Enforcing Gambling Debts Within and Without the State

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jun 29, 2022

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It can be challenging and frustrating to enforce an unpaid gambling debt. It is frustrating because suing someone won’t help if there are no assets, the gambling operation is closed, or the money is immune to collection efforts. It is challenging because of the following “L” factors:

  1. Location of the gambler;
  2. Location of the gambling activity (inside/outside the gambler’s state);
  3. Legality of the gambling activity in the state where the game is played.

The following three scenarios illustrate the “L” component: 

(1) Enforcing a legally-incurred gambling debt in a place where that type of gambling is legal and the gambler is domiciled: this scenario increases the odds that the judgment can be enforced. 

 (2) Enforcing a debt which was legal in the state in which it was incurred but the game played was illegal in the home state of the gambler: it boils down to which state’s law applies.

(3) Enforcing a gambling debt in a state where the played game was legal, but which was illegal where the debt was incurred: this also boils down to which state’s law applies. 

Two other situations where debt collection is uncertain

          (a) Enforcing a gambling debt arising on a foreign website. You may not have legal recourse–and even if in theory you do, actually enforcing a judgment in a foreign country means hiring a local lawyer and playing by that nation’s rules, which may or may not be helpful.

          (b) Enforcing a gambling debt on Indian tribal lands. This is almost the same thing as enforcing the debt in a foreign nation, since Indian tribes are almost like separate countries in their own right. You will be suing in Tribal court, before a tribal judge, under tribal laws and procedures. 

What are the common gambling debts? 

The three most common types of gambling debts are: 

  • A casino extends credit to a customer, typically a “high roller,” who ends up losing a chunk of cash and then refuses to pay his or her “markers” (a “marker” is the typical evidence of a gambling debt at a casino and is considered a negotiable instrument); 
  • A gambler wins big from a casino or online gambling site which refuses to pay him or her, usually claiming either that the gambler cheated or that there was some error or mistake made in the game the gambler won (e.g., a slot machine malfunction); 
  • There is a bet between private citizens (such as a bet on whose team will win) and the loser welches on the bet.

Gambling debts are contracts, and are enforced like contracts–which means only legal debts are enforced by a court 

The reason that gambling debts, wagers, or bets may be enforced is that they are considered contracts. There is a mutual agreement between two parties that in exchange for one party laying or placing down a bet, the other party will pay them winnings if the bet or wager is successful. With a mutual agreement and both sides providing things or promises of value (“consideration”), there is a contract–and contracts are, as a general matter, enforced by the courts. Courts enforce all kinds of contractual debts: if you borrow money and fail to repay it, the lender can sue; if you have work done on your house but don’t pay the contractor, the contractor can sue; if your boss doesn’t pay you for working, you can sue your employer; etc. 

Gambling debts are in theory no different. 

However, there is a major limitation on the ability to enforce contracts in court: the courts will not enforce contracts for illegal activities. This is the reason the court refuses to let a drug dealer sue a customer who promised to pay but didn’t, or a crime boss sue a hitman who took his money but didn’t complete the contract. 

Gambling is illegal in the United States except to the extent specifically made legal or authorized by a state. That means that the “default,” so to speak, is that a gambling debt is illegal unless the type of bet or wager it comes from was made legal by the state. The legalization of gambling also generally requires (except for social gambling, where legal) that the gambling operator or provider be licensed or authorized to take bets or wagers. So to have a legal gambling debt, both the type of gambling and who is providing the gambling must be legal in a state. 

Enforcing gambling debts in a location where the debt is legal 

Enforcing a gambling debt arising from legal gambling, in a place where that type of gambling is legal, is no problem–or, at least no more of a problem than enforcing any other debt or contract. There are two scenarios where a legal gambling debt will be enforced in a place where that type of gambling is legal: 

(1) Enforcing a gambling debt in the state where it was legally incurred. In this instance, the law leans in your favor as state’s courts will always enforce debts or bets arising from that state’s own legal gambling. For example, Nevada will enforce debts owed either to or by its own casinos; states with horse racing will enforce debts or wagers made at race tracks in that state. 

(2) Enforcing a debt in another state where that type of gambling is legal. New Jersey and Pennsylvania both have legal casino gambling. If a PA resident goes to Atlantic City, NJ, gambles on credit, then skips back across the state line to PA, the casino can sue him in PA, in the county where he lives and owns real estate (suing where a debtor has assets makes collections easier). Since casino gambling is legal in PA, PA courts will enforce casino debts or bets made in other places where they are legal. PA courts will see nothing illegal about a casino gambling debt. 

