Security

Vegas casino bets on RFID

Gambling chips are getting a high-tech makeover that could help casinos keep a better eye on patrons.
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By Alorie Gilbert
Staff Writer, CNET News.com

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 rooms.

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.

"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 upon.

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 freebies.

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 Richards.

"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 factor."

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