The Casino Governmental Participation

Governments can best ensure that all revenues are properly accounted for by being actively involved in the accounting process.

When gaming is restricted to gaming devices only, on-line monitoring systems give government accountants the opportunity to monitor play as it occurs.

Louisiana uses an on-line system to monitor slot machine activity at private 'truck stop' casinos with up to 50 games and taverns and other locations with no more than 3 games.

On-line systems also are commonly used in government-operated video lottery terminals, which are similar to slot machines.

In a casino table-game environment, this would require that government agents be present and participate in every transaction that involves the transfer of money, credit, or monetary equivalents, such as chips.

Surveillance would require that government personnel be present to record an review surveillance tapes.

As one can imagine, this system would be financially impractical in most jurisdictions unless a jurisdiction had a single large casino or some other unique characteristic.

Short of full government participation, in some jurisdictions government participates in certain aspects of the accounting process. New Jersey, for example, has government offices on the casino premises.

In Louisiana, the land-based gaming devices are electronically linked to state police headquarters, and allow on-line monitoring of all gambling activity. This is possible in locations that allow gaming devices only.

Typical audit objectives are to ensure that the unlicensed casino is not paying or allowing unlicensed persons to receive gaming revenues; has adequate internal control procedures; is following its internal control procedures for the handling of cash and transactions; is properly reporting its revenues; and is paying all taxes and fees.

Government audits the casinos often are unannounced and irregular. Staff auditors may conduct long, detailed reviews or spot checks of compliance with certain regulations or procedures.

Another method of meeting governmental accounting objectives is the outside audits, that require casinos to undergo annual audits by independent outside accounting firms.

The government may have these firms conduct an audit of the casino's financial statement and a review of the casino's compliance with its internal control submission.

Most governments require casinos to maintain detailed records of all transactions. This facilitates the audit process either by the government or by independent auditors, and allows for government investigations into the casino's activities.

Besides independent audits, governments usually require the casinos to provide any types of periodic reports.

These are most commonly tax returns, but other reports that governments may require include employee lists, loans, equipment purchases, junket agent and junket lists, bad debts, involvement in foreign gaming, and significant contracts.

Another vehicle that government can use to ensure proper accounting and regulatory compliance committee. Regulatory agencies often dictate the membership criteria, but such committees usually include one or more outside members.

These committees must meet periodically to review the casino's compliance with all gaming laws. They also may be empowered to conduct investigations and provide advice to the casinos.