Paulson chips for PCF (1 Viewer)

[Mr Winberg]

Sorry but this just isn’t true...it implies size is the only aspect that matters.

“What’s the % chance that a visor would keep my hair dry in a thunderstorm if the size was large enough to fit my head...?”

Not only will a large enough one let water through...I might even be bald

It was only meant as a joke, but sure, I'll bite.

The difference is that in your example the word "enough" is defined as "enough to fit my head", which doesn't necessarily mean that it will keep your hair dry.

In the OP, I chose to interpret the word "enough" as "large enough that they will sell us chips". With that interpretation, the answer is 100%, because if it is less than 100%, then the order isn't large "enough" so it doesn't answer the question in the first place. I know, tremendously funny, amarite!?!

But hey, I'd like to repeat that I was just trolling. I was serious about the loophole, though, you should check it out! I'm never gonna tell a lie about something like that!

 

[allforcharity]

I didn't pick the 100,000,000 number out of a hat. Three years ago, GPIs posted net revenue was just under $90MM. 100 million chips might represent revenue equal to an entire year of operation (with a healthy 30-ish% gross profit margin). Would it piss off enough of their customers that they would go flocking to somebody else? I don't know. But if I could afford 100,000,000 chips, I'm not sure if chipping would really be my foremost hobby.

 

[GianThaMan]

I didn't pick the 100,000,000 number out of a hat. Three years ago, GPIs posted net revenue was just under $90MM. 100 million chips might represent revenue equal to an entire year of operation (with a healthy 30-ish% gross profit margin). Would it piss off enough of their customers that they would go flocking to somebody else? I don't know. But if I could afford 100,000,000 chips, I'm not sure if chipping would really be my foremost hobby.

Their market cap is $111 million.

 

[redeagle]

A million chips might get their attention, but just barely. And certainly not enough to change policy.

If it did get their attention for whatever reason, what price per chip would a casino pay? Not assuming they ask for a custom mold or anything. What was Paulson aftermarket pricing like back before they set their policy to "only casinos"?

 

[GianThaMan]

If it did get their attention for whatever reason, what price per chip would a casino pay? Not assuming they ask for a custom mold or anything. What was Paulson aftermarket pricing like back before they set their policy to "only casinos"?

$1.25-ish for 39mm and $1.50-ish for 43mm, with room for variance based on quantity, spot amount, and some other things. Never more than $2/chip for 39mm or 43mm though.

 

[grantc54]

But if I could afford 100,000,000 chips, I'm not sure if chipping would really be my foremost hobby.

Blasphemy!

 

[DZPoker]

It was only meant as a joke, but sure, I'll bite.

Oh...don’t get me wrong. So am I.

 

[allforcharity]

Blasphemy!

Hey! That's my line!

 

[BGinGA]

If it did get their attention for whatever reason, what price per chip would a casino pay? Not assuming they ask for a custom mold or anything.

Casinos pay roughly $1+ per chip. GPI makes the bulk of their income on repeat orders of non-chip items, like dice and cards, tables, felts, and other casino supplies which are expendable and replaced often.

What was Paulson aftermarket pricing like back before they set their policy to "only casinos"?

Top-tier mint chips from closed casinos sold for $1 to $1.50, with more scarce and/or desired chips selling for $2-3, up to as much as $5 to $7 per chip in quantity for higher denominations (PCA $500, Empress $1000, etc.). Home-market chips were in the $1 to $1.50 range.

GPI policy changes (restricting supply) and greatly increased demand caused aftermarket prices to soar.

 

[Windwalker]

The size of the order is irrelevant. That's the equivalent of a brute force hack. Strategy and finesse are key in situations where brute force will not work.

 

[JScott]

As a relative newbie, I say relative because i've been here a year and just realized what a "supporting member" is today haha, I have to ask, what's the big deal with Paulson? Is there some trade secret they have that can't be replicated? Do they have a patent? What's to stop someone from investing in the market and competing with them? Why the policy change? Was this a request from casinos?

What's to stop someone like me from setting up a company and competing with them? The clay/colour/quality things are a combination of science/tooling/materials, it can't be that tough to replicate. CPC makes good quality chips from what I've seen, what separates Paulson from them that can't be overcome?

GPI looks to have 90% of the market, which is well into monopoly territory, but if their Rev is under million, that's pretty small potatoes compared to other markets, not to mention the casino world.

 

[Windwalker]

As a relative newbie, I say relative because i've been here a year and just realized what a "supporting member" is today haha, I have to ask, what's the big deal with Paulson? Is there some trade secret they have that can't be replicated? Do they have a patent? What's to stop someone from investing in the market and competing with them? Why the policy change? Was this a request from casinos?

