Teamwork Part IV

Surveillance as an Income-Producing Department

By Jim Goding

In budget meetings and fighting for upgrade funding, even in getting the funds together to meet minimum legal requirements, corporate political infighting will often produce the statement that “Surveillance does not produce income.” The same statement has been made, over and over through the years, regarding Security and also the Compliance and Inspection sections of tribal gaming regulation agencies. Needless to say, this statement is false. However, it is not often obvious to people outside this field exactly how these areas produce income for the organization. I will attempt to show in this article how these investigation and inspection areas actually produce income, and also why it is not often apparent to people in the normal operations areas. The short answer, of course, is through teamwork with other departmental managers. The income produced by a properly equipped and trained Surveillance department shows up as increased income in the Pit, Slots, Retail, Food and Beverage, and in massive savings on legal fees and settlement costs as well as saving money from fines from regulatory agencies, increased insurance premiums and other costs that don't occur when an inspection or investigation department is fully trained and proactive. This only works well if teamwork is active, however. Often, the best way to get other managers to work with Surveillance information is to show how their income could be increased. Once this starts working, it even sometimes happens that the budget infighting cuts down over Surveillance costs. (It will never, of course, go away entirely.) Let’s take a look at a few examples; we will look at three examples from the most visible departments. These can also be used as typical examples for other areas, especially the internal theft threats. Monetary damages alone from these can be extrapolated. Slots: A slots cheat (external theft); a crooked floorperson (internal theft); and a crooked change booth cashier (internal theft). Table Games: A cheating dealer (internal theft); an advantage player (external threat); and procedural errors by dealers (customer service). Security: A safety violation (potential lawsuit); a distract-and-grab team (threat to customers); and an under-trained Security Officer (potential lawsuits). SLOTS: THE SLOTS CHEAT: This person operates by various means, including devices such as optics, which fool the payout counter, and devices which can reprogram the central processing unit of a slot machine. More modern devices communicate directly to the credit meter on the machine, fooling it into granting far more credits at the touch of a button. The first is less expensive to the casino. The cheater uses the device to empty the coin hopper of a slot machine and then exits the area. Let’s say that each time he uses the device, it costs the Slots department one fill bag: $300 in quarters, for example. Now, if the person finds, by getting away with it, that he can make $300 each time he comes into the casino, he will return many times, perhaps twenty times over the course of  year. That comes to $6000, for a single slots cheat, for one year. However, if this person is detected and apprehended, or even scared away by the attention brought on him by a well-equipped Surveillance department working in tandem with an educated Slots department, that is $6000 in savings. In actual fact, that is a conservative estimate: in a single visit to a well-known casino, one cheat using such a device emptied three machines before leaving the area, a minimum of $900 in one visit. A device essentially identical to the one he used brought a black-market price of over $25,000. What does that say it was expected to produce? Another major casino was hit four times in two years for over $30,000 each time by a team of people who were reprogramming the computer chip that determined when a large jackpot was to pay. This was only possible because (1) the Surveillance department was crippled by being under-equipped, having no or ineffective coverage over the slot banks concerned, and (2) the Surveillance and Slots departments did not work together, and in fact were discouraged by management from doing so. THE CROOKED SLOTS FLOOR PERSON: This person has a variety of ways to operate. Fill bags, at $200 to $400 each, can disappear off the floor. Or the person can simply pour fill bags into a conspirator’s bucket, splitting the proceeds. The thing to remember is that such a person never does his scam only once: it will continue to occur, over and over, as long as the person feels he can get away with it, which means until he is caught. So, again, let’s take a conservative estimate: Say he sends out only two false fills per week, at $300 each. That’s $31,200 a year. And of course, that assumes that only one person is doing it, which is a false assumption: If a department is operating in such a way that one person can get away with stealing, others are doing it as well, and it may reach well into the departmental supervisory level and above. Jackpot amounts can be falsely overridden, for relatively small amounts, a couple hundred at a time. We have seen all of these, and more expensive ones as well. One Slots supervisor at a relatively minor off-strip Las Vegas property took the casino for over $2 million in less than two years before being detected. A Slots manager in Arizona took his casino for over a million bucks before being detected. In the case of the Las Vegas property, that casino was unwilling to pay Surveillance operators the going rate, and as a result, their Surveillance staff were either completely inexperienced or were rejects from other casinos where they had not been able to make the grade. This casino, for reasons of its own, did not want trained Surveillance investigators. (I once applied there myself, turned down the job offered because they were unwilling to pay even standard starting wages for Surveillance though I had several years of experience at that time. Another investigator I know who had worked there had been released when he detected an internal theft scam by investigating internal control violations.) Each of the examples here involved people who were caught doing these exact actions. In each case, a well-equipped and trained Surveillance department operating as a team with senior Slots Management may have caught them much sooner, saving major amounts of money for the company. THE CROOKED CASHIER: This, at first look, is generally considered to be