EXECUTIVE
SUMMARY | Gaming has come of
age and become a real
discipline and a serious nationwide
business. It involves a lot of different
industries under one roof: gaming,
lodging, entertainment, food and beverage,
golf and other recreational activities.
CPAs with auditing
skills are in high demand in
the gaming industry, where many
financial services are needed such as
reviewing financial statements, internal
controls and standard operating
procedures. As technology replaces cash
on the floor, IT skills also are highly
desirable. Knowledge of construction
accounting can be a plus.
Like any niche, the
gaming industry has distinct
peculiarities. Expect to take a couple
of years learning the vocabulary,
getting to know the issues, meeting the
people, creating awareness and sowing
marketing seeds by speaking at trade
shows and conferences.
Reporting
requirements change from state to
state, and special training
is necessary. Conferences are available
throughout the year through the Tribal
Gaming Association, the Institute of
Internal Auditors and other
universities.
While the Big Four
firms concentrate on the
publicly traded and nationally known
casinos and hotel chains, midsize firms
likely will be more successful with
smaller tribal casino engagements. There
are 290 tribal casinos in the U.S.
A casino’s back
office can be a
family-friendly place with relatively
stable work hours, says one staff CPA
who also has three children.
Cheryl Rosen is a
freelance business journalist whose
work has appeared in Business
Ethics, Business Finance,
CFO.com, InformationWeek
and Optimize. Her e-mail
address is
crosen2@optonline.net
.
|
For CPA Joseph Eve, building a niche
practice in the gaming industry took a little
serendipity, a lot of hard work and patience, and
a good marketing plan. Tribal gaming is
governmental, so Eve’s small tax practice in
Billings, Mont., with its side business in local
government, provided a good foundation. By the
early 1990s, Eve understood the niche’s growth
potential and the need for trained and talented
auditors to protect the tribes, the casino
customers and the investors in this fast-paced,
cash-based business. Through a growing
relationship with the Chippewa Cree tribe, the
Fond du Lac tribe and other Native American
governments, Eve found himself “essentially
dragged into the casino business with them”—and
never looked back. Not one to let fate deal his
hand, he made a conscious decision to focus on the
gaming industry, hired marketing expert Timothy
O’Dell, added three partners and started shifting
his firm’s business mix. He transformed it from
about 40% traditional accounting and 60%
government—with only a couple of casinos—to 85%
gaming. Auditing gaming requires high
levels of trust and lots of personal
relationships, even more than traditional
accounting engagements, Eve says. The firm spent
three or four years creating awareness through the
traditional marketing channels of networking and
speaking at trade shows, and at the same time
worked hard at developing the essential expertise.
“This is a niche where one audit failure will take
you out of it forever,” Eve says. “False moves get
around Indian country within days.”
Eventually, the investment paid off. Today the
firm audits about 60 of the 290 tribal casinos
around the country. There’s room for growth, too.
Big Four firms in the gaming industry more often
audit the books at publicly traded and nationally
known casinos, while midsize firms often handle
tribal casino engagements. Eve’s firm hopes to
grow from $10 million in revenue in this “highly
fragmented niche” to $100 million over the next 10
years.
DOUBLE DOWN The gaming
niche goes far beyond Indian country, of course.
There’s opportunity in this computer-oriented,
late-night, high-risk industry whether you’re a
partner in a small firm or a recent CPA graduate
with a talent for data mining or a penchant for
excitement. From Las Vegas to Minnesota, casinos
large and small are looking for qualified
accountants to keep an eye on the bundles of cash
and millions of unrecorded transactions being
handled by managers and CFOs with extraordinarily
high rates of turnover. When Tony McDuffy
passed the CPA exam in Tennessee in 1981, for
example, he was offered a job at FASB—but opted
instead for the one at Holiday Corp., which at the
time was parent of Holiday Inn and Harrah’s
casinos. Today he is Harrah’s senior vice
president, controller and chief accounting
officer. Cash plays just a small role in his day;
he handles reporting for internal and external
users, full-charge accounting for the corporate
group, payroll and disbursements, property
reporting and tax. “I’ve heard my job
described as operating a bank in a circus—and that
has proven to be true in that we have customers
who make deposits and withdrawals, but in slot
machines instead of ATMs,” McDuffy says. But at
the same time, gaming has come of age and become a
real discipline and a serious business—moving
“from a collection of small kingdoms run by local
management to a nationwide network with
cross-property relationships with customers,”
McDuffy says. Harrah’s revenues were roughly $9.7
billion in 2006. “It’s very cash-intensive and
marked by solid returns,” he notes. With
all that cash, it’s no surprise that casinos are
highly regulated, with unique twists in reporting
requirements from state to state. Special training
is necessary; McDuffy took a 10-day intensive
course at the University of Nevada, but
conferences are available throughout the year
through the Tribal Gaming Association, the
Institute of Internal Auditors and other
universities. He is now on a task force writing a
new edition of the AICPA’s Casino Audit Guide,
which will be published next year. It will
touch on new elements in this ever-changing
environment, such as loyalty programs and rewards
points, which only airlines offered back when the
first edition was written 20 years ago. To
McDuffy, the real excitement is not in the ringing
bells and whistles on the floor, but in the
ever-changing business going on in the executive
suite. He has participated in “a number of
once-in-a-lifetime transactions”—two spinoffs,
property sales and acquisitions, IPOs and debt
issuances, and now the switch from a public
company to a private one. “I enjoy sitting around
and debating accounting theory and how it will
manifest itself in financial statements—to have
had the opportunity to participate in that series
of transactions has been an incredible
experience,” he says. CPA Nicole Kramer,
meanwhile, got into the business literally from
the ground up. A Connecticut native, she heard
about the plans to build Mohegan Sun 11 years ago,
just as she was about to graduate. She took her
first job as one of three in-house accountants
with the Mohegan Tribal Gaming Authority, the
parent organization that manages Mohegan Sun
facilities in Connecticut and Pennsylvania, and
has never left. Working in that preopening phase
gave her broad experience she would not likely
have found in an accounting firm or even a small
business. She’s handled financial accounting,
general ledger, construction accounting, accounts
payable and financial transactions to secure debt.
