Paycheck Cashing at Casinos a Controversial Issue

LAS VEGAS – It's payday and a long line has sprouted at the casino's cashier cage, where tellers dole out bundles of money.

Nearly all the folks waiting this afternoon inside the Boulder Station casino (search) are clutching paychecks. A waitress offers free margaritas to the growing crowd beneath catchy banners —"Just cash your check, spin and win?" "Everyone's a winner ... Guaranteed!" and "Free drink with every paycheck cashed."

Many in the line leave the casino without spending a penny money inside the casinos but the practice is drawing some criticism from those in and out of the industry.

Patrons come to avoid the fees of check cashing centers and banks' requirement that they have an account.

Unlike banks, casinos lure their customers with free booze and an array of gimmicks. People can win food and more money by playing games, such as Poker Payday, Paycheck Bonanza Plus and Paycheck Poker.

Some of the biggest practitioners of this time-honored Nevada trade are Wall Street darlings like Station Casinos (STN) and Boyd Gaming (BYD), companies that own casinos popular with locals.

At Boulder Station, testimonials hang above the cashier cage from Gilbert, Michael and Dietmar, the last claiming he doubled his paycheck.

The Orleans casino (search) boasts the Paycheck Party Machine that allows players to pick their favorite game: poker, slots or Keno and "Win up to $250,000."

On its massive parking deck, the Palms hotel-casino displays a scantily clad woman holding wads of money with the slogan: "Win up to $10,000 instantly." The casino also advertises in the local newspaper.

Arizona Charlie's (search) tempts workers with the words "Dream Big!" and a free big-screen television.

The biggest companies in the industry — MGM Mirage (MGG), Harrah's Entertainment (HET) and Caesars Entertainment (CZR) — do not cash paychecks. In Las Vegas, these gambling goliaths depend on tourists rather than local residents to drive their earnings.

Harrah's Chairman Phil Satre said many communities frown upon the practice and it isn't worth the negative publicity.

Virginia McDowell, senior vice president of operations of Argosy Gaming (AGY) in Indiana, said her company does not allow check cashing at its casinos.

"We wouldn't even if we could because ... it's not good business," she said. "It's just not the right thing to do. We are good corporate citizens and we certainly don't want to do anything that's going to cause problems."

Indiana, New Jersey, Missouri, Illinois and Louisiana are among the states that prohibit payroll or government check cashing at their casinos.

Kevin Mullally, executive director of the Missouri Gaming Commission (search), said people should not do their banking at casinos, which are for entertainment.

"I'm sure that some would argue that it's a convenience factor for the patron," he said. "But it's just inconsistent with the environment that we would like to create in Missouri. You don't go to the movies and cash your paycheck. You don't go to the bowling alley and cash your paycheck. When you start allowing those type of deviations, then it becomes something other than that."

Scott Scherer of the Nevada Gaming Control Board (search) said he was approached by a company that wants to go a step further and install automatic loan kiosks inside casinos.

"My gut instinct is I'm opposed to this but I'm open to listening," he said. "It could be a combustible issue for the industry. If you're cashing a paycheck, it's money you've already earned. Do we want to allow this one step further — gambling away money you haven't earned?"

Executives with MGM Mirage and Caesars Entertainment have raised the question of whether check cashing should be discontinued in all casinos.

When members of the American Gaming Association (search) considered disallowing casino check-cashing in the industry's new code of conduct, Station Casinos objected.

It would put the company at a competitive disadvantage if only AGA members followed the trade organization's code of conduct, Stations spokeswoman Leslie Pittman said. Not all casino companies — the Palms, for instance — are part of the association.

"If this is going to be prohibited it should be across the board," Pittman said.

Judy Patterson, the association's executive director and senior vice president, said, "There wasn't consensus on this issue."

Station Casinos supplies a valuable service to many residents who don't have bank accounts and don't want to pay a percentage of their check to cash it at other places, Pittman said.

At the off-Strip Orleans hotel-casino, scores of people stood in line one recent Friday waiting to cash their checks. The line was longer than a football field and a waitress couldn't unload her drinks fast enough to the mostly Hispanic crowd.

At the end of it paycheck queue, the Paycheck Party Machine loomed large.

Robert Stillwell, Boyd Gaming's vice president of corporate communications, said the casino tactics are reasonable, including offering free drinks.

"You see a lot of promotions in retail, and it's commensurate with what any business does trying to generate business," he said. "We are not serving minors. We are serving adults."

Rob Hunter, a clinical psychologist who runs the Problem Gambling Center (search) in Las Vegas, said his patients don't need more temptation to gamble.

"The idea of having an entire check in $100 bills and two free drink coupons is inherently dangerous for the problem gambler," he said.

Arnie Wexler, former executive director of the Council on Compulsive Gambling (search) of New Jersey, agreed.

"That's wrong," Wexler said. "For them to cash checks is a business decision, but for them to give free drinks? That's disgusting. It's an inducement to gamble once you get the money."

Charlotte Haskell, who receives $781 in workers compensation every two weeks, likes to cash her checks at Boulder Station.

"I've been coming here forever," Haskell, 41, said. "I'm going to get my free spin."

Haskell doesn't burn through all her money after she cashes her check at the casino. She's developed a system.

"That's how I control my gambling, having someone drop me off and wait," she explained.

But then again, Haskell doesn't like to gamble on Friday, anyway.

"I usually come back Saturdays. Saturday is my day."