Indiana Supreme Court to Hear Case of Compulsive Gambler Who Says She Was Lured Into a Casino

Sept. 17, 2009 — -- Jenny Kephart admits that she's a pathological gambler who lost the $125,000 that an Indiana casino advanced her during one unlucky night at a blackjack table. But in a two-year court battle, she has argued that she doesn't owe the casino a dime because its employees should have denied such an addicted gambler access to the card table.

The Indiana Supreme Court is scheduled to decide next month if she has to repay the casino, with potential legal implications that could stretch far beyond the borders of Indiana.

On March 18, 2006, Kephart went to Ceasars Riverboat Casino, now the Horseshoe Southern Indiana casino, where she embarked on a gambling spree and, subsequently, lost $125,000 in credit provided by Caesars, according to court documents. That same night, Kephart had already lost at least $8,000 of her own money, according to her attorney.

Ceasars and Horseshoe are owned by the same corporation, Las Vegas-based Harrah's Entertainment.

The following year, when the casino sued her for failing to repay the $125,000, Kephart filed a countersuit, claiming she was a "pathological gambler" and that the casino knowingly "took advantage of her to enrich itself."

The case eventually ended up in the Indiana Court of Appeals, which ruled in favor of the casino in March, saying that Kephart's lost money was an "injury she chose to risk incurring."

Kephart's lawyer, who filed a petition to the Indiana Supreme Court, told ABCNews.com that he's pleased he'll get another chance to argue how he says the casino wronged his client.

"This casino intentionally, knowing she was a compulsive gambler, went after her to get her to gamble," said Kephart's attorney, Terry Noffsinger. "And, of course, the odds are in the favor of the house and she lost a lot of money."

Ceasars "was familiar" with his client because she had previously gambled at the chain's other location in Nebraska, Noffsinger said.

Upon moving to Tennessee in 2004, before which she had filed for bankruptcy because of her gambling habit, Kephart, now 54, received an inheritance of nearly $1 million after her father died, Noffsinger said.

Casino Preys on Compulsive Gamblers

It was then, he said, that Kephart was approached by Caesars.

"Caesars had dealings with her before and then she moves and guess who contacts who?" Noffsinger said. "They offered her a car [to take her to the casino], a free room and free drinks and then when she ran out of the several thousand dollars she had arrived with, they gave her $125,000 in credit."

Lawyers Gene Price and Steven Langdon, both of whom represent the casino in this case, did not return several messages left by ABCNews.com.

But, according to published reports at the time of the 2007 lawsuits, Price and Langdon argued in court that if Kephart was as addicted as she claimed to have been, she should have enrolled in the state's Voluntary Exclusion Program.

The program, developed by the Indiana Gaming Commission and similar to programs in a handful of other states where casinos or track betting exists, allows individuals with compulsive gambling problems to add themselves to a database that casinos crosscheck when they take identification from guests, primarily when they are cashing in on big wins or requesting credit.

Ernest Yelton, the executive director of the commission, said 3,193 Indianans are enrolled in the program, which allows those with gambling problems to voluntarily request to be excluded from Indiana casinos for a period of one year, five years or a lifetime.

He said that 1,532 of those enrolled in Indiana are lifetime members. Members can only be removed from the program at their request.

"The point is to self-help individuals who believe they might have an issue with gaming," Yelton said. "Due to their circumstances, they don't want to go back and gamble again."

Yelton said that if members of the program are caught in any of the 13 casinos in the state, they are subject to arrest for trespassing. And any of their winnings must be forfeited.

While Kephart declined to be an interviewed by ABCNews.com, in a 2007 interview with The (Louisville) Courier-Journal, she said that she never asked to be banned because she "didn't realize how seriously addicted she had become."

Court to Rule on Kephart's Debt and Gambling Addiction

"They knew I had money, and they went after it," said Kephart, who attributed her gambling addiction to her former job as a dealer in the mid-1990s. Since that time, Kephart told the paper, she estimated that she'd gambled away at least $900,000. Today, Kephart's attorney says his client is in Nashville, Tenn., where she is currently unemployed.

Ed Feigenbaum, the editor of Indiana Gaming Insight, and a lawyer, said that the decision by the Supreme Court to take on the Kephart case is telling and could have ramifications that reach far beyond Indiana's borders.

"In Indiana, there isn't a great deal of law and certainly, not real, black-letter law on this particular topic," said Feigenbaum, who has no connection to the Kephart case. "We've only had casinos since the beginning of the 1990s, so we're still experiencing a lot of the general civil litigation that follows these types of things."

Feigenbaum said he has rarely seen the appellate judges be as outspoken in their court opinions as they were in the Kephart case and that might be the reason the Supreme Court starting paying attention, he said.

Even in the majority opinion, which was 2-1, one of the judges expressed concerns about the casino's willingness to extend credit to Kephart.

The outcome of the Kephart case could also influence gambling law elsewhere, said Feigenbaum, who added that he couldn't think of another case in which a U.S. court has ruled in favor of the compulsive gambler.

"This is a court that has gained some notice in recent years for being well-reasoned," he said. "This is a ruling that, one way or another, could be looked at by other courts and picked up upon."

The hearing for the Kephart case is scheduled to begin Oct. 29.