ASC

ASC 815-924

Entertainment—Casinos

815 Derivatives and Hedging

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In brief

IntermediateDerivatives and hedgingRevenueIndustry-specificRecognition

This Subtopic applies the derivatives and hedging guidance of Topic 815 to casinos and to the casino operations of other entities. Its single substantive rule is a scope-out: fixed-odds wagering contracts — bets where the odds of winning are known or knowable when placed (e.g., certain sports and race wagers) — are not accounted for as derivatives by the casino that issues them. Instead, the casino treats them as revenue transactions under Topic 606.

Key points (5)
  • The Subtopic covers derivative instruments, including certain embedded derivatives, and hedging activities of casinos and casino operations of other entities (815-924-05-1).
  • Scope is the same as the Overall Entertainment—Casinos Subtopic, Section 924-10-15 (815-924-15-1).
  • A wagering contract is a 'fixed-odds wagering contract' if the odds of winning are known or knowable at the time the bettor places the bet with the casino (815-924-25-1).
  • The issuer (casino) shall not apply Topic 815 derivative accounting to fixed-odds wagering contracts (815-924-25-1).
  • Fixed-odds wagering contracts are revenue transactions for the casino and shall be recognized under Topic 606, Revenue from Contracts with Customers (815-924-25-1).

For students. Exam-relevant point: a sports bet looks like a derivative (underlying, notional, net settlement), but GAAP expressly routes fixed-odds wagers to Topic 606 revenue accounting for the casino. The common mistake is assuming the exception applies to the bettor or to all wagering contracts — it is stated for the issuer and for wagers whose odds are known or knowable when placed.

fixed-odds wagering contractsports and race wagersderivative scope exceptioncasino operationsrevenue from contracts with customersembedded derivativesissuer accounting

Machine-generated study aid for ASC 815-924. Check the source paragraphs below.

815-924-00Status

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815-924-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
924-815-05-1AddedAccounting Standards Update No. 2016-2012/21/2016
924-815-15-1AddedAccounting Standards Update No. 2016-2012/21/2016
924-815-25-1AddedAccounting Standards Update No. 2016-2012/21/2016

815-924-05Overview and Background

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815-924-05-1
This Subtopic includes the accounting and reporting standards for entities operating as casinos and for the casino operations of other entities, for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities.

815-924-15Scope and Scope Exceptions

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815-924-15-1
The scope of this Subtopic is the same as Scope and Scope Exceptions as outlined in the Overall Subtopic (see Section 924-10-15).

815-924-25Recognition

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815-924-25-1
Wagering contracts placed by bettors for which the odds of winning at the time the bets are placed with a casino are known or knowable (for example, certain sports and race wagers) are fixed-odds wagering contracts. The issuer of those contracts shall not account for such contracts under the guidance in Topic 815 on derivatives and hedging. Rather, those contracts are revenue transactions for a casino and shall be recognized in accordance with Topic 606 on revenue from contracts with customers.

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