Casino Gambling and White-Collar Crime

Casino Gambling and
White-Collar Crime:

An Examination of the
Empirical Evidence

August 1999

Prepared by:
Jay S. Albanese, Ph.D.
Virginia Commonwealth University
® For: American Gaming Association



Casino Gambling and
White-Collar Crime:

An Examination of the
Empirical Evidence

August 1999

Prepared by:
Jay S. Albanese, Ph.D.
Virginia Commonwealth University
® For: American Gaming Association



Table Of Contents

Executive Summary ...........................................................................................................................................................................3
Introduction............................................................................................................................................3
White-Collar Crime and Street Crime .........................................................................................................................6
Should We Expect a Casino—White-Collar Crime Link ........................................................................7
White-Collar Crimes in Nine of the Largest Casino Markets............................................................7
Arrest Trends in Non-Casino Markets.......................................................................................................................12
Comparison to National Trends.........................................................................................................................................13
Embezzlement and Gambling..............................................................................................................................................14
The Motivations to Embezzle ...............................................................................................................................................16
Conclusion..................................................................................................................................................................................................19
References ..................................................................................................................................................................................................21
About the Author ...............................................................................................................................................................................24
To Receive Copies ..............................................................................................................................................................................25

1

2

Executive Summary

This report investigates the alleged link between casino gambling and the commission of white-collar
crimes. The overwhelming majority of casino customers are people over the age of 25 who work at legit-
imate jobs and spend a portion of their income on games of chance. The rapid expansion of casino gam-
ing venues in recent years is said to have increased the incidence of white-collar crimes by casino cus-
tomers who get themselves in financial trouble by overspending at casinos.

This study investigates this empirical question by using several kinds of data to examine crime and
offender trends in five different ways:

• Trends in embezzlement, forgery and fraud both before and after the introduction of casino gambling
in nine of the largest casino markets.

• Embezzlement, forgery and fraud arrest trends in two comparable jurisdictions without casinos.
• Comparison of these city-by-city trends to national trends in embezzlement, forgery, and fraud over the

last decade.
• Content analysis of articles published in USA Today over a 10-year period that include mention of

embezzlement and gambling.
• Assessment of the reasons offered by people arrested for embezzlement to examine the extent to which

gambling is a causal factor.

This study is the most comprehensive examination to date of the impact of casino gambling on white-
collar crime.

The results do not support the claim that casino gambling contributes significantly to trends in
embezzlement, forgery, and fraud. In addition to statistical data that document arrest trends, interviews
with convicted embezzlers reveal that single factors do not cause embezzlement. Instead, it is the way
in which a person defines a financial problem as non-shareable or a threat to the stability of one’s
family that is important in the causal chain. Measures to reduce the instance of this conduct in the
future are outlined.

Introduction

• An Omaha, Neb., woman pleaded no contest to stealing more than $100,000 from an elderly woman
she cared for, claiming she used the money at a casino.1

• A Madison, Wis., man told investigators he forged checks stolen from a former employer to feed his gam-
bling at Ho Chunk Casino. Several other cases in Wisconsin led an assistant district attorney to remark that
“a growing number of the white-collar crimes we prosecute involve either drugs or gambling.”2

• Federal prosecutors in Iowa had eight cases during a two-year period in which suspects admitting
embezzling funds or using stolen credit cards to gamble.3

• A theater clerk in Minneapolis was convicted of embezzling more than $300,000 from the theater and
was sentenced to 30 months in federal prison and three years of supervised release with mandatory
treatment for compulsive gambling.4

1 Angie Brunkow, “Woman Found Guilty in Bilking,” Omaha World-Herald 10 Nov. 1998: 1.
2 Richard W. Jaeger, “Gambling Breeds Unlikely Criminals,” Wisconsin State Journal 26 Aug. 1996: 6a.
3 Frank Santiago, “Authorities Link Gambling to Cases of Theft,” The Des Moines Register 11 Nov. 1997: 6.
4 Dennis J. McGrath, “Gambling-Related Crime is Costly to Taxpayers,” Star Tribune [Minneapolis] 4 Dec. 1995: 6a.

3

These events occurred in different states, but they all involved some kind of embezzlement, forgery, or
fraud to support gambling behavior. On the other hand, police officials in Alton, Ill.; Joliet, Ill.;
Davenport, Iowa, and elsewhere have reported that crime has not increased there, despite the availability
of casino gambling. It was thought that “white-collar crimes would increase and organized crime figures
would start showing up. But basically, there haven’t been any problems.”5

Are these events isolated incidents, or are they evidence of larger trends? Do offenders or prosecutors
blame casino gambling as a primary cause of theft, when other causes are more influential? Is the expe-
rience of police officials the same in all casino jurisdictions? Arguments for and against casino gambling
have often relied on anecdotal accounts to make their case, but they are not a sufficient basis for public
policy decisions that affect thousands and perhaps millions of people.6

In order to separate anecdotal from objective evidence, it is necessary to gather larger numbers of cases
than individual incidents provide. In this way trends can be assessed over a period of years in a number
of different jurisdictions. This ensures that conclusions are based on the consensus of evidence, rather
than on isolated incidents that may or may not be representative of the situation in general. In addition,
interviews with large numbers of convicted embezzlers and fraud offenders can provide insights into the
extent to which specific factors play a role in this kind of criminal behavior.

The spread of casino gambling in recent years began with Atlantic City, which opened its first casino in
1978 and opened a total of nine large casino-hotels within a period of five years. By 1998, Atlantic City
had a total of 35,057 slot machines and 1,516 gaming tables in 12 casinos. This translates into 44,153
“gaming positions” at which customers can sit or stand and gamble. Other cities approached casino
development more cautiously. Outside Nevada, no other city has even half the gambling capacity (“posi-
tions”) of Atlantic City. Table 1 presents the relative size of casino gambling in nine of the largest gam-
ing markets in the United States.

It is clear that most casino development is considerably smaller than that experienced in Las Vegas or
Atlantic City, where casinos form the basis for the local economy. In most other jurisdictions, there are
fewer casinos and fewer gaming positions.

