Casino Cage, Credit, and Collections
87Figure 6.2 (b)Daily Cash Summary
Casino credit is granted only to players who will take full advantage of the credit line established by gambling with those funds. The credit au-thorized will be taken away by the casino if the player does not make use of it. In effect, the requirement that the credit be used for gambling serves the same purpose as charging interest: The casino does not require the player to lose, but the player must gamble.
Credit is granted to a player by the casino in order to increase play and, it is hoped, the amount won by the casino. The willingness to grant credit alone does not ensure that players of this caliber can be attracted to the casino. Casino customers who gamble on credit are normally upscale clientele who desire amenities such as gourmet restaurants and fine room accommodations. As a result, the physical facilities, as well as the market-ing plan used to attract these customers, become crucial if the casino is to be successful in marketing to such individuals.
Types of Casino Credit
Credit is considered to be extended anytime the casino is at risk of losing any or all of the funds advanced to a particular player. One form of casino credit is check-cashing privileges. Check-cashing privileges permit the customer to cash either personal or business checks at the casino cage.
The casino then deposits these checks in its bank account on the next business day. The primary risk to the casino from customer check cashing results from the acceptance of a check for which insufficient funds exist in the customer’s account to cover the amount of that check.
In recent years, casinos have also experienced increasing numbers of forged and counterfeit checks. This has resulted in many casinos using check approval programs such as Telecheck to transfer much of the risk of loss to a third-party service.
One exception to standard check-cashing procedures is the situation in which the casino agrees to hold the customer’s check or checks for a specified number of days before depositing them in the bank. This cour-tesy is generally limited to premium customers who are repaying credit previously extended; customarily, the casino, depending on policy, will hold the checks for 30 to 45 days before depositing them for collection. In some casinos, the customer’s account may be considered clear for the amount of the check(s) received so that the patron may continue playing, which effectively results in a further extension of credit by the casino.
Credit Line The total amount the casino is willing to extend is called a player’s credit line. If for example a player’s credit line is $10,000, then the casino will accept checks totaling $10,000 from the player and may agree to hold these checks until some date in the near future.
Front Money Players often come to the casino and bring cash to deposit at the casino cage. Deposits of funds that the player intends to use for 88 Chapter 6 Casino Cage, Credit, and Collections
gaming purposes are referred to as front money. The deposits are referred to as safekeeping if the player intends only for the funds to be held by the casino cage for security and convenience. Front money deposits enable the player to draw upon the funds by signing markers at the table games up to the amount of the deposit.
Credit Granting Procedures
A player wishing to establish casino credit must first fill out an applica-tion (Fig. 6.3). The credit applicaapplica-tion can be accepted by any cage cashier, credit executive, or casino marketing executive. The application can also be mailed, handled by telephone, or sent via facsimile to the casino. When taking an application over the phone, the casino employee simply takes the information and completes the application based on the information communicated. In this instance, the player must still appear at the casino to activate the credit line.
To be granted credit, the customer must (Fig. 6.4):
1. Have at least one bank reference (preferably a U.S. bank) 2. Have a checking account
3. Be the signer on the account
Credit applications vary slightly from casino to casino; however, every application contains at least the following information relevant to the customer:
1. Complete name 2. Address 3. Birth date
4. Social Security number (if U.S. citizen)
5. Name of business where employed, type of business, position with business, and address of business
6. Phone numbers for both residence and business 7. Amount of credit requested
8. Bank references with account numbers 9. Mail preferences
If the application is presented in person, the identification of the applicant is verified, photocopied (in most cases), and stapled to the application. If the application is not taken in person, the identification is verified and photocopied prior to any credit being issued. Photocopying a player’s identification document may be of great value if it subsequently becomes necessary to prepare a CTRC in accordance with Title 31 or Regulation 6A requirements. If the player’s identification is on file and is unexpired, there may be no need to interrupt, or even notify, the player if the $10,000 threshold for cash transactions is exceeded. In many casinos today, the
Casino Credit 89
90
J I M S C A S I N O
Las Vegas
Credit Application
Thank you for your interest in Jims Casino.
