Casino owners may become the newest members of the RFID bandwagon. They show a keen interest in the technology as a way to track customers from the moment they hit the gaming tables. And the purchase of two patents by a large manufacturer shows they will not miss out on the 21st century technology.
Shuffle Master, a gaming supply company headquartered, in Las Vegas, Nevada, recently purchased two RFID-related patents for $12.5 million. Like its name indicates, the company specializes in providing utility products to casinos, such as automatic card shufflers. But it also carries its own proprietary table games for casinos. The patents’ seller was Enpat, a licensing agent for the inventors, explained Paul Meyer, Shuffle Master’s president and chief operating officer. “We did a lot of due diligence. We looked at over 400 patents to make sure we identified the correct ones,” he added.
The first patent is for RFID-enabled gaming chips. A casino could track the chip from the time it was first played to the time it is cashed in. The second patent is for the gaming table tracking system that monitors and records all gaming chip transactions in a casino. Both patents were originally filed in 1995.
“At last year’s Global Gaming Expo, we were showing an intelligent table system,” said Mr. Meyer. “At that time our product was based on optical technology, but we later decided that one size fits all made no sense because many casinos had different needs. We went on a modular development role and earlier this year concluded that the technology of the future was RFID. It offers 100% accuracy and is superior to optical. The purchase of these patents demonstrates our commitment to bring reliable and integrated RFID technology to market for the benefit of our casino customers.”
Under the terms of the sale, Mikohn Gaming Corporation’s obligations under its non-exclusive license agreement for certain uses of these patents at gaming tables will be owed directly to Shuffle Master as licensor. Similarly, Gaming Partners International Corporation (which makes RFID readers and chips) will retain its exclusive license for the use of these patents in the manufacture and sale of RFID gaming chips and readers, according to Shuffle Master.
“Mikohn (a Shuffle Master competitor) has a few placements of RFID. They’ve been trumpeting RFID for quite some time. With our acquisition; Mikohn would be a licensee of Shuffle Master,” said Mr. Meyer.
Even with the minimal placements of RFID chips and tables in casinos thus far, Mr. Meyer thinks the field is still very wide open. “There are some 42,000 gaming tables in the world. That means lots of room to grow.” He’s looking at the end of the fiscal year, which, for Shuffle Master, is October, “that we’ll certainly have something to demonstrate at the Global Trade Show.”
The downside to a Casino for RFID implementation, he said, is that it “would require an investment because they would have to re-rack their casinos.” Case in point: a conventional chip without RFID costs about 90 cents, he said. With RFID, that cost would jump a dollar, to $1.90 a chip. “I’ve been told the average cost to a casino (to upgrade) is $250,000.”
So how do RFID-enabled chips and tables work?
“Say I sit down at a black jack table and I have a player’s card. I place it and a $100 bill on the table. My card is swiped which places me at that table,” explained Mr. Meyer. (A player’s card is another way for casinos to track frequent gamblers. They earn points on the card for free meals, or other rewards.)
Without RFID, “as I play over time, the only way the casino can estimate the kind of player I am, is by using pit boss estimates. That’s a pretty rough estimate. That’s where table tracking comes in. Every chip is associated with me and is tracked using a reader. Exactly what I’m betting and losing or winning is tracked automatically. Without tracking, they (casino) don’t know what I’m betting.” In other words, the reasoning behind RFID utilization is that the casino will know what every player is doing at every table.
“Say you move away from one table with $500 in chips. You now go to cash in those chips. Those RFID chips can be read at the cage and associated with you. In your moment of generosity, you give a cocktail waitress a $25 chip. When she cashes it in, we know how generous a tipper you are.”
But not only does RFID allow casinos to track players, it also can track employees.
“You have an executive host hanging out with a big-time gambler who might lose $1 million a year. Say he gives the executive host a $500 tip. Most casinos don’t allow executive hosts to accept tips.”
Another example: “If a dealer during a shift change tries to leave the table with a $100 chip, he’d be caught,” said Mr. Meyer. “Every chip has a unique serial number, which is tied to the player card. If I don’t have a player card, it’s difficult to associate an RFID chip with me, but a very high percentage have player cards,” he added. If the player doesn’t have such a card, he would simply give the dealer his first name and last initial before buying the chips and they’d be tied to him in that fashion.
In conjunction with RFID table tracking, “that literally means tracking player performance at the table and all around the casino,” said Mr. Meyer. “There has been an enormous amount of attention given to this,” he added. “New technology takes time to be adopted and I think it’s very clear that Shuffle Master’s reputation as the leader at deploying technology in the table area” could drive the move towards this new technology. “There has been a lot of buzz. People look at the adoption by Shuffle Master favorably because they know it will be deployed quickly.”
It also doesn’t hurt that Shuffle Master has seen its stock increase 1,700% in just five years. “We’ve generally been increasing our profitability in the 25% to 30% range,” said Mr. Meyer. “We compete best in niches where there is little competition and we have strong patent protection in the products we do own.” Last year, the company was named one of America’s 200 Best Small Companies by Forbes magazine for the sixth consecutive year.