52-year-old Californian Mark Johnston is suing the Downtown Grand because they plied him with free drinks and lent him money while he was inebriated. The lawsuit relates to a 17-hour period on January 30 and 31, the Thursday and Friday prior to the Super Bowl this year.

According to Johnston's lawsuit, he was served roughly 20 drinks in that time. His lawyer, SeanLyttle, argued it was unheard-of for a casino to allow someone to lose such a large amount while clearly intoxicated.

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A statement read: "Mr Johnston, an experienced gambler, was dropping chips on the floor, confusing chip colors and slurring his speech badly, and he was unable to read his cards or set his hands properly."

Before he arrived in Sin City, Johnston was given $250,000 in credit which was increased to $500,000 while he was gambling, the lawsuit read.

Johnston told CNN in an interview: "Just picture a drunk walking the street and he's drunk, and someone pickpockets and takes his money from him. That's how I characterize it.I feel like it's the days of old Vegas, the way they've been extorting me with letters and attorneys."

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If Johnston's suit is successful, a large part of Las Vegas' gambling revenue – and Nevada's state coffers -- could come under threat. According to the Nevada Gaming Control Board, the state's casinos reported a total "gaming win" of $884,203,134 in January this year. The AGA's 2013 Survey of Casino Entertainment revealed that in 2012, American casinos employed 332,075 people, contributed $8.6 billion in direct gaming taxes and earned $37.34 billion in gross gaming revenue.

Don't booze and bet

The American Gaming Association (AGA) notes that of the 23 states with commercial casino gaming, 13 are allowed to offer free alcohol to their patrons, including Nevada. It adds that not all the states thus allow free alcohol and that "the vast majority of guests consume alcohol responsibly or choose not to drink at all.

"Avid casino players like to be at the top of their game and therefore avoid the consumption of alcohol."

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The AGA does say that casino companies must adhere to strict policies regarding alcohol service: "A combination of regulatory requirements and company programs are in place to prevent customers who are visibly intoxicated from entering or remaining in a casino or from being served more alcohol."

The Nevada Gaming Control Board is investigating the Downtown Grand casino to see whether it violated regulations, the chief of the board's regulation enforcement division, Karl Bennison, told CNN.

The state of Nevada does not allow people who are "visibly intoxicated" to gamble and they are not allowed to provide free drinks to inebriated customers.

The casino has so far declined to comment to news outlets.

Could this happen in Europe?

Simon Halberstam, head of technology and gambling law at U.K law firm Kingsley Napley, told CNBC that Johnston's case was not straightforward due to gambling laws being different all around the world and that therefore there would not necessarily be copy-cat lawsuits elsewhere.

"The point is that happened in Las Vegas and is subject to US Federal and State law," he said in a telephone interview. "If it were in the UK, he might well have a case because there are all sorts of rules about people running these establishments making sure the people who play are effectively fit to play in terms of psychological condition, their age, and their general make-up."

However, Halberstam did emphasize that in the U.K. gambling laws focus on vulnerable individuals who are "problem gamblers." He did highlight that this case should make it clear that cheap or free drinks in casinos were dangerous.

"In the U.K. we are more interested in people who have psychological or other on-going issues; there is not much discussion regarding the context of alcohol," he said. "If a casino in the U.K. introduced alcohol at a major discount that would potentially be a problem because they would be inducing vulnerability."

Robert West, the Editor-in-Chief of the science journal, Addiction, told CNBC that there was a responsibility on Johnston to anticipate what his time at the casino would entail.

"The defendant knew what he was letting himself in for in terms of the temptation to drink when he signed up for the gambling spree,"Wood said. "It goes to an issue of responsibility on people to anticipate temptation and if there is a risk they can't deal with it, to keep themselves out of harm's way."

He added: "The casino is doing what they do and have always done. He presumably knew that when he started."

As Halberstam said, "A first-time scenario like this where a person gets drunk? I don't think there's anything (law) that would stop that."

—By CNBC's Kiran Moodley. Follow him on Twitter @kirancmoodley