Jeff Jonas knows the Las Vegas gambling industry inside and out. As the founder and chief scientist of Systems Research & Development, Jonas helped build numerous casino systems before 2005 when SRD was purchased by IBM.

Jeff Jonas knows the Las Vegas gambling industry inside and out. As the founder and chief scientist of Systems Research & Development (SRD), Jonas helped build numerous casino systems before 2005 when his company was purchased by IBM. Big Blue was intrigued by SRD’s NORA system (Non-Obvious Relationship Awareness), a technology that uncovers relationships that can be exploited fraudulently for profit, such as connections between dealers and gamblers. Now a distinguished engineer and chief scientist for IBM’s Entity Analytic Solutions, Jonas is still based in Las Vegas but is focused more on applying his technology to national security and the banking industry.

Speaking at the O’Reilly ETech conference on emerging technology in San Diego on Thursday, Jonas promised to reveal some, if not all, of the secrets he learned about the casino industry. Before the talk, he called some of his former clients to make sure certain details could be revealed.

“My idea today was to tell more about the casino industry than I ever told,” Jonas said.

After Jonas moved to Vegas in 1990, he met a man who said his job was to cheat casinos.

“I’m like ‘are you a card counter?’ He says ‘you don’t get it! That would be like marijuana. What I do is like heroin!’ I didn’t know anything about this. Then he proceeds to show me his disguises, all these glasses, his mustaches. And I’m like ‘this is going to be crazy.’”

Over the next 15 years Jonas helped pioneer facial recognition technology and various other systems in casinos such as the Bellagio, Treasure Island and Beau Rivage in Mississippi.

“Today possibly half the casinos in the world run something or another that I had my hand in,” he said.

Vegas seems to put an enormous focus on high-tech security, but in some ways the casinos are just doing enough to get by. “They spend the minimum amount of money on security and surveillance,” Jonas said. “They’d rather buy three more slot machines and make money. They only mess with you if you’re really, really cheating.”

A casino like the Bellagio probably has 2,000 cameras connected to 50 monitors, with just a few people watching live surveillance, Jonas said. But the information is there to be scrutinized when casinos notice players winning unusually large amounts of money.

In one case a dealer – who said his family had been threatened - helped players rake in $250,000 at a blackjack table when he used a deck of “perfectly ordered cards” that had been handed to him by one of the gamblers, according to Jonas.

“They didn’t detect this as it happened,” Jonas said. “Most of the videos the casinos collect are just used forensically. When the table loses a quarter of a million dollars they go back and replay it nice and slow, see that little piece of video, and it’s time to make some calls. In the old days it was the kneecaps, but those were the old, old days.”

Casinos will always kick a cheater out, but known card counters might be allowed to stay if they aren't skilled enough to win money. While counting cards in one's head is not illegal, a good card-counter in blackjack gains a statistical advantage over the house, and if the casino decides the counter is making too much money, he will be escorted off the premises.

But card counters have to be really good: One mistake an hour could swing the advantage back to the house. And casinos don’t mind that. “If you’re not perfect at card counting, you can still lose money,” Jonas said. “They’ll watch you count cards and if you make any mistake they’ll just let you play.”

They might even let a good counter continue to play if he or she is part of the entourage of a high roller who’s losing millions. If the counter makes $20,000 off the casino while his buddy loses millions, for the casino it’s just part of the cost of doing business.

Card counting teams from MIT made millions off Vegas and have since been immortalized in a book and film. The MIT team’s innovation was to have separate roles for players: Some were there to count and place small bets, others acted as high rollers and made big bets when the decks were favorable. It’s easy for Vegas to spot a counter working alone based on betting patterns – lots of small bets followed by a few big ones. The MIT team survived longer than most because the separation of roles gave the appearance of legitimate betting patterns.

There are many other methods players use to shift the odds in their favor, with varying levels of legality. Jonas discussed a few, in some cases showing photos and video from his own collection. Here’s a sampling:

* The infinite hundred-dollar bill: One team took $1.2 million off a casino in two weeks when it discovered that a new hundred-dollar bill could be fed into a certain slot machine and, if you hit a button at just the right time, the machine would give the player $100 worth of credit while spitting the actual $100 bill right back into the player’s hands.

