Allard v. Flamingo Hilton (In re Chomakos) - 69 F.3d 769 (6th Cir. 1995)

Rule:

The time that counts in determining whether gamblers received property of reasonably equivalent value in exchange for the money they wagered is not the time when the bet is won or lost, but the time when the bet is placed.

Facts:

Appellant bankruptcy trustee sought to recover pre-petition gambling losses incurred by bankruptcy debtors from appellee casino operator pursuant to 11 U.S.C.S. § 548(a) and Mich. Comp. Laws § 566.11 et seq., Michigan's version of the Uniform Fraudulent Conveyance Act. Appellee contended that the opportunity for the debtors to win more than the sums they bet, coupled with the entertainment value that appellee's casino provided its customers, constituted reasonably equivalent value and fair consideration for the bets. The bankruptcy court accepted that contention and held that the bets were not voidable under the Bankruptcy Code or under the Uniform Fraudulent Conveyance Act. The district court affirmed the bankruptcy court's decision on appeal. Appellant sought further review. 

Issue:

Were the bankruptcy debtor's losing bets voidable under the Bankruptcy Act or the Uniform Fraudulent Conveyance Act? 

Answer:

No.

Conclusion:

The court affirmed the district court’s decision, holding that the time that counted in determining whether the debtors received property of reasonably equivalent value in exchange for the money they wagered was not the time when their bets were won or lost, but the time when the bets were placed. The court concluded that the evidence showed that at the time the bets were placed, there was a reasonable equivalency of value.