Cheque Cashing Facilities

The use and potential cost thereof in relation to high end junket play.
By Andrew MacDonald
Gaming Manager, Adelaide Casino, 1994

Introduction | Cost Structure | Mathematics | Associated Costs |

Firstly it is important to understand the true costs associated with returned cheques.

There is the possibility that the player will win using unsecured funds and that because the cheque or credit marker is redeemed you are never aware that it was no good and would have bounced. If this occurs there is a potential cost and tax benefit from this situation. In the instances where the player loses apart from the pain of either; year to date adjustments or bad debt write-offs the true cost is primarily related to the Government tax which may be required to be paid on the “false” revenue. In Australia at least there is no contingency for reducing Government tax as a result of writing off gaming debts against revenue.

Next we would consider labour and expenses as a cost associated with doing potentially non profit producing business.

Finally there is the commission or rebates paid when the player wins and thus commissions are not withheld as no cheques are held awaiting clearance. Again you never know the monies were not there, so you make the appropriate payments.

To then calculate what reduced commission should be considered in relation to play on cheque cashing/credit as opposed to cash or cleared funds requires consideration of the probability of the cheque/credit amount being dishonoured and an understanding of the company’s desired operating margin in a high risk business segment. With regard to the latter the company may philosophically desire a higher operating margin on high risk business in the same way that return on investment percentages should increase with higher risk ventures.