CASINO WATCH
Bankruptcy facts:

  • Costs of new pathological gamblers in 3 years were $9 billion

  • By 2000, bankruptcy costs due to gambling - $220 per household

  • Gambling could be the fastest-growing cause bankruptcy

  • Counties with gambling had an 18% higher bankruptcy rate

  • 21% of Illinois Gamblers Anonymous members had filed bankruptcy

  • Rates are higher in counties with gambling facilities

  • Casino gambling being blamed for the rising tide of bankruptcy

  • Gamblers can bankrupt the family

  • Gambling financially and spiritually bankrupts

  • NV bankruptcy rates are climbing

  • NV man filed $4 million bankruptcy, lost 10 homes and 2 businesses

  • NV - Average bankruptcy debt loss $9,556

  • LA bankruptcy filings 14.4 percent in 2001

  • MS in 2001 increased nearly 21 percent over the previous year

  • TN high rates in nation, attributed to Tunica, MS casinos

  • IL University - gambling accessibility brings more bankruptcies

  • IL - Increase in bankruptcies coincides with boats' arrival

  • IA - 25% filing record high bankruptcies are gamblers

  • IA bankruptcies jumped 34% in 2001

  • NM bankruptcies up 22% in 2001

  • NY record level bankruptcies attributed to gambling

CASINO WATCH Excerpts from

Bankruptcy Developments Journal
Volume 19, No. 1

John Warren Kindt and John K. Palchak

In the late 1990s, SMR Research Corporation was commissioned by the banking industry to investigate the trend toward financial insolvency in America. SMR's report found that legalized gambling is not only the fastest growing cause, but also the third leading cause of individual bankruptcies in the United States.

Testimony before the National Gambling Impact Study Commission indicated that in 1997, the bankruptcy costs due to legalized gambling translated into a cost of $40 per U.S. household. By the year 2000, these costs were expected to be $220 per U.S. household.

Extrapolating from bankruptcy reports and the Harvard Addictions Meta-analysis, 1.5 million people (0.5 percent of the U.S. population) became new pathological gamblers in the years 1994 to 1997, creating social costs of $40 billion per year. The bankruptcy costs of 1.5 million new pathological gamblers in those three years alone were $9 billion resulting from 315,000 new bankruptcy filings. On an annual basis, these bankruptcy costs due to legalized gambling are at least $3 billion with 105,000 new bankruptcy filling. These numbers are projected to increase by fifty percent as more of the new pathological gamblers finally financially "bottom out."

"[S]tudies have suggested, fairly consistently, that more than 20% of compulsive [i.e., pathological and problem] gamblers have filed for bankruptcy as a result of their gambling losses." Worse, pathological and problem gamblers used multiple credit cards to finance their gambling. .

Other states such as Kansas, Michigan, Minnesota, Missouri, and South Dakota also had increases in both unsecured credit card debt, high debt-to-income ratios among consumers, and increase bankruptcies subsequent to the introduction of legalized gambling.

Finally, the close link between gambling and bankruptcy was illustrated in a pithy observation from a well-known report on the subject, which noted that in Nevada, "the closer you come to Las Vegas and Reno, the higher the Bankruptcy rate."

It has been demonstrated that the introduction of legalized gambling in a certain geographic area leads to an increase in the bankruptcy rate, and a general increase in social costs to the community affected.

Furthermore, research suggests that the spread of gambling may be accompanied by an increase in families' financial failure: SMR Research Corporation has found that bankruptcy rates are significantly higher than the national average in counties with gambling facilities.

However, Professor Grinols reported that the annual benefits per person were dramatically exceeded by the socio-economic costs that accompany legalized casino gambling.

Non-discharge of their gambling debts would keep pathological gamblers (and often innocent family members) as debtors forever - a type of involuntary servitude to casino owners - which can and has resulted in even more deleterious social consequences such as crime and suicide.


Bankruptcy Excerpts

21% of Illinois Gamblers Anonymous members had filed bankruptcy*
Henry R. Lesieur, Ph.D., Christopher W. Anderson, MS, NCGC, LMFT.

