Casino Surveillance News

April 2010

Welcome to Casino Surveillance News, the first and longest-running online trade letter for Casino Surveillance and Security. We are still here and still operating.

The news-only portion can be seen at http://casinosurveillancenews.com/newsletter-2

CSN News:

Though it is April 1st, you won’t find any April Fools jokes here. Sorry, my sense of humor doesn’t extend that far.

Casino Surveillance News now has available a complete, on-site, one-payment permanent training program, customized for YOUR casino operation. We can accommodate privately owned, corporate, or tribally owned casinos.

The training programs involve operating in the real world of gaming, in the prevention and detection of real-world scams and other threats to the actual bottom line of the casino.

Each includes a number of Power Point presentation classes including text, voice-over narration, video clips illustrating scams, situations, required coverage and universal problems, and other photographic materials, as well as text materials to be studied. Each also has tests designed to direct attention to areas needing to be restudied.

The training we are making available is designed to bridge the gap between new people and experienced operators, between those with some experience and those with decades of experience, and to fill in the gaps in experience when a person comes to a new casino that has games he has not experienced. Our training is DISTILLED EXPERIENCE from many sources, including investigators, supervisors, directors and gaming law enforcement personnel.

1. Training new operator/investigators:

This program is used for newly hired operators, whether or not experienced, in bringing an entire department up to the standard required. It is designed from the lowest common denominator: training people with no gaming experience up to a level of competence where they can spot and report discrepancies in a gaming operation. Where a person already is experienced in an area, simply have them take the test, and if passed, the training material is not needed. This level is very effective in filling in the gaps in training and experience that newly hired but experienced investigators may have. The customization involves the games offered by the casino: table games (which ones do YOU have?), Slots, Finance operations (cage and count rooms), Security, Hotel, Retail, etc. You only pay for what you and I determine your operation needs. I feel that I can offer advice, but you are the one who knows your own operation. Your word is always final.

2. Training Supervisors:

Supervisors and the Director are the people who must pass on all reports, who must fill in the gaps in training and experience of the people working under them. Prevention and detection of illegal and unethical activity in the casino and its support operations is a team activity, and the Director and Supervisors are the team manager, coach and quarterback.

Supervisors require a higher level of training in specific areas, including the handling of evidence, reporting, training personnel, handling personnel, and directing surveillance operations. These classes are designed to fill in any gaps between experienced Surveillance Investigator and Supervisor, so that the Supervisor and his juniors and seniors have confidence in the ability of the Supervisor to make rational decisions, even under pressure, to properly focus attention on areas where it is needed, and keep his own people productively functioning.

3. The Director’s Course:

The Director is the team manager, and it is his job to ensure the attention of Surveillance is correctly focused on the parts of the casino operation where vulnerabilities occur, bringing executive attention to the vulnerabilities, and ensuring that  holes in the casino operation are plugged. This requires some high-level information on Surveillance itself as well as training on the handling of personnel, executive level teamwork, and other duties including liaison and team-building both within the department and outside it, with Security, executive branch, other managers and outside law enforcement.

Please visit the site at these addresses for details of the available, customizable training plans:

http://casinosurveillancenews.com/surveillance-training-programs

http://casinosurveillancenews.com/training-materials/available-classes

WE STILL SET THE STANDARDS FOR TRAINING OF CASINO SURVEILLANCE

and for

BASIC SECURITY TRAINING FOR CASINOS:

http://www.casinosecuritytraining.com/security-training-programs

A custom training program can be made for your casino and put into place in a matter of three weeks.

Contact jimgoding@casinosurveillancenews.com

Keynote Article:

Complacency Part III:

Company Loyalty and the Employee Hot Line

by Jim Goding

Though I have mentioned complacency in connection with Surveillance and Security in particular, complacency and apathy does not stop there.  These attitudes can invade every part of an organization.

Regular employees in all areas of the casino become complacent as well, and this definitely does not contribute to the viability of the organization. In fact, it adds to its problems in major ways, not the least of which is justification for internal theft and fraud.

When a person sees others in his department–or in other areas–getting away with things that are forbidden by law or company policy, it creates problems. It is even worse when one employee gets disciplined for things that he knows others are getting away with. Such a person becomes a “disgruntled employee,” and he or she may eventually use the facts of (1) having been disciplined for something, and (2) knowing others have consistently gotten away with similar or worse behavior, to justify fraud and theft.

A few employees and management staff will end up, eventually, using this as a justification for fraud and theft.

The truly honest ones leave the company and go somewhere they think honesty might have a higher value. Or they go somewhere the middle or upper management is not obviously on the take, where thieves are not protected, and where an honest person has a chance.

You will find, over a long period of time, that the greatest majority of your employees are loyal, at least as far as the performance of their duties, to the company that provides their income. They resent it when someone steals from their employer, and they resent it even more when their workload is increased by thieves, and even more yet when a company is in difficulty and they know there is internal theft and fraud occurring, and their jobs and paychecks and annual bonuses and increases are at risk.