5 Douglas Montero, “Casinos Would Increase White-Collar, Organized Crime,” The Plain Dealer 1 March 1995: 10; see Patricia
A. Stokowski, Riches and Regrets: Betting on Gambling in Two Colorado Towns (Niwot, Colo: University of Colorado Press,
1996) 211-12.

6 See William V. Ackerman, “Casinos Have Proven Beneficial to Deadwood, South Dakota,” and Elizabeth Manning, “Casinos
Have Ruined Deadwood, South Dakota,” Legalized Gambling, ed. M.E. Williams (San Diego: Greenwood Press, 1999), 97-
110; Vicki Abt, James F. Smith, Eugene M. Christiansen, “Misconceptions Abound in the Debate Over Legalized Gambling,”
Legalized Gambling: For and Against, ed. R.L. Evans and M. Hance (Chicago: Open Court Publishing, 1998), 392-434.

4

Table 1 Largest Casino Markets by Total Available Gaming Positions7

Casino Jurisdiction Number of Gaming Positions
Las Vegas, NV 89,483
Atlantic City, NJ 44,153
Tunica, MS 18,719
15,792
Biloxi-Gulfport, MS 11,284
Kansas City, MO 8,978
St. Louis, MO 7,269
Lake Charles, LA 5,666
Shreveport, LA 3,913
Vicksburg, MS

Because these nine cities are among the largest casino markets, they were chosen for inclusion in this
study. As gaming positions increase, the opportunities for casino gambling expand correspondingly.
Therefore, any impact on crime should be manifested most clearly in the largest casino markets. This is
offset to some extent, however, by the size of the population within commuting distance to the casinos
and by other potential factors. These include:

• the availability of competing forms of entertainment in the area
• the age composition of the local population (i.e., older and more likely to go to a casino or younger

and less so)
• the extent to which the casino draws patrons from far outside its immediate area
• the length of stay of these visitors
• the nature of employment and income-level of casino patrons

These factors are all measurable, but with great difficulty. This is because precise counts of casino visi-
tors, their origin and length of stay, age distribution and backgrounds, and their behavior upon their
return home are hard to track with accuracy across different jurisdictions. City-level data such as this are
important when considering any kind of economic development in the entertainment industry, but they
are generally not kept in reliable fashion and almost never measured regularly over a period of time.

As a result, this study focuses on white-collar crime trends in nine of the largest casino gaming markets.
It is important to be clear, however, about what it meant by white-collar crime.

7 Las Vegas is the only Nevada city examined in this study because it is the largest. Nevada is also unique because its legal gam-
bling dates to the 1930s, and the entire state economy is based on casino gambling.

5

White-Collar Crime and Street Crime

The generic term “white-collar crime” was invented by sociologist Edwin Sutherland in 1939. He
referred to crimes by “persons of high social status” that are committed in the course of one’s occupa-
tion as white-collar crimes.8 The term encompasses a variety of specific offenses, some of which may be
committed by persons of low social status (i.e., fraud or forgery), and outside the course of one’s occu-
pation (i.e., credit card fraud). There continues to be debate among researchers over the precise scope of
the term white-collar crime.9 Sutherland’s primary thrust, however, was that the historical bias toward
studying only the crimes of the poor (i.e., street crimes) is as significant “as it would be if the scholars
selected only red-haired criminals for study and reached the conclusion that redness of hair was the
cause of crime.”10

In practical terms white-collar crimes include crimes of theft by deception (rather than by force or
stealth), crimes against public administration (obstructing government processes), and regulatory offens-
es (that impact public health, safety or welfare).11 Unfortunately, there do not exist national counts of
these offenses, despite their seriousness. Unlike street crimes, such as robbery, burglary and assault,
which are counted annually nationwide, there are no comparable counts of white-collar crimes. The only
national source of data regarding white-collar crimes is provided by arrest statistics. Most police depart-
ments report arrests they make each year for 27 offenses; three of these can be considered white-collar
crimes. They are embezzlement, forgery and fraud.

• Embezzlement – the conversion or misappropriation of property entrusted to someone.
• Forgery – the making of false legal documents or altering of existing documents, including counter-

feiting (forgery of U.S. currency).
• Fraud – larceny by trick or possession of property obtained by deception.

Each of these offenses involves taking money or property by deception or through a violation of finan-
cial trust, rather than by force or stealth, which characterizes street crimes.

As previously noted, police report only arrest statistics each year for these offenses. Crimes may not be
reported and, if reported, arrests not made. Therefore, arrests always undercount the true extent of any
crime. Nevertheless, there is reason to believe there is a high correlation between offenses known to the
police and arrests for these crimes. This is because it is unlikely that an embezzlement, forgery, or fraud
will be reported to police until a victim is reasonably sure that he or she has been victimized. Once
aware, victims of these crimes usually have a good idea of who was the perpetrator.

Street crimes are not considered in this study. They have been studied a great deal in recent years both
before and after casino development, and in casino and non-casino cities. These street crime studies vary
a great deal in the time periods they cover, the cities included, and the crime-related factors they consid-

8 Edwin Sutherland, “White-Collar Criminality,” American Sociological Review 5 (1940): 1-12.
9 For a summary of the contemporary debate over the scope of white-collar crime, see Proceedings of the Academic Workshop—

White-Collar Crime Definitional Dilemma: Can and Should There Be a Universal Definition of White-Collar Crime?
(Morgantown, W.Va.: National White-Collar Crime Center — Training and Research Institute, 1996).
10 Edwin Sutherland, White-Collar Crime (New York: The Dryden Press, 1949) 9.
11 Jay Albanese, White-Collar Crime in America (Englewood Cliffs, N.J.: Prentice Hall, 1995). chs. 3-5.

6

er. As a result, there are some differences in findings among these studies. The consensus among these
studies, however, indicates that casino gambling does not have a significant impact on street crimes.12
Given the typical age of casino patrons, this finding might be expected because casinos do not attract
large numbers of young people (who commit most street crimes). This circumstance led to the present
study to investigate whether the comparatively older casino patrons engage in white-collar crimes to
support their spending at casinos.13

Should We Expect a Casino—White-Collar Crime Link?

