Nevada casinos and restricted licensees that have implemented a new penny policy are rounding up when customers cash out.
Chan Lengsavath, chief of the tax and license division of the Nevada Gaming Control Board, said Strip casinos will be among the last to implement the new policy unveiled in late March in response to the Treasury Department’s announcement last year that it would stop minting pennies.
Restricted licensees that include taverns and smaller casinos were the first to implement the penny policy; they didn’t have a large stockpile of pennies, like the larger casinos, Lengsavath said.
The Board sent a notice to licensees to provide guidance that they may choose to round up or down as necessary to the nearest five-cent increment.
Rounding up benefits the business’s bottom line by generating extra revenue, as customers pay slightly more than the exact total. Rounding down reduces total revenue, but is a customer-friendly practice that builds goodwill and protects the brand from accusations of overcharging. “We didn’t want patrons to feel like they were being taken advantage of, even if it’s for a penny,” Lengsavath said of the choice given to licensees.
The new policy was necessitated when the federal government stopped producing pennies, Lengsavath said. That’s why they were given flexibility on their rounding policies and that operators can deduct it from their state gaming revenue.
“Some of the bigger operators said it could be a few hundred thousand dollars from their bottom line each year,” Lengsavath said. “We allowed that to be deductible. However, if it’s deducted, they have to show that it’s due to rounding. We don’t allow customer service to be deducted.”
Many of the larger casinos still have pennies, having stockpiled them after the Treasury Department announcement in late December, and some are continuing to develop their policies internally, Lengsavath said. Whatever operators decide, the policy requires signage detailing it and the more signage the better. “So far everyone is rounding up to be on the safe side. We wanted to give them that option, because it was forced on them. We’ve heard some have plenty of pennies, but eventually they will run out.”
Notices can be provided via signage throughout the casino, anywhere tickets can be redeemed, and on-screen messaging on kiosks during redemption.
The federal government stopped manufacturing new pennies late last year, but the Federal Reserve is continuing to circulate the roughly 114 billion pennies currently in existence. How long existing pennies remain in circulation depends largely on consumer behavior.
The move was made because the total production cost of the penny has risen from 1.3 cents to 3.69 cents per penny. These production costs include materials, facilities, and overhead. The U.S. Mint projects an immediate annual savings of $56 million in reduced material costs by stopping penny production.
The Treasury Department encouraged the public to spend their on-hand pennies to support a smooth transition and allow retailers and point-of-sale-system providers time to adapt. This initiative aims to help keep the existing supply in circulation, ensuring clarity and fairness at the point of sale during the transition.
Businesses should apply rounding practices in a fair, consistent, and transparent manner, the Treasury Department said. Retailers were encouraged to continue accepting pennies and providing penny change for cash transactions while the coin remains in circulation.
“When penny change is not available, businesses may round the final amount of a cash transaction to the nearest five-cent increment, recognizing that states will approach this issue differently based on unique considerations,” according to the Treasury Department. “The penny will remain legal tender, meaning it retains its status as an acceptable form of payment. We recommend that non-cash transactions, such as payments made by check, credit card, or debit card, continue being priced and processed to the exact cent.”
