A framework for casino gaming executives and surveillance professionals
Back in 2020 I sat down with table games guru Bill Zender and reviewed our notes from the previous 20 years on casino scams. Our objective was to come up with our “Top 20.” We went back and forward on a number of scams but finally agreed on the list. I followed up our discussions and research with an article called The Top 20 Casino Gambling Scams of the Century.
Since writing that article I’ve often thought about the commonalities of each scam. Not just the Top 20 on our list but all casino gambling scams over the last 20 years. What do most of them have in common? Could they have been prevented? What can we learn to minimize the risk of history repeating itself or to even improve game protection in the casino industry?
I’ll cut to the chase. I believe that over 90% of the casino cheating scams could have been prevented if two things were maintained - randomness and procedures.
Most scams (arguably all) are picked up…eventually. Casino managers know that cheating is a cost of doing business; however, most expect speedy detection and mitigation of any scam. I’ve found that quick detection and loss minimization is more often achieved by effective checks and balances, well trained staff and more supervisors on the floor dedicated to watching the games. Without these things, casinos are open to losing a lot of money.
Casinos are generally well equipped to protect their games. Unlike backroom private poker games and illegal gambling, casinos have manned 24/7 live surveillance operations using state-of-the-art camera systems. With that being said, all the cameras made in China won’t help your casino unless you have five things that are absolutely necessary to protect casino games.
What I’ve learned is that casinos have become more focused on detection than prevention. They often rely heavily on the doctrine of thou shall call surveillance to look at it, if we are getting beat. Often the damage is already done. The losses could have been prevented if casino management had focused on and applied 5 principles of game protection. These 5 principles apply to all casinos games - live and electronic. They can be applied for strengthening game protection on current games on the floor or assessing new games before they go on the floor.
1. Random Outcome
The preservation of game randomness is the number one responsibility of a casino executive. It is the essence of gambling. When randomness is compromised or manipulated there is no integrity in the results and fairness is lost for both the players and the house. From a financial perspective, the house relies on randomness to deliver steady long-term profits through the mathematical house edge intrinsically built into the game.
I estimate 90% of casino losses incurred by cheating over the last 20 years has been caused by the compromise of randomness, assisted by at least one staff procedural violation. It simple terms, the fix was in.
The monster scams of the 21st century (so far) has been different variations of “baccarat sequence scams” where cards were recorded and identified before they were dealt. This is the casino industry’s equivalent to insider information in the stock market. To make the scam work often dealers are recruited to breach at least one dealing or shuffling procedure. I estimate close to a billion dollars have been stolen from casinos around the world using baccarat sequence scams.
When the granddaddy of all baccarat sequence scams, “the cooler,” became too risky to pull off after camera systems were introduced in the 70s and 80s, cheats didn’t take long to realize that the “false shuffle” was undetectable from overhead fixed cameras. It would take years of plundering and pillaging casinos across the world before casino manufacturers came up with the solution - a shuffle machine. This worked well until concealed camera technology got better and the creativity of baccarat sequence cheaters went into hyper drive.
Concealed cameras have been used by cheating teams to identify sequences of undealt cards in various ways. Cameras, either hard wired to recorders or streaming via bluetooth to the internet to an outside source, have been concealed on players and dealers. More imaginative scams include cameras planted in fake chips, dealing shoes and even shuffle machines.
Manipulating random outcomes in casino games is not exclusive to baccarat. Other examples include rigged roulette wheels, dodgy dice, marked cards and edge sorting. These methods involve tampering or compromised gaming equipment.
It is important that all gaming equipment from playing cards to shuffle machines are “integrity inspected” on a regular basis to ensure they haven’t been compromised. It should also never be assumed that gaming equipment purchased from a manufacturer will pass the integrity inspection on delivery.
In 2014 a Russian high-tech organized cheating network was discovered in the US. In probably the most sophisticated slot machine scam our industry has seen, the team led by a hacker called Alex wrote an algorithm that enabled cheats to predict future jackpots on the machines. By reverse engineering different slot machines they discovered the computer random number generators used in the machines were not random. They were pseudorandom. Outcomes were predictable. This scam had actually been perpetrated for decades by cheats who knew slot machines weren’t random. This team just scaled up and took advantage of the explosion of machines around the world and the ignorance of the casino industry towards what drives the randomness (or pseudorandomness) of slot machines.
Not all games in the casino are 100% random. Games can be broken down as independent and dependent trial games. Roulette and craps are independent. The previous outcome doesn’t change the odds (probability) of the upcoming outcome. Card games like blackjack and baccarat are dependent trial games. As cards are dealt the odds change slightly depending on the amount of cards left. As the deck is depleted the state of the game and the probabilities change.