Some observers claim that there is a direct relationship between the availability of casino gambling and
white-collar crime. It is alleged that some people will overspend in casinos, develop regular or compul-
sive gambling habits, and steal from their employers or others as a way to support their continued gam-
bling.14 Perhaps the most widely quoted source is the American Insurance Institute, which has been said
to estimate that 40 percent of all white-collar crime is related to gambling. This statistic has been cited
by both writers and politicians in arguing against casino gambling.15 But an investigation by Joseph
Kelly, a professor of business, discovered that the American Insurance Institute does not exist and appar-
ently never did. He also found no basis to support the 40 percent statistic.16 As a result, there has been a
great deal of rhetoric about casino gambling and white-collar crimes without many facts, and no system-
atic data to support the views expressed.

There is intuitive appeal, however, to the notion that white-collar crimes might increase. The increase in
check-cashing and general economic activity created in and around casinos could result in increases in
forgery, fraud, and embezzlement. In fact, the casinos themselves may well be the targets of these
crimes. These offenses would be expected to occur most often near the casino locations, given the large
number of check and cash transactions that occur inside casinos.

White-Collar Crimes in Nine of the Largest Casino Markets

Arrest data was obtained from the FBI crime reporting unit to which local police departments send their
crime statistics each year. Arrests made each year of adults aged 18 and older from 1988 through 1996
(the latest year available) were included. This time period was selected because most casinos opened in
these jurisdictions during the early 1990s, allowing for before and after comparison of arrests. Also,
juveniles were excluded due to the infrequency with which they are arrested for these crimes and
because they are generally excluded from participation in casino gambling.

12 For a summary and review of many of these studies, see William Miller and Martin D. Schwartz, “Casino Gambling and Street
Crime,” Annals of the American Academy of Political and Social Science 556 (March 1998): 124-137; Jeremy Margolis, Casinos
and Crime: An Analysis of the Evidence (Washington, D.C.: American Gaming Association, 1997); Jay Albanese, “Predicting the
Impact of Casino Gambling on Crime and Law Enforcement,” in Gambling: Public Policy and the Social Sciences, ed. W.
Eadington and J. Cornelius (Reno: Institute for the Study of Gambling and Commerical Gaming, 1997).

13 The issue of organized crime has been considered elsewhere, although a detailed empirical study in multiple jurisdictions has
yet to be conducted. See Jay Albanese, “Casino Gambling and Organized Crime: More Than Reshuffling the Deck,”
Contemporary Issues in Organized Crime, ed. J. Albanese (Monsey, N.Y.: Willow Tree Press, 1995), 1-17.

14 See Paul Simon, “Gambling Has High Social Costs and Should be Restricted by the Government,” Legalized Gambling: For
and Against, ed. R.L. Evans and M. Hance (Chicago: Open Court Publishing, 1998) 201-18; William N. Thompson, Legalized
Gambling, second edition (Santa Barbara, Calif.: ABC-CLIO, 1997); John W. Kindt, “The Economic Impacts of Legalized
Gambling Activities,” Drake Law Review 43 (1994): 51-95.

15 Simon 212; Robert Goodman, The Luck Business (New York: The Free Press, 1995) 50.
16 Joseph Kelly, “The American Insurance Institute, Like THAT Bunny, Keeps Going and Going and Going..” Gaming Law

Review 1 (1997): 209-12.

7

Figure 1 Las Vegas

2000

1500

1000 ■ ■ ■ ■ ■ ■ ■ ■ ■

500 ▲✱ ▲✱ ▲ ▲ ▲ ▲ ✱▲ ▲✱
✱ ✱ ✱ ✱
✱▲ 1989 1990 1995 1996
1991 1992 1993 1994
0
1988

■ Fraud 947 888 930 869 801 891 940 1,010 999

▲ Forgery 226 217 333 368 372 457 431 243 165

✱ Embezzlement 221 229 267 196 163 176 237 167 131

Figure 1 displays the trends in arrests in Las Vegas from 1988 through 1996. Although casinos have
existed for many years in Las Vegas, the city grew to record numbers of casinos, hotel rooms, and visi-
tors because of expansion of existing sites and the opening of new casino-hotels during the 1990s.17
Figure 1 shows that despite this increased capacity, embezzlement arrests fell by 41 percent, forgery
arrests dropped by 27 percent, and fraud arrests increased by only 5 percent over this period.

Nevertheless, Las Vegas is a unique city, so it is important to look at the experience of other jurisdictions
with casino gambling. Figure 2 displays trends in arrests for the three white-collar offenses in Atlantic
City. The decline in arrests for these offenses is even more dramatic than in Las Vegas. Over the nine-
year period, arrests for embezzlement dropped 44 percent, forgery declined by 72 percent, and fraud
arrests dropped by 86 percent. This is a remarkable finding, given increased casino capacity and visitors
to Atlantic City over the last nine years. There are now more than 12,000 hotel rooms there and more
than 44,000 gaming positions there.

Figure 2 Atlantic City

200

■ ■ ■ ■ ■ ■ ■ ▲ ■
▲ ▲ ■ ▲✱
150 ▲ ▲ ▲ ▲ ✱
✱ ✱ ✱ ✱ ✱ 1996
100 ✱ 1995
1990 1991 1992 1993 1994
50 ▲ 1989

✱

0
1988

■ Fraud 164 130 135 111 106 97 35 16 23

▲ Forgery 53 66 41 63 37 86 16 23 15

✱ Embezzlement 16 3 0 0 0 0 0 0 9

Figure 3 displays arrests trends in Memphis, Tenn., the city closest to Tunica, Miss., which is the third-
largest casino jurisdiction. Many visitors to Tunica come from the Memphis area. Similar to Atlantic

17 Kevin Heubusch, “Taking Chances on Casinos,” Legalized Gambling, ed. M.E. Williams (San Diego: Greenhaven Press,
1999) 23-31.

