Chips are the currency of casinos and poker games around the world. Walk into any brick-and-mortar casino and you’ll see more than a few chips. Even the sound they make as they clink together is as timeless as the bright lights of the Vegas Strip.

There’s a lot of money in Vegas, but it all starts with those little round chips you see circulating the casino floor. So why do casinos use chips instead of cash? At first, you’d think it would be easier to deal with cold, hard cash. There would be no need to constantly cash in and cash out. The casino wouldn’t have to hire cashiers simply to exchange chips for cash. Things would run easier, wouldn’t they?

Well, casinos use chips for a few reasons, and it’s not just tradition. Let’s take a look.

1. Psychology

The primary reason casinos prefer chips over cash is because chips add a little mental separation between the gambler and his valuable money. It’s a little easier for you, the gambler, to place a big bet because it’s just chips. Logically, you know what those chips represent. But since it’s not actual cash in your hand, you feel slightly less inhibition towards taking bigger risks.

Basically, it’s a matter of psychology. You can also think about it like this. If you wanted to place a $500 bet on blackjack and all you had was cash, you would have to sit there and count out the currency. It might be twenty-five $20 bills or a small wad of fresh, crisp hundred dollar bills. It’s very real and it’s staring you in the face. It gives time for what you’re doing to really sink in.

But if you use chips, all you need to do is throw a single, purple chip down on the table. It doesn’t look like much. It’s just a single, lonely chip sitting there in the middle of a green felt sea. All it takes is a second and the money is gone.

2. Security

Chips provide casinos with an extra layer of security. Casinos control those chips and have a number of tricks they can use to discourage or foil those with criminal intent. A few years back, a man parked his motorcycle in the Bellagio’s valet area, ran inside with a gun and robbed a craps table for $1.5 million worth of chips.

The Bellagio noticed that a good portion of the thief’s ill-gotten gains consisted of $25,000 denomination chips. A few days later, the Bellagio announced to the world that it would soon discontinue all of its current $25,000 chips. Those chips would all become worthless after the deadline set by the casino.

This put the thief in the awkward position of having to cash in a lot of valuable chips in a short amount of time. He was later caught trying to sell his chips via the poker forums. The “buyer” reported the attempted sale to police and the bandit was later caught.

Some casinos also add RFID (radio frequency ID) chips to their chips. This allows them to keep track of their high denomination chips and easily detect frauds. If someone comes in with a bunch of clever counterfeits, those chips won’t authenticate and the casino won’t mistakenly cash out a bunch of fake chips.

If a bunch of RFID-enabled chips are stolen, the casino can determine (depending on the circumstances) exactly which chips went missing. The casino can then remove those individual chips from its inventory and render the stolen chips worthless. All the while, no other chips are affected.

3. Convenience

One reason casinos use chips is a simple matter of convenience. In fast moving games, it would be a nightmare to wait for players to fumble around with dollar bills for every single bet. Money gets bent, it doesn’t stack easy, it’s hard to track and it takes up a lot of space.

High stakes games would complicate these matters even further. Just imagine trying to play a game of $4,000/$8,000 fixed limit Holdem with a bunch of hundred dollar bills. It simply wouldn’t work. Chips make things easier for everyone.

4. Data

This last point applies specifically to casinos that use RFID-enabled chips. The vast majority of casinos haven’t gone full RFID on all their chips, but the industry seems to be slowly trending that way. Casinos that use 100% RFID-enable chips can collect vast amounts of data.

RFID chips allow casinos to catch dealer mistakes, to catch players who attempt to sneak in extra chips to the table after betting has closed, to track how chips move around the casino and more. Casinos can use this information to streamline profits, track trends and avoid losing money to crooks.

One day, casinos may even use RFID chips to identify how skilled specific players are. Casinos could then use that information to determine appropriate comps for individual players. Or, they could figure out who the card counters are and encourage them to go play somewhere else.

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