Example: a staff member clocks in, turns around and leaves, and then returns at the end of the shift to clock out, having spent the time with his family, his girlfriend, on another job or in a local bar.  In a large organization, this is relatively easy to get away with. The rush to get going at the beginning of  a new shift masks the fact that the person is not there, and the manager of the department who does the actual approval of payroll records may not know that three of the thirty people on his graveyard shift are clocking in five days a week but only working two or three. Or that the person who clocked in routinely works for an hour at the beginning of the shift and then sleeps the rest of the shift in a fire stairwell, because he or she is working one or two other jobs.

But I guarantee you that someone at lower levels has seen this activity and deeply resents it, because it adds to his or her workload. He has to work harder, for the same pay as the person who works not at all. After a while the witness will begin to resent the management for not handling the problem.

Yet most are either afraid to report it for fear of being labeled a troublemaker, for fear of retaliation, for fear that the payroll thieves are being protected by the managers, or simply out of apathy, feeling that nothing will ever be done about it.

This is especially true of lower-level employees who witness fraud and theft by their managers, or who know or suspect that managers are protecting certain staff for personal or personal financial reasons. I have even seen a situation in which a blatant thief was protected by a manager because the lower-level thief knew how the manager was violating other company policies. It’s called blackmail.

Justification is necessary in most cultures for a person to start stealing from the employer. The feeling that others are getting away with it, that management is doing nothing to correct it, or that supervisors and managers themselves are involved in fraud or theft or other violations–these are very, very powerful justifications.

The Solution

So how do we solve this problem of apathy, complacency and fear on the part of the employees?

According to the Association of Certified Fraud Examiners (ACFE), nearly half of all cases of internal theft and fraud are discovered because of tips (information) from employees or customers. This is far in advance of all other methods: The next in line is “discovered by accident,” almost a quarter of frauds and theft detected.

You reinforce things that work. In this case, that means making it SAFE for employees and customers to tell management that something is wrong, or just out of whack.

In two different companies where I have worked and several where I have consulted, employee tips and customer complaints have resulted in discovery of

* Cashier theft

* Dealer theft and cheating activity

* Security Chiefs or their direct juniors  theft and corruption

* Bartender theft of cash and merchandise

* Players’  major and minor cheating

* Managers and supervisors being apprehended for corrupt activity

* Both internal and external theft and cheating in Slots

* Theft in Count Rooms

* Payroll theft (as described above, as well as other methods)

* Tip theft

* Other forms of fraud, theft and corruption

The greatest majority of these tips came from employees who resented the fact that dishonest people were getting away with fraud and theft, adding to their workload, and making far more money off the job than the informants were getting paid.

Needless to say, when you start putting all this stuff together, it really does hurt the bottom line of a casino-resort operation. It also can create a lot of disgruntled employees who can then justify theft on their own.

Customers observing crooked activity get the feeling that the entire casino is corrupt, and they don’t come back–and they tell others about it. Sometimes they even report it to regulatory agencies.

Needless to say, it is much better to discover and handle illicit activity on your own than it is to have the state come in and find it for you. This places your license at risk, and can often involve heavy fines or other penalties from regulatory agencies. Even the fact that it is possible to bypass internal controls can result in sanctions from state or other regulators.

So you MAKE IT SAFE for employees or customers to report discrepancies they have observed.  This is required of publicly traded companies under section 302 of Sarbanes-Oxley, which requires publicly traded companies to have a method of receiving information from people who wish to remain anonymous regarding accounting and other financial matters that may be suspicious.

That doesn’t mean that privately owned companies should not also have such a mechanism in place, as well as means of ensuring that management (at any level) cannot retaliate against people who report potential illegal activity. This should be in place for any casino operation.

Often your best source of information is your honest employees. As I will cover later, even a deliberate false report on such lines will often uncover illicit activity, when properly investigated.

One of the other aspects of the most recent report from ACFE is that smaller, private corporations are hit much more often than larger public corporations, and also hit much harder. Meaning, a $100,000 theft hits a small company much harder than it does a giant corporation.

So you MAKE IT SAFE. Make it possible to report anonymously. Engage a third-party company to receive “hotline” calls. Put up a box in an area where a person can leave a written note, where they have a chance of not being seen by their own boss or other supervisors, or security, or, really, anyone else. Put a lock on the box, with the only key to it being kept by the corporation president, owner, or an outside agency such as tribal gaming regulation.

I’ve seen a couple of real “flubs”  on this one, by the way. One had the box placed in the reception area of the executive suite, under the direct eye of the executive assistant.  Another had it placed outside the employee dining room, with a camera apparently pointed right at it. How safe does this make an employee feel about reporting possible fraud on the part of managers and executives? Was this a flub, or a means of guaranteeing that no one would ever report the illicit activities of the management?

So MAKE IT SAFE. Make it possible to report anonymously. Make it IMPOSSIBLE to retaliate against any employee who provides information regarding illicit activity on the part of anyone in the company. Again, this is required of publicly traded companies, but it will very much enhance the ability of Surveillance or Security or corporate counsel, internal audits or any other part of the management to prevent or detect internal theft and fraud.

