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Strip Club Funny Money Is No Laughing Matter

Once touted as an easy way for strip club customers to ‘make it rain’ with credit card purchases, funny money has since become a way to keep dancers from earning what’s owed to them

Strip clubs are about spending money. Sure, they’re also about the art of stage performance, the thrill of potentially being touched by a stranger and the pleasure of spending time with a young woman who is far, far out of your league, but all of these things are, of course, about spending money, too. 

But when it comes to precisely how you spend that money, you have some choices. Cash is preferred. Depending on the establishment, you may be able to charge private dances to a credit or debit card. There’s probably a club out there that accepts checks, not to mention digital formats like Venmo. Hell, some even take crypto! But for years, numerous strip clubs have offered a special form of payment exclusive to the industry: funny money. 

Despite its colloquial name, funny money is more than just fake money like the kind you play with in Monopoly. Instead, it refers to a specific type of currency exchange. For example, a customer can have a club charge $500 to their credit card. In exchange, they get $500 worth of in-house dollars, often named something corny relating to the club itself — think “Cheetah Bucks” or “Sapphire Dollars.” That customer then has the freedom to more easily distribute that money as they wish, all without having to continuously charge their credit card. Funny money can come in a variety of denominations, too: ones for throwing, 20s for tipping, 100s for buying dances. At the end of the evening, the workers who’ve received funny money can exchange it back to real cash. 

There’s no precise record as to where funny money originated — as with the history of strip clubs writ large, much of the finer details, particularly as they relate to finances, have been kept under wraps. But it’s fair to assume that its development coincides with the development of two other things: 1) the ubiquity of the credit card; and 2) the evolution of the contemporary strip club.

While varieties of exotic dance and stage performance have existed for centuries, it wasn’t until the 1970s that strip clubs as we know them — with lap dances, poles and topless ladies — became a public offering (previously, they were either underground or more akin to some form of burlesque theater). The transformation of the Mitchell Brothers O’Farrell Theatre in San Francisco from an adult cinema to a bar/club featuring customer-dancer contact and three-song stage sets for performers in 1977 is widely cited as the first modern strip club, introducing the prototype that proliferated into the 1980s and 1990s. From there, the concept of an upscale “gentlemen’s club” began to further gain traction in major cities, soon introducing chain strip clubs like Spearmint Rhino, Bucks or Rick’s Cabaret. 

Meanwhile, just as strip clubs became a mainstream offering across the country, credit cards were blowing up. By 1998, two-thirds of American families had some form of bank-owned credit card. Particularly for chain strip clubs with corporate ties, accommodating such clients and their little plastic forms of payment would have become imperative. 

But doing so isn’t always so straightforward as swiping a credit card once to pay off your bill at the end of the night. An evening at the strip club might entail encounters with a dozen different dancers, waitresses, managers and other staff, all of whom may be owed a specific fee and expect a tip on top of it. Divvying up this money, particularly when it depends on the discretion of the customer to decide how to tip, is complicated. 

More than that, when a customer buys hour-long access to a private room, he isn’t just paying a rental fee to the club, he’s also paying a dancer for her time. Most dancers, however, aren’t employees of the club itself, but independent contractors. Were a customer to pay for a room on a credit card, the club would also need to ensure that the dancer was compensated as part of this payment. Issuing funny money from a credit card to pay the dancer out at the end of the night fulfills this, similar to cutting a check. 

Also, exchanging a credit charge for funny money prior to services being rendered helps prevent losses stemming from problems with the credit card itself. If a customer discovers that his card has been declined or that he’s reached his credit limit after racking up a large tab, he’d be unable to pay. But if he’s already taken out a chunk of funny money with the club, that won’t ever be an issue. 

At least, these are the benefits often touted by clubs. But as some dancers have previously reported, funny money can easily allow for some unfair labor practices to flourish. “If a customer pays for a service like a VIP room via credit card, us dancers get our cut through ‘Dance Dollars,’” says Poppy, a dancer in Illinois. “For example, a 30-minute room is $350 cash, and our cut [as dancers] is $250 cash. If you pay with a credit card it’s $414, because the club taxes extra for cards, but we still get $250 in Dance Dollars,” she says. The club then takes an additional 15 percent off of that $250 when it comes time for Poppy to get paid out, leaving her with $212. In other words, when someone pays for Poppy’s time in her club’s dance dollars, she makes less than she would if they were to pay cash, despite actually costing the customer more out-of-pocket. 

This issue of exchange rates has been problematic for clubs in the past, and some have even been sued for such practices. After speaking to a dancer named Emma in 2015, Jezebel reported that “although many clubs have modified their labor practices in the past four or five years after getting sued, Emma says that Hustler and Little Darlings clubs, both owned by Larry Flynt’s company Deja Vu, are widely known among strippers to continue to be not-great in the fair labor department.”