* The chip cup: The chip cup looks just like a stack of $5 chips, but it’s hollowed out and can hold a few $100 chips. Using the chip cup, a dealer and player working together can make a killing.

* The palm: A player palms a card and trades it with a neighbor to make a better blackjack hand. This trick is decidedly low-tech, but nearly undetectable when done with great skill.

* The specialty code: A programmer who worked on a video poker game snuck in some code that produced an automatic royal flush if a player followed a specific sequence of betting over the course of seven or eight hands.

* Cameraman: Jonas showed photos of one player who was wearing buttons that were actually infrared cameras, capable of capturing the identity of cards as they pass through a shuffle machine. One shuffle machine in particular had a tiny hole that revealed each card, but not to the naked eye. The infrared camera illuminated the card, and the video images were transmitted to a vehicle in the parking lot, where collaborators slowed the video down and could tell their player in the casino which card was coming next. Hitting on 17 is a smart move when you know a four is coming next.

How casinos strike back

Casinos are all about odds. If a player has shifted the odds into his favor, he can be asked to leave. But if a player simply wins a ton of money through sheer luck even though the odds are against him, the casino will do everything it can to lure the player back.

To Jonas, the example that may describe this phenomenon involves a private jet.

“There’s this one casino, one of their high rollers beat them for $18 million,” Jonas said. “That’s actually going to show up on quarterly earnings. So they left with $18 million. The casino sent a jet to their town and left a limo in front of their house on weekends and said ‘you know just in case you get the bug.’ And they got the bug and they took them up on it and they came back and lost something like $22 million.”

For tax reasons, casinos have to track players who cross certain winnings thresholds, such as $2,500 and $10,000, Jonas said. If you win this much money, expect to be followed even if you haven’t told anyone your name.

“If you show up and don’t tell them who you are, and play at one table and then move to another, and then move to an entirely different area of the casino … [and then] you go to your room and change and come back, they’re obligated to try to track you through all of that,” he said.

Sensors are everywhere. “Each resort has tens of thousands of sensors, every doorlock system, every slot machine, ATM machines, point of sale machines, it just goes on and on,” Jonas said. “There might be more sensors per square foot than anywhere possibly other than a battleship.”

Casinos face legal and financial risk if they let the wrong people play. People with gambling addictions can place themselves on exclusionary lists, and can actually sue casinos if they are allowed to place bets, Jonas said.

An additional list maintained online by the Nevada Gaming Commission shows a few dozen criminals who have cheated casinos and must be prevented from gambling.

“If a casino gets caught transacting with these people, they could lose their gaming license or be heavily fined, no matter how hard they tried to spot them,” Jonas said.

The job gets harder when criminals start recruiting people to help them, in some cases people the casinos are unfamiliar with, and in other cases high rollers who have lost a lot of money and would therefore not be suspected of cheating.

“They have false identities,” Jonas said. “They just make up names, they buy fake credential packages. When you get to know who they are, they go distances far away, start recruiting people you’ve never seen. They train them in their own lab, so the first time they step foot in a casino, they’re a pro.”

One system Jonas developed for casinos more than a decade ago uses facial recognition technology to quickly compare suspected cheaters with mug shots and uncover fake identities.

But for all the technology and security guards employed by casinos, they simply stand and watch when faced with the most brazen types of theft, Jonas said.

“We’ve had armed cage takeovers where they jump in with guns and take out the money,” Jonas said. “Now a very interesting thing that is not widely known is that when surveillance sees this happening, they don’t bring security in. They push security back, because you don’t need a shootout. So when you have something like that happening you hold the door open for them – have a good day.”

Casino developer Steve Wynn’s daughter was kidnapped in 1993, and Wynn paid over $1 million in ransom money to get her back. “They did not call the FBI first,” Jonas noted. But the captors were eventually tracked down and caught due to their flashy spending habits.

“That’s the way they catch the bad guys,” Jonas said. “They’re generally idiots.”