How do casinos protect against employee theft?

Internal controls are procedures the casino must follow or implement to help protect and account for its assets. You can look at internal controls as a method of checks and balances that help insure that no one person can abscond with money undetected. There are three principal types of internal controls: "access," "documentation" and "personnel."

Access controls are physical safeguards, such as metal detectors, surveillance cameras and lock-and-key devices. For example, these controls insure that only persons with a need have access to sensitive places such as the casino cage, the insides of slot machines and into the rooms where the cash and coins are counted.

Documentation controls require casino employees to make physical records of all transactions where it is practicable to do so. For example, suppose a table game was running short on chips. The cage would send a chip runner to bring the table more chips. To insure that the same amount of chips both leave the cage and make it to the table's rack, records must be created both at the cage and the table. At the cage, the cage cashier must count out the chips and place them into racks for transport. The cage runner must verify the number of chips, and both the cashier and the runner must sign a transaction slip. The cage cashier maintains a copy as proof so that she can balance her accounts at the end of her shift. Likewise, a transaction report is made at the table when the dealer counts the chips and puts them in his rack. Both the runner and the dealer sign this transaction slip. The dealer puts one copy in the drop box. From there, the count team separates it from the cash and sends it to internal audit, which in turn reconciles the transaction reports from the cage and the table to ensure that they are consistent.

Personnel controls are, in essence, persons watching other persons. For example, in the casino pit, the casino manager, the shift manager, the pit boss or floor supervisor can watch or approve any given transaction. As the transaction grows the more senior employees must be involved. For example, while a pit boss can comp a player to dinner, large credit lines must be approved by at least three high-ranking casino employees. Moreover, the ever-present surveillance system monitors transactions wherever they occur. Certain procedures can assist proper observation. For example, all denominations of chips are different colors and have different side markings so they can be distinguished even when stacked and even by a black-and-white camera.

To understand the nature of these controls, one must appreciate that a typical casino may have a thousand pages of controls that cover every aspect of the gaming operation. Nothing occurs in the casino without touching on some aspect of internal controls.

Casinos may be fined or lose their licenses if they fail to follow their internal controls. Most violations, however, are mistakes by well-intentioned employees who have made a human error or misunderstood the requirements. In this way, the regulations can provide benefits to the casino because they detect errors and help the casino safeguard its own assets. The regulators can save disciplinary action for those casinos that have numerous violations, are repeat offenders or who intentionally violate their internal controls.

This summary of the internal control process was provided by IGML member Anthony Cabot of the law firm of Lionel Sawyer & Collins, Las Vegas, Nevada.