Question of the Day - 24 January 2020

It's true that casinos have to keep a certain amount of cash onsite to pay out big winners, whether a whale or just a minnow who gets lucky and hits a big progressive jackpot. This is a matter that falls under the jurisdiction of the Audit Division of the Gaming Control Board, regulation 6.150, which you can look up in its entirety on the GCB's website.

And it's not just a guess at the possible maximum payout a casino might face on any night with a random number of zeros on the end. Precisely calculated formulas apply, depending on the size of the property and the type of gaming it offers; naturally, the more gambling a casino offers, the more money it needs to have available.

Regardless of how big or small a casino might be, however, it's required to remain in compliance with the regulation; otherwise, it must alert Gaming Control immediately should the available bankroll fall even $1 beneath the mandated amount.

When we asked the chief of the Audit Division whether this ever happens, he explained that a sizable safety cushion is built into the dollar amount required, so that a temporary shortfall still enables a property to operate, but properties that do violate the regulation generally go out of business shortly thereafter. It's not a sign of good financial health.

The bankroll that a typical casino (as opposed, for example, to a stand-alone video poker bar) must have is divided into two types. There's the money that they must keep "on-hand," i.e., hard currency in the cage, kiosks, and vaults. And then there’s the money that falls into the "next-business-day" category -- in other words, funds that the casino is good for, but would need to issue a check or wire transfer for, being too large to be handled via a straight cash transaction.

For the purposes of Reg. 6.150, "currency" is defined as paper money issued by the United States government -- coin and foreign cash don’t count. And the "next-business-day" stash includes all the "on-hand" cash, plus any coin, foreign currency, chips/tokens, personal checks, payroll checks, cashier's checks, and any money held at financial institutions that can be converted to currency and be at the casino by the next business day. It excludes counter checks, markers, any cash that patrons may have placed on deposit (that's your money and not theirs to borrow), and unpaid race and sports tickets (if you place a wager on the Super Bowl in July, that money is technically still yours -- or at least not the casino's -- until the game has been played).

As far as the actual formula is concerned, it's not that complicated to calculate, if you have all the relevant figures at your disposal -- the GCB supplies an Excel spreadsheet that has all the codes embedded in it and works it out for you, once you type in the required information. 

There are also some helpful "look-up tables" that give you some definite figures: For example, if your gross gaming revenue is greater than $130 million, you need to have available $1,000 per .01-.50 and multi-denomination machine, plus $1,800 per $1 slot, and $5,000 each for slots of higher denomination. 

So you can see that there's no set figure we can quote, but we can say this: Casinos have to have a whole heckuva lot more money on hand than banks.

On January 17, 2019, the Fed updated its reserve requirements. All banks with more than $124.2 million on deposit must maintain a cash reserve of 10% of deposits. Banks with more than $16.3 million but less than $124.2 million must reserve 3% of all deposits. Banks with deposits of $16.3 million or less don’t have a reserve requirement -- yes, small banks are allowed to hold 0% in reserve.