What's to stop someone like me from setting up a company and competing with them? The clay/colour/quality things are a combination of science/tooling/materials, it can't be that tough to replicate. CPC makes good quality chips from what I've seen, what separates Paulson from them that can't be overcome?

GPI looks to have 90% of the market, which is well into monopoly territory, but if their Rev is under million, that's pretty small potatoes compared to other markets, not to mention the casino world.

There's enough stuff on PCF about their trade secrets that you can read up. But there's another factor, when it comes to chippers like us.

You can spend enough money, hire the best horologists, buy the best tools, and update designs to make so much sense for the current market. You can even make a watch that looks exactly like a Panerai. But to a Panerai lover, its just not a Panerai.

Paulson isn't just about the years of processes and IP they've developed; its also about the brand. That intangible thing that triggers emotions, senses and love that exists across all consumer categories; like Supreme for hype beasts; Chanel or Celine for the fashion-forward female; Mansur Gavriel for the vegan; or Triumph or Indian for the motohead.

To your revenue / size question: Look at Wilson Sporting Goods, as an example. They have a 58% share of the football market; 61% share of the basketball market; 80% share of the baseball glove market. But they struggle to get over a billion dollars in revenue. That's because of three things:

First, large scale revenue is usually driven my repeat purchases and soft goods. Nike sells more (billions more) because their primary product are things that people wear, not things they use to play.

Second, the category doesn't lend itself to multiple purchases: for example, how many baseball gloves do you purchase in a lifetime? Now, compare that to the number of sneakers, hats, sweatpants and t-shirts.

Third, they build things that last; if Paulson chips died from play every few months, they might have more orders, but less business overall.

The category is for a high-quality, long-lasting product that is bought by a regulatory-controlled market with limited participants. That is the EXACT formula for a small-ish revenue business. (relatively speaking.)

 

[Coyote]

The size of the order is irrelevant. That's the equivalent of a brute force hack. Strategy and finesse are key in situations where brute force will not work.

Buy them out man!

 

[GianThaMan]

As a relative newbie, I say relative because i've been here a year and just realized what a "supporting member" is today haha, I have to ask, what's the big deal with Paulson? Is there some trade secret they have that can't be replicated? Do they have a patent? What's to stop someone from investing in the market and competing with them? Why the policy change? Was this a request from casinos?

What's to stop someone like me from setting up a company and competing with them? The clay/colour/quality things are a combination of science/tooling/materials, it can't be that tough to replicate. CPC makes good quality chips from what I've seen, what separates Paulson from them that can't be overcome?

GPI looks to have 90% of the market, which is well into monopoly territory, but if their Rev is under million, that's pretty small potatoes compared to other markets, not to mention the casino world.

Trade secrets. A shit-ton of trade secrets. It’s not only that, but the cost of getting a setup like Paulson’s is gonna be at least $10 million, and then you have to reach out and poach hundreds or thousands of casinos to make that money back, which would probably require you to offer lower prices than Paulson, and even they are usually only making $0.50/chip in profit. The policy change was mainly from pressure by casino associations and gaming commissions who wanted the chips to be secure and non-reproducable, which is also a big selling point to casinos.

CPC makes okay chips, but they’re severely lacking in the security department, which is important for casinos, and not to mention, their chip manufacturing process is much more labor intensive and manual than Paulson’s so they make much less per chip than Paulson does. Again, to make a setup that rivals Paulson, it would cost them Millions of dollars that they don’t have.

GPI’s revenue is about $90 million a year based on the last public resource I could find, and the only thing they really have a monopoly in is Clay chips, which is a fraction of that number.

There’s a lot more nuance in this than I stated here, but the gist is, Paulson won’t be replicated until a dumb Billionaire becomes a chipping addict, and even then, they’d probably just buy Angel/GPI instead.

 

[JScott]

And you guys answered my question.

@Windwalker as a watch guy I get it, I guess I’m lucky I don’t care about the brand as much when it comes to chips. I just like it when they look good.

i guess in the watch world, I’d gladly rock an oris as much as a panerai, but I do love me the PAM1312.

 

[redeagle]

There’s a lot more nuance in this than I stated here, but the gist is, Paulson won’t be replicated until a dumb Billionaire becomes a chipping addict, and even then, they’d probably just buy Angel/GPI instead.

Next group buy idea? I’m in for a few hundred shares.

Thank you all for very interesting and informative responses.

 

[allforcharity]

Many people have thought that making chips is easy. Almost all have failed when they try.

Why are most manufacturers sticking with ceramics and plastics, and not competing in the clay market? You can intuit the answer.