petty theft. However, its consequences are much more far-reaching than the immediate theft at which the person is finally caught. To begin with, a crooked cashier generally steals a small amount of money, usually from the customers, amounting to, at most, $40-100 a day. He or she generally rationalizes it as an increase in pay. They may not make that much every day; let’s average it at $15 a day, five days a week, or $75 per week. That comes to $3900 per year. However, the consequences of this are much more far-reaching. In actual fact, many people do realize they have been short-changed, and are either too timid to say anything or just don’t think it is worth the trouble to complain. However, they don’t come back. And it is very common for Joe Bloke from Peoria to tell his friends and relatives that he was short-changed by the slots cashier at such and such a casino, and this will keep those people from ever showing up. You can consider that for each displeased customer, at least five future customers will never come to your casino. But let’s just ignore that for the purposes of this article: We’ll figure that only two of the cashiers in this loosely-run Slots Department are stealing, say two slots floorpeople, and if is a fairly large casino, let's say two slot cheaters of the less expensive variety are operating on a regular basis, using something like an optic device or one of the more modern equivalents. With these alone, we are looking at preventing or detecting and stopping over $80,000 per year in lost income for the slots department. It is common for a Surveillance department, once it begins to be properly equipped and trained and work as a team with the Slots and Security departments, to find literally dozens of examples of these losses, as well as many other types, within the first year. After that, its presence and reputation actually prevents such activity from occurring. TABLE GAMES: THE CHEATING DEALER: Let’s take an example I have seen in a major Las Vegas Casino. Because procedures in the Pit were very lax, the dealer had worked out a way of slipping cash from customer buy-ins into his shirt. On the night he was arrested, this dealer had over $800 in cash that had been taken from customers stashed in his shirt. He in fact confessed to having averaged $300 per day for the last year when confronted with Surveillance videos of his most recent thefts. Just in one year, this dealer had taken $75,000 directly from the casino’s income, and that is just what he confessed to. Of course, with procedures and supervision this lax in the casino, we know that this dealer was not alone. (I know of at least two other dealers who were busted for theft or cheating in that casino over the course of the two years I worked in that pit.) Since there were over 200 dealers working, probably only a few of them stealing, and not all of those working as profitable a scam as this one, let’s say there was "only" another $75,000 per year in lost income.  This is in fact a very conservative figure: In another casino with approximately the same betting limits where I worked, two dealers were busted for theft off the crap tables, and each day they were taking out $3-400. THE ADVANTAGE PLAYER: The amount of money lost to advantage players such as card counters and shuffle trackers tends to strike fear into the hearts of senior Pit personnel. Of course, not all advantage players win. However, they tend to return, again and again to the same casino, until stopped. One team that was caught in Las Vegas was betting quite high on favorable decks, and after only half an hour of play had won nearly $40,000. This was the fourth visit by these particular players, and on each of their previous visits they had won between $10,000 and $50,000. Of course, these boys were the cream of the crop. Smaller, singleton players will often elect to be less conspicuous. Over the course of five years, I caught counters who had been working the casinos for extended periods of time. Some even had comp accounts. One was located by noting that he had been five times to the casino that year and had never lost a dollar, but in fact had profited $6-8,000 per visit. On his next visit, his play was analyzed and he was found to be a very skilled advantage player, and barred from further play on blackjack. In preventing return visits by advantage players, in catching them when they return anyway, a skilled Surveillance department pays its salaries many times over. In one of the major casinos spoken of, by extrapolating how many times the teams would return in one year and how much money (by conservative estimates, as above) they would have taken according to their past record, the skilled Surveillance personnel saved the casino over $400,000 per year. PROCEDURAL ERRORS: This is a bit more difficult to analyze in terms of dollars, and we will not add any figures in. However, procedural errors by dealers cost the casino many customers, and that, of course, is very expensive in terms of dollars, both in dollars never dropped and in customers who leave before they otherwise would, losing their money in another casino and telling their friends where they actually had fun. The way it works is this: Dealers who habitually violate procedures are those with low skills and low morale. They appear unprofessional: not spreading cards, correcting their own errors, argumentative, and sloppy. They are the most likely, because of their low morale, to hustle tokes and otherwise offend customers by their attitude. In addition, dealers who are sloppy in procedure ATTRACT cheats, thieves and other types that are not the desired customers of the casino. One of the first things that a cheat looks for in scouting a territory is dealers who are sloppy in their procedures: Sloppy procedures make it much easier for the cheat and thief to operate. In contrast, dealers who are well trained and supervised feel good about their work, feel good about their customers, make money in tips and make money for the casino by keeping the players at the table for longer times and more buy-ins. A professional staff attracts players and keeps them at the tables whether the players are winning or losing, because the players are being entertained. That, in fact, is what players really come to the casino for—at least the players that the casino wants. A well-trained and well-equipped Surveillance Department, through its remote supervision of the Pits and correct reporting on command lines, keeps the Supervisors and dealers on their toes and corrects dangerous and