MO - Bankruptcies citing gambling debts as a contributing factor have jumped since the riverboats entered the Kansas City market in mid-1994. But bankruptcy lawyers interviewed for this story reported similar increases in gambling-related bankruptcies throughout the metropolitan area. While bankruptcy filings at the Kansas City courthouse increased each year, echoing the trend nationwide, bankruptcies citing gambling as a contributing factor increased at a much faster rate. By 1998, 194 of the 5,618 persons who filed -- 3.5 percent -- said gambling was a contributing factor in their bankruptcies. They listed unsecured debts of more than $7.5 million, much of it to credit card companies. Bankruptcy lawyers and gambling counselors say actual figures might be higher because people are reluctant to admit they have a gambling problem.
It's not only debt-ridden gamblers who are the losers. Experts say consumers pay higher costs because of bankruptcies -- regardless of cause -- in the form of higher interest rates and fees on credit cards. Other costs can range from more expensive credit insurance to footing the bill when problem gamblers enter the court system. The Treasury report, however, concluded that frequent, high-risk gamblers had about a 6 percent greater likelihood of filing bankruptcy.

MO - Janite Lee, who won $18 million in the lottery in 1993, now lives in a "little room" in a friend's home in Edwardsville. Bankruptcy filings say that Lee ran up big gambling losses - $375,000 lost at casinos in the last year alone. "I know a lot of the money went into gambling," said Lee's attorney, Rochelle Stanton.
"Court begins figuring out bankruptcy of lottery winner"/By Jim Gallagher/The St. Louis Post-Dispatch/9.11.01

NV - According to U.S. Bankruptcy Court statistics, between 1990 and 2000 more than 54,000 people -- enough to fill Boulder City five times over -- filed for Chapter 7 personal bankruptcy.
"Bankruptcy rate climbing locally, statistics show"/By CHRIS DI EDOARDO/Las Vegas Review-Journal/9.4.01

NEW ORLEANS (AP) -- Bankruptcy filings in Louisiana rose 14.4 percent in 2001 as the number of consumers and businesses seeking relief from creditors hit an all-time record nationwide. The change, which would impose stricter limits on the ability to discharge consumer debt, is awaiting final congressional approval. Consumer credit counselors in Louisiana say they have noticed a rising number of those with debt trouble citing problems with gambling.
"Bankruptcy filings in Louisiana increase more than 14 percent"/By ALAN SAYRE/NOLA.COM/3.2.02

WASHINGTON - Gambling could be the fastest-growing cause of the record rates of bankruptcy in the United States, a consulting group says. The finding came as a new federal commission began hearings Wednesday on the gambling industry. SMR Research Corp. of Hackettstown, N.J., finds a clear connection between the spread of legalized gambling in 298 counties across the United States and the rise of bankruptcy filings in those areas.
"Panel opens hearings on gambling"/By LANCE GAY SCRIPPS HOWARD STAFF WRITER/The Sun Herald/8.22.97

BILOXI - The number of bankruptcies on the Coast in 2001 increased nearly 21 percent over the previous year, according to court records in the Biloxi division. It was the third year in a row that the number of bankruptcies has gone up.
"Biloxi bankruptcies up 21%"/By DAVID TORTORANO/THE SUN HERALD/1.14.02

Many debtors declined to be interviewed or could not be reached for comment. But here are some examples from public court files: A Blue Springs couple who won $6,000 gambling at the riverboats also lost $30,000, most of it in credit card cash advances that helped push their credit card debt to more than $37,000 in 1998.
A Raytown woman earned $22,600 a year but lost $40,000 gambling in a12-month period. She owed nearly $75,000 to credit card companies and borrowed an additional $15,000 from her mother. A Gladstone man lost $80,000 gambling over a two-year period and owed more than $80,000 to credit card companies. A Warrensburg, Mo., man tapped into his 401(k) to offset his gambling losses of $25,000. Dean Gerstein is a Washington-based researcher with the National Opinion Research Center of the University of Chicago..."But you are going to see more gambling-related bankruptcies when gambling becomes more accessible," Gerstein said. "There is a high prevalence of bankruptcy among problem gamblers."
"Increase in bankruptcies coincides with boats' arrival"/By JOYCE SMITH/The Kansas City Star/1.8.00

