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Betting Chips Meet Silicon Chips As Casinos Integrate TechnologyThu Jan 27, 7:00 PM ETDoug TsuruokaBetting chips, usually made of plastic or fired clay, are getting a new ingredient: silicon.Over the last five years, various casinos have tested the idea of adding radio frequency identification tags to their betting chips. The RFID tags send data to a dealer's personal computer, making it easier to track the amount that individual players are betting in games like blackjack or roulette.Some early tests didn't get far. One problem was the cost of RFID chips, which had been priced at several dollars apiece. They've also been a bit slow, taking several seconds to kick out data.Now Progressive Gaming International (NasdaqNM:PGIC - News) -- a Las Vegas-based developer of gaming technology -- has come up with a cheaper, faster RFID betting chip.The new chips cost $1.25 each, down from about $4 three years ago. That makes them more affordable for casinos, which use tens of thousands of chips. And the chips' data can be read in milliseconds, rather than the several seconds it took three years ago."We have much higher speeds and much lower costs," said Russel McMeekin, chief executive of Progressive, which has $90 million in annual sales.Hard Rock's GambleTen gaming tables at the Hard Rock Hotel & Casino in Las Vegas began using the new chips in late December. Analysts say it's the first major test of faster RFID chips at a big casino anywhere in the world.It's a sign that RFID technology, already used to track Wal-Mart inventory and Pentagon (news - web sites) supplies, is getting a better foothold in the gambling world.About 100 casinos worldwide use slower versions of Progressive's RFID chip. "RFID betting chips are a brand new tech for casinos that could lead to mass adoption," said Dave Bain, an analyst at Merriman Curhan Ford & Co.Progressive, which changed its name from Mikohn Gaming on Jan. 4, is in the midst of a turnaround. It earned 7 cents a share in the third quarter, compared with a loss of 32 cents in the year-ago period. Sales jumped 16% to $25.7 million.The company's only been profitable in three of the last 13 quarters. But investors are betting on a bright future. Its shares are trading above 10, double what they were a year ago.Progressive's faster, cheaper chips are a response to requests from big casinos in gambling centers like Las Vegas. The volume and pace of bets in these spots is much higher than at smaller casinos, making RFID betting chips a better way to track play.Gaming tables with Progressive's system have antennas installed under the table surface. The antennas pick up signals from the chips and the system displays the information on the dealer's computer screen instantly.The RFID chip transmits more than just the amount bet. It also indicates the identity of the player. This way, dealers know if a player is a regular patron and entitled to special prizes or favors.Progressive charges its customers an $8,000 one-time fee per gaming table for the system. There are additional costs depending on the data features used. And casinos pay anywhere from $3 to $6 per table per day as a user fee to Progressive.Progressive expects to have 10,000 gaming tables at casinos worldwide using its RFID chip system in five years. That represents a quarter of all casino gaming tables in the world, McMeekin says.The firm doesn't make complete betting chips. It sells the RFID tags that casinos affix to the chips they already use. "It's a small RFID tag about the size of the tip of the baby finger that's embedded in the gaming chip," McMeekin said.Progressive gets its tags from Infineon Technologies (NYSE:IFX - News), a German company that makes RFID chips.Overseas OpportunitiesMcMeekin sees Russia and China as two potentially huge markets for RFID betting chips.Legalized gambling, he says, has grown by leaps and bounds in Russia. Gambling in China, meanwhile, is booming in the ex-Portuguese enclave of Macau, which has a longtime casino industry.Casinos in both countries are thirsty for new technology that makes their businesses more efficient, McMeekin says. "Gambling markets like Macau can be very big (for RFID)," Bain said.One big selling point: RFID could help thwart cheaters.One ruse among scam artists is to sneak extra chips onto a gaming table after winning to boost their take, Bain notes.This form of cheating is common in Macau, which -- unlike the U.S. -- still relies on manual playing systems."If someone sneaks an RFID chip onto a table, everyone will know," Bain said, noting that the chip would show up immediately on a dealer's PC terminal.Progressive's next project: a system that reads playing cards as they're dealt in blackjack and other games.It would rely on an optical image reader to recognize individual playing cards, McMeekin says.
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