Holding personal checks as IOUs is illegal
By Rick Ask, Administrator
Gambling Control Division
I think most everyone knows that gambling on credit is illegal in Montana. However, some recent incidents highlight an activity that licensees may not realize is credit gambling.
These incidents involve licensees allowing players to alter the amount of their previously cashed checks in order to obtain more cash. Investigation of these cases showed some licensees were using the players' checks as “markers” or IOUs, pending the outcome of gambling for the evening. This is prohibited.
Montana law states:
“Credit gambling is offering or accepting as part of the price of participation in a gambling activity or as payment of a debt incurred in a gambling activity:
(i) a check, credit card, or debit card held pending the outcome of a gambling activity;
(ii) a loan of any kind at any time from or on behalf of a licensee;
(iii) any form of deferred payment, including a note, IOU, post-dated check, hold check, or other evidence of indebtedness; or
(iv) a check issued or delivered that is accepted by the licensee with the knowledge that it will not be paid by the depository.”
– 23-5-157(1)(b), MCA.
While nearly all gambling in Montana must be conducted on a cash-only basis, the law allows checks and debit cards to be used to obtain cash for gambling. However, if a licensee agrees to cash a player's check, the law requires that the check be delivered and accepted unconditionally.
In other words, once a check has been accepted, the licensee may not allow the check to be altered – neither the date, the amount, nor the payee may be changed by the issuer after it has been tendered. Additionally, a licensee may not hold a check, or any other evidence of indebtedness, pending the outcome of a gambling activity.
The licensee may not permit a player to post-date a check. Nor may an operator allow a player to repurchase his or her check after noon of the following day - 23.16.202 ARM.
Allowing a player to alter a check shows that the check was not delivered or accepted unconditionally. It may also indicate that the check is being held pending the outcome of a gambling activity. Both are prohibited under the law.
Remember, a gambling licensee needs to accept checks unconditionally and process them as required by law. And if a player wants additional cash, he or she will have to write another check.