MS - A federal judge in Memphis has ruled that a Bartlett woman who ran up more than $8,200 in credit card debt over two days in Tunica gambling casinos then filed for bankruptcy did not defraud the creditor. The Crutcher case is important locally because of Shelby County's historically high rate of bankruptcies and the sense that Tunica gambling is contributing to it. Already last year, consultants to the credit card industry were pointing to the high - and increasing - level of bankruptcy near gambling markets. SMR vice president George R. Yacik noted that, in the 12 months ending in March, Shelby County still ranked No. 1 in the country in the rate of bankruptcy filings, at 18.5 per thousand.
"Unusual ruling sides with gambler Court: Addiction led her into bankruptcy"/By Bartholomew Sullivan/The Commercial Appeal 10.3.98

NV - Las Vegas bankruptcy attorneys and Nevada bankers are at odds over why bankruptcies are skyrocketing and what should be done about the problem. Not so, says Nevada Bankers Association Executive Director Ted Wehking. "In a strong economy bankruptcies should be going down. We're seeing the opposite.
"Bankers, attorneys disagree over why Nevada bankruptcies are skyrocketing"/By Brian Seals /Las Vegas Sun/3.9.98

Part of Nadler's attention to the gaming industry apparently stems from findings of the National Bankruptcy Review Commission. The commission found that gaming may be contributing to the swell of bankruptcy filings. Nevada recorded 13,427 filings in 1997, a 27.5 percent increase over the previous year. That amounts to one bankruptcy filing for every 46 citizens, compared to a national average of one filing for every 70 citizens.
"Bill limits collection of gambling debts"/By Brian Seals/ Las Vegas SUN/3.9.98
The 298 U.S. counties which have legalized gambling within their borders had a 1996 bankruptcy filing rate 18% higher than the filings in counties with no gambling -- and the bankruptcy rate was 35% higher than the average in counties with five or more gambling establishments. Atlantic County, the only location in New Jersey where casino gambling is legal, had a 71% higher bankruptcy rate than the state average...and Nevada, the only state to have legalized casino/sports betting, had a 50% higher bancruptcy rate than the rest of the nation. And Shelby County, Tenn., where residents have easy access to 30 gaming halls and riverboat casinos in nearby Mississippi locations, has the highest personal bankruptcy rate in the nation -- four times the national average -- according to the report. (SMR) "There are 2.5 million compulsive gamblers in the United States -- about 3% of the adult population which gambles -- and more than 20% of compulsive gamblers said they had filed for bankruptcy as a result of their gambling losses."
AOL NEWS/6.26.97

MO - She gambled away an estimated $10,000 to $20,000 between 1996 and 1998. In late 1998, faced with credit card debts of more than $45,000, she declared personal bankruptcy.
"Increase in bankruptcies coincides with boats' arrival"/By JOYCE SMITH/The Kansas City Star/1.8.00

Economist Michelle Clark Neely, writing in the fall quarterly of the St. Louis Federal Reserve Bank, says one reason for the rise is that the social stigma attached to bankruptcy has diminished. Also responsible, she says, are the rising divorce rate and the spread of legalized gambling. She noted that Tennessee, one of the eight states in the St. Louis Fed's district, has the highest personal bankruptcy rate in the country. It also has the second highest divorce rate, trailing only Nevada. And speaking of Nevada, Ms. Neely says, "Compulsive gambling is increasingly being blamed for the rising tide of bankruptcy, especially in the states that have casinos." Bankers are worried by the forces of deflation; protectionism is emerging; personal debts and bankruptcies are climbing and gambling and divorce are creating personal economic problems, not to mention social disorders.
"At Economic Dysfunction"/By GEORGE MELLOAN/Wall Street Journal/9.10.98

New Mexico bankruptcy filings have been rising steadily for years now, and there's no indication they're about to slow down anytime soon. "They were up 23 percent in 2001 and 7 percent last year," said Norman Meyer, clerk of court for the U.S. Bankruptcy Court for the District of New Mexico in Albuquerque. Santa Fe bankruptcy attorney Jim Nye agreed. "When casino gambling first started, there were more clients with significant gambling losses," he said. "That seems to have dropped off over the past year." Still, based on what he hears from clients, "I think gambling is detrimental to people in New Mexico," Nye said.
"Bankruptcy Remains on the Rise"/By BOB QUICK/The Santa Fe New Mexican/3.16.03

