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CALIFORNIA CORPORATE & SECURITIES LAW

Even In Nevada, “Get It In Writing” May Not Be Far From The Mark

A recent ruling by U.S. District Court Magistrate George Foley, Jr. serves as a reminder the “get it in writing” tends to be good advice.  The case involves a casino’s attempt to enforce a $3 million gaming debt incurred by one of its patrons.  This patron executed a credit agreement but the casino allowed him to gamble without executing any markers for the debt.  The casino explained the process as follows:

Although a credit instrument (also referred to as a “marker”) is generally signed contemporaneously when funds are advanced on credit to a casino patron, Nevada law and the regulations of the Nevada Gaming Commission promulgated thereunder also permit and authorize a licensee to advance funds on credit to a patron through the initial use of “lammers” a customary practice when a licensee allows a patron to “play on the rim” (also referred to as “rim play”). Rim play is generally a courtesy extended only to high level, ultra-VIP casino patrons.

During rim play, a licensee uses “lammers” or “rim cards” to track advances made to a patron during play, while the patron is in action, thereby allowing the patron to game without interrupting play to obtain executed markers.

Desert Palace, Inc. v. Michael, 2017 U.S. Dist. LEXIS 19202 (D. Nev. Feb. 9, 2017) (quoting the casino’s complaint).  In this case, the patron allegedly exhausted his entire credit limit and then avoided the casino’s employees who attempted to have him execute a marker.  Allegedly, he has since returned to his home in England and refused to execute a marker.  Magistrate Judge Foley provided the following observations about the enforceability of gaming debts under Nevada law:

Although Caesars alleges that a gambling debt incurred during “rim play,” such as occurred in this case, is legally enforceable under Nevada law, it has not cited any statutory or regulatory provision that expressly states that a gambling debt can be enforced against a casino patron in the absence of an executed credit instrument or marker.1 Nor does there appear to be any Nevada state or federal case so holding. The closest case cited by Caesars is Morales v. Aria Resorts & Casino, LLC, in which the patron incurred a $500,000 gambling debt and executed several casino markers equal to that debt. 995 F.Supp.2d 1176 (D.Nev. 2014). The court held that the casino could bring a civil action against the patron to recover the amount of the debt without presenting the markers to the designated banks for payment. Id. at 1181. The court stated:

[M]arkers are merely instruments for collecting on a gambling debt, as distinct from the debt itself, and redeeming a marker is not the only means by which a gaming establishment may seek to collect on an outstanding debt. See N.R.S. § 463.368 (enforceability of markers under Nevada law is not dependent on presentation). Accordingly, Morales “defense” related to presentment does not raise a triable issue of fact. Nor does it preclude summary judgment in favor of Aria.

Id.

Morales does not hold, however, that a gambling debt is enforceable in the absence of any executed credit instrument.

Although Nevada has long since moved past the view that wagering and gaming contracts are inconsistent with the interests of the community and at variance with the laws of morality, West Indies, Inc. v. First Nat. Bank of Nevada, 67 Nev. 13, 214 P.2d 144, 147 (1950), it has not enacted a law making gambling debts enforceable in the absence of an executed credit instrument. Fairness may dictate that Defendant should pay his gambling debt to Caesars. There appears to be substantial doubt, however, whether that debt is legally enforceable.

(footnote omitted).  It should be noted that Magistrate Judge Foley made these observations in ruling on the parties’ discovery motions.  It is not a decision on the merits.  In fact, both parties have pending motions for summary judgment on the enforceability of the defendant’s gaming debt.  Thus, we will have to await the court’s final decision on that fundamental issue.

Reminder to readers: This blog discusses legal, legislative and regulatory issues.  It is not legal advice and I am not your lawyer.  Also, this blog does not update posts for subsequent decisions, legislation and rule changes.

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