Legal loophole for illegal gambling debt closed

South Dakota lawmakers close legal loophole

South Dakota legislators have drafted an amendment designed to close a loophole which has complicated debt repayment obligations in the state. The change follows a court case where a local man avoided repaying a $33 000 debt on the grounds that he once lost $1 500 to the lender in a card game.

Associated Press reports that the amendment is currently on its way to the state governor's desk for final approval, and that it seeks to close a loophole that if a debt stems from illegal gambling, either in part or in whole, then the whole debt is void.

The amendment proposes that only the illegal portion of such debt should be invalid.

Senator Mike Vehle said that the amendment would not affect the case which triggered the need for change. Back in November, the state Supreme Court reinstated a jury's 2007 finding that the loan included consideration of a gambling debt that since deceased Donald L. Davis made to businessman Gerald Neve.

Court documents indicate that the two Sioux Falls men met in the early 1990s as members of the Elks Club, where they gambled in card games. Neve said he lost $1 500 to Davis one evening in 1992 and that Davis said they would work something out, according to the court documents.

Neve said Davis subsequently loaned him $33 000 in September 1993 and that it included consideration of the earlier gambling debt. Neve had financial troubles at the time and owed money for business expenses, medical expenses and taxes.

In 2005, Neve sought a court order to have the promissory note declared invalid.

Davis died after the appeal was filed and Neve settled with Davis' estate, but the high court still ruled on the legal issues.

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