Casino Employee Fraud – 10 Strategies to Protect Your Profits [UPDATED]

Security is a primary concern for casinos. Many invest in taking serious security measures to protect themselves against consumer and patron theft. But what about theft from their own employees?

According to the 2022 Report to the Nations, CFEs estimate that organizations lose 5% of revenue from fraud every year, amounting to an average loss per case of up to $1,783,000.

Add this staggering sum to how much your casino also spends on taxes, employee payroll, and other operational expenses, and that is a huge chunk of your net profits.

In other words, that 5% of total revenue lost to employee fraud is taken 100% from what would have been your profits. For example, if your net profit after all taxes and expenses was $10 million, but you lost $2 million to fraud, now your net profit is only $8 million – a 20% loss.

If your net profit would have been $2.5 million but you lose $2 million to employee fraud, you net only $500,000 – an 80% profit loss.

Depending on the size of your casino, losing $150,000 can be far more catastrophic than a large casino losing $1 million. Again, 100% of these losses come from your profits.

So what can you do to protect your casino from fraud? Here are some tactics you can implement today.

  1. Delegate Tasks Among Multiple Employees

Casino employee fraud happens behind closed doors, and when one person has too much control over sensitive data. According to the 2022 Report to the Nations, only 9% of fraud cases involve financial statements; however, it is the most costly, with the average case amounting to $593,000 in losses. By delegating tasks among a team, you can reduce the risks of one employee stealing from you.

For example, assign reviewing bank statements to one employee, signing checks, and making payments online to another employee. You can also assign a director to oversee and supervise accounting operations for quality assurance and compliance. 

Reducing casino employee fraud is largely accomplished by minimizing the opportunities to commit it.

2. Get Documentation for Every Signed Check

When you consider all the checks and payments your casino makes to vendors and contractors for all the zillion things it takes to run a casino, you will realize that your vulnerability to employee fraud isn’t just confined to the casino floor, table games, food and beverage, and slots. In some cases, employees and vendors might team up to steal from casinos.

Make it a part of your process to request documentation on everything from purchase receipts to copies of deposited checks.

3. Install Cameras, Cameras, and More Cameras

Nearly every casino uses surveillance cameras today. However, the challenge arises is accessing and analyzing the thousands and thousands of hours of data and footage your surveillance systems collect.

With video recordings now stored in the cloud, it actually takes longer to export the videos you want to view than it does to record them. So if you’re looking for a video of a certain employee’s actions for the past six months, you will have a major challenge simply accessing and viewing all the relevant data.

All your cameras and surveillance systems must talk to each other, especially when certain events occur.

For example, if a bartender skims on drink profits, can your payment processing system sync up with your surveillance cameras? This is what you need to produce ironclad proof of theft.

4. Use Identity Verification Software when Hiring

Some employees want to work at a casino to be around all that money. Some of them might even have criminal records or have falsified their identities. Be sure to institute a thorough and detailed background check before making any hires. Invest in software that verifies whether or not a new hire has been blacklisted by the Gaming Control Board.

Although this might cost you upfront, it is a small price to pay to prevent potentially losing hundreds of thousands of dollars in theft. 

5. Conduct Frequent and Publicized Audits

This is one of your most powerful deterrents against casino employee fraud.

Conducting audits of your finances and security systems may help you catch fraud after the fact. However, it’s better to prevent it altogether. Make it well-known that you conduct frequent unannounced audits at irregular intervals.

When employees are aware that someone is always monitoring surveillance cameras and financial transactions that occur through all operations within the casino, they will likely think twice about attempting to steal from you. 

Nothing beats the fear of getting caught. So, the more fear you can instill, the fewer fraud cases will occur.

6. Have and Enforce an Employee Code of Conduct

When expectations are known and communicated, behavior improves. One of the easiest ways to reduce financial loss due to employee fraud is by implementing a Code of Conduct.

7. Create a Healthy Company Culture – with Integrity

Believe it or not, leadership plays a key role in preventing fraud. Leadership must abide by your casino’s cultural values. Integrity across all levels is critical, or the culture breaks down.

For example, you can’t get angry at a bartender for skimming profits if the bartender’s supervisor gives free drinks to a best friend or an attractive woman.

When employees feel unknown, uncared for, and devalued, they begin to act out of anger and resentment, and consider behaviors they normally would not. Remember—a lack of communication is a breeding ground for resentment.

Make it a priority to keep your team engaged and informed. If your casino staff, departments, and managers all feel isolated in silos and unappreciated, prioritize creating a healthy and positive culture.

8. Set Up a Multimedia Reporting Hotline

According to the 2022 Report to the Nations, organizations with hotlines detect fraud more frequently and reduce their losses than organizations without hotlines. 

How do you implement this? Simply set up a phone hotline for employees to call anonymously if they see or learn about employee fraud taking place.

To increase employee buy-in, create an online form and a dedicated email address as well. In other words, make it easy to report abuse and fraud.

People who care about honesty and a good reputation will report abuses and fraud – but ONLY if they feel safe in doing so. Make it easy and safe for your employees to take action.

9. Train Managers and Surveillance Teams

How many managers and surveillance staff at your casino have 10 or more years of experience? How many of them know how to identify employee fraud on the casino floor and table games? For example, do they know how to spot the false shuffle? Do they know the signs that a dealer is colluding with a friend at their table? 

The good news is that you can spot at least seven warning signs of employee fraud relatively easily if train your managers and surveillance teams on what to look for. Some warning signs are evident before the person decides to steal. Other warning signs are indications that fraud and theft have already occurred. 

10. Use Employee Scheduling Software

In addition to implementing the above strategies, it also helps to know the warning signs that an employee might be considering stealing from you.

Casino Schedule Ease is a terrific way to help improve your company culture. Employees frequently have schedule change requests, early out requests, inquiries about vacation time, family medical leave, and so much more. All these requests burden your systems and personnel, and delays and lack of communication can infuriate your employees.

With our scheduling software designed specifically for casinos, your team can access everything on their mobile phones. They can make change requests and EO requests and get answers quickly. Employees love our software, and they will appreciate you for providing them with this convenience.