Casino gambling and workplace fraud: a cautionary tale for managers

Purpose – The purpose of this paper is to examine notable instances of fraud that have occurred in Southeastern Connecticut and surrounding areas since the development of two large casinos in that region. Design/methodology/approach – Fraud case histories and prosecutions in which the gambling actions of individuals provided the incentive or pressure for the fraud to occur are examined. Findings – A number of employees who work in business and government have stolen significant sums of money to support gambling activities. The cases are linked to the growth of casino gambling and an accompanying increase in pathological and problem gambling; which research indicates doubles within 50 miles of a casino. Consistent with prior research, most of the thefts were not discovered by auditors or management in a timely manner. Research limitations/implications – This paper examines the impact of fraud due to casino gambling in one region, further research will examine other regions. One limitation in the research process is the reluctance of businesses to report instances of fraud, thus resulting in an underreporting of the extent of the problem. Practical implications – The paper recommends actions to be taken by managers in casino areas that can prevent employees from committing such fraud. These actions include the establishment of internal audit procedures, use of an external auditor for specific internal control tasks, upper management review of certain key business documents, increased accountability for organizational check registers, improved control for incoming cash receipts, and fraud awareness training. Originality/value – Managers in casino regions that become aware of the risks and employ the recommended measures may prevent and minimize business fraud.