[Congressional Record Volume 142, Number 139 (Tuesday, October 1, 1996)]
[Extensions of Remarks]
[Page E1898]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       GAMBLING CREDIT REFORM ACT

                                 ______
                                 

                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                        Tuesday, October 1, 1996

  Mr. LaFALCE. Mr. Speaker, I am today introducing legislation to 
protect consumers, financial institutions, and taxpayers from the 
unwarranted use of credit cards for gambling. My legislation the 
Gambling Credit Reform Act, would prohibit the extension of credit 
under any open-end consumer credit plan where a creditor knows or has 
reason to believe that such credit will be used to make a bet or wager, 
or to play any game of chance in a casino or other gambling 
establishment.
  I was appalled to read recently that the New Jersey Casino Control 
Commission had approved the use of credit cards for the purchase of 
playing chips and slot tokens in casinos at Atlantic City. This means 
that gamblers who run out of cash can obtain more playing chips or 
tokens with the wave of their hand without even leaving a playing 
table. Gambling industry experts see this as one of the ``most 
potentially dramatic'' changes in gambling in years and one that will 
result in more impulse gambling and higher revenues for casinos.
  The use of credit cards directly to make bets or wagers has never 
been permitted in this country and with good reason. Allowing gamblers 
to use credit cards to obtain more chips without leaving a gambling 
table removes one of the last remaining checks on compulsive or problem 
gambling--the need to walk away to find more cash to gamble. Permitting 
the use of credit cards will make it significantly easier for problem 
gamblers not only to bet all their disposable income, but to tap into 
available credit lines on one or more credit cards.

  This is particularly troubling at a time when our Nation's financial 
institutions, and credit card banks in particular, are threatened with 
unprecedented levels of consumer debt and personal bankruptcies. 
Consumer debt has increased at double-digit rates since 1994 while 
personal incomes have stagnated. Accumulated consumer debt is now 
estimated at nearly 85 percent of the Nation's disposable income. 
Consumer debt service is at a near-record level of 17 percent of 
disposable income and loan delinquencies are at record levels.
  With consumer debt continuing to grow nearly three times faster than 
income, it is no surprise that a record number of American families 
will declare bankruptcy this year. If current trends continue, more 
than 1 million families--or 1 percent of all U.S. households--will file 
for bankruptcy this year. This represents a 26-percent increase over 
1995 and a bankruptcy filing rate equal to one bankruptcy filing every 
2 minutes throughout the year.
  By almost every account, the primary contributor to these problems 
has been what Federal Reserve Chairman Alan Greenspan described as the 
``extraordinary rise'' in credit card issuances and debt. Outstanding 
credit card debt increased 16 percent in 1995, to a total debt of $454 
billion. However, a far greater potential problem comes from the vast, 
still untapped credit lines already granted to consumers on existing 
credit cards. Available credit lines increased by 30 percent in 1995, 
providing consumers with an additional potential debt of $1.1 trillion.
  It is clear that existing credit card balances are already becoming 
too much for consumers to handle. More people are late in making their 
credit card payments than at any time in the past 15 years. And the 
American Bankers Association reported in mid-September that credit card 
delinquencies had reached the highest level on record.
  Allowing gamblers to use credit cards directly for gambling will only 
exacerbate these trends. It will lead to greater financial strain and 
anguish for many American families, increase credit delinquencies and 
losses at financial institutions, and contribute to potential losses to 
our deposit insurance system that, conceivably, would have to be 
covered by taxpayers.
  No responsible financial institution would grant a loan to an 
individual for the purpose of going to Atlantic City to gamble. But 
this is exactly what we are condoning and encouraging with the use of 
credit cards. It accentuates the already serious problems of consumer 
debt and rising bankruptcies and it presents additional and unwarranted 
risks for financial institutions. My bill will stop these developments 
before they spread to all forms of gambling throughout the country.
  Mr. Speaker, I recognize that there is little chance that this 
legislation can be considered this year. My purpose in introducing the 
bill is to give notice that there are Members of the Congress who 
consider this misuse of credit cards to be unacceptable. I intend to 
refine this legislation and reintroduce a similar proposal early next 
year and I hope that, upon its return, the Congress will consider this 
legislation and enact it into law promptly.

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