 

[JScott]

Many people have thought that making chips is easy. Almost all have failed when they try.

Why are most manufacturers sticking with ceramics and plastics, and not competing in the clay market? You can intuit the answer.

To be fair I never thought it was easy.

I’m nowhere near sophisticated enough to tell the difference between all of the molds, but as I noticed the day I met you and played with the chips, there are some I loved, and others I didn’t. A lot of it was preference.

 

[BGinGA]

There's enough stuff on PCF about their trade secrets that you can read up. But there's another factor, when it comes to chippers like us.

You can spend enough money, hire the best horologists, buy the best tools, and update designs to make so much sense for the current market. You can even make a watch that looks exactly like a Panerai. But to a Panerai lover, its just not a Panerai.

Paulson isn't just about the years of processes and IP they've developed; its also about the brand. That intangible thing that triggers emotions, senses and love that exists across all consumer categories; like Supreme for hype beasts; Chanel or Celine for the fashion-forward female; Mansur Gavriel for the vegan; or Triumph or Indian for the motohead.

Maybe so.... but give me a decent mold chip that looks, smells, feels, weighs, wears, and plays like a Paulson with all the same options for $1 each and I'll buy tens of thousands, brand name be damned.

And I'll store 'em on shelves next to the Holy Grail in the Unicorn stables guarded by leprechauns in my private domed crater on Mars. 'Cuz that ain't happening, either.

But point being, I have no loyalty, innate fondness, or emotional attachment for GPI/Paulson, only towards the small works of functional art that they create.

 

[gmunny]

Well don't tell anyone, but I heard there may be a Paulson GB next April 1. Check back then.

 

[CrazyEddie]

In fact, Paulson chips have had plenty of competition through the ages, and still do! Many of those competitors have since been bought out via GPI, but by no means all of them. Abbiati, Matsui, and Sun-Fly all sell chips to casinos quite successfully. But they aren't clay chips.

Clay chips have evolved from the very early days of poker chips, making small changes and improvements over the years, but are still fundamentally made the same way they always have been. Clay chips were the first chips to be mass produced and widely distributed, supplanting ivory, bone, and wood. They became the chip of choice for early casinos and card rooms, and then as well for the post-war Vegas casino boom. The home market moved away from clay chips into injection-molded plastic, but the casino market stayed with the much higher-quality clay chips.

There used to be multiple manufacturers of clay chips, but over time they went out of business or were merged into GPI. Now the only two left are GPI and CPC, with CPC being a small operation that mainly sells to the home market.

Could someone start up a new business making clay chips? Sure! But there would be substantial start-up costs, and fierce competition. On the casino side, GPI is a 10,000 pound gorilla; good luck competing. On the home side, CPC probably has a commanding lead in what is a very small market. Both of them have already long since paid off their capital costs - specialized equipment, research and development, and business relationships. That's a big barrier for a new entrant to overcome.

But new entrants are by no means impossible! CPC was itself a new entrant just a few years ago; they were able to fill an empty niche (the home market) and were able to purchase all of their assets (equipment, R&D, etc) from a previous player that had gone out of business. BCC had a somewhat similar story, being a new startup and making a fair go of it before getting bought out by GPI. Even Paulson started as a competitor to Burt Co, and eventually became a collossal success.

Likewise, Bud Jones started as a competitor to Paulson - except instead of making clay chips the same old way, they made a completely different kind of chip (high-quality injection-molded plastic) and successfully marketed it to casinos. Later Chipco likewise came up with a completely different kind of chip (ceramics) and was quite successful in the casino market, at least for a while. And in the past few years, other companies have stepped in to provide yet a different kind of chip (china clays) to the home market, and have done quite well. So it's entirely doable, and has been done!

But a new company making clays - not plastics, not ceramics, not china clays - will have unique challenges to overcome. The compression molding process used for clays is labor-intensive, the equipment is expensive, and the processes are not well-documented, all relative to the commodity business that injection molding has become. But the materials used and the processes involved produce a chip with characteristics that are very desirable - mostly regarding the way they feel, sound, and handle, but also their unique visual character - and which have yet to be adequately replicated using injection molding. That's why clays from Paulson, CPC, BCC, ASM, TR King, etc are so highly valued and appreciated by the folks here on PCF, and why you're unlikely to see anyone else making anything quite like them anytime soon.