8

City, there was an overall decline in arrests for all three white-collar crimes: embezzlement (-4 percent),
forgery (-86 percent), and fraud (-98 percent). The first casinos opened there in 1992. The 1994-96
decline in arrests reflects that experienced for the entire nine-year period.

Figure 3 Memphis

Number of Arrests 400 ■ ■ ■ ▲ ▲ ▲ ▲ ■▲ ▲✱■
300 ▲ ✱
▲ ■ ■ ■ ■ 1996
200 ▲ ✱ ✱ ✱ ✱ ✱ ✱ 1995

100 1989 1990 1991 1992 1993 1994
0✱
1988

■ Fraud 362 227 258 131 125 131 57 0 8

▲ Forgery 188 104 194 315 345 415 147 0 29

✱ Embezzlement 4 2 2 1 0 9 0 0 0

The fourth-largest casino jurisdiction is Biloxi-Gulfport, Miss., located on the Gulf of Mexico. The city
of Biloxi reported arrests to the FBI for only three of the nine years during 1988-1996, so only the city
of Gulfport can be included here. As Figure 4 indicates, Gulfport police reported significant increases in
arrests for all three white-collar crimes. Since 1988, embezzlement arrests rose from eight to 30 arrests,
forgery increased from six to 73 arrests, and fraud went up from six to 113 arrests.

Some of this increase may be due to annexation of land by the city of Gulfport. In January 1994, Gulfport
nearly doubled its geographic area and increased its population by approximately 50 percent due to a land
annexation. This increase in population could be expected to increase the likelihood of crimes.

The first casinos opened in Biloxi-Gulfport in 1992, and the increase in arrests for these offenses
appears to have slowed since then. For the 1992-96 period, arrests for embezzlement are up from 25
to 30 arrests, forgery is up from 29 to 73 arrests, and fraud increased from 24 to 113 arrests.

Figure 4 Gulfport

Number of Arrests ▲
■

100

■

75 ■ ▲

■ Fraud 50 ■▲✱ ■ ▲ ■✱▲ ■ ▲ ✱ ✱
▲ ▲ ✱
25 1989 ✱ ✱ 1992 ✱ 1995 1996
■ 1994
✱ 0 1990 24 1993 77 113
1991 84
0 ■▲ 37 32
1988 9

6

▲ Forgery 6 0 25 44 29 24 45 138 73

✱ Embezzlement 8 0 21 16 25 9 27 23 30

9

In Kansas City, Mo., the fifth-largest casino jurisdiction, arrest rates were inconsistent. Figure 5 indi-
cates that embezzlement and fraud arrests rose (+185 percent and +42 percent, respectively), whereas
forgery arrests declined by 24 percent from 1988-1996.

Figure 5 Kansas City

Number of Arrests 800

600 ▲

▲ ■ ▲ ▲ ▲ ▲ ▲ ▲ ▲
■ ■ ■ ■ ■ ■ ■
400

200 ■

0✱ ✱ ✱ ✱ ✱ ✱ ✱ ✱ ✱
1988
1989 1990 1991 1992 1993 1994 1995 1996

■ Fraud 204 252 196 235 287 238 251 286 290

▲ Forgery 477 564 416 448 410 324 362 347 363

✱ Embezzlement 13 6 2 11 18 21 17 33 34

The first casinos opened in Kansas City in 1994. Since then, changes in arrests have slowed.
Embezzlement is up from 17 to 34 arrests, forgery increased by one arrest, and fraud is up by 39 arrests.
These are smaller changes than was seen before casinos opened there.

St. Louis reported only one embezzlement arrest over the nine-year period, and both forgery and fraud
arrests dropped (by 16 percent and 40 percent, respectively), as summarized in Figure 6. Casinos first
opened in St. Louis in 1994. Since then, forgery arrests are up 36 percent while fraud arrests are down
2 percent.

Figure 6 St. Louis

800

600

■■

400 ■ ■ ■

200 ▲ ▲ ▲ ▲ ■ ■ ■ ■
▲
✱ ✱ ✱ ✱ ▲ ▲ ▲ ▲
0✱ ✱ ✱
1988 1989 1990 1991 1992 ✱ ✱
1994 1995
1993 1996

■ Fraud 398 391 516 491 414 255 242 253 238

▲ Forgery 158 201 187 221 184 126 98 107 133

✱ Embezzlement 0 0 1 0 0 0 0 0 0

10

The seventh-largest casino jurisdiction, Lake Charles, La., did not report any embezzlement arrests over
the nine-year period, but both forgery (-60 percent) and fraud (-94 percent) arrests dropped significantly.
These arrest trends are presented in Figure 7.

Figure 7 Lake Charles

■ ▲

15 ▲ ■▲
10 ▲

5 ✱■ ▲ ■ ▲ ▲ ✱ ▲ ▲
■
0✱ 1989 ✱ ■ ■ 1994 ✱■ ■✱
1988 ✱ ✱ ✱
1991 1995 1996
1990 1992 1993

■ Fraud 16 1 5 5 2 3 11 1 1

▲ Forgery 10 14 7 12 6 7 11 6 4

✱ Embezzlement 0 0 0 0 0 0 0 0 0

Casinos first opened in Lake Charles in 1994. Since then, both forgery and fraud arrests have continued
to decline.

Shreveport, La., reported a total of only nine embezzlement arrests from 1988 through 1996, while
forgery and fraud arrests were inconsistent. Forgery arrests declined by 59 percent over this period,
while fraud arrests rose by 337 percent. These trends are presented in Figure 8.

Figure 8 Shreveport

400

300 ▲ ▲ ▲ ▲ ▲ ▲ ■
■ ■ ■ ▲ ▲
▲ ■ ■
✱ ✱ ✱ ✱ ✱ ■■ ✱
200
1989 1990 1991 1992 1993 ✱ ✱ 1996
100
1994 1995
■

0✱
1988

■ Fraud 19 34 42 92 56 96 75 80 64

▲ Forgery 110 80 95 152 79 127 141 119 45

✱ Embezzlement 1 0 0 0 0 0 0 0 8

Casinos opened in Shreveport in 1994. Since then, forgery arrests have dropped 62 percent and fraud
arrests have decreased 15 percent, and there were eight arrests for embezzlement.