IA - . AMES (AP) - More than a quarter of Iowans filing for bankruptcy consider themselves gamblers, according to a study by an Iowa State University researcher. "Yes, there is a connection (between gambling and bankruptcy),' said Tahira Hira, the study's author and a human development and family studies professor at ISU. "If we continue the way things are, with availability and access increasing, that connection will be stronger."
"ISU study links gambling, bankruptcy"/8.5.98

IA - Despite Iowa's booming economy, bankruptcy filings have reached another record high this year. Experts attribute the continuing surge to credit card debt, gambling and poor consumer education. "A number of my clients have over $100,000 in credit cards without any regard for their ability to repay," said attorney Joe Peiffer of Cedar Rapids, who specializes in bankruptcy cases. "I have a number of clients in excess of $40,000 in gambling losses in the last year."
"1997 Iowa bankruptcy filings hit record high"/By Dick Hogan/The Gazette Company/12.11.97

Bankruptcy filings in Iowa jumped almost 34 percent last year, a pace the state hasn't seen since the farm crisis of the '80s. Attorneys, professors, trustees and other experts suggest a variety of reasons for the spike in bankruptcies: a faltering economy, an expansion of gambling...
"Bankruptcy numbers mushroom in Iowa"/
By MARK SIEBERT/DesMoinesRegister/3.24.02


Raised in Las Vegas, problem gambler convicted of stealing millions. Over a quarter century, he has been convicted of stealing $6.6 million and sentenced to five years' probation. He has *blown $2.2 million on a baccarat game. He has been forced to file a $4 million bankruptcy petition, lost 10 homes and folded two businesses.
"Addict recounts hardships"/By ROD SMITH /Las Vegas Review-Journal/2.13.03

Bankruptcy - Metropolitan areas with casino and other types of gambling Metropolitan area average Atlantic City, N.J. - pop. 336,176 - 930.7 • New Orleans - pop. 1,320,311 - 444.2 • Detroit - pop. 4,435,676 - 459.3 • Reno, Nev. - pop. 325,650 - 666.6. Bankruptcy data for year ending September 1998, compiled from U.S. District Courts by The Dismal Scientist, Westchester, PA.
"Gambling's Impact"/ www.msnbc.com/September 1998

New Lenox Trustee James Skiniotes lost nearly $60,000 at two Joliet casinos in 1999 — the same year he allegedly used his position as a loan officer to swindle a local couple out of money they needed to buy a house, according to testimony Wednesday. But in a bankruptcy filing earlier this year, Skiniotes cited "gambling losses" between March 2001 and 2002. The dollar amount lost on gambling was listed as "unknown."
"$60,000 lost at casinos: testimony Includes cash Skiniotes allegedly stole"/By Chris Hack/www.dailysouthtown/12.5.02

EVANSVILLE, Ind., Oct. 22 — David N. Williams burned through his life savings at the Casino Aztar, a glitzy new riverboat docked on the banks of the Ohio River here. Ten months later, in early 1999, no one at the casino noticed when Mr. Williams slipped in and resumed using his Fun Card. He ended up mortgaging his house to pay off $45,000 in credit-card debt and filing for personal bankruptcy.
"Bankrupt gambler sues casino"/By Milo Geyelin/THE WALL STREET JOURNAL/10.22.02

NEW ORLEANS (AP) -- Bankruptcy filings in Louisiana rose 14.4 percent in 2001 as the number of consumers and businesses seeking relief from creditorshit an all-time record nationwide. In 2000, SMR found that counties with casino gambling had a per capitabankruptcy filing rate 13.6 percent higher than counties without casinos.Counties with at least five casinos had a per-capita filing rate 29 percent
higher than non-casino counties, Feldstein said.
"Bankruptcy filings in Louisiana increase more than 14 percent"/By ALAN SAYRE The Associated Press/NOLA.com/3.2.02