 

[BGinGA]

There used to be multiple manufacturers of clay chips

Just six distinct variations:

• TR King (closed)
• Paulson (now a GPI brand)
• Hispania (closed -- equipment later owned by Nevada Jacks, Palm Gaming, and ABC, but never used)
• Blue Chip Co. (now a GPI brand)
• Matsui (no longer makes clay chips)
• Classic Poker Chips (equipment formerly used to produce chips by Portland Billiard Ball/Burt Co., US Playing Card, Chipco, Atlantic Standard Molding, and American Standard Molding)

 

[JMC9389]

Just six distinct variations:

• TR King (closed)
• Paulson (now a GPI brand)
• Hispania (closed -- equipment later owned by Nevada Jacks, Palm Gaming, and ABC, but never used)
• Blue Chip Co. (now a GPI brand that will never see the light of day because GPI are a bunch of poo poo heads that won't let the home market have any fun)
• Matsui (no longer makes clay chips)
• Classic Poker Chips (equipment formerly used to produce chips by Portland Billiard Ball/Burt Co., US Playing Card, Chipco, Atlantic Standard Molding, and American Standard Molding)

FYP

 

[BGinGA]

• Blue Chip Co. (now a GPI brand that will never see the light of day because GPI are a bunch of poo poo heads that won't let the home market have any fun)

FYP

GPI currently markets and sells Blue Chip brand chips (produced on the 'Flower' mold, formerly known as BCC's 'Sun' mold) to customers as a lower-cost alternative for low-denomination cash checks and no-value chips, with very limited choices regarding color pallette, spot patterns, inlay/hot-stamp options, and security features. They certainly do see the light of day, although not (intentionally) seen in the hands of home market users.

 

[CrazyEddie]

Interestingly, as of 1921, the US Census determined that there were "nine establishments" engaged in the industry of manufacturing composition poker chips (the forerunner of what we now think of as clay chips):

From our own historical records, we know of the Portland Billiard Ball Company and USPCC existing around that time. I wonder what the other establishments were, and whether they ended up getting acquired by USPCC - or perhaps the census didn't distinguish between manufacturers and distributors/resellers.

Also interestingly, button manufacturers also sometimes made poker chips:

Source: https://www.google.com/books/editio...on+poker+chips&pg=RA5-PA8&printsec=frontcover

 

[BGinGA]

From our own historical records, we know of the Portland Billiard Ball Company and USPCC existing around that time. I wonder what the other establishments were, and whether they ended up getting acquired by USPCC - or perhaps the census didn't distinguish between manufacturers and distributors/resellers.

There was a link recently posted on PCF to an online PDF document that identified several material types (along with inventor/company), some used for early 20th century poker chips (and garment buttons, among other things) -- I thought either you or @Jeff in Iowa posted it.

Most were different variants and precursors to what we'd categorize today as "plastic" (nylon, polyester, etc.), but not similar to compression-clay material. Different manufacturing methods were also detailed, including thermoplastic, thermosetting, injection-molding, and compression-molding. Worth finding for your archive collection if you didn't post it.

 

[JScott]

I think some of you are undervaluing the role technology will play in this game in the coming years. Trade secrets, equipment costs may not be barriers in 5-10 years. I mean, hearing the history of CPC, their quality could surpass a larger company like Paulson if they are in fact only in their early years.

Technology is a great equalizer though. I mean, I never thought I'd be 3D printing parts in my garage for a drone that's going to be doing mineral exploration in Chile or meeting with my board of directors in VR... but here we are.

 

[BGinGA]

I think some of you are undervaluing the role technology will play in this game in the coming years. Trade secrets, equipment costs may not be barriers in 5-10 years.

CPC has been around -- in one iteration or another -- since the early 1900s, making essentially the same chips since 1945 or so. Paul-Son started making chips in 1975.

Neither company's processes have significantly changed since inception, and I don't see technology changing anything anytime soon..... like in the next 45-75 years. It's not like there haven't been any tech advances since WWII, or even since 1975. They just don't apply.

 

[Brookston]

GPI currently markets and sells Blue Chip brand chips (produced on the 'Flower' mold, formerly known as BCC's 'Sun' mold) to customers as a lower-cost alternative for low-denomination cash checks and no-value chips, with very limited choices regarding color pallette, spot patterns, inlay/hot-stamp options, and security features. They certainly do see the light of day, although not (intentionally) seen in the hands of home market users.

Neat. I had no idea this was true. Any links to this, I can't find any info on the GPI site. Or is this something you'd have to talk to a sales rep about?

 

[JScott]

and I don't see technology changing anything anytime soon.....

While I'm well aware that you've forgotten more about poker chips than I'll ever know... that's something I'd bet against.

Billion dollar industries and entire economies have gone under due to advances in technology, and it happens in a lot less than 45 years. That said, @Windwalker made a great point about the fact they're not consumables, so I can see that, and the fact it's an extremely niche market, delaying progress. But the tech will come in the next few years to either replicate the process, or create a similar quality chip.