Counterfeit Chips: Preventing the Bleeding
When I worked in surveillance I hated calls from the cage. Usually it meant that the paperwork downstairs showed a variance in the inventory and they needed us to review hours of video to try and verify a mistake a cashier had made. More often than not it would take a surveillance operator away from monitoring the floor to investigate a $100 error by a cashier. In a busy casino with around 200 gaming tables it sometimes seemed a little like writing parking tickets outside a bank being robbed. But hey, that comes with the territory.
One day I got a call from the cage that I'll never forget. It was the Tuesday after a long holiday weekend. I had just settled down with my first cup of coffee, ready to catch up on the daily reports from the last couple of days when the Cage Manager's extension number appeared on the caller I.D. It was one of those "Houston, we have a problem" calls.
Apparently a cage supervisor had noticed the $500 chip stock was greater than the casino's official inventory? They had checked the stock and suspected some of the chips were counterfeit.
I put my coffee aside and made my way to the chip bank where I met the Cage Manager and Supervisor. A tray of $500 chips ($50,000) had been set aside. We checked each chip by running a black light over the center inserts. Our chips had a special security feature built into each one that showed up under the ultra violet light. Yup, they were counterfeit alright. They looked nearly identical to our chipsexcept these were definitely counterfeit.
I had seen bogus chips from time to time but I had never seen 100 of them sitting side by side in a chip rack. The texture, weight, color and size all looked like the real thing. If you looked closely you could see some differences in the font used on the denomination text in the center inserts. But unless you had reason to believe they were bogus, you couldn't tell.
I met with the head of table games and briefed him on the situation. Immediately the decision was made to credit off all chips of $500 denomination and above from the tables. As each credit came through the chip bank, a team of cage supervisors would run the black light wand over the chips. We also initiated a black light sweep of all chips in the racks of the gaming tables, cashier desks and chip bank.
Over the next few hours the tally of bogus chips steadily climbed. I swear at one stage I thought it was going to overtake the amount of hamburgers served at McDonald's. By lunchtime all the high denomination chips had been delivered to the chip bank. The one rack of counterfeit chips initially found by cage personnel had grown to over eight racks. The final tally - 807 X $500 chips. Or as they call it on earth $403,500.
O.K, so we had stopped the bleeding (for now). This is an appropriate term considering the chip bank could have been renamed the blood bank that day. How could this have happened? There were a lot of questions to be asked and take it from my surveillance team, a lot of video to be reviewed.
Over the next month a team of six surveillance operators were assigned to assist police with the investigation. Over 1,000 hours of video were studied to try and find clues as to who may have been involved with the scam. It really was a needle in a haystack type scenario.
Here are the main challenges we faced. First: Contrary to television TV shows, it is impossible to distinguish authenticity of chips from reviewing analog video tape recorded through a fixed camera positioned 7-10 feet above a table or cage window. Before the digital age, analog video tape was used and recycled on a weekly basis for up to two years. After a year, the quality of the video would deteriate significantly making reviews very difficult.
Second: $500 chips were not uncommon in a casino with so much action. Potentially everyone who played or cashed out a $500 chip could have been a suspect. On a busy holiday weekend this meant we had about 3,000 suspects.
Third: In a casino so large there were potentially about 230 outlets for passing counterfeit chips (tables and cashier windows). More on this later.
The best we could hope for is that we could identify on video a suspect or group of suspects that made multiple suspicious $500 chip transactions over the holiday weekend.
After a month of reviewing tapes we discovered about a half a dozen players who cashed in large amounts of $500 chips. But overall the review was inconclusive as the suspects seemed to have legitimately played and won the chips. The review led us to believe whoever was involved in the scam may have used a number of outside agents to pass the chips in amounts less than $2,000 at a time.
During our internal investigations we uncovered three major flaws in our internal controls which made our casino vulnerable to a scam this big.
Although our high denomination chips had a built in security feature, it became apparent that not many (almost none) of the front-line staff in the cage or the tables knew about it. By waving the chips under a black light the feature could be identified. If management had implemented regular or random checks on chip inventory the influx of counterfeit chips may have been detected and halted sooner.
The slot department had taken over the management of change booths from the cage a few months prior to the scam. In an effort to improve customer service to slot players, the decision was made to accept high denomination chips at the satellite change booths to facilitate table game players that wanted to "pull the handle" between shoes (so to speak) without having to go to the main cage to change their chips. This increased the options for passing high denomination chips and gave the perpetrators the opportunity to cash out in areas that were traditionally not as concentrated with camera coverage. Oh by the way, the surveillance department "didn't get the memo on that one".
Probably the greatest flaw in the system was the inventory controls in the cage. As part of the accounting process, chip inventory is checked every day. Apparently the supervisor designated to this task was on leave for the holiday period and the inventory was not checked until this person returned on Tuesday morning (when variance was discovered). This means the inventory was not checked for 4 days. Records show that during the 4 days the $500 chip stock grew about $100,000 a day.
So what was the outcome? A few days later approximately $90,000 in counterfeit $500 chips was found on a nearby beach not far from the casino. The investigation led police to a suspect's house where equipment and materials to replicate $500 counterfeit chips were found. The suspect was no where to be found. To my knowledge the investigation was still ongoing when I moved on a year later.
There are a number of lessons to be learned by this experience from a casino management point of view.
Counterfeit chips are easy to produce. Today's technology is awesome. If the evil doers can counterfeit a $100 bill they sure can counterfeit casino chips. In recent years a lot of the good stuff has come out of China but don't be fooled. In Las Vegas last year, some guys were arrested after it was discovered they were manufacturing counterfeit chips just minutes away from the strip.
Look at your chips. Could you tell a counterfeit from a real one? If you have built in security features, educate staff in what to look for. If your chips don't have security features, maybe you should think about.
Run regular and random checks in the cage and on the casino floor. After we got hit we introduced black light wands in every pit. During dead-game time dealers would wand the float. On a random basis we would overtly wand the chips during a game or player buy in. In the chip bank we installed a permanent black light and introduced a procedure where we roll all chips under it.
A casino in Asia got hit 18 months ago for quite a large sum. They introduced a black light wand to every table. Whenever someone comes to the table with chips, they wave the wand over them. A great deterrent for anyone thinking about it.
Chip inventory should be checked and double checked by surveillance. The easiest way to achieve this is by ensuring an inventory report is electronically sent to surveillance each day. In fact, you should be getting every report generated by the cage on a daily basis. It's amazing how many scams can be detected by looking at the numbers. The cage is the heart of the casino through which all blood flows.
Communication within casino departments is paramount in game protection. Surveillance needs to be included in the communication flow. Every procedure, control, practice and (more importantly) change involving money in a casino should be communicated to surveillance management and I'm going to take it one step further - approved by surveillance.
As casinos around the world are getting bigger (Venetian Macau recently increased their gaming tables to 430) the sheer volume of cash transactions is increasing the threat of counterfeit chips and other scams. Properties should look at their current internal controls regarding chip transactions and ask the question, are we vulnerable?
Bogus chips are always going to pop up from time to time but a few simple little controls, more education and open communication may just stop a scratch from turning into severe internal bleeding.