#59 Copyright 2000, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I. Nelson Rose, Whittier Law School, Costa Mesa, CA.

Licensed casinos have fought for years for the right to collect their gaming debts in courts of law.

A recent decision from the Court of Appeals in Louisiana and a lawsuit filed in federal court in California have raised the stakes.

The question now is whether players who sign casino markers when their bank accounts are empty are violating state criminal “Bad Check” laws.

A lot more than money is riding on the answer. In the Louisiana case, the player received a suspended sentence of prison with two years at hard labor.

The federal suit is a class action complaint filed against the Clark County District Attorney and the Las Vegas Hilton. It accuses the defendants of “filing false criminal complaints… and causing false arrests.”

The cases raise questions never faced by any other legitimate businesses:

1) Is a marker a check? and,

2) Is it a crime to write a bad check when the check is legally unenforceable?

Not paying a debt may hurt a person’s credit rating and subject him to an unpleasant civil law suit, but in general, it is not a crime. There are no debtors’ prisons. Even buying something on credit and being unable later to pay the bill is not illegal, so long as the buyer thought he would have the money when the bill came due.

But, buying something on credit with the intention of not paying is a crime, specifically, theft by false pretenses. Writing a bum check, knowing it will bounce, can be seen as a form of fraud and larceny.

Checks are an important part of modern society: The economy would break down if checks could not be treated like money. Legislatures have enacted special laws against forging or “uttering” a check and also against people who knowingly write bad checks.

Is a marker a check? The answer depends upon whom and when you ask.

From the players’ point of view, a marker is not a check, but merely a written record of a loan. The casino loans the player money, usually in the form of chips, with which to gamble. If the player wins, the loan is paid off on the spot and the marker is torn up.

From the casinos’ point of view, a marker is a check because it looks and acts like a check. If the player loses, the casino can deposit the marker, like any other check, and collect money from the player’s bank account.

Nevada law is not as clear as it could be on the subject. The Nevada law is the same as the rest of the English-speaking world: In general, gaming debts “are void and unenforceable and do not give rise to any administrative or civil cause of action.”

There are two important exceptions: Players who think they had winning bets that should have been paid can complain to the Gaming Control Board. Casinos stuck with bad markers can file lawsuits in courts.

Unfortunately, the Legislature never called markers “checks.” In fact, it did not even call them “markers.” They are “credit instruments,” as in the following law from the Gaming Control Act: “A credit instrument accepted on or after June 1, 1983, and the debt that the credit instrument represents are valid and may be enforced by legal process.”

The Act defines “credit instrument” as “a writing which evidences a gaming debt owed to a person who holds a nonrestricted [casino] license at the time the debt is created, and includes any writing taken in consolidation, redemption or payment of a previous credit instrument.”

Years earlier, as part of its Uniform Commercial Code, the Nevada Legislature defined “check” as “a draft, other than a documentary draft, payable on demand and drawn on a bank… An instrument may be a check even though it is described on its face by another term, such as ‘money order.'”

What was the Legislature trying to do? Did it intend for “credit instruments” to be merely documentary representations of gambling debts, like promissory notes? Or, did it want markers to be treated like checks for all purposes, including falling under the criminal “Bad Check” laws?”

Nevada has at least made it clear that checks written to casinos may be collected in civil suits. In other jurisdictions gambling debts are unenforceable. This has led to a unique defense in bad check cases.

In 1996, the U.S. Court of Appeals for the Armed Forces overturned a court-martial conviction for “making and uttering worthless checks by dishonorably failing to maintain sufficient funds.” No one doubted the airman wrote bum checks at the Ramstein (Germany) Air Base Enlisted Club. But the checks were given in exchange for rolls of quarters, which the airman quickly lost in the club’s slot machines.

The Court held the checks were legally unenforceable. The charge of dishonorable conduct by writing bum checks had to be dismissed, “because the checks were written in order to facilitate gambling.”

In November, 1999, the Louisiana Court of Appeals held exactly the opposite. The defendant was convicted of issuing worthless checks to a licensed riverboat casino. This Court held “What we have here is a legitimate business providing a check cashing service to its customers.”

The same Court ruled in 1988 that an agreement to pool money to gamble in Las Vegas was unenforceable because Louisiana public policy considered gaming “contra bonos mores” – against good morals.

In the next decade, expect to see more courts holding gaming is no longer “contra bonos mores” and is now “a legitimate business.”

[Professor Rose can be reached at his Web Site: www.GamblingAndTheLaw.com]

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