Even more important, YOU INVESTIGATE ALL SUCH REPORTS, no matter who may be involved. This is part of the reason that, in Nevada and in many other jurisdictions, Casino Surveillance is separated from all other chains of command in the casino and reports only to the executive branch. In some jurisdictions, Surveillance reports first to the local or state gaming regulatory agency, and only then to the executive. This allows Surveillance to operate free of “influence” to ignore tips, ignore discrepancies and so on.

But regardless of who does the investigations–whether Surveillance, Security Internal Investigations, Internal Audits, external auditing company, private investigators, local gaming regulation, or whatever–all reports are investigated.

Very occasionally you will find that a person has used this reporting mechanism for other reasons– to get another person in trouble, to misdirect surveillance attention in order to divert attention from his own dishonest activities (references: “Politics,” “False Reports”). This is the price you pay for accepting information from honest people who are outraged that other employees are getting away with theft or corruption.

You can even use this to find the real thief. If you have established by direct observation that the person reported on is in fact honest, you widen the investigation. Do a full departmental audit. Watch the entire department for a week and follow up on all observed procedural violations. Then, if you still have not found dishonest activity, pick up the next most closely associated department, and start over.

What you NEVER do is attempt to find the identity of the person who made an anonymous false report using an established anonymous-reporting line. This can be construed as retaliation, because it is so difficult to prove that the false report was in fact deliberate.  You simply widen the investigation, or shift the focus, until you find dishonest activity.

Summary:

Value your honest employees.

Give them the chance to help you straighten out the organization.

Copyright 2010 by Jim Goding. All Rights Reserved under US and international law. Unauthorized duplication or distribution is a violation of copyrights law and of the proprietary rights of the author.

It’s News Time:

(I will supply text of the news article if any of these links do not work. Email to inquiry@casinosurveillancenews.com)

Busts and Scams:

A Chester, Pennsylvania woman was charged with theft after making 56 trips to a malfunctioning cash-out kiosk that was paying out $100 bills instead of singles, harvesting $22,000. See the story (Note: how many other patrons had also figured it out, but weren’t quite so greedy, or silly, as to return many times? And who put the wrong box in for singles, or a brick of hundreds in the singles box? Were that person’s relatives and friends also harvesting cash? No data. Some of the comments on this story are interesting as well.)

Berlin police released a man previously suspected of taking part in the storming of a poker tournament in which armed robbers made off with euro240,000 ($328,000) in jackpot money. See the story

Related story: A masked gang armed with machine guns and pistols staged a spectacular robbery at a Swiss casino dubbed and escaped with hundreds of thousands of euros after terrifying gamblers by firing shots into the chandeliers. See the story

The casino’s insurance company is suing two former Hard Rock hotel-casino employees, both of whom were part of the Hard Rock table game count staff and both of whom have been charged in thefts from the resort, charging they were involved in the theft of $831,519. See the story

A one-time well-known card counter, who worked with different teams for several years and then disappeared off the map for a while, has returned to “work” again. Read his story

In a bitter family feud , two elderly widows are locked in a protracted legal battle over a $500,000 lottery jackpot. They had contracted with each other to share all winnings. See the story (Note: I would definitely not like to be the judge on this case.)

Three senior New York Senate Democrats have been subpoenaed by the office of the state inspector general as part of an investigation into the awarding of a casino contract at the Aqueduct racetrack in Queens. See the story

Pennsylvania Gaming Control Board approved petitions to use a $35 million loan to underwrite improvements to Mount Airy’s gambling floor to accommodate poker and blackjack tables, pay a portion of the $16.5 million table games state license fee and make needed renovations. The loan comes from Louis DeNaples, who was denied a gaming license in 2009 because of “failure to disclose” certain facts on his licensing application. See the story

Two computer contractors from south London used their insider knowledge to cheat casinos out of thousands of pounds by printing false winning betting slips. See the story

Other News:

Interesting feature story on baccarat and some of the superstitions that go with it. Newcomers to baccarat might find it illuminating to see the basis for some of the apparent strange behavior of some players on this game. See the story (It is also worth noting that many of the behaviors spoken of here can distract dealers, supervisors and even Surveillance from seeing actual cheating moves, or mask the moves themselves.)

A proposed Arkansas constitutional amendment would give a single company a statutory monopoly on casinos in the state, cap gaming taxes at 5 percent of gross revenues (Nevada’s, the lowest in the nation, is 6.75 percent, plus fees), and forbid the state from having any kind of regulatory oversight over the casinos. See the text of the proposed amendment Please also see this editorial (Note: my perhaps overly suspicious nature provides a little voice that says “who owns who in Arkansas?” and another one that says “who owns that company, and what states have already licensed them, because those states need to look again.”)

A late-march decision by a New Jersey Casino Control Commission hearing officer recommended that Bayshore Rebar, which has been denied a license to work for casinos for over twenty years because of “Family” connections, receive a license to do work for casinos. The full five-member commission must vote on the decision within 45 days. See the story

The gaming industry’s Washington, D.C.-based lobbying group has shifted course on its view of legalized Internet gambling and now believes the technology exists to allow the activity to be regulated at the state or federal level. See the story and a related story

That’s all for this month, Folks.