Gambing and Credit Marker Policies

According to the Casino Chronicle (as footnoted by I. Nelson Rose), the twelve casinos in Atlantic City issued approximately $2.13 billion in credit markers in 1997. Of this extended credit, $543,174,000 remained outstanding after customers left the casinos. However, through the banking system, an additional $434,400,000 of outstanding debt is collected, leaving only 1.3 percent left in unpaid loans, which is generally lower than other unpaid consumer debt. 75 Still, the true debt¾that is, the amount the customers owed when they walked out of the casinos, still exceeded $108 million¾20 percent of the debt.
The credit marker policies in Nevada are similar to those of the casinos in Atlantic City. Credit markers are extended to patrons who pass through a background credit check. Nevada and Atlantic City casinos use the services of Central Credit, Inc. to determine a customer’s credit history. In addition, both jurisdictions use other national credit agencies. Practices of extending credit markers are reviewed by regulators and independent accountants hired by casinos. Inconsistencies in accounting are reported to the regulators, and Nevada casinos that use improper methods to collect on outstanding debts are subject to disciplinary action. Credit markers extended in Nevada casinos account for approximately ten percent of casino revenues. This figure does not include the third party credit extensions from ATM’s, credit cards, or other credit providers. 76
Providing estimates on the amount of credit extended for gambling purposes through credit cards remains problematic. Unlike casinos, credit card companies do not have to report the amounts borrowed for gambling purposes. Nor do casinos report information on credit card advances, according to the president of Central Credit. 77 Furthermore, casinos do not know how much money is received by customers directly from a credit card advance or ATM machine. Many ATM’s and debit cards have limits on the amount of money dispensed within a 24-hour period and on each withdrawal. According to International Gaming & Wagering Business, “Casinos have found a way around this dilemma by utilizing credit card cash advance services … [that] allow players to access as much cash as they want.” 78 As a result, some individuals are able to spend far more than they can afford and incur dangerously high debts.

In at least one tribal casino (Foxwoods), Commissioners were told that ATM machines offered cash advances without even the safeguard of a so-called “PIN” to prevent misuse of stolen or lost credit cards. It seems clear to us that additional consideration of the restriction and regulation of credit practices permitted in and around casinos must be given by policymakers reviewing gambling activities in and near their communities.

During the Commission meeting in Nevada, Thomas Coatis, the Director for Consumer Credit Counseling Services in Des Moines, Iowa, testified on the changes in credit availability and bankruptcy in Iowa with the rise in available gambling outlets. According to his testimony, at the beginning of the project in the late 1980’s, two to three percent of the people seeking counseling services attributed their credit problems to gambling. Today, approximately 15 percent of counseling goes to individuals with gambling attributed to the core of their credit concerns. The project has grown to six offices treating over 400 new cases each month. Furthermore, the agency offers a gambling hotline to provide assistance with individuals who feel they have a gambling problem. This hotline, 1-800-BETSOFF, averages almost 300 crisis calls each month.

Coates shared with the Commission a suicide note from one man in Iowa who had accrued $60,000 in credit card debt at a local casino: “I never thought of gambling prior to two or three years ago. I really can’t blame anyone but myself but I sincerely hope that restrictions are placed upon credit card cash availability at casinos. The money is too easy to access and goes in no time. My situation is now one of complete despair, isolation and constant anxiety.”

75 I. Nelson Rose, “The Role of Credit in the Third Wave of Legal Gambling,” Gambling and The Law (Anthony Cabot ed) (1999), pp. 3-7. 76 Robert Faiss and Thomas Coats, testimony to the National Gambling Impact Study Commission, Las Vegas, Nevada (November 11, 1998). 77 Rose, Gambling and the Law. 78 Parets, Op. Cit., p. S8.