Federal Court Finds Wisconsin Laws Don't Cancel Casino Markers

A man who tried to avoid paying his casino markers by declaring bankruptcy in Wisconsin and then shielding himself with its anti-gambling laws was disappointed when a federal court upheld the gambling debts.

A Wisconsin man who had been CEO of a chain of nursing homes is still responsible for his gambling debts and must repay casino markers worth $1.25 million, despite declaring bankruptcy in Wisconsin. The US Seventh Circuit Court of Appeals decided that the debts were incurred in Nevada, and involved Nevada corporations, so Nevada law should apply.

Robert Jafari, who had run the Meadowbrook Manor rest homes, signed markers of $1 million to Wynn Resorts and $250,000 to Caesar's Palace. But both were returned unpaid, and the casinos sued in Nevada court.

But Jafari, rather than respond to the complaint in Nevada, filed in Wisconsin for bankruptcy. Attorneys for Jafari said that the gaming markers were unenforceable debts, as defined under the Wisconsin Anti-Gaming Statute. They also contended Nevada courts were obligated to follow the laws of Wisconsin, as the host state to the bankruptcy.

But the federal appeals court found that virtually every aspect of the casino transaction occurred in Nevada's jurisdiction. The two casino are located in Nevada, Jafari received the markers in Nevada, and conducted his gambling there.

"In contrast, Wisconsin's only contact with the (casino contract) was that Jafari happened to reside in Wisconsin at the time he entered into the agreements," said the court's written opinion.

The result is that Nevada law applies, and the casino debts will be allowed as claims in the bankruptcy court hearings.