Please return the completed form by mail or fax; the postage is prepaid for your convenience.
Please contact us should you have any questions.
Name (Please print) ____________________________________ Date of Birth _____________
Street Address ______________________________________________________________________
City ___________________________________________ State ________ Zip Code ____________
Residence Phone (___)_______________ Social Security Number ________________________
Company Name _________________________ Type of Business _________________________
Position ________________________________ Business Phone (___)______________________
Company Street Address ____________________________________________________________
City ___________________________________________ State ________ Zip Code ____________
Credit Requested $ ____________ Direct All Correspondence to: ___ Business ___ Residence Bank 1 Name (Checking account only) _________________________________________________
Branch and Street Address ___________________________________________________________
City ___________________________________________ State ________ Zip Code ____________
Account # (Business) _____________________ Account # (Personal) _____________________
Deposit Checks to: ___ Business ____ Personal
Bank 2 Name (Checking account only) ______________________________________________
Branch and Street Address ________________________________________________________
City ___________________________________________ State ________ Zip Code ____________
Account # (Business) ________________________ Account # (Personal) __________________
Deposit Checks to: ___ Business ____ Personal Anticipated Arrival Date ___________
My signature below is authorization for my financial institution to provide Jims Casino with the requested information pertaining to my checking accounts in accordance with the provisions of the Federal Fair Credit Reporting Acts. This authorization applies to both my business and personal accounts. I will be responsible for any fees charged. The confidentiality of the information provided will be maintained except when disclosure of this information is required by applicable law.
Name (Please print) ___________________________________________
Signature _____________________________ Date _________________
Figure 6.3 Credit Application, Jims Casino
91 C r e d i t Au t h o r i z at i o n P r o c e s s
1. Is credit application complete?1 Yes (go to #2) 2. Is credit application legible? Yes (go to #3)
3. How much credit is requested? $ _____________ (go to #4)
Deliver Application to Credit Department for Processing 4. Has identification/passport been photocopied?2 Yes (go to #5) 5. Has gaming report been obtained from Central? Yes (go to #6)
6. Is customer reported as 4 in 14? Yes (see credit mgr.) No (go to #7) 7. Has consumer credit report been obtained? Yes (go to #8)
8. Is consumer credit report clear? Yes (go to #9) No (see credit mgr.) 9. Does customer have credit elsewhere? Yes (go to #10) No (go to #23) 10. How long established with Central? Date ___/___/___ (go to #11)
11. Has in-transit been requested? Yes (go to #12)
12. Does customer owe? Yes (see credit mgr.) No (go to #13) 13. Is it after banking hours? Yes (go to #21) No (go to #14) 14. Has bank check been obtained? Yes (go to #15)
15. Can customer sign alone? Yes (go to #16)
16. Has account been open at least 6 months? Yes (go to #17) No (see credit mgr.) 17. Does average balance support the request? Yes (go to #18) No (see credit mgr.) 18. Does customer have any derogs at Central? Yes (go to #19) No (go to #21)
19. Are the derogs: Paid? (go to #20) Owed?
(do not issue credit) 20. How recent? ________________ How much? ________________
21. Is any bank info available through Central? Yes (go to #22) No (proceed w/caution) 22. Does customer‘s current limit equal request? Yes (go to #27) No (see credit mgr.) 23. Has bank check been obtained? Yes (go to #24)
24. Can customer sign alone? Yes (go to #25)
25. Has account been open at least 6 months? Yes (go to #26) No (see credit mgr.) 26. Does average balance support the request? Yes (go to #27) No (see credit mgr.) 27. It is time to make a decision.
Key Questions:
✔ Does customer have credit elsewhere?
✔ Does customer owe?
✔ Does customer’s current limits equal request?
✔ Does average balance support the request?
