Do your poker loans to other players remain unpaid? Has your backing agreement been breached by a player you staked? You do have legal recourse against these players. This recent article for poker website, Upswing Poker, explains some of your options to get your money back from these players.
The first thing that you can do is to send a demand letter to the person who owes you money. The letter should state explicitly that payment must be received by you within a certain amount of days to avoid a lawsuit. Depending on the person and their financial situation, this may be enough to get the money returned. You can let them know that they may be on the hook for your attorney's fees and costs if you file a lawsuit and win. This provides an additional incentive to pay, because attorney's fees can be incredibly expensive, and are often priced at a rate of $400-$500 per hour. Not only will he or she have to pay his defense legal fees, but he may have to pay your lawyer as well! The downside to sending out a demand letter is putting them on notice of a potential lawsuit. After a lawsuit is filed, the Plaintiff (person who is suing), must serve the Defendant with the lawsuit. This is called service of process and is done by a process server. However, a Defendant who is aware of an imminent lawsuit may evade service by not answering the door or leaving town. This will make it more difficult to get the lawsuit moving and you collecting your money.
Second, you can file a lawsuit. Against some players, a demand letter and the threat of attorney's fees will not be enough to persuade them to pay you. In these cases, you can file a lawsuit in small claims court, county court, or circuit court in the county where the agreement or loan took place. Again, the person who is suing is called the Plaintiff, and the person to whom the lawsuit is filed is called the Defendant. The court where you file the lawsuit will depend on the amount of money that is owed to you. For example, if you are owed $3,000.00, you will likely have to file a lawsuit in small claims court. However, if you are owed $100,000.00, the county's circuit or district court will hear and preside over your case.
1) Small Claims Court: $.01 to $8,000.00
2) County Court; $8,000.01 to $30,000.00
3) Circuit Court: $30,000.01 and more.
1) Small Claims Court: Up to $10,000.00
2) Justice Court: Up to $15,000.00
3) District Court: $10,000.00 or more
1) Small Claims: Up to $10,000.00
2) Limited Civil Cases: Up to $25,000.00
3) Civil Cases: More than $25,000.00
Each state differs in their jurisdictional amounts. You can find out the jurisdictional amounts by visiting the county court's website where you will be filing the lawsuit. Additionally, there are different rules for each court. An attorney can file suit for you, or you can try to do it yourself. Most county clerk websites have free information for pro se litigants. (Pro se means that you are not represented by an attorney.)
How do I draft a lawsuit and sue for poker debt collection?
You can likely sue under a few legal causes of action. A person trying to collect on an unpaid loan can sue under “Money Lent.” The Plaintiff simply alleges that he or she lent money to the Defendant, that the money was intended as a loan, and the money has not been paid back. The drawback to suing under Money Lent is that you will have to pay your own attorney's fees. An attorney who sues a Defendant in this scenario will likely work on a contingency fee. This means the attorney only gets paid a percentage of the amount they recover from the Defendant. The attorney does not get paid without reaching a settlement or obtaining a judgment from the Defendant. Some attorneys will charge a hybrid of a contingency fee and an hourly fee, but these arrangements are always negotiable.
You could also sue for breach of contract if a contract exists between you and the Defendant. A contract should exist with a backing agreement. For example, let's say you paid a $5,000.00 buy-in for a player to play a tournament in exchange for 60% of the winnings. If the player cashes or wins and doesn't pay you, you could bring a lawsuit against him or her for breach of contract. The contract should contain a provision for attorney's fees and costs. A contract requires three elements: offer, acceptance, and consideration. In the above scenario, an offer is made by the backer to the player to pay his $5000 tournament buy-in in exchange for 60% of the winnings. In exchange, the player gets to play for free and makes both himself and the backer money if he cashes in from the tournament. The key to a valid contract is consideration. This basically means that both parties in a contract must be exchanging something of value to the other party. Otherwise, the contract could be construed as a gift. The backer's offer to the player can get accepted upon signing the contract.
Does the backing agreement have to be in writing?
Probably not, but it should be. Oral contracts are enforceable, but they can be much more difficult to prove due to the absence of anything in writing.
Worthless Check and Fraud
A worthless check crime is an unusual scenario, but it does occur from time to time when poker winnings are at stake. Suppose a player shows you his bank account balance on his phone. The balance is $20,000.00. In reliance on this representation, you give him $10,000.00 in chips and he writes you a check for $10,000.00. You extend him this courtesy, because he is a bad player and you want him in the game. He loses the $10,000.00 in chips and leaves the game. The next day you deposit the check and find out shortly after that the account has insufficient funds. This is obviously a terrible situation and you are a victim of fraud. What can you do?
In the situation described above, the player who wrote you the check committed a felony. You can go to the police and report him to have him arrested, and you can also file a lawsuit against him in civil court. If convicted, the player would likely be placed on probation and payment of the money to you would be a requirement while on probation. In Florida, you can also sue the player for three times the amount of money that is owed to you – for example, if you are owed $10,000.00 you can sue him for $30,000.00 in treble damages after a specific demand letter is sent to his address. Here is a link to the Florida statute regarding civil damages for writing a worthless check.
According to Florida Statutes 68.065 and 832.05, a Misdemeanor is committed if the amount of the check is less than $150.00. If the check is $150 or more, the drafter of the check commits third degree felony punishable by up to five years in prison. Civilly, the person who writes the check can be sued for up to three times the check amount. I have listed a few states below with resources to find out more about the criminal and civil penalties in those areas. I would imagine that all states make writing a worthless check a crime.
New Jersey: https://law.justia.com/codes/new-jersey/2013/title-2c/section-2c-21-5/
What happens after the Defendant is served with the lawsuit?
After the Defendant is served with your lawsuit, he or she has a certain amount of time to file an Answer to your lawsuit (also called a Complaint). The amount of time will differ depending on the state, but 20 to 30 days is common. At this point, you're hoping he hires a lawyer or reaches out to you or your lawyer to settle the debt. Again, he is often incentivized to settle because he will not want to keep paying his attorney an hourly rate to defend the lawsuit. Many people would rather settle quickly to avoid paying thousands in attorney's fees. You can use this to your advantage. If he chooses to defend, then you or your attorney will send out discovery to him. Discovery consists of Interrogatories, Requests for Production and Requests for Admission. These documents consist of questions that he must answer. The information obtained through discovery should help you to win your case by filing a motion for summary judgment.
What happens if the Defendant doesn't answer my lawsuit?
A Plaintiff can file a motion for default judgment if Defendant doesn't answer the complaint. At a default hearing, the judge will make sure that the Defendant was served, that he or she is not on active military duty (a Defendant in active military duty cannot be defaulted), the Defendant cannot be a minor or legally incompetent. If these requirements are met, the judge will enter a default against the Defendant. The judgment will state how much money the Defendant is to pay you.
How do I collect on the judgment?
In many states, the court will allow the Sheriff to take the Defendant's personal property (cars, boats, jewelry, etc.) and real property (Defendant's land and buildings). The property will be sold at auction. However, the Defendant's home (at least in Florida) will be off limits because it is protected homestead. The Defendant's wages can also be garnished.
I hope this article helps to educate poker players on the loan collection process. Please email me at [email protected] if you have any questions.