NY congressman hits gaming with bankruptcy measure

Brian Seals

Friday, May 29, 1998 | 10:56 a.m.

A reform measure that would prevent collection of gambling debts from bankrupt casino customers faces one last gasp in Congress.

And that has the attention of the gaming industry.

"It singles us out as an industry," said Wally Chalmers, vice president of the American Gaming Association. "There's no justifiable reason for singling us out."

A bill sponsored by Rep. George Gekas, R-Pa., that would force more consumers into repayment plans, a move hailed by the credit industry, is headed for a vote on the floor of the House of Representatives, probably in early June.

Gekas' bill generally focuses on forcing more debtors into repayment plans. It has no provision regarding gambling, but a competing bill sponsored by New York Congressman Jerrold Nadler did.

Though Nadler's attempts to tack on elements of his bill to Gekas' measure has been twice defeated at the committee level, Nadler is likely to attempt to tack several amendments, including the one affecting gaming, on to Gekas' bill when it hits the House floor.

Nadler aide David Lockman said the congressman is concerned about gambling addicts being able to get cash advances on credit cards in casinos.

"He just thinks that's irresponsible practice," Lockman said. "That's asking for trouble."

AGA officials say the amendment would prevent casinos from collecting gambling debts from people who file for bankruptcy. That could limit credit card cash advances and markers used by high-rolling casino customers.

"That hits at the time-honored practice of casino credit," Chalmers said.

Gaming concerns aside, credit card companies are also the target of Nadler, who believes irresponsible lending is as much to blame for the increasing number of bankruptcies in America as are irresponsible consumers.

While Nadler's bill is favored by consumer groups for addressing credit and lending abuses, Gekas' measure has the backing of the credit card industry -- which is calling for more personal responsibility.

Currently, consumers have the option of filing under Chapter 7 (liquidation of all assets) or Chapter 13 (a repayment plan). Gekas' measure would require consumers to enter repayment plans if they could pay $50 per month or 20 percent of their unsecured debt after paying on other secured debts, like taxes and mortgages. Households earning 75 percent of the national median would be forced into these repayment plans. That would give credit card companies and retailers a better chance of recouping money owed.

Either measure has implications for Nevada, the gaming industry by Nadler's proposals and Nevada consumers under Gekas' bill.

Nevada was third in the nation in per capita personal bankruptcies in 1997, behind Tennessee and Georgia. Some 13,028 Nevadans filed for consumer bankruptcy in 1997.

Nationwide, 1.3 million Americans filed for bankruptcy in 1997, totaling about $40 billion in erased debt.