Internal Audit Busts Casino Fraud


There are different forms of casino fraud taking place in a casino establishment. But the many fraudulent activities taking place may require different kinds of security approach to prevent its occurrences. While surveillance cameras are good form of preventive measures which monitors suspected illegal activities committed by their customers and staff, its scope of security coverage might have some boundaries.

While a CCTV camera is an effective means of documenting any illegal activities and illicit behaviors taking place in a casino, it does not have the capability of monitoring the casino’s account and internal operations. This will need a better and in depth scrutiny and investigation which an internal auditing can perform.

While the internal auditing capacity to detect fraud taking place in casino tables and slot machines may be limited, the control internal auditors can exert may not be as stringent with these situations in certain casino area operations such as the following: food and beverage operations, marketing, hotels, financial and accounting operations. Internal auditor’s skills of detecting and preventing casino fraud in these areas are stronger rather than its application on the physical structures of a casino.

Identified fraud-ridden areas are extensive in the marketing and promotion areas in a casino’s operation. Casinos are funding for the marketing promotions that will lure casino players to their facilities. Activities taken in this area of casino operations seem to be neglected making it an obvious prey to fraudulent activities.

An example would be the complimentary abuse. Casinos provide complimentary bonuses to their customers. The more a casino player plays the more comps they are entitled to earn. Casino players are rated based on the frequency of their games. The recording is done by a casino manager who may freely “miscalculate” a player’s rating entitling them to more comps than they should really earn.

Internal auditors can help the casino management save comps costs by designing an automated control that can prevent the occurrence of inflated ratings of casino players. Auditing can be done by embedding regular audit routines in the casino’s computer system that will prevent overstatement of a casino player’s ratings. A manual policy may be implemented for the immediate examination of all the rating cards of each player every few hours that an auditor will match from the actual players who are currently sitting on the casino table. This will significantly reduce the opportunity of a manager or supervisor to make a false entry on the casino record.

Internal auditors may be sent occasionally to record and observe from the surveillance department all the customer’s rating performances and these can be used to compare with the actual ratings done by the supervisors at that time.

While the casino’s operational control over its structures and framework may be well-designed, it may often not be as effective as the management perceived. But with internal auditing functions, it is an effective means of busting other fraudulent activities taking place in any casino business.