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Best of Howard Stutz

Gaming Guru

Howard Stutz

Checking the books brings intrigue for casino auditor

10 April 2007

LAS VEGAS, Nevada -- Armed with an accounting degree from Arizona State University, Gregg Gale wanted more than just a job as a numbers cruncher.

He found that intrigue and some glamour when he joined the Gaming Control Board as an auditor in 1979.

Two days into the job, Gale was checking over the casino books at Caesars Palace. At the time, Caesars was considered the Strip's most luxurious resort.

A few months later, Gale was auditing the casino records at the Stardust. The Strip hotel-casino was controlled by organized crime under the guise of the Argent Corp., all of which was made famous in the book "Casino" and the subsequent movie of the same name.

A few years later, Gale again audited the Stardust books, this time as part of a joint effort between gaming regulators, the FBI and the Internal Revenue Service, which took over the casino after an alleged skimming operation was uncovered. The casino's ownership was forced to surrender its gaming license.

The Stardust matters marked the kind of investigative opportunities Gale imagined 28 years ago when he sought out a career that involved both law enforcement and an accounting background.

"Being a casino regulator is not something you grow up envisioning yourself doing," said Gale, who has been the control board's chief auditor for 20 years. He oversees a staff of 98, half of whom are certified public accountants.

"The Gaming Control Board, in the 1970s, recruited at Arizona State and the California schools," Gale said. "I had an interest in law enforcement, but I also wanted to be a certified public accountant so this job allowed me to achieve both goals."

The casino industry, over the years, has routinely found employees by prospecting from the Gaming Control Board staff. Gale had one thought about a career change that could have landed him with a hotel-casino in either auditing or operations. He obtained a second bachelor's degree, this time in hotel administration from the University of Nevada, Las Vegas.

But what kept him at the control board?

"They promoted me," Gale said.

The control board's audit division conducts full scope audits on all major casino licensees every 2 1/2-3 years. In between, agents will go undercover to be sure the casinos are following proper accounting procedures and the multitude of the state's gaming regulations.

Gale said the growth in the gaming industry over the past three decades has helped the control board's audit division do its job, but also presented several challenges.

Question: What do you enjoy about performing a casino audit?

Answer: Last year our gaming licensees paid more than $1 billion in fees and taxes. As everyone knows, gaming is the lifeblood of our state, and one-third of the state government is paid for by the casino operations and the taxes we raise. Our (audit) professionals make sure the casinos are complying with all regulations. I like being part of that.

Question: Has auditing changed much with the growth of Nevada's gaming industry?

Answer: There is the same basic premise behind a casino operating in 1979 and a casino operating today. When money flows into a casino from slots or table games, that basic business model still exists and it doesn't matter if it's a large casino or a small casino. The only difference is that a large casino has millions of dollars of cash flowing into the count rooms.

Question: How has technology made it easier to follow the money trail in a casino?

Answer: The state of Nevada made a major step in 2003 toward computerizing the slot machine floor. The accounting system now has to interface with slot machines and monitor all the inflows and outflows of the games. The leading manufacturers are in the development and regulation phase of those systems, and once they are in all casinos, it's going to be great for the auditing business.

Question: There are more casinos in Nevada than there were when you started with the control board. Does that make auditing more challenging?

Answer: It's a different type of challenge because the larger casino operations have more games and more slot machines. But there are more complex operations of accounting than there were 20 years ago. We also didn't have as many controls in place 20 years ago that now give us the checks and balances in use today. The challenges before were that we didn't have a lot of audit trails but we've adapted our procedures to the environment.

Question: What has kept you interested in the job for almost three decades?

Answer: I still enjoy the challenges. In my capacity, there is always something new every day. We have to maintain our audit cycle and meet deadlines. I also enjoy working on new gaming regulations.

Question: What new regulations are being developed?

Answer: We are working on regulations governing mobile gaming devices. Before (the devices) go into the field, we have to write the regulations on how they will operate. How do you tax the gaming activity that goes through the device? That's a question we have to answer. We need to make sure there are audit trails in place so we can do our audits on the activity.

Question: The Stardust was imploded recently. Do you have any memories from investigating the skimming operation at the casino?

Answer: I participated in the a joint investigation in which we had information that millions were being stolen through the use of fill slips, which tracked chips moving from the cage to the game. The slips were filled out, but the money never left the cage. We had a tip that the fictitious fill slips took place at 6 p.m. so one night, we had a gaming control agent, an FBI agent and an IRS agent at every Stardust gaming table.

When (the phony fill) took place, we had them dead to rights. I was part of the team of agents who swarmed over the casino. That night, we essentially took over operations. The casino owners turned over their gaming licenses and the Boyd Group (now Boyd Gaming Corp.) took over. The Stardust did very well after that until they closed it and imploded it.

Question: Did you ever consider applying to be one of the three members of the Gaming Control Board when there was an open position?

Answer: I entertained that thought from time to time. But it's a different type of work. It's a policy making job and you also make decisions on licensing applications. I enjoy the day-to-day grind and being behind the scenes. I enjoy being able to keep things operating efficiently.