sloppy violations of correct games procedure before they become habitual. This enhances the security, image and morale of the Pit, increasing their income and viability through better customer service. Enforcement of procedures also discourages potential dishonesty by staff by making it difficult; dishonest employees will depart for another area. In the first casino in which I worked Surveillance, one procedure correction enforced over an array of nine games raised the hold percentage on those games by a full point. In addition, one of the dealers on those games left for another casino immediately after the memo came down from the GM on that procedural point. That dealer was a few weeks later apprehended in a cheating/collusion scam that had cost the casino over $30,000 in a single night. It is unknown how many times this dealer had pulled the same scam on a smaller scale. The procedure corrected was the spreading of cards so they could be read by supervisors and surveillance. SECURITY AND OTHER PARTS OF THE CASINO: SAFETY VIOLATIONS: Some of these would curl your hair if you saw them. I have seen (as mentioned in other articles) some of the most truly stupid actions by staff, with potential costs in the millions of dollars. Let’s just take two that I saw in a single casino in the space of one month. The first was a casino housekeeper, or porter, who was vacuuming the casino floor late at night in the area of an escalator that led down to one of the sets of restrooms. This person had, completely unthinkingly, worked his way from one side of the escalators to the other, and in the course of his work had actually stretched the black power cord for his vacuum cleaner across the opening to the escalators. It was stretched across at ankle height on the down escalator and at knee height on the up side. Now, consider this from the point of view of a civil lawyer. First off, late at night in the casino, many patrons are inebriated to greater or lesser extent, and mostly on liquor that is provided “free” by the casino. The path to the bathroom had a tripwire, in effect, stretched across it by the unthinking (negligent) actions of a casino employee. There were no warning signs (negligence) and the power cord was black and nearly invisible (violation of safety rules: it should have been orange and highly visible, negligence again). What happens when someone on the way to the bathroom trips over that "invisible" cord? If they survive the fall, they sue the casino for potentially hundreds of thousands of dollars in hospital bills, lawyer fees and punitive damages, because of the negligence by staff and by management who should have provided better safety training and enforced standard safety regulations. This particular error was caught by an alert Surveillance agent during a routine scan of the casino and corrected immediately by teamwork with Security BEFORE an accident occurred. As a result of the report filed by Surveillance, the staff member involved was corrected and received proper safety training, along with several other employees. Let’s be conservative here, and say that the cost of an accident there would have been roughly $200,000 in hospital bills and attorney fees, settled out of court. This is not an unreal figure. Though the actual money would have been covered by company liability insurance, the premiums would have been raised because of the staff negligence and lack of safety training. The second example of safety violation happened less than a month later. A cleaner was observed standing on top of a slot machine with a rounded top, hanging on to the electrical sign by one hand, and dusting the tops, between machines and around the sign using a backpack vacuum cleaner. The cord for the vacuum was stretched across a major aisle between a Pit and the slots area, at floor level on one side and chest level at the other. There were no warning signs. A customer entangling himself in that cord could not only have tripped and fallen (potential injury) but could also have pulled the worker down from a precarious (and illegal) perch on the slot machine, injuring the worker and possibly pulling down also the electrical sign, with other potential injuries involved there, plus the relatively minor cost of repairs. This is another potential $100,000 in fines (for safety regulations: no ladder, standing on the machine unsupported, no warning signs, power cord across walkway with no barriers), attorney fees, hospital bills, plus increased insurance premiums and state worker’s compensation insurance. Again, an alert Surveillance agent working as a team with Security and Housekeeping prevented a potentially very expensive accident. Human Resources contributed, because of these two instances, with increased safety training. THE UNTRAINED SECURITY OFFICER: This person carries a potentially very heavy liability, and in fact may only be detected by Surveillance cameras and crew. In one casino, a new and poorly trained Security officer, ordered to escort an inebriated customer out, in fact frog-marched the customer to the door and forcibly pushed him out, resulting in the customer falling on his face and injuring himself. Though in this case no lawsuit resulted, the Security Supervisor for the shift was unaware of the potential problem employee until notified by Surveillance. A single instance of this casual brutality could cost the company hundreds of thousands of dollars, even if no serious injury resulted. Added to that would have been the fact that this customer had been served complimentary liquor beyond the point where he was visibly intoxicated, which is a violation of state law. The casino could have lost its liquor license or been fined heavily by gaming regulation on this point alone, even without the injury and misconduct by the untrained security officer. But let’s take a more prosaic example: underage gamblers. In Las Vegas at this time, it can cost the casino $10,000 per instance of being caught by Gaming Control allowing minors to gamble. Let’s say that the new security officer doesn’t understand that it is a part of his duties to be alert for underage gamblers, and to check ID’s and persuade minors to leave the casino. (And believe me, there are a lot of officers who will commonly walk right by obvious minors while on patrol: I have seen it hundreds of times.) That can be a very, very expensive error of ignorance. However, if detected and reported to Security management by an alert and well-equipped Surveillance crew, this liability can be handled at virtually no cost.