FRANKFORT, Ky. -- Legalizing video gambling machines would bring more revenue to Kentucky but also could increase gambling addiction and bankruptcies, according to the former director (Timothy Kelly) of the National Gambling Impact Study Commission.
"Lawmakers hear of slots' risks, benefits"/By Kirsten Haukebo/The Courier-Journal/3.5.02

Beyond the Limits of Recreation: Social Costs of Gambling in Southern Nevada -Estimated Average Social Cost per Problem Gambler by Item - Bankruptcy Debt Loss $9,556.
By R. Keith Schwer,William N. Thompson, Daryl Nakamuro/2.18.03

AK - In a case that carries implications for the nation's burgeoning gambling industry, a bankruptcy judge in Little Rock has ruled that a Mississippi casino must surrender $189,000 lost there by an embezzling lawyer.
"Bankruptcy by loser kills casino's win"/JOE STUMPE/ ARKANSAS DEMOCRAT-GAZETTE/2.26.98

Canada - An Edmonton nurse who is a single mom and has a serious gambling problem got no sympathy when she went to court seeking a discharge from her second bankruptcy.
"Judge tears strip off bankrupt gamber"/By Tony Blais/The Sun/1.8.02

Canada - By the time his boss confronted him in December 1999, Brochu had sapped $100,000 of his own money and stolen $50,000 from his professional association. He was the treasurer. Real estate broker Constantin Digalakis is suing the Ontario Lottery and Gaming Corp. for $7 million. He went bankrupt after losing more than $250,000, in part he alleges, because the province's self-exclusion program wasn't enforced.
"Lawsuits will showcase social costs of Canada's gambling bonanza"/ www.canoe/2.23.03

During the same time period, there have been announcements of increased provincial investments in gambling treatment, but little sign of the results, says Alice Marchand, director of the problem gambling program. "The gambler who has reached the stage of compulsivity and obsession, a total obsession, has generally reached bankruptcy or bankrupted the family. They're financially and spiritually bankrupt and so the moral ethic is questionable. That's where we start, with education," Marchand says.
"Gambling addiction hard to overcome"/By Randy Burton/The StarPhoenix/11.15.02

Connellan, a loans officer with the National Australia Bank, cooked the books on his day job to feed his after-hours habit, a pokies addiction. Using breathtakingly simple scams, he extracted more than $1 million from his employer in less than two years. In 1996 he went into voluntary bankruptcy with debts of $40,000.
"Gambling: the factor that almost destroyed a life"/By Karen Kissane/ theage.com/8.8.02

"People are more likely to admit they're a heroin addict than say they are a compulsive gambler," Farrell said. They don't tell their lawyers, either, said Richard Gertler, a bankruptcy specialist and partner in the firm of Thaler & Gertler in Westbury, Long Island. One of his clients, whose family owned a printing business, rattled through $1 million cash, then got a business loan for another million and bet it all on sports. Bankruptcy rates, meanwhile, have reached record levels in New York, and experts see a strong link with problem gambling. "They'll spend on their credit cards, they'll get cash advances," Gertler said. Then "they shrug their shoulders. (They say) 'Well, I fell on hard times. Last year, a bankruptcy trustee recouped $357,000 from the operator of Harrah's Casino in Shreveport, La., after a precedent-setting decision by the 8th U.S. Circuit Court of Appeals in St. Louis. The court ruled Harrah's had fronted an embezzling lawyer the money even after realizing he was "over his head." "They try to hide it. Gamblers are very good liars."
"Therapeutic justice still a long shot"/Times Union/1.13.02

John, who is in his 40s, now is trying to pay off the $100,000 debt he amassed during more than 10 years of gambling. "It was the lottery that bankrupted me..."
"Many see their dream of riches turn to nightmare"/By JON R. SORENSE/
Daily News Albany Bureau Chief

The end of the line for so many gambling addicts was perhaps best expressed by a tri-state area woman who nearly lost it all on her personal road to ruin. "I'm very depressed. I feel I don't have a life - physically, mentally, emotionally. I'm drained. I am bankrupt,"
"Compulsive gambling: There is debate over terminology and prevalence of the addiction"/by M. D. KITTLE/Telegraph Herald/10.11.02