Currently, in her position as finance manager,
she’s working on corporate governance and
Sarbanes-Oxley section 404 compliance. “It’s a
great field and a great industry,” she says.
“There’s a lot of excitement and it’s unique in
the sense that you have a lot of different
industries under one roof: gaming, lodging,
entertainment, food and beverage, golf, even
Pocono Downs harness racing.” Beyond the
basics of accounting that apply to every company,
most of what Kramer knows she learned on the job
and through the gaming industry—at the Gaming Expo
and through AICPA guides and seminars. And while
the action may be hottest on the casino floor at 2
a.m., Kramer, who has three children, has found
the back office to be a family-friendly place with
relatively stable work hours. Bob Rudloff,
CIO of MGM Mirage in Las Vegas, also got into
gaming mostly through simple geography. Growing up
in Atlantic City, he watched as the big casinos
changed the skyline of the boardwalk and of the
town behind it. He worked for Harrah’s and Trump
for 17 years before being recruited by
PricewaterhouseCoopers, which was building its
internal audit practice industry. But he didn’t
like the travel and missed being part of the
casino team—and now is back, as vice president of
internal audit at MGM Mirage. “The best
part is there is nothing routine about this job,”
he says. Right now he’s involved in a $7 billion
construction project and with an overseas property
in Macau; the company also is aggressively
consolidating its three technology systems into
one, “putting a new dimension on what internal
audit does across the organization” as his team
works closely with IT to identify risk and ensure
the security of the systems that open the hotel
room doors, run the slots and track the winnings.
| Betting
on Youth Like all
the gaming experts with whom
we spoke, Bob Rudloff at MGM
Mirage is concerned with
finding good people—so
concerned that he has
developed an internship
program with the University of
Nevada. The program began with
two interns in 2003 and now
brings in six interns a year,
four or five of whom turn into
full-time employees.
Most interns are in their
senior year, though a few have
been juniors. Each commits to
working for six to 12 months,
spending 20 hours a week
during the school year and 40
hours when school is not in
session. They are paid $10 an
hour and assigned to an audit
team of one senior auditor and
three staff auditors, where
they do real audit work—“the
same job as the staff
auditors, but under close
supervision.” MGM
Mirage also has a recruiting
program that requires all
staff members to contact the
placement office of the
university from which they
graduated to promote the
casino company and encourage
referrals.
| |
GROWTH IS IN THE CARDS
Whether it’s outside or in, auditors agree
the gaming industry is, well, on a roll. Richard
Fentner, director at Dopkins & Co. in Buffalo,
N.Y., says his firm has specialized in
not-for-profit clients for many years, and now
gets about 40% of its business from the niche.
Through that work, he was approached by the St.
Regis Mohawk tribe to audit its bingo operations.
When the tribe built a casino in 1999, the firm
took on auditing that, too, as well as reviewing
financial statements, internal controls and
standard operating procedures, and working on
special projects such as improving the cash count.
“Here, in western New York, this niche is really
starting to take off,” Fentner says, “and there’s
potential for a lot more work.” Indeed,
it’s hardly just in New York that the demand for
auditors and finance professionals in the gaming
industry is growing. Virtually everyone with whom
we spoke cited the difficulty in finding good
staff as a key issue. Dave Richards, CPA,
president of the Institute of Internal Auditors,
Altamonte Springs, Fla., calls gaming “a very big
and important sector.” The IIA has a dedicated
gaming industry group with its own newsletter and
advisory board, holds an annual gaming conference
that attracts 200–300 internal auditors, and has
launched an Internal Audit Education Program to
develop courses at several universities. Beyond
the new casinos, the group has seen growth
recently from outside the United States, most
notably from Latin America. “Gaming is a
particularly sexy type of career track in terms of
the amount of risk that’s involved, plus it’s
exciting, and it offers young people a lot of
opportunity to travel,” Richards says. “Certainly
a CPA is a good background to leverage into that
sector—and then you can build on the financial
expertise into things like operational compliance,
fraud and IT that are pervasive throughout the
business.” So whether you feel more
comfortable auditing the books in the back office
at noon or casing the casino floor at 4 a.m., if
you like to travel or would rather never leave
home, the gaming industry is a niche that has a
niche for you. |