Bankruptcy and Gambling Debts: Should You Bet Against The House?

bankruptcy and gambling debts

Bankruptcy and gambling debts became a more relevant topic in Ohio in November 2009 when Ohio voters approved a constitutional amendment allowing four casinos to be built and operated in the cities of Cincinnati, Cleveland, Columbus and Toledo.  Gambling debts by Ohioans have increased after the opening of these four casinos and the continued growth of additional casinos/racinos around the Miami Valley.  The topic of bankruptcy and gambling debts in Ohio is almost as common as the same topic in fabulous Las Vegas.

This Opens New Questions

This  leads to the question of whether gambling debts are dischargeable in bankruptcy.  Traditionally, gambling debts were not dischargeable; however, now the odds are in your favor and gambling debts are treated as general unsecured debts that are discharged.  The gambler’s luck has changed and he/she can gain a fresh start by filing for bankruptcy.  The bankruptcy court will view gambling debts much like they do other debts; courts will look to see if the debt was incurred with the intent to repay.  For compulsive gamblers with a gambling addiction, that question is debatable and may depend on how the money to gamble was obtained.

Many times people use credit cards to obtain a cash advance to help fund their gambling activities.  The debtor’s financial history will be analyzed to determine their intention to repay the credit card companies for these cash advances.  If there has been a good-faith effort on the part of the debtor to repay their debts related to gambling, the debt will be discharged.  But, if the gambler incurred the cash advance with no intention of paying back the advance, the court very likely will rule the debt non-dischargeable.  The gambler who incurs credit card related debt for their gaming is similar to the everyday consumer who overspends on their credit cards to finance their lifestyle.

When dealing with bankruptcy and gambling debts, your bankruptcy attorney will want to know everything related to your gambling history (i.e. how much have you gambled, how long have you been gambling, how much have you paid back, etc.).