✔ Does customer have and reported derogatories?
1 Application may be taken over the phone. Application is not complete until customer signs form.
2 If customer is not present during application process, make sure I.D. is photocopied before issuing credit.
Figure 6.4 Credit Authorization Process
application and identification document are scanned into the casino sys-tem and retained in computer files.
The casino often requires the player to sign a “bank credit authoriza-tion form,” which authorizes the customer’s bank to release any credit in-formation directly to the casino. Once the application is received by the casino, information on the customer’s bank account is requested. Many casinos use credit agencies for obtaining credit and bank checks on a player.
National Cred-A-Chek is a company used by many Las Vegas casinos for bank verification. It is not unusual for a bank to refuse to provide any customer information, and the casino is very sensitive to the customer’s desire for privacy. If a casino were to contact the bank directly, the request for information could create concerns for the officers of the bank. As a re-sult, companies such as National Cred-A-Chek provide a valuable service to both the casino and the casino’s prospective customer.
Regardless of who makes the contact or how the bank is contacted, certain information is requested:
1. Opening date of the account 2. Average and current balance 3. Signers on the account 4. Is the account “satisfactory”?
Opening Date The opening date of the account is very important. A new account could indicate problems for the casino. A new account may not be a good indicator of the player’s liquidity or, even worse, it could signal an attempt to defraud the casino. Typically, a casino desires an applicant’s bank account to be open at least one year.
Average and Current Balance The bank will be requested to provide the customer’s average and current balance in each account given as a refer-ence for both personal (P) and business (B) accounts. The average balance will be a range and, normally, is based on the last three to six months.
Savings and loans occasionally use the last six months in computing the average. 92 Chapter 6 Casino Cage, Credit, and Collections
A person with a Low 5 Personal rating has, on average, a personal account balance ranging from $10,000 to $39,999. A High 4 Business rating indi-cates that the applicant’s business account contains an average balance ranging from $7,000 to $9,999. The applicant may be approved for credit based on qualifying average balances in either a personal or business account.
The current balance is the amount in the applicant’s account at the time of contact by the casino or credit agency. Between 5 and 10% of the banks throughout the United States will not release either the average balance or current balance. In these instances, the bank is asked if a check in the amount of the credit requested would clear today. The casino then knows a minimum amount in the account as well as the opening date of the account.
Signers on the Account Since a signed marker is nothing more than a counter check, the casino must have the signatures necessary to cash the check. If two signatures are required, for example, a husband and wife or two business partners, the instrument is of no use to the casino.
Is the Account Satisfactory? When a bank reports that an account is sat-isfactory, it means that no bad checks have been written during the past year. If the customer has a history of writing checks for which insufficient funds are on deposit in the account, the bank will report the account as being unsatisfactory.
Classes of Customers Applying for Casino Credit
Fortunately for the casinos, approximately 75% of the customers applying for credit have casino credit elsewhere. It is fortunate for the casinos be-cause there is an agency that specializes in providing credit information on casino credit customers; however, 25% of those applying for credit have no prior history of gaming credit. The bank information is the pri-mary source available to establish credit for someone who has no prior history of casino credit. The average balance, current balance, and the amount the customer requests are the key determinants.
For the 75% who have casino credit elsewhere, there is a reporting agency known as Central Credit, Inc. (Central Credit) that provides in-stant information on the applicant. Casinos around the world have the option of subscribing to the services offered by Central Credit. If the ap-plicant is in Central Credit’s files, the name of the apap-plicant, birth date, address, Social Security number, and every casino where the customer has a credit history will be provided. Central Credit also reports any derogatory (derogs) information reported on the customer. The primary concerns of the casino are (1) outstanding balances at other casinos and (2) any derogatory information.
