Patrons Plagued by Casino Credit

At casinos in Tunica, Miss., Las Vegas and Atlantic City, N.J., gamblers can rack up hundreds of thousands – even millions – of dollars in debt from credit lines provided by casinos.

That access to credit has caused some high-profile Arkansans to turn to crime or contribute to their filing for bankruptcy protection to repay gambling debts.

“It’s quite difficult for a casino or for a casino employee to tell when a gambler is having problems,” said Holly Wetzel, a spokeswoman for the American Gaming Association in Washington, D.C., which represents casinos. “Like me losing $50, and then someone else losing $50 may mean a very different thing based on the individual’s circumstance.”

To crawl out of a gambling debt, Lu Hardin, as president of the University of Central Arkansas in 2008, developed a scheme to get his hands on a $300,000 bonus by deceiving the UCA board of trustees. He stepped down from the job in September 2008, and in March he pleaded guilty to one count each of wire fraud and money laundering in connection with receiving the bonus before he was entitled to it.

As of late June, a sentencing date hasn’t been set, but it could be at the end of September, the U.S. Attorney’s Office in Little Rock said.

Because of Hardin’s pending sentencing, Hardin’s attorney, Chuck Banks, declined a request to interview Hardin.

“I think it’s very sad that [Hardin’s] spiraling debt from gambling was what really pushed him,” said Hardin’s friend Sheffield Nelson of Little Rock. “It’s a good example of what can happen to you, because you’re talking about an extremely bright, strong businessman who got caught up in it.”

Former Northwest Arkansas developer Brandon Barber also ran up thousands of dollars worth of debts to casinos. He filed for bankruptcy protection in June 2009, listing $91,000 in assets and $47.8 million in debts, although only a fraction of that was tied to gambling. Most of his debt was tied to his failed development projects.

Still, Barber owed $125,000 to the Bellagio LLC of Las Vegas for gambling debts incurred in 2006 and 2007, $98,684 to the Atlantis Paradise Island Resort & Casino and $60,000 to the Venetian Casino of Las Vegas, his bankruptcy filings showed.

 

Getting Credit

Casinos conduct credit checks before gamblers are approved for credit, said Mike Lawton, senior research analyst for the Nevada Gaming Control Board.

“Usually these customers have a history with the casino,” Lawton said. “You just don’t walk in there and get a $100,000 marker.”

Casinos issue credit in the form of markers, which are interest-free signature loans. The payment for the marker is typically due 30 days after the loan, and if it isn’t repaid, the casino could file criminal hot check charges against the gambler, Lawton said.

Barber was arrested in 2010 in connection with writing hot checks in 2007 to cover $52,500 worth of markers at the Venetian Casino. In 2008, Barber opted for a diversion program with the District Attorney’s Office in Clark County, Nev., to avoid the criminal charge. Under the diversion program, he was supposed to repay the debt to the Venetian, but he didn’t. Clark County attempted to extradite Barber, but the summons was annulled because he was in the middle of his bankruptcy case.

In Mississippi, if a marker isn’t paid at casinos, the casino also could file hot check charges against the gambler, said Allen Godfrey, deputy director of the Mississippi Gaming Commission.

“Generally, [the casinos] will attempt to collect them and then turn [the gamblers] over to credit agencies,” he said.

Or some casinos will discount the debt or wipe it away, if he’s a good gambler, Godfrey said.

“There’s a whole gamut of possibilities,” he added.

In Nevada, casinos have an incentive to issue credit because when a gambler has borrowed money from a casino and loses, the casinos don’t have to pay taxes on that revenue until the debt has been paid, Lawton said. But that tax deduction is not available in Nevada if the casino failed to first check out the gambler’s creditworthiness, he said. The Mississippi Gaming Commission only gets involved in a credit issue if casinos aren’t following their internal controls or policies on issuing credit or trying to collect the debt.

 

Hardin’s Fall

Nelson said he didn’t know when Hardin started gambling or what casinos he visited. Nelson – who in the 1980s was chairman of Citizens United Against Gambling, a group dedicated to keeping casinos from entering Arkansas – said he never discussed those details with Hardin.

“He just shared with me that he had gotten into gambling,” Nelson said. “He has responded by getting into Gamblers Anonymous.”

Up until 2008, Hardin seemed to have a charmed life. In 2002, he left his job as the director of the Arkansas Department of Higher Education after six years to become president of UCA. Hardin, who had been a state senator for 14 years, started a heavy advertising campaign that helped UCA’s enrollment more than triple.

But sometime before April 2008, Hardin was in “financial distress with a large personal debt,” according to the information sheet filed by the U.S. Attorney’s Office. Hardin “had taken out loans from banks, drawn on lines of credit, and made early withdrawals from his retirement fund to pay on the large personal debt, but was not able to extinguish it.”

The U.S. Attorneys Office wouldn’t reveal any details about the debt that weren’t included in the information, the term used to describe charges filed by federal prosecutors as opposed to an indictment by a grand jury. Hardin ultimately forged letters so he could get his hands on a $300,000 bonus early.

In the summer of 2008, the news broke that Hardin received the bonus and he stepped down as UCA president in September 2008, citing health problems.

In March, he waived indictment and pleaded guilty to crimes connected to receiving the bonus early. 

Hardin could receive up to 20 years in federal prison for the wire fraud charge and 10 years for the money laundering charge. But under the terms of his plea agreement, Hardin is likely to receive 21 to 27 months in prison.

 

‘Responsible Gaming’

Wetzel said casinos try to educate gamblers on how to gamble responsibly and know their limits.

“So the onus to some extent does lie with the individual,” Wetzel said. “They’re the only ones who can accurately assess what is responsible gaming for them.”

Most casinos offer a self-exclusion policy, which allows a gambler to voluntarily sign up to be blocked from a casino, Wetzel said. If the gambler sets foot inside a casino, he could be arrested for trespassing, she said.

Nelson said he was opposed both to casinos giving credit and to the casinos themselves.

“Lu is just one example of people who have gotten into the web, and he’s suffering because of it,” Nelson said.