An expert in casino surveillance, security and operational protection says organized groups are using slot advantage play to take millions from properties across the country, and the problem is only getting worse.
Darrin Hoke, who served as a corporate resource for surveillance at Penn Entertainment facilities across the country, took part in core training sessions Tuesday at the World Game Protection Conference. The full program and exhibit floor kicks off Wednesday and Thursday at the Tropicana Las Vegas on the Strip.
Hoke focused on electronic game protection in which he discussed the overall slot network design and examined the areas that are the most susceptible to fraud and abuse. He talked about players club schemes, slot advantage play, and internal/external fraud and provided solutions to casinos.
There’s a reason why the G2E show floor is dominated by slot manufacturers: slot operations represent 75% to 85% of all gaming revenue. The problem is most casinos spend very little time monitoring or investigating the numerous vulnerabilities associated with these multi-layered and inner-connected networks, Hoke said.
“Slot advantage play has been a big deal over the last few years,” Hoke said. “A lot of the older card counters have transitioned into that. They are opening multiple accounts and getting enrolled into the direct mail program of the casinos so they can get their free play. They come in, and play to a certain level and get the free play coming in and they don’t play again until the next cycle kicks back in about 90 days later. There’s syndicates all over the United States that are making tons of money doing this type of activity. It’s way worse today than it’s ever been. Everybody is getting wise to doing it since they see how profitable it is and understand that the casinos don’t do much about it.”
Nothing these groups are doing is illegal, Hoke said. Many are video poker players because there’s a low hold for the game, and they can grind out that, Hoke said.
“They’re getting money out of a casino that would otherwise go to a regular player, akin to signing up for an app at a restaurant and not using those points and then the employees will take the points and apply to their accounts to take advantage of the benefits,” Hoke said. “It’s very much the same thing, except they are doing this on a massive scale. In one particular case out of Florida, a group was moving close to $2 billion throughout the United States.”
For example, a group of 10 would go to a casino and play to a certain level and get free play as part of enrollment into the direct mail program, Hoke said. When players go to a certain level, that determines how much free play they get.
“If you get to $250 a week in free play, which is an incentive to come back to the casino, you don’t play again,” Hoke said. “You let that free play come in and take the cards from all nine of your friends and come in and play all of that free play off of their card. Whatever you make off of that is what you end up getting. You can’t cash out free play for money but what you can do is by leveraging it and not playing any more money at the casino, you’re not risking any more funds. You’re only risking the money the casino sends you. Then you rinse and repeat that every 90 days. You can come back and play to a certain level again and you start to get the offers again.”
The groups aren’t risking much because when it comes to video poker and playing “a perfect strategy” there’s maybe a 1% house edge.
“It shows on the system that you played $100,000 but you were grinding it out,” Hoke said. “It’s manipulating how the system is reporting the information back to the casino for the offer. “These syndicates go on Facebook and recruit people and even seek out family and friends, They form LLCs with a Secretary of State for tax purposes and to pay employees, making it a big business.
“They will use (that free play money) to take over a must-hit jackpot on a bank of machines. If it gets to a certain amount and has been in that status for a while, it has to hit soon. They will sit there and try to take over and do team play and make money that way. There are a lot of different overlays that they use to turn it into an advantage for them.”
According to Hoke, The trick of the scheme is not to make another trip using their own money, but to use free play instead. Casinos expect a conversion rate from free play of about 40% to 60%.
“With the advantage play guys, it’s 100% every single time,” Hoke said. “If you’re some Joe Blow that came in and played a few times and got your card and free play offer, you may not use four of ten free play offers you get. When I would go into the system, I would look at the guys who always had their free play but didn’t show having a trip in the system using their own money. Once I saw who all those guys were, it was easy to spot who the advantage players were.”
Free play is a casino marketing expense and one of the biggest that a property has, Hoke said. One study shows that about $30 billion a year is wasted on free play in the casino industry.
Casinos, meanwhile, don’t want to give it up and lose customers to competitors, but that doesn’t mean they should do nothing.
“They need to understand who their players are and look at their top-tier slot players and what their predominant game is,” Hoke said. “If it’s video poker or a low-advarnage play game, I would take a secondary look at those and see how they redeem their free play and if they register another trip. If they don’t risk another dime after they earned their free play, it’s an advantage play on their side.”
Those groups take advantage of how casinos operate by giving those who live further away get larger offers than local residents, Hoke said. These players obtain a P.O box within 100 miles to get larger offers even if they live near the casino, he said.
“In Washington State they were using an address 68 miles away from the casino I was at, and they were getting pretty good offers to incentivize them to come back,” said Hoke who has talked about the scheme with World Game Protection Conference founder Willy Allison on a podcast. “But a lot of casinos are wising up to it now. They’re not happy we’re exposing a lot of the nonsense they are doing.”