Meanwhile, in 2017, a series of clubs in New York attempted to evade sales taxes with the use of funny money. According to them, when a customer took out the faux dollars, the whole transaction qualified as a currency exchange — which isn’t taxed. Still, when dancers went to exchange their funny money back into real cash, the clubs assessed a fee on their earnings. 

In some cases, this discrepancy is explained as part of the cost of processing credit cards. Credit card companies charge a fee to the merchants themselves, typically ranging from 1.5 to 2.9 percent of the total purchase. Considering that many clubs already charge a 10 percent processing fee onto the client’s bill, charging an additional 10 to 15 percent when dancers go to exchange their money back means that clubs are earning anywhere from 17 to 18.5 percent more on every credit card transaction compared to cash.

As Maxine Fensom, owner of gentleman’s club Maxine’s in Australia, says, all of these extra fees are precisely why she did away with funny money in her club. “I’ve used ‘funny money’ in the past at my club, and found it just didn’t work,” she tells me. “Our guests weren’t fans of the additional fees, and we at the club were liable for the associated taxes for any funny money purchased, so we decided to only use real money from then on.”

Previously, she had used funny money primarily for the sake of making sure there was enough physical money (whether that be actual currency or not) circulating in the club. “It was used to help ensure there are enough funds available for guests to spend when and what they want to,” she says. “Clubs print funny money to make sure guests have enough cash in stock to ‘make it rain’ or throw large amounts of singles when celebrating. Without the funny money, it’s possible a club won’t have enough funds readily available for guests to keep the party going.” 

Of course, not having enough funds around would be bad news for everyone in the club — making it rain is one of the celebratory, theatrical components of the strip club that makes the experience fun for both customers and dancers alike. But now, Fensom says, the club just ensures that the ATM and cash registers are simply well-supplied. 

Alice, a dancer in Joshua Tree, California, says the reason her club used funny money wasn’t really about wiggling through a financial loophole, but they still sometimes found a way to screw over dancers. “It was used to make sure their cards cleared before you got paid out,” she says. “It was really dumb, to be honest. Sometimes they’d underpay our funny money, or when it came time to pay us, they’d claim that they [the customer] ‘cancelled’ the transaction.” (Oddly enough, Alice adds that one of the clubs she worked in that offered this system transferred credit card purchases not into paper currency, but coins.) 

What does all of this mean for the prospective strip club customer? Well, we can all hope that the clubs we frequent are utilizing the most squeaky-clean of labor practices and ensuring that all of their dancers are paid fairly. Unfortunately, it’s hard to figure out if that’s actually the case. You can try scanning through club reviews written by dancers on sites like The Ultimate Strip Club List, but said reviews can be slim. 

At any rate, it might not matter as much anymore — while the use of funny money continues in numerous clubs, there are just as many that don’t use it at all. Accepting credit cards is risky business in strip clubs, as is any venue where alcohol tends to be abundant and customers might be less than forthright about their spending the next day. Chargebacks are a major concern not only in clubs but for essentially any vendor: Per a report from Juniper Research, a digital marketing research firm, credit card chargebacks are increasing 20 percent each year. As such, some payment processing systems will no longer serve a strip club if they’ve received too many chargebacks or if the club has been deemed too “high risk.” 

Still, our spending does continue to lean digital, with the share of American cash purchases decreasing from 31 to 26 percent between 2016 and 2020. As dancer Dame Joan wrote for Jezebel in 2019, this increasing shift toward non-cash payments often puts sex workers in even more precarious positions. In her club, credit card charges result in a whopping 30 percent cut in dancers’ earnings. “Without cash, the club I work at is free to exploit,” she writes. “Cash handed directly to a dancer gets pocketed, but credit card charges are skimmed — and because workers are more or less off the books, we have no recourse to contest absurdly high fees.” 

At the same time, sex workers are increasingly being kicked off digital payment platforms like PayPal and blocked from bank accounts with institutions like Chase. This bind has left dancers like Dame Joan anxious that there may come a time when they’re no longer able to work in the industry and pay their bills. 

The best way to make sure your favorite gal isn’t being ripped off by the club through funny money or credit card fees is simply to not use them. For now, at least, cash is still accepted nearly everywhere. Hit the ATM before you get to the club, unless you’re fine with paying an exorbitant fee when you’re there. No matter which club you go to, you can always count on the fact that your legal U.S. tender will be welcomed. She might still get screwed over on house fees and tipping out the manager, but at the very least, her cash remains cash. 

With those potential caveats in mind, why don’t you bring extra?