Bank Secrecy Act and Casino Performances

• In Event: Accounting and Disclosure

Abstract

After 22 years of exemption from federal jurisdiction of the Bank Secrecy Act (BSA) over currency and foreign transactions, on June 30, 2007 Nevada casinos repealed its state level administration of the corresponding transactions - the Nevada Gaming Commission (NGC) Regulation 6A, putting casinos in Nevada under the same federal umbrella as that for those casinos in the other states of the United States. This study examines the impact of BSA on casino industry’s market performance and accounting performance. Results show that the huge gaps in casino performances before BSA have been reduced since BSA. Specifically, pre-BSA, Nevada casinos had lower market performance but higher accounting performance than those of the casinos in the other states; post-BSA both measures for these two groups of casinos come closer. Results suggest that BSA has been effective in levelling the operating fields for the casino industry, and the improvement of Nevada casinos’ market performance suggests that adoption of BSA is conducive to their reputation recovery. This study contributes to the stream of literature that explores the impact of change in jurisdiction from state level to federal level, and results of this study are potentially useful to casino operators in the nation and federal and state regulators.

Author

• Fanghong Jiao, Bradley University