The lucrative world of casino gambling is facing a formidable adversary: organized groups employing sophisticated tactics to exploit slot machines, causing substantial financial losses to casinos across the US. According to a leading expert in casino surveillance and security, this issue is rapidly escalating, posing a significant threat to the industry’s profitability.

Casino Surveillance Expert Sounds Alarm on Rampant Slot Advantage Play Tactics

Darrin Hoke, a seasoned professional in casino surveillance and operational protection, recently shed light on the alarming trend of slot advantage play during core training sessions at the World Game Protection Conference held at the Tropicana Las Vegas, reported CDC Gaming. 

Hoke emphasized the vulnerability of electronic gaming systems to fraud and abuse, particularly highlighting the exploitation of players’ club schemes and internal and external fraud mechanisms.

Slot machines represent a substantial portion, accounting for 75% to 85%, of all gaming revenue in casinos, underscoring the severity of the issue. Hoke revealed that many casinos inadequately monitor these complex networks, leaving them susceptible to exploitation by organized groups engaging in slot advantage play.

Hoke explained that these groups exploit various tactics to extract significant sums from casinos, primarily targeting video poker due to its low house edge. By strategically utilizing free-play incentives and leveraging multiple accounts, these groups amass substantial winnings without significant financial risk.

Casino Industry Should Ramp Up Measures Against Slot Advantage Play

The modus operandi typically involves enrolling multiple individuals into the casino’s direct mail program to accumulate free play rewards. Once a certain threshold is reached, the group collectively utilizes these rewards to generate profits, circumventing the need for personal funds. Hoke emphasized that while this practice is not illegal, it results in substantial losses for casinos, with some groups allegedly moving billions of dollars across the country.

Moreover, these groups employ sophisticated strategies, such as team play and exploiting must-hit jackpots, to further enhance their advantage. Despite casinos’ attempts to incentivize customer loyalty through free play offers, Hoke noted that these efforts often result in wasted expenses, with a significant portion of free play going unutilized.

Hoke urged casinos to adopt proactive measures to combat slot advantage play, emphasizing the importance of scrutinizing player behavior and identifying patterns indicative of exploitation. 

Additionally, he highlighted the need for enhanced security protocols to detect and deter organized groups from engaging in fraudulent activities.As casinos grapple with mounting financial losses attributed to slot advantage play, industry stakeholders are under increasing pressure to implement comprehensive measures to safeguard against exploitation and preserve profitability.

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A coordinated operation by law enforcement forces across Italy executed a court order for confiscating assets worth approximately €400 million ($433 million) belonging to an iGaming operator registered in Malta. This action follows Italy’s intensifying efforts to counter organized crime infiltration in the online gaming and betting sectors, curbing corruption and money laundering operations.

The Organization’s Reach Extended Across Europe

An international investigation revealed the offending operator’s ties to a sophisticated criminal system engaged in running black market online gambling operations. The organization’s headquarters was in Italy’s Reggio Calabria region, but it projected its influence abroad through companies with offices in Malta, Romania, Austria, and Spain. Such illegal operators can be very damaging, offering virtually zero customer protection or responsible gambling safeguards.

The operator used a so-called “cascade” system, enabled through contacts with criminal organizations. These elements provided protection and helped popularize the brand online, while local businesses facilitated the illicit collection of proceeds, with a share going to the criminal entities. This arrangement was used to launder significant sums and would have continued expanding.

The group avoided detection by transferring most proceeds from illegal activities abroad, evading Italian tax authorities. The unnamed kingpin at the center of the investigation held a prominent position in the Malta-based company. However, the operator primarily targeted the Italian market via multiple outlets dedicated to betting and games of chance, obscuring its involvement.

Gambling Companies Remain Susceptible to Criminal Influence

Authorities learned of this organization after an investigation into links between businesses and organized crime revealed that the crime boss at the center of the operation held assets that did not align with his declared income. This discrepancy allowed the court to issue a seizure warrant on the suspect’s assets, followed by a second order to seize all assets linked to three connected iGaming companies.

The estimated total value of the seized assets is roughly €400 million. The court also decreed special surveillance of the suspect for two and a half years, ordering him not to leave his municipality. This development highlights a milestone success for Italy’s financial police and Public Prosecutor’s office as the offending operators will no longer threaten the safety of Europeans.

The online gaming and betting sector, often susceptible to criminal infiltration and money laundering, continues to face scrutiny as law enforcement works diligently to curb corruption. Italian authorities have substantial experience uncovering gambling-related crime, but the extensive reach of such illegal networks makes lasting progress difficult. Hopefully, the investigation will provide sufficient evidence to target other such enterprises before they can do much harm.

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The small Mediterranean island nation has long profited from its status as one of the world’s leading iGaming hubs but faces constant struggles with crime and corruption. In 2021, Malta was put on FATF’s greylist for systemic regulatory and enforcement failings, but a series of reforms managed to sway the financial watchdog. However, recent news indicates that the country’s woes are far from over.

Illegal Gambling Rings Launder Millions Each Year

A recent investigation connected to the 2017 murder of journalist Daphne Caruana Galizia uncovered an underground lottery ring that ostensibly accounted for an astonishing 30% of the total market share. The government managed to obtain the information thanks to the arrest of local criminal leader Melvin Theuma who shared extensive details about his organization in exchange for a presidential pardon.

Theuma’s input was instrumental in untangling the details behind the illegal lotto operation and its ties to the island’s construction and property markets. These businesses still operate primarily with cash, making them the perfect avenues to launder yearly lottery profits of up to €30 million. Despite the authorities’ efforts, the underground network allegedly maintains its presence across the island.

According to a detailed report by local news outlet MaltaToday, the parallel lotto operates parallel to the official national operator, using the same winning numbers. The underground organization offers tickets and substantial prizes, undercutting the legitimate lottery and using the accumulating gambling debts to undermine local communities.

Such Scandals Threaten Further International Sanctions

The rising controversy again draws attention to the Maltese authorities’ ability to enforce the law and crack down on organized crime. Despite Theuma’s cooperation, the underground lottery is ostensibly still alive and well. Perhaps the matter is not a priority compared to the country’s more pressing problems, but such public failings threaten to undermine what little goodwill the government has left.

2021’s FATF listing created a bureaucratic nightmare for companies dealing with financial services, banking, or gaming. The increased regulatory pressure disproportionately impacted smaller businesses and could have severely impacted the local economy if the government had not acted with alacrity. While updated laws and regulations are promising, the thriving underground lottery proves that enforcement is still sorely lacking.

Despite removing Malta from the greylist, the FATF maintains a watchful eye on the island nation. A return to past behaviors, lack of progress, or new regulatory failings can lead the country back into international trouble. The authorities and the public must work toward improvement across all levels of society to restore Malta’s damaged reputation and capitalize on its unique advantages.

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