Spring has arrived, which means the day and night clubs will be in full operation very soon, if not already. With that in mind, I think back to one of Derk Boss, CFE, CPP, CSP’s quotes, “Where the money and alcohol pour freely, so does the potential for graft, corruption and theft.”
One of the biggest issues we see within these areas – clubs located in the casino and operated by the Food and Beverage department – is that those assigned to loss prevention are not paying enough attention to these areas. As we always say, “Where there is value, there is fraud, always.” These areas must be monitored and audited by trained personnel on a regular basis. It’s not a question of if you will get hit, but when!
Because these are venues that are heavy cash environments with easily taken and transferable product and low accountability, as well as team members depending on tips for their livelihood, there is a built-in incentive to do what you can to make more money. It’s for these reasons that surveillance is critical in these locations.
Common Scams in Casino Venues
Casino Hosts
There are many ways a host can game the system. In fact, it is usually the host position that is central to many of the scams and schemes that can occur in club venues.
Hosts will bring their clients in ahead of others in line and/or bypass the security checkpoint as well as:
- Discounting the price of bottle service, private lounge chair, section, room, cabana, etc.
- Waiving cover charges
- Procuring drugs
- Procuring prostitutes or escorts
- Claiming fraudulent commissions
Often, money earned from entry fees, bottle service and private areas is not well tracked, especially cash. This means that payments, particularly cash, can easily be diverted into a host’s pocket.
POS & Cashiers
Cashiers can steal entry fees and cover charges in several ways. As a cashier operates a POS, the methods used to steal from this location are the same as any other POS.
They may use the following to skim funds:
- Voids
- No sales
- Cancels
- Comps
The cashier can work with the hosts to cover the fraudulent sale of services by not listing the service or private area as having been sold or listing it as sold at a reduced cost (or higher cost).
Security
If the security team is corrupted, and officers are working for their personal interests, illegal activity and harmful behavior will arise that will cut into the profits of the venue and expose it to regulatory fines and potential damage to its reputation.
Security is posted at locations to ensure patrons:
- Meet age requirements
- Are not in possession of weapons or drugs
- Are not overly intoxicated
- Are dressed in the proper attire
Security is also posted at private areas and booths to maintain the privacy of the patrons who paid for entry into those locations and/or bottle service. Therefore, it’s easy for them to “turn their heads” from whatever illegal activity may be occurring in return for a cash payment.
Club Venue Managers
It stands to reason that if the nightclub/pool manager is effective at their job and works diligently to deter and detect illicit activity – scams and employee misconduct – most would not happen. Such activity should be obvious to an astute observer. A manager who pays attention to the floor and to the numbers (sales, inventory, profit margins, etc.) will often suspect that a scam is occurring. It is important to bear in mind that if illicit activity is occurring in a specific venue and the manager does not report it, they are either too inexperienced to know what’s going on or the manager is involved in the scam itself.
Bartenders
Due to the cash flow, pace of business and number of guests, it is much easier for a bartender to cover his/her thefts and can be difficult for management to know that funds are being stolen. Bartenders can easily work with waitstaff to steal from the venue or patrons by:
- Overcharging/under ringing
- Resales
- Voiding tickets
- Comping cash-paying guests and/or providing services for tokes
Make the Invisible, Visible
In conclusion, the only way to prevent and reduce losses in these venues is to expect them and to ensure your surveillance team, as well as the audit department, is paying attention. This means routine audits of both video and documented transactions. Remember, with the technology we have available, it is easy to hide theft and fraud. However, we can use that same technology to track it down. It is our job to make the invisible, visible!