Card counting is a byproduct of card games. Tracking cards and knowing what’s left in the deck can help you in your betting and playing strategies. This is not cheating, it’s paying attention. The question players have to ponder is whether the edge gained is worth it financially and time-wise. On games like baccarat, it’s not. On other games like blackjack or side betting it can be but a lot of factors have to come into play including eluding detection and getting backed off.
Three pieces of advice for casinos:
Understand what makes every game random and guard it.
If your game randomizer is electronic, don’t assume it can’t be compromised.
Scrutinize the baccarat shuffle and cut. This is a baccarat cheats “happy place.”
2. Execution of the Correct Outcome
Just as important as ensuring the game has a random outcome is making sure the rules and procedures are carried out for each game the same way, every time. We all know that rules govern the game; however, procedures facilitate how the game is conducted, controlled and the correct outcome executed.
In casinos we have lots of procedures, for a very good reason. They are proven best practices that combine game efficiency and game protection. Most have stood the test of time. Procedures ensure games are conducted in a consistent manner. This gives everyone with interest in the game (players and the house) assurance that the game is being played on the up and up.
Consistent adherence to procedures provides a flatline for the conduct of the game that if breached, can serve as an alert to supervisors and surveillance personnel of cheating or fraudulent activity. From a game protection standpoint, procedures provide a defense that is to casinos what shields were to the Spartans. Unfortunately, at our own peril, we don’t always enforce them. Careless staff and lackluster oversight creates an environment of complacency. Players looking to beat the house legally or illegally strive in this type of casino environment.
Sometimes casinos bend procedures for players considered by casino executives to be high-rollers. History has shown us that this doesn’t always end well. Some of the Top 20 scams of the last 20 years were successful because casino executives, dazzled by the possibility of a sizable win for the house coupled with the fear of the high-rollers leaving and going somewhere else, enabled organized cheat teams with large bankrolls to dictate the procedures of a game in order to facilitate a scam. By "social engineering" management, time-proven best practices were thrown out the door and the cheats took advantage of the open door.
Sometimes casinos add extra procedures in an effort to increase security only to learn that sometimes more procedures means more opportunities for cheats. A prime example is when manufacturer pre-shuffled cards came on to the scene. A number of casinos felt it would be a good idea to lay a deck or two of the pre-shuffled cards face up on the baccarat table after they came out of the box, to prove to customers (and surveillance) that they had been shuffled. They were then placed into the shoe and dealt. Concealed video camera cheats had a field day recording future card sequences and results.
In some cases cheating has been enabled because of new processes introduced to the game incorporating new technologies. A prime example is the case of the casino who used an automatic deck checker to check that all 8 decks of cards were present and accounted for after arriving pre-shuffled from the manufacturer. The deck checker, a relatively new product on the market, had a design flaw that sorted the cards face up instead of face down. The deck checker was positioned under a surveillance camera (an extra layer of security) which revealed the order of all the cards before they were placed in a shoe carrier to be taken to the baccarat pit. Someone with access to that surveillance camera was able to relay the entire order of the cards in the shoe to a high-roller player accomplice. That was very costly.
Three pieces of advice for casinos:
Formulate procedures based on time-proven best practices and enforce them.
Any requests for an exclusive change of procedure by a group of players should be collaboratively risk assessed internally, with the final approval coming from the CEO/President.
Sometimes more “layers of protection” creates more opportunity for cheats.
Correct Payments and Forfeiture
The final part of the equation for operating casino games is the take and pay procedures. Dealers, floor managers and surveillance staff are trained to know the correct odds and payouts for each game. It is the dealers responsibility to determine the correct payout after an outcome and prepare a payment of chips. Chip payments are completed under strict procedures that ensure they can be verified by floor managers from fixed surveillance cameras recorded above the table.
Mistakes happen. It is not uncommon. Dealers are expected to be human calculators for an 8-hour shift. Table games still fosters a mental math environment. However, sometimes there are more nefarious reasons for incorrect payouts. Crooked dealers colluding with associates at the table is also not uncommon. “Dumping” is when a dealer simply ignores the correct payouts and when the floor manager isn’t looking, overpays their associates winning bets. Turning a blind eye to associates losing bets and not collecting them for the house goes hand in hand with dumping off to associates. All dealer overpayments should be recorded and dealers investigated for the possibility of collusion by reviewing previous play.
Sometimes incorrect payouts can be made during the chip buy-in process or color change process on the table. A common way for dealers to fatten the bank accounts of their friends is to slip them a “dirty stack.” That’s where chips have high denomination chips slipped under the top chip of the stack.
