Vegas casino bets on RFID

R.A. Hettinga rah at
Thu Feb 10 12:50:01 PST 2005


 Vegas casino bets on RFID

 By Alorie Gilbert

Casino mogul Steve Wynn has pulled out all the stops for his new $2.7
billion mega-resort in Las Vegas: an 18-hole championship golf course, a
private lake and mountain, and a bronze tower housing 2,700 plush guest

 But when its doors open in April, the Wynn Las Vegas will have one unique
feature that few visitors are likely to notice--high-tech betting chips
designed to deter counterfeiting, card-counting and other bad behavior.

 The fancy new chips look just like regular ones, only they contain radio
devices that signal secret serial numbers. Special equipment linked to the
casino's computer systems and placed throughout the property will identify
legitimate chips and detect fakes, said Rick Doptis, vice president of
table games for the Wynn.

What's new:
 Betting chips are getting a high-tech RFID makeover designed to deter
counterfeiting and misbehavior at the tables.

Bottom line:Despite this, RFID technology is still relatively rare in
casinos--until that killer application arrives.

More stories on RFID

"Security-wise, it will be huge for us," Doptis said.

 The technology behind these chips is known as radio frequency
identification, or RFID, and it's been used for years to track livestock,
enable employee security badges and pay tolls.

 The casino industry is just the latest to find new uses for RFID
technology. Retail chains, led by Wal-Mart Stores, are using it to monitor
merchandise. Libraries are incorporating it into book collections to speed
checkouts and re-shelving. The United States and other nations are
incorporating it into passports to catch counterfeits. One company even
offers to inject people with RFID chips linked to their medical records to
ensure they receive proper medical care.

 In casinos, RFID technology is still relatively rare and in search of a
killer application to spur adoption. Yet some tech-savvy casino executives
envision RFID transforming the way they operate table games, including
blackjack, craps and roulette, over the next four or five years.

 For one thing, there's the counterfeiting problem, on which there is scant
data. The Nevada Gaming Commission gets about a dozen complaints every year
related to counterfeit chips, said Keith Copher, the agency's chief of
enforcement. Last year, a casino in Reno quickly lost $26,000 in such a
scheme--one of the biggest hits reported to the commission in recent years.
And counterfeiting is on the rise at overseas casinos, Copher noted. The
RFID technology would let dealers or cashiers see when the value of the
chips in front of them don't match the scanners' tally.

 However, financial losses due to counterfeit chips are usually minor, and
few perpetrators get away with it, Copher said.

 Perhaps that's why the Wynn has found a dual purpose for the high-tech
chips: The casino is also using the chips to help account for the chips
they issue on credit to players, since managing credit risk is a huge part
of any big casino's operations.

 The Wynn plans to take note of the serial numbers of the chips they lend
and of the name of players who cash them in. If someone else returns the
chips, it could signal that the original player is using their credit line
with the casino to make loans to others--something casinos generally frown

 That sort of security doesn't come cheap: The Wynn is spending about $2
million on the chips. That's about double the price of regular chips, and
doesn't include addition equipment the Wynn will need to purchase, such as
RFID readers, computers and networking gear.

Eye in the sky
 The technology could also help casinos catch card players who sneak extra
betting chips onto the table after hands are dealt or players who count
cards. That's one reason the Hard Rock Hotel and Casino in Las Vegas plans
to switch on a new set of RFID-equipped betting chips and tables next month.

The casino is installing RFID readers and PCs at game tables. With antennas
placed under each player's place at the table, dealers can take a quick
inventory of chips that have been wagered at the push of a button. The PCs
display all the initial bets, deterring players from sneaking extra chips
into their pile after hands are dealt.

 Yet the benefits of RFID go beyond security. It may also help casinos
boost profits through savvier marketing.

 "Vegas has a little bit of a wait-and-see attitude... They want to make
sure the product is bulletproof."
 --Tim Richards, vice-president of marketing, Progressive Gaming International

Take the Hard Rock Hotel. In addition to monitoring wagers, the casino
plans to use its new RFID system to "rate players"--monitor gamblers to
reward them with free rooms, meals and other perks based on how much and
how often they wager. As the technology advances, RFID could also help
track how well they play. The casinos generally reserve the most enticing
rewards for their most "valuable" players--those that bet and lose the
most--to keep them coming back.

