Bill limits collection of gambling debts

Brian Seals

Monday, March 9, 1998 | 9:25 a.m.

A New York congressman's proposal to reform bankruptcy laws would limit collecting gambling debts, a prospect vigorously opposed by the gaming industry.

Rep. Jerrold Nadler, D-N.Y., is sponsoring a bankruptcy reform bill that includes a provision that would limit claims on a debt incurred in or adjacent to a gambling facility or a debt the creditor should have known was intended to be used by the debtor for gambling purposes.

That's sparking opposition in the gambling industry.

"We're always concerned anytime we see anything related to gaming. We're watching and following it closely," said Frank Fahrenkopf Jr., president of the American Gaming Association.

Farhenkopf questioned the practicality of the measure.

"I don't know how you would enforce it," he said. "How do you know if you're extending credit that person is going to go out and gamble?"

Nadler was not available for comment. An opposing bankruptcy reform bill sponsored by George Gekas, R-Pa., does not contain any gaming-related provisions.

Nadler's bill is considered more friendly to consumers while the Gekas proposal is backed more by creditors.

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. Farhenkopf said the word "may" is used because there was no certain determination that gaming contributed to the problem.

Nor do Las Vegas attorneys see gambling as a large contributor to bankruptcies.

"You see a small portion, but nothing excessive," said attorney Frank Sorrentino.

Sorrentino said credit card debts and divorce are greater factors. Attorney Gregory Koppe said his clients file for varied reasons. He, too, said divorce is a large contributing factor to filing bankruptcy, but gambling only a portion.

"A percentage of it is definitely related to gambling, but I don't think it plays a huge factor," Koppe said.

For whatever reason, Nevada ranked third in the nation for the highest number of bankruptcy filings per capita, behind Tennessee and Georgia, according to the American Bankruptcy Institute.

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. Of the filings in 1997, 399 were business filings while 13,028 were consumer filings.