Cancelled casino chips information page - a very informative article about the life of a casino chip.

Drilled Casino Chips Over Stamped Casino Chips Notched Casino Chips
Drilled Casino Chip - Over Stamped Casino Chip - Notched Casino Chip

Drilling chips is a way of canceling them, but not always just to make key chains for the hotel's gift shops. Sometimes they were just given away to management/staff/special players too. This was also done to insure that an obsolete, but not destroyed, chip could never be cashed. The best cancelled chips are drilled with a small hole in an inconspicuous place that does not mar the center insert or hot-stamp printing. At the other extreme, the worst drilled chips I've seen are from the Sierra Tahoe -- a big 3/8 inch bit right through the center of the chip!

Another type of cancellation to mention is OVER STAMPING. Paul-son uses a gold-foil sunburst pattern. There is a riverboat in Indiana whose name changed before opening. The set of chips made with the wrong name were sunburst cancelled then sold at Paul-son's retail store as souvenirs.

There is a ring pattern like the 25c Oliver's Castaways chip, and various other over stamps like the "ZAB" cancelled $1 Castaways chip. The Tahoe Plaza $5 chips that are overstamped with a $1 denomination.

Another type of cancellation is "erased" information. Some of the Mapes-Money Tree "Nonnegotiable" hot-stamped chips had the center of the hot stamp drilled off , but not all the way through - just the surface. They reused these chips as 10c chips in their low-limit crap game, to save some money instead of reordering chips!

One final type of alteration (not really a cancellation) is the stick-on patches like the $1 and $5 chips at the Valley Inn in Mesquite. A few of the Puerto Rican casinos "remanufactured" and altered some chips used there.

Notched Casino Chips
Casino Chip manufacturer's samples are most often cancelled by 3-4 notches - just like this Sands chip. However, older ones have been known to be cancelled by drilling too, on occasion. The common sense way to determine is that cancelled UNCIRCULATED chips are nearly always samples, whereas cancelled chips which show table wear were cancelled after play.

Chipco used a rectangular type of notching. Same effect, just that it's a square bit, instead of a round bit doing the notching.
This was written by Robert Pardue & Pete Rizzo