How to Pay Off Gambling Debt

Should You Consider Filing for Bankruptcy to Handle Gambling Debt?

Businessman working late in office

Luis Alvarez / Getty Images 

People with gambling addictions often end up deep in debt. When gambling debt becomes a problem, the debt has often gone beyond money owed to casinos or riverboats. Instead, you may have credit card debt, loan debt, and even home equity debt all associated with gambling problems.

Many people with a gambling problem end up filing for bankruptcy. However, that doesn't need to be the first step you take.

Learn how to deal with your gambling problem, pay off your debt, and retake control of both your health and finances.

Acknowledge the Problem

Before you deal with gambling debt, you need to deal with what created it: the problem gambling itself.

For your sake, as well as for the sake of your loved ones, take some time to look at your situation and evaluate whether you have a gambling addiction.

You might have a gambling addiction if you:

  • Feel a compulsive need to gamble
  • Feel the need to keep your gambling a secret
  • Gamble even when you don't have the money
  • Have friends or family who are concerned about your gambling

If you have debt from gambling, you may struggle with problem gambling, even if you don't have a gambling addiction. This is gambling behavior that disrupts your life, harms your personal relationships, or leaves you in financial distress.

Gambling debt is a major sign of a gambling problem, as is gambling with money that is supposed to be used for bills, food, or other necessities.

Either way, the first step to addressing your debt is to realize that you have a gambling problem.

Avoid More Gambling

Many gamblers think they can win enough money to pay back their debts, but this often creates more gambling debt to repay.

Even if you did win enough money to pay off your debt, chances are you would gamble that money away too, thinking if you won once you could win again.

When it comes to paying back debt, there is no quick and easy solution.

Cut Off Your Source of Funding

If you continue gambling, you will continue to accumulate debt, which will prevent you from fixing your finances. The best way to stop gambling is to remove the source of funding you have been using.

How you cut off funding will depend on where and how you gamble.

If you’ve been gambling with credit cards, close them. If you usually gamble online, you can take steps like closing your accounts on any gambling websites to make it more difficult to transfer money.

You can put a freeze on your credit report to make it more difficult to open a new credit card or loan account, as they require a credit check before issuance.

You can also seek help from a partner or loved one, who may change passwords on your online accounts or set up two-step verification to make it harder for you to access money for gambling.

Seek Treatment

Gambling addiction is an impulse-control disorder. Depending on the extent of your problem, you may need medical help to treat it.

You may need to pursue therapy or other mental health services. Some health insurance plans cover this type of treatment. Check with your provider to see what options are available. Otherwise, you may need to find a therapist on your own.

Some states will cover the cost of treatment if your insurance doesn’t cover addiction therapy. Your state's Consumer Affairs Office may have more information about state programs for gambling addiction.

Pay Off Gambling Debt

Once you are deal with the addiction, you can focus on repaying the debt. Paying off debt requires honesty and discipline. It is rarely a quick process.

Identify All Your Debts

Start by writing a list of where you owe money, including:

  • Credit card debt
  • Friends and family who have loaned you money
  • Overdrawn bank accounts
  • Money owed to casinos or riverboats

Include every debt that comes to mind on the list. If you learn of new gambling debts, add them to the list. The key is to know who and how much you owe so you can take action.

Prioritize Repayment

Order these debts by their level of urgency. The most urgent ones will need to be paid off first.

For example, if a debt could cause some of your property to be repossessed or collections agencies to start harassing you, those should go at the top of the list. High-interest credit cards should also be paid off as quickly as possible.

Once you know which debts are most urgent, you can focus on those first. After they have been repaid, you will have more available funds to continue paying the remaining debts on your list.

Explore Repayment Options

Once you have a plan for which debts to focus on first, start directing as much of your discretionary money towards repaying these debts as quickly as possible. You may also need to seek additional sources of money if your current income is not sufficient to repay your gambling debt.

  • Borrow: If you have very urgent debts, you may be able to borrow money from family or friends who know about your gambling problem and are willing to help. However, you will eventually need to pay back these loans as well.
  • Personal loan: If you have lots of debts that are difficult to keep track of, consider a personal loan. This would allow you to pay off your individual debts, effectively consolidating them into a single debt that needs to be repaid.
  • Sell assets: If you have valuable assets like a second car or expensive electronics, you may be able to sell them and pay off some or all of your debts.
  • Second job: Working extra hours every week can help you come up with more money than if you depended solely on your primary source of income. A second job or side gig will also limit the amount of time you have available for gambling, which can help you manage your problem.
  • Settlement payment: Your creditors may be willing to accept a settlement payment on your gambling debts if you can come up with a percentage of what you owe within a few days.

Create a Budget

When you are paying off gambling debt, you will need to limit your other spending in order to see results. The more money you can save in other areas, the faster you will be able to eliminate your debt.

Create a budget to manage your finances so you know where every penny of your money is going. Then look for ways to minimize your expenses, such as moving to a less expensive home, eliminating travel, and cutting down on discretionary spending like dining out.

If someone else has access to your bank accounts and budget, they can help monitor your spending and hold you accountable for both paying off your debt and avoiding more gambling.

Bankruptcy and Gambling Debts

Gambling debt, including debt incurred from casinos or charged on credit cards and loans, can be discharged in bankruptcy. About 10% of bankruptcy filings are due to gambling debt, and 20% (or more) of compulsive gamblers are forced to file for bankruptcy in order to discharge their debts.

Filing for bankruptcy should not be your first solution for dealing with gambling debt. Bankruptcy can severely damage your credit, making it difficult for you to get a credit card, rent an apartment, or get hired for a new job.

When you file for bankruptcy, any creditor can object to the bankruptcy filing by claiming you incurred the debt under false pretenses or through fraud. For example, if you took out a credit card cash advance knowing you didn’t have the money to repay the advance when you borrowed it, the creditor can ask the court not to discharge the debt.

However, the creditor has to prove that you committed fraud. If your financial situation is poor enough, and other methods of repaying it aren't working, bankruptcy may be your only option for dealing with a gambling debt.