Casino Financial Controls: Tracking the Flow of Money » (New Edition)

Every manager and supervisor must be financially literate in order to advance their career in casino management. Managing expenses, a key aspect of performance reviews for managers, relies heavily on the ability to read financial statements. Since there is cash and cash equivalents moving around the casino facility like in no other business, the need for financial literacy is critical in the casino industry. Money exchanges hands at gaming tables and at the cage. Employees assume responsibility for banks and chip racks worth thousands of dollars. Extending credit and issuing comps have a material effect on the profitability of casinos. Money is everywhere and controls must be in place to avoid theft and embezzlement. Incredibly easy-to-understand, Casino Financial Controls: Tracking the Flow of Money gives solid explanations of accounting principles as well as examples of accounting entries. Examples of procedural controls and the reasons for each control are also included and explained in pragmatic terms. The criteria for extending credit or issuing comps are used to avoid serious damage to the bottom line. In addition, pictures and illustrations are included to help the reader to better visualize the reality behind the words.

Preface xiii

Acknowledgments xiv

Chapter 1 Introduction 1

The Need for Financial Controls 2

The History of Financial Controls in American Casinos 3

Harrah and Financial Controls 5

The Casino Business as a Cash Business 6

Unique Terms 7

The Importance of Hold 8

Types of Controls 8

Traditional Controls 8

Accounting Controls 9

Comp Controls 10

Credit Controls 12

Chapter 2 Terminology 14

Introduction 15

Drop 15

Modern Slots and Drop 15

TITO 17

Paid Out 18

Hold 18

Profit and Loss 18

Further Terms 19

House Advantage 20

Explaining House Advantage 20

Determining Winners 21

Random-Number Generators 23

Additional Terms 24

Chapter 3 Hold Percentage 26

Hold 27

Hold Percentage 27

Amount Wagered versus Drop 28

Drop Team 28

Fills 30

Theoretical versus Actual Hold Percentage 30

Keno, Bingo, and Racebook 31

Using the Hold Percentage as a Control 31

Cheating 34

Chapter 4 Controls in Place 37

Introduction 38

Manual Procedures 38

Public Forms of Manual Procedures 38

Manual Procedures for Dealing 39

Signatures 41

Separation of Duties 41

Multiple Employee Involvement 42

Surveillance 42

Duplicate/Triplicate Forms 43

Cash Countdowns 44

Digital Trail 44

Man Trap 44

Supervisory Oversight 44

Technology's Impact 44

Chapter 5 Paper Trail of Revenue and Payouts 49

Introduction 50

Forms 50

Fills 51

The Fill Process 52

Slot Fills 54

Credits 55

Wager Documentation 56

Keno 56

Race and Sportsbook 56

Bingo 57

Impact of Technology 58

Paper Trail Uses 59

Chapter 6 Conversion of Financial Data into Financial Statements 61

Introduction 62

Definitions 62

From the Floor to the AccountingDepartment 65

"21" 66

Cocktail Service 68

Payroll 70

Chapter 7 Analysis of Financial Statements 73

Introduction 74

Financial Statement Structure 75

Basic Statement Structure 76

Prior Year and Budget 77

Variance Analysis 79

Small Variances Add Up 81

Overstaffed or Overscheduled 82

Other Key Ratios 84

Chapter 8 Purpose and History of Comps and Credit 87

Introduction 88

Definitions 88

Comps 88

Credit 90

Markers 92

History of Comps 93

Slot Clubs 95

History of Credit 99

Chapter 9 Criteria for Issuing Credit 101

Introduction 102

Criteria for Issuing Credit 102

Income 103

Assets 103

Cash on Deposit 104

Credit 104

Marker Play 105

Repayment 107

Collections 108

Legality of Markers 110

Chapter 10 Criteria for Offering Comps 113

Introduction 114

Determining Player Worth 115

The Importance of House Advantage 115

The Importance of Average Betting 117

Comp Method 118

Slot Comps 119

Redemption 121

Method of Redemption 122

Chapter 11 Impact of Comps and Credit on Financial Results 125

Introduction 126

Transfer Pricing 126

Impact of Comps on the Profit/Loss Statement 128

Retail Method of Transfer Pricing 128

Cost Method of Transfer Pricing 128

Impact of Comps on the Receiving Department 130

Controlling Comps 131

General Methods of Control 131

Targeted Comp Amounts 133

Other Methods 134

Impact of High-Limit Play on the P/L Statement 135

Examples of the Impact of High-Limit Play 135

Chapter 12 Conclusion 139

Introduction 140

The Reason for Controls 140

Review of Key Terms 141

Financial Statements 143

Expenses 145

Conversion into Financial Information 146

Managing Comps and Credit 147

Author's Biography 151

Index 153