New slot scam, and a whacky estimate of casino theft

There’s always an arms race of sorts going on between slot cheats and casino security. The cheats figure out a way to rip off the machine, the security folks learn how to detect and prevent it, so the cheats come up with a new scam. Ad infinitum. Now, surprise surprise, comes news that ticket-in/ticket-out machines–which don’t have coins to steal–are nevertheless susceptible to cheating from the inside. Here’s the whole story from the LV Sun:

High-tech thieves have discovered a new way to rip off slot machines – stealing more than $1 million from the Orleans before management shut down their computer-assisted heist.

Gaming regulators say the crime – one of the largest in years – shows a vulnerability in casino security that could lead to new surveillance standards.

The theft began in September 2006 and allegedly involved three slot workers who, over several months, manipulated software that prints slot machine payout tickets. They allegedly worked with two accomplices who posed as customers and cashed the tickets.
….
The Gaming Control Board’s enforcement chief says the Orleans incident was a new one to him, although it had a familiar ring to security experts.

In this case, Orleans workers printed winning tickets on test machines in a back room, using software allowing the machines to mimic machines on the slot floor that had been turned off, investigators told the Sun. The tickets were for relatively small amounts – a few hundred dollars each – to escape the notice of casino bosses.
Las Vegas SUN: THIEVES INSIDE THE MACHINE

Later in the article, a security expert estimated that casinos lose about 6 percent of their revenue to inside theft each year. Since according to my calculations big Strip casinos make about $700,000 a day on average (some days are bigger than others), that’s a total of $42,000 a day going out the back door.

That figure is frankly unbelievable. I can’t imagine that, in a business where it’s common to nickel-and-dime employees over salary (any dual-rates out there?), it would be the industry standard to sit back and tolerate losses of $15.3 MILLION a year. I want to see some proof of that 6 percent figure before I take it seriously.

Think about it. How many employees have access to cash on the casino floor? A few hundred? To get up to these numbers, 42 of them would have to be taking $1000 a day home with them, every day, without anyone noticing. I could accept a cashier here or there stuffing a $20 into their pockets while no one was looking, or a dealer paying a friend’s push once or twice a night with no one noticing. I wouldn’t be too surprised at a total of $500 to $1000 a day, at most, disappearing.

But if casinos regularly fail to account for 6 percent of their revenue, that is some serious tax evasion. Think of it–that’s $15.3 million for every casino on the Strip not being taxed. In the old days they called that skimming, and this is why casinos have something called Minimum Internal Control Standards. The state would never tolerate that. By sheer dollar amount, this is far more than was skimmed from casinos during the glory days back in the 1950s and 1960s. Heading into a fiscal crunch, it is frankly unbelievable that the state would countenance that kind of sloppy control.

The more I think about it, I’m officially calling “bullshit” on that six percent figure, until I see some kind of proof. It just doesn’t make sense that casinos would spend millions of dollars on player tracking to avoid giving out too many buffet passes while happily letting $42,000 disappear each day.

Author: Dave

Director of the Center for Gaming Research at the University of Nevada, Las Vegas and author of several books, including Roll the Bones: The History of Gaming. Also Gaming and Hospitality editor for Vegas Seven magazine.