Casino Credit 93
Gaming Report/Inquiry and Intransit There are two primary types of reports provided by Central Credit: the gaming report (also known as an inquiry) and an intransit report. The gaming report (Fig. 6.5) is requested most often and is available immediately. In addition to payment and credit limit history, the gaming report will include any reported bank in-formation. The shortcoming of the gaming report is that the information is not necessarily up-to-date.
The intransit report (Fig. 6.6) provides up-to-the-minute informa-tion because every casino where the applicant has credit is contacted to find the current amount owed to the casino. The shortcomings of the in-transit report are that it takes time for Central Credit to contact each casino and that much of the derogatory information available in the gaming report is not included.
From the Central Credit sample reports, the inquiring casino can de-termine that Mr. Kilby established a line of credit at Treasure Island on January 16, 2002, in the amount of $5,000. The casino can further deter-mine that Mr. Kilby’s last action at Treasure Island was on August 2, 2002.
At the time the Central Credit reports were requested (April 30, 2003), Mr. Kilby’s account at Treasure Island indicated a balance outstanding of
$19,500.
Central Credit will not provide any information until the customer is established at the casino requesting the information. A customer is con-sidered established when credit is applied for or when a cashier’s check or money order is deposited. Establishing an applicant puts Central Credit on notice that the inquiring casino is claiming the applicant as one of its customers. Central Credit will list all casinos where the applicant has a credit history, including credit limits and the date of the customer’s highest and last credit issued.
Derogs Derog is short for derogatory information. If any subscribing casino has had difficulty collecting from a credit customer, this deroga-tory information will be indicated in the Central Credit system. Derogs include insufficient funds (NSF), no account, slow pay, account closed, and stop payment.
4 in 14 Central Credit will also report whether an applicant is “4 in 14.”
Any customer who has applied for casino credit at four or more casinos during a two-week period is noted as “4 in 14.” Research has shown that 80% of these applicants will write checks that go bad during the follow-ing six months. If a customer is classified 4 in 14, the casino will almost al-ways turn down a request for credit.
Preferred Customers Preferred customers are those whose credit infor-mation is treated as confidential or preferred by the casino. The casino in which the customer is treated as preferred will not release any credit in-94 Chapter 6 Casino Cage, Credit, and Collections
95
V64
CENTRAL CREDIT, LLC
Page 1672 Gaming Report 04/30/2003 12:26:15 PM
Summary Notify Terminal:
CCID: 00 123 103 790
Name: KILBY, JIM 07/08/1949 @ LAS VEGAS, NV
Resume: First Est: 08/24/1967 By V24 No. of Clubs: 27 Flags: D P Last Est: 07/06/2002 By V179 Last Updated: 04/30/2003 12:32p by V64
Gaming
V64 PALACE STATION CASINO D #10042
REST 07/09/1990 10,000.00 LT LA 06/27/2002 70,000.00 LTDT 02/09/2002 50,000.00 UDA 04/30/2003 77,000.00
TTO 06/26/2002 70,000.00 BAL 04/30/2003 77,000.00
NOCR 11/19/2002
MEMO NOCR DEROG
5,000.00 NSF 07/31/2002 ORIG 07/16/2002 72,000.00 DCA 07/31/2002 ORIG 06/27/2002
V43 BALLY’S/PARIS LAS VEGAS D #0141705
EST 01/23/1989 FM LA 06/02/2002 20,000.00
UDA 04/30/2003 17,720.00 BAL 04/30/2003 17,720.00 CCN 06/09/1994
20,000.00 NSF 07/25/2002
V141 TREASURE ISLAND D P #203
EST 01/16/2002 20,000.00 LT LA 08/02/2002 10,000.00 LTDT 06/14/2002 30,000.00 UDA 04/30/2003 19,500.00
NOCR 08/21/2002 BAL 04/30/2003 19,500.00
MEMO NOCR-DEROG
30,000.00 NSF 08/23/2002
V110 RIO HOTEL & CASINO #1425