The ninth-largest casino jurisdiction, Vicksburg, Miss., reported widely varying arrest trends.
Embezzlement arrests rose from six to 24 over the nine-year period, while forgery arrests declined from
22 to three. Fraud arrests increased, however, from six to 92 as shown in Figure 9. The first casinos
opened in Vicksburg in 1993. Since then, arrest trends have been somewhat less pronounced with
embezzlement arrests rising from 11 to 24. Forgery dropped from 31 arrests to three, and frauds
increased from 27 to 92.

11

Figure 9 Vicksburg

■

100
■
75

50 ▲✱■ ▲ ▲ ▲ ▲ ■ ✱ ✱
✱■ ■ ▲✱ ▲ ▲
25 ▲ 1989 ✱■ ✱■ ✱
0 ■✱ 1990 1994 1995 1996
1991 1992 1993
1988

■ Fraud 6 4 5 0 9 27 34 110 92

▲ Forgery 22 8 24 32 29 31 20 11 3

✱ Embezzlement 6 6 4 7 6 11 21 35 24

To summarize, the nine-year arrest trends in these large casino cities were not consistent. Embezzlement
arrests increased in four cities, but declined in three others between 1988-1996. Forgery arrests increased
in only one city, but declined in eight others, and fraud arrests increased in five cities, while they
decreased in four. For all three of these white-collar crimes combined (for all nine cities), therefore,
there was a total of 10 increases in arrests and 15 decreases between 1988-1996. When looking at only
post-casino years, the trends still show more declines than increases in arrests for white-collar crimes.
These results indicate that there have been more net decreases over time than there have been increases
in arrests for embezzlement, forgery and fraud among the largest casino jurisdictions.

Nevertheless, these trends may simply reflect arrest trends that are occurring in similar cities without
benefit of casinos. This possibility is assessed in the next section.

Arrest Trends in Non-Casino Markets

One way to assess whether arrest trends for embezzlement, forgery and fraud are connected to casino
gambling is to examine trends for these offenses in similar cities that lack casinos. Similar patterns
would suggest that forces other than casino gambling are driving the arrest rates.

It is recognized, of course, that no two cities are exactly alike. There are always differences between
jurisdictions that may affect arrest trends (including age and income distribution, employment patterns,
the nature of the local economy, and so on). In addition, casino visitors often come from non-casino
jurisdictions. Nevertheless, crime impacts would be expected to be felt most severely near casino
markets due to the large number of cash and check transactions that occur in and around casinos, and
the fact that visitors often come from the immediate area. The results of these city-to-city comparisons
are fascinating.

Table 2 summarizes the comparisons of Las Vegas-Orlando, Fla., and Atlantic City-Myrtle Beach, S.C.
It can be seen that arrest trends for embezzlement, forgery and fraud in Orlando were similar to those
in Las Vegas. Embezzlement and forgery arrests dropped, while fraud arrests increased only slightly.
The declines were larger in Orlando, but police there did not report arrests for these crimes to the FBI
for 1988, 1989, 1991 and 1996, so the Orlando data reflect information for only five years during the
period 1988-1996.

12

Table 2 Las Vegas and Atlantic City Arrest Trends with Comparison Cities

(Nine-year trends 1988-1996, except for Orlando 1990-1995)

Offense Las Vegas Orlando Atlantic City Myrtle Beach
Embezzlement -41% -81% -44% 0 (None reported)
Forgery -27% -49% -72%
Fraud + 5% + 1% -86% +28%
+173%

Trends in Myrtle Beach arrests rose (except for embezzlement for which there were no reported arrests
over the 9-year period). In Atlantic City, arrests dropped in every category.

For the other cities, obtaining multiple-city comparisons was difficult due to problems in identifying
jurisdictions that were at all comparable or that were not major feeder markets to casino jurisdictions. In
addition, a number of cities have not regularly reported annual arrest statistics to the FBI, making com-
parisons impossible.

The data from city-to-city comparisons are suggestive, rather than conclusive, given the inherent differences
in every jurisdiction. Nevertheless, the findings of the Las Vegas-Orlando and Atlantic City-Myrtle Beach
comparisons are remarkable and do not suggest a unique white-collar crime impact in casino markets.

Comparison to National Arrest Trends

Another possibility remains that trends in white-collar crimes in casino jurisdictions are higher than
national trends over the same period. The reasoning might be that greater opportunities for embezzle-
ment, forgery, and fraud exist in casino jurisdictions in general and therefore arrests for these crimes will
be higher than in the nation as a whole. In order to examine the merit of this claim, national arrest data
for these offenses were gathered for the period 1988-1996. These data are summarized in Figure 10.

Figure 10 National Arrest Trends

400,000

300,000 ■ ■■ ■■

■ ■■ ■

200,000

100,000 ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲

0✱ ✱ ✱ ✱ ✱ ✱ ✱ ✱ ✱
1988
1989 1990 1991 1992 1993 1994 1995 1996

✱ Embezzlement 11699 13034 12055 10602 11707 10916 11614 11605 11449

▲ Forgery 73165 80979 74393 77066 88649 89487 93003 91991 88355

■ Fraud 260848 289996 279776 292597 346314 335580 330752 320046 324776

The figure shows that there were 11,699 arrests nationwide for embezzlement in 1988, and that this
number fluctuated somewhat over the next nine years ending in 11,449 arrests in 1996, an overall
decline of 2 percent. There were 73,165 arrests nationwide for forgery in 1988, a number that rose and
peaked in 1994 resulting ultimately in 88,355 arrests by 1996, an overall increase of 21 percent. There
were 260,848 arrests nationwide for fraud in 1988, a number that increased to 324,776 in 1996, a nine-
year increase of 25 percent. It is clear that arrests nationwide for forgery and fraud have increased sig-
nificantly, whereas arrests for embezzlement have decreased slightly.

