New Gambling Law Has Impact on Divorce

On behalf of The Marks Law Firm, L.L.C. posted in Divorce on Thursday, July 31, 2014

This spring, the Missouri legislature passed a bill to allow casinos to run lines of credit for individuals – a minimum of $10,000 and no maximum.  Governor Nixon did not sign the legislation, but he did not veto it, so it became law and goes into effect August 28.

While the law may have the effect of increasing casino business, it will also have the rather obvious effect of putting more gamblers into debt.

Previously, Missouri had strict limits on what a person could bet and lose in a given time period.  Now, both of those restrictions have disappeared so that a person with sufficient income (or even credit cards) could ask a casino to float a “marker” of a significant amount – and lose it all in one night.

How could this impact a divorce? In Missouri, debts incurred during a marriage, just like property acquired during a marriage, are presumed the joint responsibility of the parties.  So, if one spouse decides to go to the casino and open a line of credit for $25,000 only to lose all of it at the poker table, that spouse has incurred a marital debt that could put the other spouse on the hook for half.

Historically, courts in Missouri have considered gambling debts accrued during the marriage in different ways depending upon the knowledge of the other spouse.  If the other spouse could establish that he or she had no knowledge of the gambling and/or the debt, the court would see that as a form of either marital misconduct or dissipation of marital assets.  In such a case, the court could decide to place all of the responsibility for the debt on the gambling spouse and even order that gambling spouse to reimburse the unaware spouse of her half of the marital assets lost to repay the gambling debt.  For example, if the gambling spouse took out a loan against a 401(k) without telling the other spouse, half of those funds – plus any taxes or penalties incurred, and interest income lost – would be awarded to the unaware spouse.

If the non-gambling spouse is aware of the gambling and the debt, the non-gambling spouse may have a harder time recovering the lost assets.  The court will look to whether the non-gambling spouse acceded to the gambling or tried to protest but found no way to “cut off” the gambling spouse because of the joint ownership of assets.

Once a spouse files for divorce, that spouse has a remedy to protect the marital estate against further depletion of gambling debt by seeking an order of the court prohibiting encumbering or dissipating any asset without the consent of both parties.  Such a mutual restraining order will assure the non-gambling spouse that any misconduct during the pendency of the divorce will be deducted from the property of the gambling spouse.

Because gambling could be considered a form of marital misconduct, the court could use problem gambling as a basis for an unequal distribution of the marital estate.

One can debate the pros and cons of gambling as social or economic policy, but with regard to divorce, it can create serious financial problems. If you have questions about gambling and divorce, contact us – we can help.

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