EST 02/23/1990 UPD 04/30/2003
Figure 6.5 Central Credit Gaming Report
96
V64
CENTRAL CREDIT, LLC
Page 1672 Gaming Report 04/30/2003 12:25:38 PM
Full CCID: 00 123 103 790
Name: KILBY, JIM 07/08/1949 @ LAS VEGAS, NV
Resume: First Est: 08/24/1967 By V24 No. of Clubs: 27 Flags: D P Last Est: 07/06/2002 By V179 Last Updated: 04/30/2003 12:32p by V64
Gaming
V64 PALACE STATION CASINO D #10042
EST 04/11/1986 H&L 06/27/2002 70,000.00
REST 07/09/1990 10,000.00 LT UDA 04/30/2003 77,000.00
LTDT 02/09/2002 50,000.00 BAL 04/30/2003 77,000.00
TTO 06/26/2002 70,000.00
V43 BALLY’S/PARIS LAS VEGAS D #0141705
EST 01/23/1989 FM HI 01/24/1989 50,000.00
INQ 07/08/2002 LA 06/02/2002 20,000.00
EST 10/30/1991 15,000.00 LT H&L 05/19/1992 38,000.00
INQ 10/01/1993 UPD 04/30/2003
INT 02/17/1993
V110 RIO HOTEL & CASINO #1425
REF 02/08/1990 UPD 04/30/2003
40001689 PER ACCT: 10,000 GOOD CSA Since:
CITIBANK By: V43 on 01/09/2002
40001689 PER H1 4 Since: 09/01/1989
BK OF AMERICA By: V8 on 06/11/984
038720 PER MED 5 Since: 12/1982
0387005 PER LO4 Since: 06/1975 Res 2250 Fountain @ Las Vegas Occup PROFESSOR
Rmrk UNLVPER V8 06/10/1984, V19 05/29/1988 End of Report.
Figure 6.6 Central Credit Intransit Report
formation to Central Credit. If a gaming or intransit report is requested, the only information provided is that the customer does have credit. No derogs or amounts owing are included in Central Credit’s report for a preferred patron.
It is not unusual for one casino to consider a customer preferred while a second casino does not and releases pertinent credit informa-tion to Central Credit. The only way a casino can obtain informainforma-tion on a preferred customer is for an executive at the inquiring casino to di-rectly contact an executive at the casino where the customer is a pre-ferred customer. In this manner, the executive at the casino receiving the inquiry may decide on the amount of information, if any, to provide to the inquiring casino. The policy of many Las Vegas casinos is to treat any customer with a line of credit of $50,000 and above as preferred;
however, the policy may vary from casino to casino and from player to player.
Disposition When preparing an application for casino credit, the cus-tomer will be asked how she plans to “dispose” of any outstanding bal-ances. Disposition refers to how the customer plans to pay any monies owed the casino. Disposition methods may vary from customer to cus-tomer. The following are examples of disposition methods:
• Check on departure.
• Customer will pay an outside (branch) office within 30 days.
• Statement sent to residence. Customer will pay within 30 days of last marker.
• Send no statement. Customer will pay within 30 days.
The card shown in Fig. 6.7 is provided by a typical casino to credit players.
The Credit Decision and Setting Limits
Applicants for consumer credit must prove that they are deserving of the loan. To be denied casino credit, applicants must have something in their report to indicate that the loan is not deserved. Generally, an applicant may be expected to be granted casino credit if there is nothing in the ap-plicant’s record to show that credit should not be granted.
Table 6.1 compares the information required by casino and consumer creditors before issuing credit. In the past, national consumer credit re-porting agencies were not checked by casinos before issuing credit; how-ever, it is becoming a policy at many of the larger casinos to contact agen-cies like TRW for a report on any applicant who does not have a record with Central Credit.
Casino Credit 97
Whether casino or consumer credit is being sought, the executive re-viewing the application is ultimately looking for the “3Cs” of credit:
Whether casino or consumer credit is being sought, the executive re-viewing the application is ultimately looking for the “3Cs” of credit: