SURVEILLANCE SPECIAL REPORT: De-Tokenization

It’s time to get rid of chips!

Call me crazy, but I’m convinced it’s time to get rid of casino chips. It’s time for casino table games to go digital like the rest of the world. How can you run table games without chips, you ask? They go together like fish and chips or chips and salsa. Hang on, hear me out. I not only think those germ-ridden little pieces of clay are troublemakers, they’re holding casinos back in the 21st century.

When and why were chips introduced to gambling in the first place? I’ve asked a few authorities in the casino industry this question, and no one really knows. The most common answer is that chips have been part of the casino business since the beginning of time. I was forwarded an article that suggested the arrival of chips in gambling (in the form we know today) happened around the 1880s. Although I know some casino guys in Vegas that worked in casinos back then, they couldn’t tell me why chips were introduced to casinos. If I were to guess, the obvious reason would be to help casinos determine who owned each bet and to help make payment of winners a lot quicker.

No less of an authority than David Schwartz, author of Roll the Bones: The History of Gambling, says the birth of chips is unknown.

“The use of non-monetary markers to denote sums used to gamble with is as old as gambling itself, so it is impossible to identify a single origin point,” he says.

Times have changed since 1880. More than 90 percent of transactions in the U.S. are now done digitally, mainly through the use of some sort of smart card, like a credit or debit card. Transactions are quick. Verification of ownership is quick. There is a digital trail. People don’t have to worry about getting mugged when they walk down the street.

Society has long accepted the benefits of digital currency. It’s the way commerce is conducted in today’s world… except for casinos. As we step into the table-games pit we go back in time. We’re asked to bring cash, change it to chips, and then change it back to cash at the cage.

Back in 2000 I started to question why we use chips. The casino I worked in got whacked with a counterfeit chips scam that cost us over $400,000. I began to think about the trouble they brought to casinos. Quite frankly, as a game protection guy, chips have always caused a lot of problems. Over the last five years, I feel the case to digitize table games has gotten stronger. We are in a digital world that has seen businesses become more successful through getting the right information quickly and efficiently.

In some markets, table games are stagnant. I believe going digital could benefit the way we manage table games. It could even revive them.

 

17 Reasons To Get Rid of Chips

This is a change issue. A great man once said you don’t need multiple reasons to change something, you only need one good reason. If you’re looking for only one good reason to go digital on table games, I would say it’s accountability. But that being said, I’m going to give you 17 good reasons to get rid of chips.

 

1. They Take Up Space

Chips need to be stored somewhere: usually in a room. If they’re not in the chip bank, they’re in three other places: on the tables, in the cage window drawers or with players. Casinos carry two sets of chips in case they are hit with a large counterfeit scam and they have to replace the originals. Often chips sit for years in chip bank rooms gathering dust. A lot of space is required to store both sets of chips.


2. Transportation is Time-Consuming

Chips are cycled from the chip bank to the table games. The chip bank employs a cashier to be on hand 24 hours a day to prepare fills and verify credits going to and from tables. Security officers are taken away from their general role of providing security to become a delivery person for table games. If the fills are large amounts, internal controls often dictate that a surveillance operator has to monitor the transportation of the chips to the table. The process of verifying chip deliveries usually involves stopping a game and verifying delivery amounts. It’s time- and resource-consuming.


3. Counterfeit Chips

Casino chips are relatively easy to counterfeit. Yes, most chips have some sort of secret identification mark. If staff are lucky, they may even be RFID. But quite frankly, most staff in casinos don’t know what to look for to verify a chip and most staff don’t have the time. The threat of counterfeiting is even bigger today because of technology and really good Chinese copycats.


4. Surveillance Can’t Tell How Much the Bet Is

When a surveillance operator is watching a game or reviewing video of a game using the standard directly-over-the-table view, they can’t see how many chips are on a bet. To verify the exact amount they have to zoom in live while they’re watching it with a PTZ camera so they can count the edges of the chips. Sometimes you may ascertain the amount of chips in a stack by previous payouts, but sometimes bet recognition through an overhead camera is best described as an educated guess.


5. They Slow the Game Down

Converting cash to chips. Converting low denominations to high denominations. Converting high denominations to low denominations. Calculating how many chips in a winning bet then calculating, preparing and paying a stack of the correct amount of chips. Sorting chips in the chip tray so the floor supervisor can calculate if a table is winning or losing. The fills. The credits. The opening procedures. The closing procedures. All these processes slow the game down!


6. They Attract Cheats

The most common way of cheating on table games is late betting. Past posting, bet capping, bet pinching. They are all scams involving manipulating chips after the result. The key word here is chips. No chips, no two-bit cheating.


7. Robbery

Chips openly displayed on table games are tempting for brazen desperados. Snatch-and-run robberies at the Bellagio and Venetian in recent years have netted individuals over $1 million each. The manner in which chips are openly displayed on table games not only increases opportunities for thieves, it puts our dealers in harm’s way.


8. Employee Theft

Chips are easy for staff to steal. The common way is to slip out one or two higher-denomination chips on a daily basis. The amount is not significant on a daily basis, but over the staff member’s career, the numbers can be staggering. Last year a dealer in Macau incredibly stole over $6 million in chips in one hit.


9. Players Stealing from Players

A common problem with mega-size casinos (150-plus gaming tables) is players stealing other players’ chips, mainly on non-card games like roulette, sic bo or craps. They steal the chips off the betting layout or from the player’s bankroll on the edge of tables. Often, surveillance is called on to identify who stole the chips. In effect, surveillance is distracted from protecting the house to protecting customers’ individual interests.


10. Dealers Colluding with Players

Without doubt the largest criminal threat in relation to suffering immediate losses to the game itself is collusion. Although the largest collusion scams usually involve dealers assisting players obtain information of future results, there are often smaller amounts of money being shoveled out to players by rogue dealers who see the opportunity to skim a bit off the top by paying “dirty stacks” of chips or just downright paying too many chips without being caught.


11. Dealers Make Mistakes

Oh yes they do. Until we replace them with robots, they’ll always make mistakes. A common area where mistakes are made is in the “take and pay” procedures. This is when the results have to be determined and winners and losers are dealt with. Chips in, chips out. It is not uncommon for dealers to mistakenly miscalculate results and incorrectly pay players. Digitization would eliminate payout errors, since computers would be doing the taking and paying.


12. Ownership Disputes

Except for roulette, chips are generic. They all look the same, without any distinguishing features that the chip actually belongs to an individual. On non-card games, especially unlimited player games like big six and sic bo, there are often patron disputes over who placed a winning bet. Surveillance resources are called upon to adjudicate. Serial disputers are commonplace.

 

13. Dexterity Wouldn’t Be Required

If casinos got rid of chips, training for dealers wouldn’t take so long. Payouts wouldn’t have to be calculated. Dealers would not have to be trained in chip work. Dexterity wouldn’t be required. Dealers could focus on providing a fun customer experience.

 

14. Floor Supervisors Can Lose the Clipboards

A big part of the role of a floor supervisor is to track chips coming and going. They move around their tables counting the table’s chips and the players’ chips and making notes on a clipboard. It’s funny watching the floor supervisor stare down a winning player’s bankroll at the edge of the table or go into full CIA investigation mode when players are “going south” with chips. Digitizing the game would allow floor supervisors to focus on providing a fun customer experience (see a trend here).

 

15. Easier to Manage Tips

Managing tips for dealers in a large casino is a process unto itself. A dealer taps a toke. A toke goes in a box attached to the table. Boxes are collected once a shift or day. Tokes are counted under a camera. Money is divvied up. The whole process runs in parallel with the casino’s own cash drop box collection. It’s a daily performance that takes time and effort and relies on a lot of trust. If tables were digitized, tips could be counted, divvied up and sent to a dealer’s bank account instantaneously.

 

16. Cleanliness and Health

I wasn’t going to go there, but I will. I remember reading a study years ago about a test conducted on the cleanliness of casino chips. I won’t go into the details. I’ll just say it was nasty. From personal experience I can relay a story that I have never forgotten. It’s about a dealer that almost passed out and had to be taken off a table. I was watching the game in surveillance and noticed a gambler was picking his nose profusely and playing blackjack. I’m talking boogie wonderland all over the chips. The dealer was terrified. I called my work mates over to the screen to check it out. We sat and watched in horror as he placed his boogar-capped chips on the betting square. I’m pretty sure everyone except for the player was thinking what we were thinking in surveillance—please God, let him win! He won the first hand. Phew! He won the second hand. Phew! And then it happened. He lost. The dealer almost passed out as she took the losing chips and placed them in the float. She couldn’t deal the next hand and was escorted out in a shade of green.

 

But Here’s the Main Reason

That was 16 reasons just off the top of my head for getting rid of chips. There are probably a lot more I haven’t thought of, but it’s my 17th and final reason that has tipped my way of thinking in recent years and convinced me that table games will never reach their full potential unless we get rid of chips.

17. Accountability

Accountability means the obligation of an individual or organization to account for its activities, accept responsibility for them, and disclose the results in a transparent manner.

Table games have always fallen short when it comes to tracking the money accurately. Unlike most businesses in the 21st century that make annual revenues of millions of dollars, there is no digital trail of betting transactions at the tables. Table game operations are like large banks without receipts.

Casinos give players lots of free stuff based on guessing. We ask a floor supervisor to scan the ever-increasing amount of tables they are responsible for and estimate the average bet of each of his players. Sometimes that means up to 50 players coming and going at the same time.

This estimate and some other information like time played and win/loss are written down by hand and entered into a computer. The computer uses a simple program that calculates a set percentage of the player’s estimated turnover. Based on what the floor supervisor has estimated, the player is credited with free stuff (often a lot) to entice future play. The problem is the data entered is a guess.

It’s an old boys club system that relies heavily on competency and trust, but it’s far from an accurate account of transactions that take place in a casino. At best, we can agree that it’s a close guess.

Unfortunately, the system is open to collusion between the raters and the rated. Surveillance audits of player comping regularly shows inaccuracy up to 30 percent in most cases. Sometimes it’s collusion. Sometimes staff just feel that over-rating players provides stronger job security. If a customer complains they are underrated by a floor supervisor, they may be called out by management. It’s just easier and there is less chance of repercussions if you rate on the high side.

It’s hard to calculate how much over-comping costs the casino industry as a whole. Random surveillance audits only cover a small sample size. But that’s the point. If we got rid of chips and went digital, our industry would be more transparent and would be able to accurately account for every transaction. We would clean up a flawed system open to fraud, inaccuracies and guesswork.

Another problem that has surfaced in recent years is casinos not complying with anti-money laundering laws. If you haven’t heard, federal governments take this stuff seriously. In the last few years, casinos have been fined millions of dollars for non-compliance with AML laws.

One of the issues where casinos have been falling down is sloppy internal accounting and controls. Digitizing all betting transactions would help the process of complying with audits and investigations by providing authorities with a transparent system of identifying players and tracking the money. It would save a lot of time for surveillance and compliance departments and ensure speedy and accurate information is passed on to authorities.

 

What’s Needed to Make Table Games Digital?

Don’t ask me. I’m not an IT guy. All I know is what’s in my wallet, and I can tell you it’s not chips or even cash. It’s smart cards. In my other pocket I have an iPhone with Apple Pay. No one’s denying there would be challenges to overcome. Issues that would have my table game friends from the 1880s engaged in spirited banter down at my local barbershop. There’s always someone in the room who thinks Rocky Marciano was better than Joe Louis.

I find when it comes to offering new ideas to table game people, I’m almost certainly met with the player acceptance argument. I find that this age-old argument is usually based on personal agendas and take it with a grain of salt.

I like to remind my table games friends about our brothers across the way in the slot department. They’re the ones that now produce 65-90 percent of revenues on the gaming floors across the U.S. I remind them how successful they’ve been with their loyalty card programs, their data mining, targeted marketing and computerization of play information and transactions. Yeah, the slot business really went south after they got rid of the handles and the tokens.

Initially, the challenge in table games would be digitizing all tables with touchpad betting surfaces and smart card validators. Systems would need interfaces to results, shoes, etc. There are smart table products currently out there that essentially incorporate all aspects of a normal game. Video analytics and AI products are being developed by CCTV customers. We are on the cusp of digitization in table games; it’s just a matter of, do you go hybrid and wait or do you jump in and go fully digital now?

“Oh, no, but table game players are different.”

Yes, they are different. No argument there. But let’s stop and think for a moment. Think about how it could be if your table game players carried your casino’s cash card and used it to purchase things all around the world.

Think about your card being placed on the hotel counter of the Burj Khalifa or in the world’s top restaurants or clubs. Am I being evil by suggesting that your players shouldn’t leave home without it?

Digitization of table games could open up a new world for casinos. Casinos could become banks—with receipts.

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