Cheating May Be Sexy But it Doesn’t Pay the Bills (part one of two)
If casino surveillance departments charged for all the services that they provide, their business would be booming. If they only got paid for catching cheats, they would have gone bust years ago.
99 Problems But a Cheat Ain’t One
For the last ten years I have scoured the internet almost every day searching for news on casino cheating. It’s easy to do. You put “casino cheating” in the Google search engine and let it fly. If I see something of relevance, I will retweet it on Twitter. I do this for two reasons: to keep casino people abreast of casino cheating and so that I have information archived for future reference. It’s my depository. I rarely leave a comment. I let the content of the news report do the talking. I also Google search “casino”, “casino fraud”, “casino theft”, “casino robbery”, “casino security” and “casino surveillance.”
I’m fortunate to have formal and informal connections with industry surveillance networks and news media journalists who keep me posted. I also have connections with casino people from around the world who I’ve met over the past 16 years at the annual World Game Protection Conference. I like to think I’m tuned in.
Over the last five years I have noticed a decline in reported casino cheating activity. At the same time I’ve observed an upswing in casino security and non-compliance activity. I have spoken to a lot of casino insiders on this topic and asked them the question “where have the cheats gone?”
Most surveillance professionals agree, cheating is rare these days. It happens from time to time but it’s rare. Some say it’s always been rare. Theories vary but no one really knows why there’s been a decline in cases reported. Surveillance operations have been so busy playing an important role in their casino’s overall operational risk management strategy, they probably haven’t even had time to think about it.
Data seems to support opinions. In June this year the International Association of Certified Surveillance Professionals co-sponsored an industry survey of surveillance managers. About 100 surveillance professionals, mainly from the US, responded. This is not a large sample size but enough to get a reasonable indication of what’s going on in regard to cheating. Respondents were asked to give surveillance department statistics from 2019, the last full “normal year” before Covid-19.
56% of respondents said they reported 1-10 cheating incidents a year, 12% reported 10-15 incidents, 24% reported over 15 and 8% said they don’t know. These are some broad ranges that make it tough to average out but what stands out to me is that over half (56%) of surveillance managers report between 1-10 cheating incidents a year at their property. Not exactly a feast to lay before the king and queen.
More importantly, what are the financial losses casinos are incurring from cheating? The survey asked respondents what was the average financial loss per cheating incident. 49% said less than $1K per incident. Another 18% said somewhere between $1K-$5K. Not exactly “Oceans Eleven.”
I haven’t mentioned the stats on the larger cheating incidents because the specific frequencies and amounts are not defined in the survey. I assume that any casino cheating incident over $5K would be prosecuted and end up making the news where my Google fingers would find it. On average in the US there’s about one of those reported online every month or two, but considering there’s about 1,000 casinos in the US, that’s not exactly industry-wide cause for concern.
All in all, considering casinos generate billions of dollars a year in the US, it seems to me that although cheating represents a unique and constant threat, the financial risk in 2021 could be described as minimal and manageable.
Why is Cheating Down in Casinos?
If casinos, networks, surveys and news outlets are indicating cheating is down, why?
Covid? Maybe that has had some effect but you could argue it actually opened up opportunities. Keep in mind the reduction in cheating has been observed over the last five years, way before Covid came along.
What about the “it is happening, you just aren’t picking it up theory.” There’s no evidence that cheating activity is going on that we don’t know about. I’m happy to entertain the thought but as far as assessing the risk today and allocating resources to the threat, I need more evidence. A casino risk management strategy shouldn’t be devised on ghosts from the past. Effective risk management strategies should be devised on data, current and emerging trends and actual risk calculated by assessing the threat and addressing any vulnerabilities in your operation.
What about “it is happening, the casinos are just not telling anyone?" Plausible. Casinos, especially large publicly traded public ones, do from time to time prefer to go to the cone of silence with big cheating incidents. But generally the information gets out at some stage, even if it is months later during the court process.
Here’s what I think. Cheating in casinos is down because surveillance has gotten good — really good.
Most casinos now have every square inch of the floor covered. Digital camera technology has improved immensely with high definition and 360 degree cameras. Television sporting events remind cheats every day that camera technology is reaching new heights. Although improvements could be made on table game and slot machine coverage, the entrance and perimeter cameras can be viewed live or on review to get clear high resolution images of anyone. Those images are easily transferred amongst properties. Camera technology has overcome the grainy days of video tapes and is a real, not perceived, deterrent now.
Information is in abundance
Before the internet, casino people had to rely heavily on word-of-mouth to protect their games from cheats. Once the World Wide Web came along that changed and it continues to get better. Online information services, Google, OSINT, online regional, national and international casino networks, email and video conferencing connect us all nationally and globally. The speed and clarity in which information flows helps casinos stay one step ahead of the cheats and to have each others back.
Knowledge resources have grown
There are a number of training options open to gaming and surveillance people. Universities, conferences, outside training contractors, books, DVDs and regional surveillance networks. Internally casinos are utilizing the “knowledge in the room” to conduct their own training workshops. Casinos are also sending people to specialized training like fraud, OSINT, investigations and cyber security to learn new and advanced detection techniques that can be utilized to bring down bad guys. While not considered traditional game protection training, the courses provide a newer approach taught by experts in other fields that can add new weapons to your protection arsenal.
We’re just more experienced now.
Another year older, another year wiser. Twenty years ago it was rare to find a surveillance manager with over 20 years of experience. Surveillance operations only became mandated in the 80s. Now seasoned veteran surveillance and gaming managers are everywhere. They have seen a lot. They know a lot. They’ve had a birds-eye view of casino operations and seen their share of cheats and moves over the years. Their knowledge along with the decades of video collected and viewed on cheating is passed on within the industry and helps bring the new hires up to speed quickly. Videos are also used to help gaming floor staff learn about cheating moves. It provides the real story, not just an interpretation. Video is used to analyze ineffective procedures and refine practices. Arguably using surveillance video as a training tool for all staff has increased the amount of astute eyes above and on the gaming floor.
It appears to me that the cheating glory days are over. Casino cheating still goes on but not to the extent that it did during “the big baccarat rush” of the nineties and early twenty-first century. I estimate baccarat scams took over a billion dollars from casinos around the world during the 15-year period between 1998-2013. The high limits and desire to keep high rollers happy and playing forever gave bankrolled organized cheating teams opportunities to take advantage of pandering casinos around the world. The thirst for the baccarat big money left casino executives drooling and that led to a “let them do whatever they want” approach to managing and protecting the games.
The cheating that casinos have seen over the last five years has been, for the most part, small stuff. Stuff like bet pressing, pinching and past posting. According to the surveillance survey 47% of the “shot-takers” get caught on the first try. Amateur stuff. Occasionally, there is a significant cheating incident involving employee and player collusion.Those cheating incidents are rare but they can be costly.
So why hasn’t cheating been totally eradicated from casinos? When speaking to casino surveillance professionals most agree cheating often happens when time-proven airtight procedures are loosened for big players or simply not enforced by floor supervisors and managers.
At the 2019 WGPC a poll was conducted and 245 participants were asked what caused the most game protection breaches at their property. 82% of participants said bad enforcement of procedures. This still remains to be the thorn in a casino’s game protection side. Imagine how secure casino games would be if procedures were adhered to 100% of the time.
It’s Not the Fleas Casinos Have to Worry About, It’s the Dogs
I have a rating system for different types of casino cheating. It’s simple. How much did they get away with?
The fleas steal less than $1,000 from your casino. They are the shot-takers, the desperados, the lone wolfs, the hit and runners. Their techniques usually involve changing a wager after the result is known.
The cats steal between $1,000-$100,000 from your casino. They mainly work in teams like past posting, card switching or dice sliding teams. Sometimes they mark cards. They are more professional and skilled in their approach. They often use distraction techniques.
The dogs steal over $100,000 from your casino. Professional teams who travel internationally and play high limits. The cheating techniques usually involve obtaining inside information or putting in the fix. They also employ distraction techniques. Sometimes computers, concealed cameras and devices are used and more often then not they have recruited and conspired with casino staff.
I refer to cheating teams that steal over $1M as the Big Dogs. The Big Dogs are responsible for the lion’s share of casino cheating losses over the last 25 years. Most of the cheating losses incurred by casinos between 1998-2013 happened on the game of baccarat. I estimate that between 80-90% of the estimated one billion dollars stolen over that period involved collusion with casino employees.
Gaming employees colluding with cheats remains a major financial threat to casinos. It is by far the greatest table game protection threat to a casino. A cheat knows if they can “get to” a casino employee they can guarantee themselves a steady revenue stream for a long time. If cheats are able to infiltrate the casino management team, it becomes a gravy train.
Recruiting employees is not that difficult. During the big baccarat rush, cheats were known to intimidate casino employees to get them involved in cheating scams by threatening violence against them or their families. Sometimes this was done in a dark alley after the employee got off work. Sometimes it was done directly at the gaming table in their native language. Now “getting to” casino employees is a lot easier. You simply go online and click connect.
The good news for casinos is although management did learn a lot of lessons the hard way, they have actively sought to reduce their vulnerabilities. Practices and controls were tweaked and new technologies like shuffle machines and intelligent shoes were developed to combat the threat. High-end, high volume casinos have introduced their own internal collusion detection software analytic programs to monitor activity between staff and players. Data analytic divisions have been set up to monitor collusion and internal fraud.
The keys to game protection are simple: learn the threats, analyze your own vulnerabilities, consult and use knowledgeable resources, devise and enforce effective gaming procedures and stay up to date with what’s going on in the casino world. Use the best equipment and hire strong knowledgeable gaming and surveillance managers and you are well on your way to decreasing the risk of cheating in your property.
For now, things are quiet. I don’t expect that to last. We are reaching a new digital era in casino cheating. In 2014 Russian hackers were caught in the US using sophisticated computer technology to successfully predict slot machine jackpots. It’s estimated that this technology has helped cheat casinos out of millions of dollars around the world. The scam involved a global network of teams who continue to cheat casinos today.
As our casino floors become more digital there will be new scams. Mitigating these new threats will require digital defenses and an understanding of computer technology.
So if cheating doesn’t represent as much of a financial risk to casinos now as it used to, what are the “cheat catchers” in Surveillance doing? I’m glad you ask. In part two I will look at today’s casino surveillance operation, their important role in a casinos overall risk management strategy and why their stock is on the rise. Willy