 At the moment, these incentive programs are somewhat limited, because the
process of rating players is so labor-intensive. Casinos employ special
staff to observe the tables and take note (by hand) of how much players bet
and how well they play--typically focusing on high-stakes players. In
addition, such ratings are often inaccurate. As a result, casinos overshoot
the perks they lavish on players by 20 to 30 percent.

 RFID could change that by giving casinos a more accurate and efficient
tool to rate players and by allowing them to enlist more table-game players
to participate in incentive or "comp" programs. Such programs are roughly
the equivalent of an airline's frequent flyer program or a grocery chain's
loyalty card, encouraging repeat business.

 "It will allow casinos to be more aggressive from a marketing standpoint,"
said Tim Richards, vice-president of marketing at Progressive Gaming
International, a supplier of the next-generation betting chips.

 Many in the gaming industry point to the lowly slot machine--which has
evolved into a fancy computer--as the desirable model. With slots, casinos
have made a science over the last decade of monitoring players and keeping
them interested in the machines with a constant stream of rewards and

 In part, that development has helped slots generate the lion's share of
casinos' revenue--up to 80 or 90 percent in a typical casino, according to

 "We're trying to bring that same kind of thinking to table games," said
Bart Pestrichello, vice president of casino operations at the Hard Rock
Hotel and Casino in Las Vegas. "It's to reward players based on their
actual bets and decisions."

 Keeping a closer eye on table wagers could also help casinos crack down on
card counting. Armed with all kinds of data, RFID systems could analyze
game activity against statistical models and alert management of a
suspicious winning streak. The technology can also be used to catch dealer
mistakes, check dealer productivity and deter chip theft.

Still on the drawing board
 Despite all the promises of RFID, few casinos have yet to put it to use.
Part of the problem is that the technology is expensive. The cost hovers
around $8,000 per table, Progressive Gaming's Richards said. That's just
for the chips and readers, and doesn't include the extra computers and
networking equipment.

 Then there are technical problems. It takes about seven seconds for an
RFID-equipped game table to read 100 chips--far too slow to capture quick
table action.

 But Progressive Gaming and a competitor called Shuffle Master are
developing systems that take closer to two or three seconds per
reading--fast enough to capture the outcome of each hand. This year, the
companies each plan to release new versions of their RFID systems that are
faster and more affordable than today's models.

 "Vegas has a little bit of a wait-and-see attitude," Richards said. "They
very much view themselves as the primetime casinos, and they want to make
sure the product is bulletproof."

Progressive Gaming's goal is to sell at least 5,000 RFID-enabled gaming
tables by 2010. It's wiring up the Hard Rock--one of the first casinos in
Las Vegas to adopt RFID betting chips.

 Shuffle Master is making big bets too. The Las Vegas company acquired key
two RFID-related patents last year for $12.5 million and has teamed up with
RFID equipment maker Gaming Partners International to develop new products.
Gaming Partners is supplying the Wynn with its RFID system.

 Executives at both companies say broader adoption is coming but is about
five years off.

 Yet another potential barrier to RFID at casinos is concern over privacy.
Wherever it goes, RFID seems to generate objections from consumer
activists, who worry that the technology will give corporations and
governments too much power to pry into people's lives.

 But few people expect total privacy at casinos, where surveillance cameras
might easily outnumber the cocktail waitresses roaming the floor. With
casinos already keeping such a close eye on their visitors, would RFID
chips really be much cause for concern? In addition, RFID systems only
recognize people who use player's cards. The cards are part of
complimentary programs, which are completely voluntary.

 Still, you can imagine some disturbing scenarios. For instance, an RFID
reader might make a nifty tool for a thief, who could covertly scan people
strolling along the Strip for his next hold-up victim. Could casinos be
setting their patrons up for this kind of trouble?

 The question seemed to stump Rick Doptis at the Wynn. "I would have no
idea as to that," Doptis said. "We go to great lengths to protect customer
safety. Our parking lots and grounds are surveyed like no other on the
planet. We do everything we can to protect our guests. But theft is a

R. A. Hettinga <mailto: rah at>
The Internet Bearer Underwriting Corporation <>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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