The Chip Index

The Chip Index (TCI) provides a complete and extensive analysis of the evolution of prices and returns in the collectible casino chip market since 1996. The analysis is based on the compilation of comprehensive list of catalogue prices of more than 1,000 Las Vegas vintage casino chips.

TCI searches for chips of various denominations ($0.25, $1, $5 and $25) used between the years 1930s to 1960s in casinos of the city of Las Vegas. In total, TCI recorded 1,230 vintage casino chips. There exist however a significant heterogeneity across denominations. The $5 denomination alone accounts for almost 40% of the sample with 484 chips, followed by $25 denomination (26%) with 323 chips. By contrast, the least represented are $0.25 (13%) and $1 (21%) denominations with 160 and 263 chips, respectively.

TCI is updated as soon as there is a new release of the The Chip Rack.

Index points to slight increase in casino chips prices in 2019.

TCI ticked up to 2.60 percent in 2019. TCI is still below its historical maximum level, reached in 2009.

TCI is constructed to have the value of $100 invested in vintage casino chips at start of 1996 (red, righ-hand side). The implied nominal returns from each previous period (blue, left-hand side) provide the rate of return without adjusting for inflation.

TCI is about 862 in 2019, meaning that prices have been multiplied by more than 8 since 1996.

The evolution of TCI from 1996 to 2019

Casino chips have outperformed all other asset categories over the period 1996-2019.

The large difference in terms of performance between chips and traditionnal assets occurred in the early 2000s, where the chip price index rocketed while other indices increased in a steady manner. Interestingly, there is no evidence of strong correlation between this index and those on traditionnal assets.

Traditionnal assets are the following:

• U.S. 3-month Treasury bills
• U.S. 10-year government bonds
• S&P 500 equities including dividends
• Gold

TCI versus other assets from 1996 to 2019

Over the entire time frame, chips have realized a yearly average nominal return of 11.07%, or 8.67% in real terms (i.e., by correcting the nominal index values from inflation, using the U.S. consumer price index). These collectibles have enjoyed higher returns than any traditional assets, which record average nominal returns of 10.18% for stocks, 6.62% for gold, 5.49% for bonds, and 2.02% for T-bills.

Average nominal and real returns per annum for chips and different U.S. assets

The $5 denomination has reached its highest level in 2019.

Over the long-run, $5 and $25 chips appear to be the most attractive denominations from 1996 to 2019. The departure from other denominations occurred between 2004 and 2008, where both $5 and $25 indices known a boom period. The $25 index has appeared to decline in a steady manner since 2008, while $0.25 and $1 indices have been remained remarkably stable.

Sub-indices for $0.25, $1, $5 and $25 denominations from 1996 to 2019

To construct a collectible chip price index, we consult all The Chip Rack catalogues, the main source of reference for collectors of Nevada chips. The first catalogue considered for this analysis is the 4th edition that was published in 1997; the last one is the 20th edition that was published in June 2020. The latter catalogue contains almost 37,000 Nevada chips, including many varieties such as limited editions, oversized, promotional, roulette, or race and sports book. There was no catalogue in 2003, 2005, 2006, 2007, 2008, 2014, and 2017.

We search for chips of various denominations ($0.25, $1, $5 and $25) used between the years 1930s to 1960s in casinos of the city of Las Vegas. In total, we recorded 1,230 vintage casino chips. As mentioned above, there exists however a significant heterogeneity across denominations. For each chip, we keep track the evolution of its price, taking into account changes in classification numbers when necessary. We then apply the methodology developed in Arithmetic repeat sales price estimators (Shiller, 1991) to the collection of time series data.

TCI and its variants are freely available via the link below.

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