Las Vegas Sun

October 6, 2022

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Chips no longer good as cash

If $5,000 casino chips could talk, what would this one say? It might explain its recent travels and how it has ended up in the custody of a cashier at the MGM Grand, who questioned whether it really belonged to the gambler who turned it in.

The gambler, a poker player, made the mistake of treating the chip like currency. And all he's got to show for it today is a piece of paper - a receipt for the chip he no longer has - and no money.

The harsh lesson he learned is that this isn't old Vegas, where casino chips were the coin of the realm, used to settle debts between friends, buy groceries and pay for haircuts.

That culture started to change 20 years ago when Nevada defined tokens as the property of individual casinos and prohibited their use "for any monetary purpose" outside the casino. They were simply intended as stand-ins for cash, loaned to players for the sole purpose of gambling.

The regulation was adopted to bring state law in line with federal rules prohibiting the creation of new currencies and with existing casino accounting procedures. The rule also has favorable tax implications for casinos, which aren't taxed on unreturned chips.

But churches still find chips in collection baskets and gamblers frequently tip with chips.

So Nolan Dalla, one of many poker players who casually trade, borrow and gift poker chips to colleagues, was surprised to learn he was, technically, breaking Nevada law.

Dalla, a media organizer for the World Series of Poker and other major poker tournaments, obtained the $5,000 MGM Grand chip at the center of our story from a friend who owed him money. Dalla decided to cash the chip at the same time he cashed a winning sports book ticket from MGM Grand.

Asked whether he won the chip at the casino, Dalla told the casino cashier he got it from a friend. That's when a supervisor stepped in, asked a few more questions and then confiscated the chip, saying Dalla couldn't prove that the chip had been obtained legally.

Dalla's friend, reached by phone, told the supervisor he received the chip from a third gambler. That's simply how it works in the world of serious poker players: Big-denomination chips can change hands among players after they have left the table.

Dalla was given a receipt for his chip after it was seized by MGM Grand but, for now, he's down the $5,000.

He says the casino presented him with an impossible task - to prove that, at some point, a gambler at MGM Grand had bought the chip.

"I think it's very scary for gamblers that the burden of proof is on us," he said. "It's like the IRS. They think everyone's a cheat."

In fact, the casino is simply following state law. Nevada regulations allow casinos to seize chips if the casino "knows or reasonably should know" that the chips weren't obtained in the course of gambling by the individual presenting them. The little-known rule, intended to protect casinos against theft, counterfeit and other types of fraud, allows cage supervisors to keep the questionable chip while they investigate its origin.

Casinos post signs informing gamblers that chips can't be used as money, but they may go unnoticed or unheeded.

"Chips absolutely aren't legal tender. They're the property of the casino," MGM Mirage spokesman Alan Feldman said. "They are tendered for a very specific purpose and that purpose is highly regulated. We are obligated to verify that the chips were obtained through appropriate and normal gambling activity."

But old Nevada habits die hard.

"The chip represents payment," said Larry Grossman, a gaming industry commentator and former gambling talk-show host in Las Vegas. "Why does it really matter where it came from as long as it's legitimate? I think the onus should be on the casino to prove that something's wrong than for the person to prove it's theirs. I don't think that's anybody's business but the individual and the IRS."

Decades ago, casinos were more likely to cash chips without asking too many questions because fewer high-limit chips were in circulation, said David Schwartz, director of UNLV's Gaming Studies Research Center. "It was a much smaller industry, and there were fewer big gamblers to keep track of."

Casinos commonly accepted piles of chips from shopkeepers as well as chips from other gambling halls. Casinos now have tighter policies on chips that differ by property.

Generally, casinos allow employees to redeem chips they receive as tips as well as chips from other casinos owned by the same company.

But casinos can seize chips if there's any whiff of suspicion about their origin. At MGM Grand, the state's largest casino, this happens maybe once out of thousands of transactions each month. The casino won't say which denominations will trigger an investigation, but it's clear they'll question the history of a $5,000 chip.

In some cases, regulators have stepped in on customers' behalf to order that chips be cashed.

In defense of one high-stakes gambler, state gaming regulators said MGM Grand probably wouldn't have been able to prove that the man had gambled there even if he had. That's because players often choose to gamble without identifying themselves to casino bosses - preferring anonymity over the chance for comps and freebies by identifying themselves so the casinos can track and rate the level of their play.

And casinos don't rate poker players because they play against one another, not the house. So as high-value chips fly among them, the casino has no need to track the exchanges.

"Initially the burden of proof is on the person with the chip to show how he obtained it through legitimate means," said Jerry Markling, chief of the Gaming Control Board's enforcement division. But if the chip is seized and the customer complains to state regulators, the burden shifts to the casino to prove its case.

Dalla now is wondering what to do with several big-denomination chips he has accumulated over the years.

"Sports bettors and people who play high-limit poker games always carry around chips," he said. "They don't walk around with $10,000 or $15,000 in cash. This should raise a red flag in gamblers' minds. Be careful if you're in a poker room or sports book and someone wants to pay you in chips."

This problem may be moot 10 years from now, Schwartz said.

A few casinos are starting to embed chips with radio frequency identification tags. They're then given to specific gamblers so the casino can pinpoint casino profits and track play for the purpose of granting comps.

"It's going to be easier to track all kinds of transactions," Schwartz said.

And to tell if any of the chips have been to church.

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