Excerpt from the SAR Activity Review Suspicious Activity Report Filings Within the Casino and
Card Club Industries
This section will discuss one facet of the casino industry, a particular type of
casino referred to as racinos.
“Racinos”
“Racinos” generally are thought of as racetracks with slot machines. In practice,
racetracks may be authorized by state law to engage in or offer a variety
of collateral gaming operations, including slot machines, video lottery, video
poker or card clubs. For example, subject to other applicable statutes and
regulations, the Delaware State Lottery Office may license agents to operate
video lottery machines within the confines of a racetrack licensed by the Delaware
Thoroughbred Racing Commission.
The term “racino” has not been separately defined nor included specifically in
the definition of casino for purposes of the Bank Secrecy Act. Instead, FinCEN
relies on the state, territory or tribal characterization to determine whether an
entity or operation will be classified as a casino for purposes of the Bank Secrecy
Act. Therefore, if state law defines or characterizes slot machine operations
at a racetrack as a “casino, gambling casino, or gaming establishment,” and the
gross annual gaming revenues of that operation exceed the $1 million threshold,
then the operation would be deemed a “casino” for purposes of the Bank
Secrecy Act.
FinCEN has identified nine states that have authorized collateral gaming operations
(such as those listed above) at racetracks: Delaware, Iowa, Louisiana,
Maine, New Mexico, New York, Pennsylvania, Rhode Island, and West Virginia.
Twenty-three “racinos” were identified operating in some of those nine
states. It is estimated that approximately $2.66 billion was wagered at racinos
in 2003.22
For entities identified as “racinos,” FinCEN queried the Bank Secrecy Act
database for Suspicious Activity Reports filed from 1996 to September 30,
2004. Of the 14,060 Suspicious Activity Reports by Casinos and Card Clubs
filed during that period, the query identified 74 reports filed by ten “racinos”
and two racetracks with card clubs. The following charts depict the twelve
entities’ filings by states.
Suspicious Activities Reported by “Racinos”
Currency exchange was one of the most frequently reported activities and
was identified as suspicious in 16 reports, as follows:
Exchanging small denominations of currency ($1s, $5s, $10s and $20s)
for $100 bills (nine reports).
Exchanging currency for casino chips or feeding currency into slot
machines followed by cashing out with little or no gaming play (three
reports).
Exchanging large quantities of quarters from non-gaming proceeds for
paper currency (three reports).
Customer requesting to add cash to casino winnings and then
exchanging the combined cash and winnings for a single check issued
by the casino.
Refusal to provide identification and use of false identification or Social Security
numbers were identified in nine reports, as follows:
Using false or multiple Social Security numbers (six reports).
Refusing to provide required identification (two reports).
Failure of one suspect to claim winnings totaling more than $30,000
over a three-year period claiming difficulty in obtaining a valid driver’s
license. The suspect did not produce any other type of identification,
and provided a name that may have been false.
Racinos reported structuring, apparently for the purpose of avoiding reporting
requirements, in six reports, as follows:
Customers using agents to cash winnings (five reports).
Customer requesting payment by three separate checks of $5,000 each
(according to the customer it would be difficult to deposit a $15,000
check at the bank).
Fraud was reported in six reports, as follows:
Tampering with the slot machines, causing them to pay out more winnings
than they should have dispensed (three reports).
A scam described as a “stringing” involving $100 bills in the self-service
betting machines used at some racetracks to place bets
(two reports). 25
Check alteration.
Suspicious Activities Reported by Racetracks with Card Clubs
Structuring was the most common activity reported by racetracks with card
clubs. This activity was identified in eleven reports, as follows:
Customers incrementally presented winnings for payout to avoid filing
a Currency Transaction Report by a Casino (nine reports).26
Two customers attempted to use agents to claim their winnings.
One customer used multiple checks at different times to purchase
casino chips in order to avoid the filing of a Currency Transaction
Report by a Casino.
Refusal to provide identification and the use of false identification or Social
Security numbers were identified in eleven reports, as follows:
Customers refused to provide identification (seven reports).
Customers using false identification (two reports).
Customers using false Social Security numbers (two reports).
Money laundering was suspected when a customer deposited money with the
casino and then cashed out without any play. This activity was identified in
two reports.
The following fraudulent activities were also reported:
Counterfeit currency used to purchase casino chips.
Employee theft - A casino employee paid funds to an individual who
had not played at the casino.
FinCEN continues to provide information to the regulated industries relevant
to assessing risks facing the financial system, including information about
trends and patterns that are being discovered. FinCEN has provided guidance
to assist the casino industry in identifying transactions that may be
considered “suspicious” for purposes of suspicious activity reporting through
several means, including The SAR Activity Review. 27 FinCEN will continue
to monitor the growth of “Racinos” and other types of gaming operations and
will provide guidance or engage in additional rulemaking as appropriate.
Excerpted from SAR Activity Review Issue 8, page 19
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