Summary

As we have seen, the monetary damages from any of the threats above is enough to justify major improvements in surveillance capabilities or adding staff to the Surveillance department. The trick is that the income or saving of assets is, without exception, produced in an area other than Surveillance. This creates an apparency that the income produced is in Slots, Pit, or Legal, when in fact the producers of the income were a well-equipped and well-trained, competent Surveillance team, working in tandem with other areas and with Management. The other important part to consider is that, according to survey, a majority of losses due to theft in casinos are a result of internal theft outside the Pit and Slots areas. This, in addition to potential losses due to safety violations and regulatory fines, creates a major income source in a competent and equipped Surveillance Department. The entire point of this article, though, is that in fact an untrained and inexperienced Surveillance department is not equipped to pick up many of the examples I have given here. They do not have the knowledge of the scams, internal and external, that they need in order to pick up the scams. An untrained department does not correctly write or route reports, and executives discount the reports they do receive. When illegal activity is detected they may not know what evidence must be maintained or how to maintain it for presentation in court. Without knowledge of procedures in the rest of the casino, or what those procedures are designed to control and prevent, cheating and internal theft can run out of control. Untrained Surveillance can be as much of a liability to the casino as the untrained Security officer mentioned above. Confidentiality breaks, actions advised because of misunderstandings of the law, poor handling of evidence and reports that cannot meet the standard that would be required in court actions can cost the casino major portions of casino income. I know of one case in which a poorly trained Surveillance person advised a rookie gaming control investigator that a person was cheating by bending cards, when in fact the person was engaged in taking advantage of a poorly trained dealer who was exposing the hole card. The resulting arrest cost the casino over $150,000, because the video evidence in fact did not show any cheating moves, but did show that the dealer was exposing the hole card. A trained and effective Surveillance, Security department or trained and competent gaming regulatory area is an asset to the casino and its owners. Untrained or poorly trained personnel, in any department, are a liability to the casino in terms of lost customers, lost assets, potential legal problems and fines from regulatory agencies.

Copyright © 2003, 2009 by Jim Goding. All Rights Reserved. Unauthorized sale or distribution is a violation of law and of the proprietary rights of the author, and is actionable under law. Inquire with jimgoding@casinosurveillancenews.com

Please contact booksales@casinosurveillancenews.com for information on how to order publications