On electronic games payouts are determined and made by computers. This makes the process of take and pay a lot more efficient, timely and accurate. In saying that, the computers can be programmed incorrectly. Take the case of the slot technician who “accidentally” programmed an electronic craps game to payout in another currency causing winning bets to be paid more.
Three pieces of advice for casinos:
Choose dealers, floor managers and surveillance people who are competent in math.
Scrutinize dealers who are “popular” with specific players on the low limit games.
Watch dealers who spend a lot of time setting up chips in the rack.
Checks and Balances
A casino surveillance operation is the best check and balance a gaming operation has. They have the ability to monitor live, investigate on review, audit and analyze gaming abnormalities away from the hustle and bustle of the gaming floor. State of the art video systems operated by experienced and trained staff is a useful tool that many other businesses in the world would love to be able to have. Surveillance has the casino’s back.
It is essential that Surveillance maintains an independent reporting line from operations. This allows them to investigate and report findings, both good and bad, objectively and without prejudice. Although it is paramount that they work very closely with operational managers and asset protection departments on the day to day management of operational risk, occasionally there is a prudent need for their investigations to remain confidential and their findings to be passed on to the most senior person in the organization for guidance and or action.
Surveillance is not the only check and balance tool at the casino’s disposal. Accountants and analysts focus on the numbers. raising concerns and questions about low financial performance and negative trends. Auditors and specialist external consultants add a good “third eye” for an objective assessment and second opinion. Auditors are good at checking for compliance. Consultants bring an independent global view that can help decision makers with best practices and change management.
Three pieces of advise for casinos:
Surveillance is capable of providing information that can help or harm the goals of the business.
Look at audits, evaluations and investigations of the gaming floor as a health check.
The most dangerous phrase in casino management is “we’ve always done it that way.”
All the other principles of game protection couldn’t be applied without competent staff. To me there’s a difference between trained staff and competent staff. Trained staff is implied. Competent staff display the knowledge and skills learned to achieve a good result on a regular basis. Doing it is more valuable to an organization than just knowing it.
There is no need to know that a roulette wheel needs to be balanced if someone doesn’t properly balance it. There is no need to know that the odds on a split are 17 to 1 if floor staff can’t work out the payout on a multiple chip payout in seconds. There is no need to know 20 ways to mark cards with invisible substances if you don’t know how to inspect the cards and verify. There is no need to know the card checking procedures when new decks arrive at the table if you don’t know what to look for.
A larger issue in the casino industry today is finding the time to train. It’s difficult running a casino that’s open for 24 hours a day and dealing with the constant revolving door of staff turnover. It’s a grind but casinos need to to find a way. It’s important in an ever increasing operational risk environment. Training provides knowledge, new skills, motivation and “call a friend” contacts to reach out and bounce odd situation scenarios around.
The challenge is only going to get harder if veteran casino people don’t share their knowledge and encourage training. As more reach retirement age the knowledge will be lost if it isn’t documented and shared. Casinos should invest time and money in training. Somewhere in those training classes are the leaders of our future.
Three pieces of advice for casinos:
Teaching staff how to count is fine, but teaching them what counts is best.
Knowledge training is good. Competency training is valuable.
Knowledge is knowing a tomato is a fruit. Wisdom is not putting it in a fruit salad.
The Devil is in the Details
This 10-minute article is a broad overview of what I believe is absolutely necessary to operate casino games and achieve effective casino game protection in today’s casino world. I’ve only scratched the surface on the 5 principles. There is a lot more to learn.
Casino game protection is becoming more challenging because of new technology and a changing attitude in the workforce. Traditional games are being replaced with electronic games. Cashless gaming is being introduced. Sports betting is taking off. Streaming poker has taken the internet by storm. Gambling is, dare I say it, going through another explosion period. Cha-ching.
One thing is for sure, game protection professionals are going to see more technology scams.
At the same time we see seasoned veterans leaving the gaming floor and the eye in the sky. New executives are replacing old ones. Many have limited casino experience but have a zeal to try something different. Getting up to speed quickly is now the executive mantra. We don’t have time to sit through hours and hours of cheating techniques, demonstrations of obsolete 30-year old scams, ghost stories and grainy old videos. We have to be more risk-based.
My goal here was to simplify the challenging mission of protecting casino games and provide a framework for where you should focus your game protection priorities. However, to understand the 5 principles thoroughly, casino professionals need quality training on how to run a casino efficiently, regular discussion with game protection experts and reliable intelligence on the latest casino scams and game protection incidents happening around the world today. It’s a continuous process.