Appeals Court Declares Marker Debts Enforceable

11 December 2001

A federal court of appeals recently ruled that gamblers in land-based casinos are obligated to pay debts from markers--IOUs from the player to the casino.

The judgment from the 9th U.S. Court of Appeals finding says that casino markers are more akin to checks than credit card loans. While failure to pay credit card loans can result in a bad credit rating, writing checks on an empty bank account can be a criminal offense.

I. Nelson Rose, a professor at Whittier Law School and an authority on gambling law, said the finding could have implications for Internet gambling if Nevada establishes regulations for its online gambling industry that allow for use of markers.

"It's possible that it could have an impact if Nevada legalizes--actually sets up operators--and they let people gamble using markers on the Internet," he said. "Then this decision would say if the player didn't have money they're actually committing a crime, if they didn't have the funds to make the marker good."

The suit involved a Dallas resident named Matthew Fleeger, who in 1998 amassed unpaid markers amounting to $184,000 in Nevada casinos. He sued, saying the markers are debt akin to credit bestowed by a credit card company.

In October, a three-judge panel of the 9th Circuit upheld Nevada's gambling marker law, which states that such markers are checks. On Nov. 26 the panel reasserted that opinion in a memorandum.

Ivan Kallick, the lawyer who represented the casinos involved in the case, told the Associated Press that gamblers should be able to tell when they sign a marker that the note is a check.

"Whether the gamblers want to take a second and understand what they are signing is an issue the casino cannot control," he said. "If you look at the marker and what you are signing, it is clear on its face."

Ira P. Rothken, a lawyer who in 1998 helped Cynthia Haines settle her way out of more than $70,000 in credit card debt from Internet gambling, said his opinion of the Fleeger decision is that, should an online gambling site offer virtual chips to players via credit card payments, such payments should be considered loans.

Credit card loans for gambling are unenforceable in California under the precedent set in 1993 by Metropolitan Creditors Service of Sacramento v. Soheil Sadri, Rothken said. In that case, a California appeals court found that gambling debts incurred in Nevada are not collectible in California because of the state's long-standing tradition against enforcing such debts.

Rose said the main issue in the Fleeger case was whether Nevada casino markers are checks and can therefore be subject to the state's laws about writing bad checks.

"From the players' point of view, it's a loan," Rose said. "From the casino's point of view, they wanted to say it's a check and therefore if it wasn't any good at the time you wrote it, you were violating the law and they could bring criminal law enforcement in."

The reason law enforcement can be brought in is that writing bad checks constitutes fraud. For Internet gamblers who pay via credit card, he said, the judgment would only have bearing on their online casino activities if it could be proven that the gambler never intended to pay for the credit card debt, thus committing fraud. But fraud is notoriously hard to prove, Rose said, because it is hard to prove people's intentions.

"With a check all you have to prove is that they didn't have money in the account," he said. "With a credit card, it's hard to prove fraud, because the person will say I did intend to pay it back."

Rose said the Fleeger case could also gain significance in the online gaming industry in cases where players send paper checks to online casinos, a process Rose calls slow and time consuming. If operators allowed those players to play before the checks cleared, and then there was no money in the users' accounts to pay for the checks, then the online casino would be in the same situation as a land-based casino with unpaid markers.

Anne Lindner can be reached at