13

A comparison of these national trends with arrest trends in casino jurisdictions shows a marked differ-
ence. Figure 11 tallies the total arrests for white-collar crimes in the nine largest casino jurisdictions over
the same nine-year period.

Figure 11 Total Arrests for White-Collar Crimes in Nine of the Largest Casino Markets

2000 ■ ■ ■ ■ ■ ■ ■ ■
▲ ▲ ▲
1500 ▲ ▲ ■ ▲ ▲
▲ ✱ ✱ ✱ ▲
✱ ✱ ✱ ✱
1000 1991 1992 1993 ✱
1989 1990 1943 1830 1764 1995 1996
500 1927 2124 1655 1491 1597 1994 1838 1877
✱ 1254 1390 231 212 226 1729 994 917
0 246 297 1271 258 271
1988 302

■ Fraud 2122

▲ Forgery 1250

✱ Embezzlement 269

For all nine casino markets, combined embezzlement arrests increased from 269 in 1988 to 271 in 1996,
an increase of 1 percent. This compares to a national decline of 2 percent for the crime of embezzle-
ment. For forgery and fraud the differences are considerably larger. Arrests for forgery declined by
27 percent from 1988 to 1996 in casino jurisdictions (from 1,250 to 917) compared to a nationwide
increase of 21 percent in forgery arrests. In similar fashion, arrests for fraud decreased 12 percent
from 1988 to 1996 (from 2,122 to 1,877). This compares to a nationwide increase of 25 percent in
fraud arrests.

For the crimes of forgery and fraud, therefore, casino jurisdictions reported significant decreases in
arrests whereas the nation as a whole experienced considerable increases. This suggests that the presence
of casino gambling did not contribute to the national increase in forgery and fraud arrests. In fact, the
opposite occurred: arrests for these offenses actually declined in the largest casino markets. This is a
remarkable finding because it omits the impact of the large number of visitors to these casino markets.
The risk per person undoubtedly has declined even further, given the increases in the average daily pop-
ulations of these cities that resulted from casino gambling. It would require accurate city-by-city visitor
and length-of-stay statistics to determine the precise extent of the decrease in risk.18 Arrests for embez-
zlement are considered in the next section.

Embezzlement and Gambling

As the previous section indicates, arrests for embezzlement in nine of the largest casino markets
increased by 1 percent since 1998. Nationwide, arrests decreased by 2 percent. These changes are slight,
but worthy of further consideration.

Perhaps the most important question that remains unanswered in the preceding analysis is “what role did
gambling play in any of the embezzlement, forgery, and fraud arrests reported to police?” Crime statis-

18 See Jay S. Albanese, “The Effect of Casino Gambling on Crime,” Federal Probation Quarterly 49 (June 1985): 39-44;
William Miller and Martin D. Schwartz, “Casino Gambling and Street Crime,” Annals of the American Academy of Political
and Social Science 556 (March 1998): 124-137.

14

tics provide no information about whether the offenses had any connection to gambling or whether they
were the result of simple greed, alcoholism, drug use, or any one of a wide range of motivations that
might be used as a reason to commit embezzlement, forgery, or fraud.

In order to examine the extent to which gambling plays a role in these crimes, it is necessary to have
detailed knowledge of each reported case of embezzlement. This is impossible because police do not
usually record information about offender motivation, and offenders are often reluctant to discuss their
motivations. In addition, an effort to track down the offenders caught in the 271 arrests for embezzle-
ment that occurred in nine of the largest casino markets in 1996 would be an expensive undertaking. As
an alternative, a content analysis of articles appearing in the newspaper USA Today was undertaken for
the period 1988 through November 1998. A search of all articles with the keywords of “gambling” and
“embezzlement” was carried out to assess whether the offender’s reason for the embezzlement was relat-
ed to gambling. (Forgery and fraud were not examined in the newspaper analysis because these offenses
did not increase in casino jurisdictions between 1988 and 1996, as shown in the previous section). Table
3 presents the results of this analysis.

Table 3 Content Analysis of Articles Appearing in USA Today

(Search using keywords of “gambling” and “embezzlement”)

Type of Article Number of Times It Appeared
Article links embezzlement case to gambling 10
Embezzlement attributed to other causes 16
Embezzlement with no motivation given 54

All articles were news articles grouped into one of three categories: embezzlement linked to gambling,
to other causes or no motivation given.

A total of nearly 80 articles were found from 1988 to 1998. Of these 12 percent linked embezzlement to
gambling in a specific case. Another 20 percent linked an embezzlement to causes other than gambling.19
Still another 68 percent of the articles made no mention of causation.

This information is useful only insofar as news stories about crime address the offender’s motivation in
any detail. The overwhelming majority of news stories just deal with the bare facts: name, charge,
amount taken, what happens next, and perhaps a few words about the offender’s background. Also,
rarely is a distinction is made in these articles as to whether the alleged gambling was in legal or illegal
games. Very little analysis is usually offered, except in unusual cases where an interview is granted by
the offender or others with detailed knowledge of the case.

In order to assess more carefully the reasons why people embezzle, and any role that gambling might
play, more detailed information for a large number of individual cases must be obtained. This analysis is
provided in the next section.

19 Several articles mentioned gambling together with alcohol use or another factor. These cases were placed in both categories.

15

The Motivations to Embezzle

The problem with analyses of newspaper articles is that they offer incomplete, and sometimes mislead-
ing, snapshots of events. In embezzlement cases, for example, defendants may direct blame to various
influences as a form of defense strategy, rather than as a confession of truth. Likewise, typical rational-
izations for embezzlement such as liquor, debt, gambling, another woman, or playing the stock market
“are generalizations that beg the question.”20 That is to say, actual causes of embezzlement are more
complex because debt can also cause someone to spend less or take out a loan, rather than embezzle.
People who spend too much money on drinking or gambling, for example, may decide to reduce their
spending or to seek help rather than steal funds in order to continue their bad habit. Simply stated, these
commonly blamed factors do not explain why many people in these situations do not violate the law,
while some do.

