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 |

The provision of cheque cashing facilities or credit within the Casino industry is becoming more extensive and seemingly less controlled as more Casinos open and competition increases. Certainly in the high end area of the business less and less players are depositing cash or bankdrafts as they question why they need to, with so many Casinos dangling lines of credit and good payment plans to attract their business.

You often hear that so and so is as good as gold or that “Mr C” will personally vouch for him, but we are quickly turning a lucrative business segment into a money lending enterprise with payment on the never-never.

Not only do we pay commissions on turnover or on loss but we also pick up room, food, beverage and airfare costs and, I would suggest, are increasingly looking at incurring debt liability costs. While this may be a cost of doing this sort of business too often it is an unrecognised cost until the fateful day of reckoning when you find out that gold is not that good and “Mr C” did not really mean what he said. Many would argue and quite rightly that from an accounting standard point of view the expense is only realised at this time and even then only partially until after all recovery steps have been pursued with a gradual but accelerating take up in terms of provisioning during that time.

However, I would contest that this should be given consideration in junket program design or even when structuring deals with high level players who utilise cheque cashing or credit facilities. Certainly I am not suggesting that we provide monies without properly establishing that the recipient has the ability to pay, but that is becoming less certain as more players move from Casino to Casino playing on facilities and being offered the ability to pay monies back over extended periods. This may mean that in the referencing phase of checking on a clients current status you can be unaware of the true liquidity of the client. If the player has a five million dollar cheque cashing facility or credit line at three or four properties and then does the “circuit” so to speak over a short period of time is it reasonable to expect the player to be able to pay. He was originally referenced for his capacity to pay $5 million but now has potentially $15 million to $20 million in cheques out.

There is also the other aspect of this issue, not only does the ability to pay come into question but also the character. It is potentially easy to forego payment of a gambling debt in some other countries and gaming problems or disputes can quickly turn ugly with a dreadful loss of “face” occurring thus “obviously” rendering a debt null and void. The use of “face” by many of these players to get what they want particularly when they are either winning or losing large sums is renowned.

Also we have what is in some circles called “the last cheque syndrome”. Yes, the player has been good as gold for many years but then the last cheque bounces. Normally this occurs at a time when your questioning how much money can this player really afford to lose (ie how deep is the well) and other early warning signals are given such as the player becoming even more demanding, not arriving with any cleared funds, arriving at times when it is difficult to do proper reference checks, betting more heavily or in an unrestrained, all or nothing, manner. Warning signs but nothing concrete and we do not want to lose a big player, so the monies are extended.

Now I am not suggesting that the player is playing with the Casino’s money, he’s not. If we gave it to him it’s his and provided sensible business practices are engaged such as redemption requirements, withholding of commissions until clearance etc then potential liabilities can be limited.

In terms of program design however, how can these factors be incorporated.