Enforcing a debt which was legal in the state in which it was incurred in a state where it is illegal–a two-step process 

Utah has no legal gambling (see the article “States That Allow Gambling”). Let’s say for example, that a resident of Salt Lake City goes to Nevada for a long weekend, runs up a large gambling debt, then flies back to Utah before paying. She’s now in a place where gambling is illegal– is she safe? Does she never have to pay? The answer is “No”–though collections will be more time consuming and difficult for the NV casino than against a NV resident. 

While courts will not enforce illegal contracts, they will enforce the “judgments” (court orders to pay money) of sister states. The U.S. Constitution’s “Full Faith and Credit” clause requires (among other things) the courts of State A to enforce the lawful judgments of State B’s courts. This provides an avenue for enforcing a gambling debt in a state where that type of gambling is not legal. 

In our hypothetical example, a Utah court will not directly enforce the NV gambling debt. If the casino tries to sue in Utah, its case will be kicked out. But a Utah court will enforce a judgment from a Nevada court, so the casino can file another lawsuit against the gambler in Nevada, get a judgment in its favor, and if the gambler still doesn’t pay up, take that judgment to Utah, which will enforce it (e.g., put a lien on Utah property; garnish wages earned in Utah; levy on the gambler’s bank account; and so forth). Incidentally, the judgment will appear on our Utah’s gambler’s credit report. 

Enforcing a gambling debt in a state where it is lawful, but was illegal where it was incurred–also a two-step process 

The situation: A person gambled online with a legitimate, legal provider–one authorized by another state–but did so in a location where online gambling is illegal. For example, you could have someone in NY (where online gambling is not currently legal) just across the NJ border, who manages to log into and play on a NJ online gambling website. While online gambling providers have surprisingly sophisticated “geofencing” techniques to identify the location of a proposed online wager and only take ones from locations where online betting is legal, those techniques are not perfect. Whether the debt arose from the gambler not paying the online casino — which is actually unlikely: reputable online gambling sites require that the money be deposited and verified in advance– or the online casino refusing to pay the gambler, how could that gambling debt be enforced? 

It’s the same principal as the prior hypothetical Utah situation: sue on the debt where the debt is legal, then enforce the debt elsewhere. Online gambling in our example may have been illegal in NY, but it is legal in NJ and the bet was placed with a licensed NJ online gambling provider. A New Jersey court will enforce that debt, then a New York court will enforce the New Jersey judgment against a NY resident. 

Debts involving foreign or overseas persons or entities–gamble at your own risk 

U.S. states –by law–are required to enforce each other’s judgments. Foreign countries, however, are not required to enforce each other’s judgments. Many will–but there are also many countries that will not enforce U.S. judgments against their citizens. 

And there are foreign judgments which the U.S. will not enforce, if our courts believe that the foreign jurisdiction’s courts failed to provide the basic due process or procedural protections which we believe are required of all legitimate court proceedings. So if you gamble on a foreign website and they refuse to pay you, you may be out of luck legally. Enforcing a judgment in a foreign country means hiring a local lawyer and playing by that nation’s rules, which may or may not be helpful. 

Plus, if the overseas gambling provider was not authorized or licensed in your state, or was providing a type of gambling not allowed, you can’t sue in your state’s courts. Illegal contracts are not enforced. You’d have to sue in the foreign country in the first place–if you can (not all other nations may open their courts to foreigners). And even if you can sue, expect the process to be expensive (you’ll have to travel to that country, for example, in addition to hiring a local attorney). 

Debts incurred on an Indian reservation (e.g., Indian casinos) 

Federally recognized Indian tribes are “semi-sovereign domestic nations,” which is a long-winded way of saying they almost are like their own (mostly) independent countries, embedded within the United States. Therefore, suing to enforce a gambling debt incurred at an Indian casino (such as if the casino won’t pay you) is essentially like suing in a foreign country. You have to bring the lawsuit in a tribal court, under tribal laws and procedures. Or alternately, you could potentially sue in a state or federal court, then ask the tribal court to enforce the judgment, which it may or may not do. 

Tribal casinos have a good track record of being fair and responsible citizens and honoring their debts. If you get into a dispute, it doesn’t matter that they may be only a few miles from your home–you are essentially dealing with a foreign country.

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