Vegas Casino Bets On RFID
By Alorie Gilbert - Staff Writer - CNET News.com - 10 February
2005
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.
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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