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Casino Credit: Calculating the Risk

Casino credit should be simple and easy for the player, airtight and risk-free for the operator.

Casino Credit: Calculating the Risk

“If you have tables, you’d better be ready to issue quick credit, or no one with a thick wallet is going to come to your casino.”Dennis Gomes

In that 2010 interview, Gomes recalled his time as president of a Las Vegas casino, when a high roller racked up a staggering $9 million in losses, then settled the debt for $7 million.

Called on the carpet by his chairman, Gomes defended the decision to offer a discount of more than 20 percent (the casino’s threshold was half that). “All we did,” he argued, “was give this guy the privilege of dragging cardboard across our felt. For that, we made $7 million. This cost us nothing.”

Casino credit is primarily for high rollers—those who bet big, lose big, and, like the abovementioned whale, pay off big for the host casino, even when they get a markdown. But it’s also for those who’d rather play against a line of credit than carry cash, or who exceed the daily ATM limits imposed by their banks.

Mostly, it’s designed to get qualified players—at all levels—into the game with a minimum of muss and fuss.


Data Banking

Hundreds of casinos make these sensitive decisions with the help of CentralCredit, established in Reno in 1956 by Mapes Hotel casino cashier Tod Early and serving as the earliest and, eventually, primary credit and check-cashing approval source in the casino industry. It was later acquired by Global Cash Access, now Everi. As the industry’s leading repository for credit data, CentralCredit gives operators secure access to players’ credit reports across properties, and regularly updates their marker status.

So, why would operators willingly pool what could be considered proprietary player information with their rivals? For one thing, it helps make sure they get paid.

“A player may be good for $50,000 to me, but let’s say everybody else comes to the same conclusion,” says Everi Chief Product Strategy Officer Tim Richards. “Now five casinos have given him $50,000 each, and he has $250,000 in potential credit outstanding—which he’s not good for. Nobody wants to be out that money, so in this process, everybody’s interests are aligned.”

Along the same lines, but from a responsible-gaming perspective, the database lets casinos keep an eye on player activity over time, reducing the chance that a patron will become overextended.


Creating a Paper Trail

Before any amount of casino credit is issued, the player must authorize a credit department to pull a consumer report, which is checked along with bank account information, including recent balance histories. But it doesn’t work the other way; the player’s casino credit is never reported to Experian, TransUnion or Equifax, and his gambling losses, however great, will have no impact on his ability to qualify for an outside loan, provided those losses don’t affect his general creditworthiness.

Casino credit is provided via a marker, or counter-check against the credit line that will be repaid with funds from a checking account, generally in 15 to 45 days; in effect, the patron is writing a post-dated check in order to use the casino’s money. No fees or penalties are associated with the debt.

In the U.S., credit is administered differently from state to state, and can differ within states, from one county to the next. Some casinos don’t issue credit at all, and whole jurisdictions don’t allow it—like the state of Washington, home of 21 tribal casinos.

Casinos also have differing levels of risk tolerance. Some just couldn’t be bothered with the hassle of issuing, monitoring and collecting credit debt, particularly if they have no VIP clientele. They also may not want to incur the labor costs involved with running a credit department.

First-time credit is not instantaneous, says Richards. “The systems are a little bit archaic still—there are not a lot of automated ways to get bank balances—but once you solve for that, not only is credit issued in a more timely fashion, but now you don’t use as much labor to manage credit.”

Once a patron is in the system and has built up a history, issuing credit—and the right amount of it—is a fairly simple and speedy process.


Then and Now

Alvin Zayas, director of cage and credit at Pechanga Resort Casino in Temecula, California, was a banker in Las Vegas before moving into the gaming sector. “Back in the old days when I started, it was the Wild Wild West,” he says. He recalls seeing high rollers walk up to a casino cage, lugging $2 million in $100 bills. “People would offer the titles for their cars as collateral to gamble. Forty years ago, that was an acceptable mode of doing business.”

Credit lines at Pechanga can run as low as a couple of thousand dollars, but the amount matters less than the timely squaring of accounts, generally in 30 days.

The process of clearing a patron for credit was time-consuming and labor-intensive. “We applied, created a file, and had to issue all the instruments manually—30 years ago, we’d be making phone calls to banks on a Saturday night, and could be put on hold for a three-day weekend.”

Today, he says, “It’s all computerized. If you apply for credit—if you have a history at other casinos and there is nothing derogatory—we can put you on the game in 15 to 20 minutes.”

A new player with no history requires more investigation. “That’s when experience plays a role,” says Zayas. “Casino credit is not black or white; there’s a little gray area. If you want $20,000, and I’m sure you’re good for it but don’t have any information about your gaming habits, I could come back and say, ‘Would you be comfortable with $7,500?’ You have the opportunity to say yes or no, and we can build a relationship from there. But we’re not going to give you money because you said so.”

Credit lines at Pechanga can run as low as a couple of thousand dollars, but the amount matters less than the timely squaring of accounts, generally in 30 days. According to Zayas, the best risks of all are professional gamblers. “This is what they do for a living, and they’ll never stiff you, because if they do, they’ll never get casino credit anywhere.” Even if their consumer credit reports are riddled with “delinquencies from JC Penney and Sears,” he says, their casino credit report will be “immaculate.”

Credit histories also create a record of inconsistencies and suspicious money movement. “We analyze it constantly, to see if you’re taking casino credit, but not using the line properly. Say you took a marker for $10,000, but our records indicate you only gambled $2,500. Of course we ask, where is the rest? So we monitor it very closely, technology has given us the opportunity to look at it much more quickly, and we have computer programs that can identify those trends.”

Because casinos are held to the same federal reporting standards as banks, to guard against money laundering, they must report any currency transactions over $10,000, as well as multiple transactions that amount to more than $10,000 in a single day.


Cost of Doing Business

According to an analysis of casino credit in Nevada compiled by the Center for Gaming Research at the University of Nevada, Las Vegas, in general, “Nevada casinos have been successful in lowering their bad debt expenses in recent years. Since 2010, bad debt ratios for casinos have, for the most part, fallen.”

In 2019, according to the UNLV analysis, Nevada casinos wrote off more than $47 million in debt as unpayable—but that amounted to just 0.5 percent of total revenues. In other words, it’s a business expense.

According to one gaming industry analyst, the larger destination resorts in markets like Las Vegas are more than happy to provide million-dollar credit lines to players—usually, table-game enthusiasts—provided they’re good for it.

“They want them to have that bankroll, because if they can keep them in the seat long enough, they generally know they’ll make out.” But no such transaction is risk-free. “They don’t want to lose money on these people, feeding them, taking care of their entourage and coming out of pocket with money discounts.

“It requires some education and sophisticated management to do the credit research, but even then, some of it goes bad.”

Win, lose or draw, Zayas calls casino credit an essential way “to retain a player and promote future business with that player.”