Along with word that business in Las Vegas is “bouncing along the bottom,” the big news today is the latest in celebrity bad marker cases, former NBA star Antoine Walker. From the LVRJ:
Walker faces three felony counts related to writing bad checks at Las Vegas casinos between July 2008 and January 2009. According to the criminal complaint, Walker wrote six checks worth $100,000 each at Caesars Palace around Jan. 19. Before that, the 12-year NBA veteran wrote $400,000 worth of checks for chips at Red Rock and Planet Hollywood, prosecutors say.
Walker has paid back a portion of the money but still owes $822,500.
via Walker charged with writing bad checks to casinos – Sports – ReviewJournal.com.
I did a quick interview on this subject with KVVU (Fox 5) this morning, so I’ve got a few thoughts.
First, for some reason, as I read the story, I kept thinking that he got a marker for $400,000 in red chips. And the old CCTV operator in me said, “That’s four thousand stacks.” I assume that even though he was playing at Red Rock, he did not receive the money in $5 chips.
Anyway, the serious stuff starts here. Why do casinos even offer credit play? That’s a common question. The answer is that we’re talking about sums so big, few people are going to be bringing in cash, and if they are, the IRS may start to get suspicious, since most legitimately high-wealth individuals don’t walk around with hundreds of thousands of dollars on them. There is a detailed process, filled with internal controls and external checks, before someone is granted credit. Generally speaking, the casino investigates the player’s credit history and, if they seem to be good for it, lets them sign a marker.
Why are unpaid markers considered bad checks? That’s a very good question, and the best answer is that this is because that’s what the law is. Why is that the law? I haven’t been able to find much on the legislative debate over the bill that made gambling debts legally collectible in 1983, but I imagine that the casino industry had a fair degree of input into the process.
How much money are we talking about? In 1998, attorney Bob Faiss estimated that between 5 and 15 percent of all money wagered at all Nevada casinos is bet on credit. If you’re interested in the mechanics of casino credit, Faiss’s testimony before the National Gambling Impact Study Commission is as good a summary of any of the process.
For fiscal year 2008, gamblers wagered about $232.4 billion dollars in Nevada casinos.* Five percent of that is about $11.6 billion. Fifteen percent is approximately $34.9 billion. For the sake of argument, let’s assume that the number is ten percent of all money wagered in Nevada casinos. In that case, we can say that Nevada casinos extended about $23.2 billion in credit during fiscal year 2008.
According to the Nevada Gaming Abstract, in that year casinos statewide reported a total of $132.1 million as “bad debt expense,” i.e., uncollected markers. That seems like a lot of money, and it is. Compared to annual gaming revenues of about $12 billion for that period, though, it doesn’t look so big (“only” 1.1 percent). Next to the estimated total credit play, $23.2 billion, it’s tiny: 0.56 percent. Just over one-half of one percent of casino markers end up as bad debts.
That’s probably worse than a commercial bank’s lending rate, but isn’t that bad. According to a recent news story, Bank of America, one of the largest banks in the US, is writing off more than 10 percent of its credit card loans.
While more alarmist elements may imagine that there’s a tidal wave of bad credit decisions and unpaid markers coming from Nevada casinos, looking at the numbers shows that this isn’t true. Only a small percentage of markers end up unpaid, and it seems that casinos do a pretty good job of due diligence before letting players sign markers. Of course, a few high-profile cases gives a much different impression.
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*If you want to check the math, divide the total table and slot revenues by their respective win percentages, then add them.
Well. It’s obvious that this guy made a big mistake by gambling so much money in the casinos.
That’s a lot of money to blow. He’d have been much better off buying a few franchise outlets or restaurants with all that money. He shouldn’t have allowed himself to get caught up in the ‘gambling experience’.
I didn’t realize that getting a gambling marker could lead to felony convictions though.
That NGISC report does seem to possibly give his defense lawyers a fighting chance to have his crime reduced if they turn around and blame the casinos involved for not making enough inquiries regarding his credit worthiness (and verifying that he had sufficientfunds available).
The report is interesting, in that it does sometimes hold casinos potentially accountable when markers go unpaid.
If I was his attorney I’d think that some of the following NGISC statements could be, perhaps, somewhat helpful in building a shaky defense:
“Each state requires the casino to determine that the patron is worthy of the amount of credit granted.
Required to contact Central Credit. The casino must be provided with information that indicates the patron is credit worthy and has an ability to repay the credit extended. Casino executive are required to determine whether the information obtained about the credit justifies the extension of credit given.
Very few Nevada casino debts are collected through judicial process. If suit is commence, the action proceeds as does any other breach of contract lawsuit.
The bad debt expense of Nevada casinos is only 2.2 of gross gaming revenue.
Well run casinos are prudent in their lending practices. Good long-range casino planning dictates that casinos not allow patrons to borrow more than they can afford to repay.
Finally, a casino that has issued credit unwisely may be taxed by the Gaming Control board for the amount of the loan, even though the patrron has pepaid it.”
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I, personally, am not taking sides on his behalf though. If I was his dad I’d tell him he was a complete numbskull for getting ‘Stuck in a Moment’….like U2 advises against.
He was obviously chasing his losses for 6 months.
The casinos should have taken necessary precautions too (IMO).
Now, it seems, he is being made a ‘good example’ of. The IRS makes such ‘high profile’ examples annually.
Obviously, football is a game he is much better at playing.
Hey Dave: while we don’t know if Walker is a gambling addict, i.e. someone who mets the clincial criteria for pathological gambling (http://www.behavenet.com/capsules/disorders/pathgambledis.htm) , or he’s just a bad gambler on a losing streak, we do know that he has many of the risk factors for problem gambling, including:
-professional athlete
-male
-African-American
-in the 18-25 age range
Why are professional athletes more at risk? They tend to have lots of money & poor money management skill, sense of entitlement, extremely competitive, strong belief in their own skill.
A gambling problem is not an excuse for failure to pay debts, but it may be an explaination for how he got there.
Most professional athletes who are multimillionares (like Mr. Walker) pay their debts when they gamble. He decided not to pay his debt. The consequences are these: his name gets in the paper, shows up on blogs like this one and now he is probably pretty embarrassed about the whole problem he created of his own doing. Pay the money you owe and get on with your life Antoine. Next time don’t gamble so much.