International edition
November 18, 2017 | Edition Nº3368

By Richard H. Williamson, SVP Regulatory Education, International, BMM Testlabs

Casino openings, part 2

In this second and final installment of Casino openings, the seven essential departments of casino operation are addressed. Those seven departments are accounting, operations, cashier cage, security, surveillance, IT and internal audit.


or many businesses but particularly casinos, the concept of segregation of duties is intertwined into standard operating procedures and documented in internal controls that direct in detail the procedures by which important tasks are performed. The segregation of duties concept is designed to ensure that no important duty is performed in a vacuum, without oversight or verification within a specified time frame. The verification time frame will establish the risk tolerance taking into account the bounds of practicality; i.e., staffing, budgets, risk value, potential headline news.

For a casino opening, essential department personnel cannot be learning on the job but must be proficient before the front doors open. A casino opening is a great opportunity for savvy criminals or shall we say opportunists to identify and profit from inexperienced personnel who are going through the motions without intimate knowledge of their duties and responsibilities. Money is the core commodity in the operation of a casino. The movement of money into, within and out of the casino must be accurately handled and recorded. For all of these essential departments, casinos recruit seasoned industry personnel before opening because the risk of loss is very real.

While accounting seems like a very dry subject, it is the language of business. It gathers and digests information to create reports that detail successes, failures, trends, and other information by which business goals are measured. How the information reaches the accounting department and the process by which information is recorded, retained and verified is largely governed by standard business practices. In casinos, however, the process for collecting and counting money is unique and laced with multiple-department procedures to thwart collusion. Different from most businesses, the income of a casino is largely the result of unknown, unpredictable and unrecorded events that occur during the course of each shift. Capturing this revenue data in a reliable manner is important and not the sole responsibility of accounting. As noted before, the segregation of duties dictates that other departments play a part in the process to ensure the creation of verifiable data.

Probably the most visible department to the general public is operations. This department includes the dealers and supervisory personnel necessary to conduct the games of chance. Thoughts of operations departments initially bring to mind table game activity, but casino operations also include electronic gaming devices. Each of these revenue areas has their respective internal controls which are complex in their own right. The rules governing the conduct of table games begins with the equipment that is used. There are specifications for chips, dice, cards, and table layouts that involve requirements from surveillance to visual concerns. Detailed handling procedures for the receipt, distribution and destruction of chips, cards and dice are necessary to ensure that genuine products reach the tables and that counterfeit products can be detected.

Each table game has its own rules. Extensive training is required to make the dealers and supervisors proficient in protecting both the house and player. Dealers and supervisory personnel receive extensive training before opening day including game protection procedures. Test days are often conducted with non-value chips and play money in order to evaluate the skills of the dealers and the processes to collect, count and record the casino revenue. For electronic games, however, test days involve real money. Electronic games are independently tested, inspected at installation by regulatory personnel, and designed to electronically detect unauthorized modifications to their operating systems. Test days with electronic games involve payments of large jackpots pursuant to IRS rules, servicing the machines, and the collection and reconciliation of revenue which generally involves the ticket-in ticket-out (TITO) system. Gone are the days when the games needed coin hopper fills and extensive money handling procedures. The league of personnel needed to implement the processes for ensuring the integrity of electronic games has transitioned from mechanical to high-tech skills.

The efforts to maintain the integrity of the electronic games occur long before the casino opens, with the inspection of not only the games but also the systems that support this gaming activity.  Some of these systems include the monitoring equipment for recording the metered financial activity and security recordings of the electronic gaming devices, ticketing systems to enable payment of credits on a game, bonus systems for certain award features on games, progressive systems necessary to offer that type of award, count room systems to facilitate the reconciliation of the day’s activity when counting the contents of the cash boxes from both table games and electronic games, systems to monitor table game activity and kiosk systems to facilitate the payment of tickets and the payment of jackpots.

If you are a lucky player, a trip to the cashier cage is in order to redeem your table game chips. Cashier duties involve handling cash, chips, cash equivalents, and the redemption of credit instruments. Cashiers are trained to identify suspicious activities, counterfeit money and chips, and how to respond in the event of a robbery. The cashier cage has front line cashiers, chip bank cashiers and a main bank to reconcile all cashier cage activity for each shift. In the interest of segregating duties, the cashier cage personnel perform a bulk count of the money from the count room to verify the count and immediately take physical control of the money from the count team. Once received by the cashier cage, the money is used to replenish cashier cage balances and to deposit with a financial institution. A lot of responsibility is associated with the duties of the cashiers. Shortages and overages are handled very seriously. Cashiering requires constant accuracy in all transactions, particularly with the public. Extensive experience for cage cashiers is required prior to the casino opening.

Security duties are both routine, and sometimes not. Security personnel have very specific roles in a casino operation. The representatives of this department are often the independent third party to witness a financial transaction conducted away from the cage or to participate in a financial process like the movement of money or gaming chips on the casino floor. Reconciliation of these chip transfer transactions are independently verified by different departments at both ends of each transaction and subsequently reconciled at the end of the shift by yet more different personnel. Security is called upon to handle the ugly activities that occur which can involve disorderly conduct, cheating, and investigations into suspicious activities. These various security skills are not easily taught and are often developed through experience. The litigious nature of our society is the reason why skilled personnel in this area are important for a new casino to efficiently handle delicate situations.

Surveillance requirements include the ability to view every game and the players. The surveillance personnel have to know the rules of each unique table game and the proper payment procedures at both the tables and the cashier cage. There are many technical requirements for the quality and reliability of the equipment to ensure that the images captured can be used as evidence in a court of law should the occasion arise. Effective surveillance skills are essential to documenting criminal activity.

Sitting silently in the background but integrated with every department is IT. All the systems previously mentioned are operated and maintained by IT and, with guidance by the respective departments, IT provides access to personnel for specific duties and restricts access to prevent someone performing an unauthorized task or having access to information that could be used for nefarious purposes. The IT department has to work closely with all the other departments during their system selection processes and subsequently make those systems operational. IT is often involved in forensic investigations. IT personnel are the grease that keeps the operation turning and the department has to be up and running before opening day.

So all these departments work in their own capacity and collaboratively to make a casino operation successful. How does management know whether all the players are performing their tasks in accordance with the prescribed internal controls? This is the role of internal audit. Admittedly, the work of internal audit begins after the casino opens but this department needs to know the functions of all the departments prior to opening. Internal audit provides the independent review to ensure that everyone is literally playing by the rules.

Prior to the opening, just like actors, everyone learns their part and has to practice to make certain that all tasks are performed in accordance with internal controls. This is a critical step in the success of a casino opening and to make this work the equipment and systems need to be operational and properly configured. The rules for the conduct and protection of games have been developed from experiences and continue to be refined as new experiences dictate. Remember, behind every regulation is a good story as to why that rule is in place.

Test nights are essentially the final exam to see if everything is in proper working order, that everyone knows their part, that the systems operate as expected and that the casino activity can be conducted in a manner that guarantees compliance with all those rules. If you ever have the opportunity to attend a casino test night, you will have a greater appreciation of the tremendous efforts needed to make the event a success.

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