A pioneering investigation of the causes of embezzlement was conducted by Donald Cressey. He inter-
viewed 133 prison inmates who were convicted of embezzlement and other fraud-related offenses
involving a violation of financial trust. He concluded that factors like “immorality, emergencies,
increased needs, business reversals, or a relatively high scale of living…cannot be considered as causes”
of embezzlement.21 The causes are more complex. Cressey found in his interviews that, “a non-shareable
problem preceded the criminal violation of financial trust.” These problems were all related to the “sta-
tus-seeking or status-maintaining behavior” of the violators. In every case, he found the embezzlers were
either “ashamed” or had “too much false pride” to get help from other people.22 This inability to share
the problem they faced resulted in the embezzlement. Therefore, it was not the high living or immoral
conduct that caused the embezzlement. It was the fact the problem was defined as unshareable that
directly led to the theft. This explanation of embezzlement is diagrammed below.

Figure 12 The Causes of Embezzlement

Financial Problem Structure Creates a desire Exploits Justifies
(resulting from Problem as for a specific opportunity violation
status-seeking or non-shareable solution that to violate by rationalizing
status-maintaining involves no one financial conduct and
behavior) else trust situation

Figure 12 shows that status-seeking or status-maintaining behavior can result in a financial problem that
is defined by the person as something that cannot be shared with others. This leads the individual to
come up with a solution that involves no one else. Exploiting an employer, customer, or client through
embezzlement is available only to those holding positions of financial trust. Others must resort to tradi-
tional forms of theft, such as larceny or robbery. Finally, the violation is justified through a rationaliza-
tion about the conduct, claiming it is not serious, the money will be replaced in the future, or that the
circumstances left them no choice.

20 Wm. W. McCullough, Sticky Fingers (New York: Amacom, 1981) 19.
21 Donald R. Cressey, Other People’s Money: A Study in the Social Psychology of Embezzlement (Montclair, N.J.: Patterson

Smith Publishing, 1973) 75-76.
22 Cressey 75.

16

Therefore, it is not the unbecoming behavior, business problems, alcohol abuse, excessive gambling,
or other circumstance that causes the embezzlement. Instead, when the person structures or defines this
problem as something that cannot be shared with others, embezzlement results. When the offender later
blames the embezzlement on the drinking or gambling, therefore, we are hearing the offender’s rational-
ization for the conduct, rather than the cause of it. As Cressey concluded, “thus, one who gambles will
not necessarily violate a position of trust he holds, but a person who gambles might construe a financial
problem arising from gambling as non-shareable, so that it becomes a significant event in the trust viola-
tion process.”23 Therefore, it appears that the more gambling is defined as legitimate leisure activity, the
easier it may be for those who gamble excessively to share their problem and seek help, ultimately
avoiding the need to pursue “solutions” such as embezzlement. As Cressey concludes, “if an individual
who believes, for example, that he is ‘not supposed to’ gamble at a racetrack or speculate on stocks loses
his personal funds in such an endeavor the resulting problem easily could be considered by him as non-
shareable. Admission of the loss would amount to an admission of unworthiness.”24

Cressey’s study involved only men, leaving open the question of whether the process is the same for
women. This question was answered by Dorothy Zietz in interviews she conducted with 100 incarcerat-
ed female embezzlers and fraud offenders. She found that rather than a non-shareable financial problem,
women embezzle “when it seems to offer the only available solution to financial problems that might
jeopardize the welfare or cause the loss of a child or husband.”25 Therefore, females appear to embezzle
primarily to keep a family or relationship together when threatened by financial problems, whereas men
engage in status-seeking or status-maintaining behavior resulting in financial problems that they do not
feel they can share with others.

The importance of these studies is that detailed interviews with offenders make it clear that no single
factor “causes” embezzlement or any other crime. It is only when a financial problem is defined in a cer-
tain way that embezzlement is considered. This provides insights for both how we look at the causes of
crime and for theft prevention programs. The more we isolate, label, or promote the notion that people in
financial trouble have only themselves to blame, the more it appears we actually encourage them to steal
because we make underlying problems more difficult to share and to seek assistance.

These findings are supported by a study of 212 frauds that occurred in the United States and Canada.
Information was gathered from extensive questionnaires completed by internal auditors in those companies
that had experienced frauds.26 The internal auditors identified 13 personal characteristics of the offenders
that they believed were important factors behind the fraud. These factors are summarized in Table 4.

23 Cressey 146.
24 Cressey 41.
25 Dorothy Zietz, Women Who Embezzle or Defraud: A Study of Convicted Felons (New York: Praeger, 1981) 151.
26 W. Steve Albrecht, Keith R. Howe, and Marshall B. Romney, Deterring Fraud: The Internal Auditor’s Perspective (Altamonte

Springs, Fla.: The Institute of Internal Auditors, 1984).

17

Table 4 Characteristics of Internal Fraud Offenders

Personal Characteristic Factors Response Percentage
Needed the money or desired personal gain 18 %
Living beyond means 14
In debt 14
Temptation too great 14
Greed 13
Vice (gambling, drugs, alcohol) 9
Contempt for company or very low pay 7
Desire to lead a wild life 4
Family problems 3
Emotional/mental illness 2
“Dishonest type” 1
Desire to blackmail company 1
Needed a “loan” 0.4

These factors correspond to the model proposed by Cressey that status-seeking or status-maintaining
behavior leads to non-shareable financial problems which ultimately results in law violation. Gambling
played a comparatively small role in these 212 cases, and illegal gambling is much more likely to
become a non-shareable financial problem than is legal gambling activity.

These detailed analyses of the motivations of those who embezzle provide the greatest insight into why
people get into financial trouble in the first place and why they choose a criminal “solution” to the situa-
tion, rather than a non-criminal alternative. They make it clear that single-factor “explanations” such as
gambling, drugs, or greed do not account for the fact that most people in financial difficulty do not
engage in criminal activity.

