Being A Compulsive Gambler Is No Defense To Breaching Line Of Credit With Casino

In Harrah’s Atlantic City Operating Co. v. Dangelico, plaintiff, a casino, lent defendant, a “casino gambler,” $160,000 against a $200,000 line of credit. The loan was secured by checks drawn on defendant’s bank account, coupled with defendant’s representation that he had sufficient funds in that account to cover the loan. Want to bet how this story unfolds?

Defendant defaulted on the loan, plaintiff deposited the checks, defendant’s bank dishonored the checks for insufficient funds, and plaintiff sued. The trial court granted plaintiff summary judgment and defendant appealed.

On appeal, defendant claimed that plaintiff never should have extended him credit because he is a “compulsive gambler, he has defaulted on ‘casino markers’ with other casinos, and his ‘name was placed in a central credit registry not to extend to him because of his affliction.'” The Appellate Division rejected each of these arguments.

First, although defendant claimed that his name appeared on a “central registry” of people to whom casinos should not extend credit, he did not identify the “registry” or prove that he was on it. Defendant could have asked the New Jersey Division of Gaming Enforcement to put him on a list of people ineligible for casino credit, or he could have put himself on a list of people self-excluded from “gaming activities,” but he did neither.

Second, there was no evidence that defendant had defaulted on casino markers at other casinos. Defendant also did not argue that he had bounced checks at other New Jersey casinos around the same time that he applied for credit with plaintiff. Under New Jersey law, an individual who has a check returned to any casino “shall have his credit privileges suspended at all New Jersey [casinos] until . . . the returned check has been paid in full or the reason for the derogatory information has been satisfactorily explained.” But defendant did not establish that “any checks remained unpaid when plaintiff extended him credit.”

Third, defendant did not prove that he was a compulsive gambler. Even if he had, however, “proof of that condition alone” did not “demonstrate[] incapacity to enter into an agreement to borrow funds for gambling.” As the Appellate Division held: “Compulsiveness does not belie understanding the nature and effect of one’s actions.” Therefore, even if he was a compulsive gambler, defendant still had to pay back the loan he received from plaintiff.

Fourth, even if defendant proved he was a compulsive gambler and that plaintiff knew he was, plaintiff still would not have had a duty to withhold credit from him. The Appellate Division held that casinos do not generally have a duty to withhold credit from compulsive gamblers, particularly those, like defendant, who “assure[] the casino that [they have] ample funds to support [their] gambling and [do] not request to suspend [their] casino privileges.”

The Appellate Division recognized the “financial ruin that may befall compulsive gamblers and their dependents,” but it held that the relationship between the parties was not one that imposed a duty of care on plaintiff. The court observed, perhaps somewhat pointedly: “[Plaintiff] is in the business of operating casino gambling; defendant is its customer. The relationship is built on enabling gambling, not withholding it.” The court also noted that, even if it was inclined to impose a duty of care on casinos in theory, it was “unclear” how a casino would exercise that duty of care in practice. For example, how would a casino “distinguish compulsive gamblers from recreational gamblers”? And how would it “set reasonable limits on compulsive gamblers”? These questions could not be answered, therefore the Appellate Division chose to side with other jurisdictions that already “declined to impose a duty on casinos to restrict the activities of compulsive gamblers.”

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