loan-like lines of credit, thus making the casino markers in this case enforceable.
In addition, in order for a casino marker to be enforceable it must be a negotiable instrument. A negotiable instrument is a writing that promises to pay a fixed amount of money that is payable at the time it is issued, payable on demand or at a specified time, and does not state any further undertaking to be performed by the one promising payment in addition to the payment of money. In other words, a typical marker is enforceable because a patron is promising to pay the casino the amount of the marker at a specified. Nothing else is promised. Yet, even these rules are somewhat relaxed. For example, if a marker does not state a payee, then it is payable to the bearer, which in a casino case would be the casino itself. Also, if a marker does not specify a date of repayment, it is to be repaid upon demand. This deference towards casinos and gaming regulations make it extremely difficult to claim that a marker is not a negotiable instrument, and thus not enforceable.
Though casinos may extend high-end clientele large lines of credit, as in Ms. Strong’s case, one need not accept such a line. In fact, casinos allow individuals to personally limit his/her line of credit. However, whether you limit your credit or not, be aware that casino markers are enforceable in most cases.
If you or your organization are disputing the validity of a contract or implied agreement, please contact the Berniard Law Firm as issues such as these are complicated and best left to a practicing attorney.