18

Conclusion

Recently, an FBI agent was indicted on charges he stole $400,000 in agency funds to support his gam-
bling debts.27 This story is similar to those mentioned at the beginning of this study where individuals
blamed their misuse of funds on gambling and other factors that produced financial problems. Such a
characterization of a theft grossly oversimplifies the process by which people come to embezzle. Given
the results of interviews with several hundred embezzlers, it is clear that gambling does not cause white-
collar crimes. Instead, it is the way in which a person defines a problem as non-shareable or as threaten-
ing to family stability that leads to embezzlement. Only in this way can a person’s decision to seek help
versus violate the law be understood.

This is not to say that compulsive gambling is not a concern. Although estimates vary, 1 percent or 2
percent of Americans are considered compulsive gamblers.28 It has been reported that nearly all compul-
sive gamblers started gambling before age 14.29 This suggests that preventing access to gambling by
minors requires strict enforcement. Casinos must strongly enforce gambling age limits, although Internet
gambling and lottery sales to minors would appear to have the greatest possibility to lure underage gam-
blers. Also, the availability of Internet gambling to anyone with access to a computer poses a potentially
more serious problem due to the difficulty in monitoring it, as compared to casinos.30 Given the findings
reported in the previous section, greater availability of supportive (i.e., non-judgmental) assistance to
those individuals with financial problems created by excessive gambling, drinking, spending, or bad
investments would result in fewer individuals seeing their problems as non-shareable.31 This would have
the greatest long-term impact for the prevention of embezzlement.

An examination of arrest trends for embezzlement, forgery, and fraud in nine of the largest casino mar-
kets shows no consistent pattern, although more jurisdictions report decreases than increases in arrests.
Combining the data from all nine cities together, arrests for forgery and fraud have dropped in casino
jurisdictions, while they increased nationwide over the same period. On the other hand, arrests for
embezzlement went up 1 percent in casino jurisdictions and declined by 2 percent nationwide.

An examination of articles appearing in USA Today over a 10-year period found that only 12 percent
mentioned gambling when reporting on cases of embezzlement. Gambling’s precise role was rarely dis-
cussed in these articles, and no distinction was made as to whether legal or illegal gambling took place.

27 “Miami,” Richmond Times-Dispatch, 25 Nov. 1998: 2.
28 National Opinion Research Center at the University of Chicago, Gambling Impact and Behavior Study. Report to the National

Gambling Impact Studio Commission (Chicago: National Opinion Research Center at the University of Chicago, 1 April
1999); Joseph P. Shapiro, “America’s Gambling Fever,” U.S. News & World Report, 15 Jan. 1996: 59; Valerie Lorenz,
“Commentary,” USA Today, 26 March 1991: 10C; Henry R. Lesieur, “Pathological Gambling is a Psychiatric Disorder,”
Legalized Gambling: For and Against, ed. R.L. Evans and M. Hance (Chicago: Open Court Publishing, 1998) 37-63.
29 Arnie Wexler and Sheila Wexler, “The Hidden Addiction: Compulsive Gambling,” Legalized Gambling, ed M.E. Williams
(San Diego: Greenhaven Press, 1999) 137; Randy Stinchfield and Ken C. Winters, “Gambling and Problem Gambling Among
Youths,” Annals of the American Academy of Political and Social Science 556 (March 1998): 172-85; Mark Griffiths,
Adolescent Gambling (New York: Routledge, 1995).
30 See Report to the Internet Working Group of the National Association of Attorneys General: Gambling on the Internet
(Washington, D.C.: National Association of Attorneys General, 1996).
31 For a discussion of the stigma of gambling in broader social terms, see Frederick W. Preston, Bo J. Bernhard, Robert E.
Hunter, and Shannon L. Bybee, “Gambling as Stigmatized Behavior: Regional Relabeling and the Law,” Annals of the
American Academy of Political and Social Science 556 (March 1998): 186-96.

19

Finally, an analysis of the causes of embezzlement through interviews with several hundred offenders
and auditors found that no single factor causes embezzlement. Instead, it is the way that a person defines
a financial problem as either non-shareable or a threat to the stability of one’s family that is important in
the causal chain. Therefore, efforts to publicize the availability of help for those in financial difficulty,
and eliminating any connotation that they are unworthy, will increase the number of people who seek
help for their problems, and ultimately reduce the incidence of white-collar crime.

20

References

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Ackerman, William V. "Casinos Have Proven Beneficial to Deadwood, South Dakota." Ed. M.E.
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Albanese, Jay S. White Collar Crime in America. Englewood Cliffs, N.J.: Prentice Hall, 1995.

Albanese, Jay S. "The Effect of Casino Gambling on Crime." Federal Probation Quarterly 49 (June
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Albanese, Jay. "Predicting the Impact of Casino Gambling on Crime and Law Enforcement," Ed. W.
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Albanese, Jay. "Casino Gambling and Organized Crime: More Than Reshuffling the Deck," Ed. J.
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21

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22

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23

About the Author

Jay S. Albanese is professor and chairman of the Department of Criminal Justice at Virginia
Commonwealth University in Richmond, Va. He received the M.A. and Ph.D. from Rutgers University,
where he was the first Ph.D. recipient from the Rutgers School of Criminal Justice. At Virginia
Commonwealth University, Dr. Albanese directs an undergraduate program in criminal justice with
nearly 500 students and master’s programs in forensic science and criminal justice with a total enroll-
ment of more than 100 students. The graduate program is one of the largest in the nation.
Dr. Albanese served as interim research director at the Training and Research Institute of the National
White-Collar Crime Center during 1998-99. In this capacity, he developed a three-year research plan for
the Institute.
Dr. Albanese is author of seven books, including Criminal Justice (Allyn & Bacon, 1999) Organized
Crime in America (Anderson, 3rd edition, 1996) and White-Collar Crime in America (Prentice Hall,
1995). He was a recipient of the Excellence in Teaching Award from the Sears Foundation, and is listed
in Who’s Who in America, Who’s Who in American Law, Who’s Who in Education, and Who’s Who
Among America’s Teachers. He is a past president of the Academy of Criminal Justice Sciences and of
the Northeastern Association of Criminal Justice Sciences.

24

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25

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