Cashing in on POKER
Tuesday, December 05, 2006
By JONATHAN NELSON Columbian staff writer

Dan Dickau’s investment in his friend’s small company two years ago started with the simple toss of a plastic poker chip.

“What’s this?” the Vancouver native­ asked.

“It’s a prototype,” said Chase Schwatka.

It was also Schwatka’s business pitch to Dickau. The professional basketball player bit, investing an initial $5,000 to partner with Schwatka and start TheChipLab.com, an online company that sells customized poker chips.

Chase Schwatka, left, and Portland Trail Blazer Dan Dickau hope to cash in on the country’s poker craze with their new online business that sells personalized poker chips. (DAVE OLSON/The Columbian)

Almost two months old, the Web site lets customers use software to custom design their own casino-quality poker chips, which sell for $280 for 300 and $469 for 500.

Schwatka, 22, and Dickau, a 28-year-old member of the Portland Trail Blazers, are tapping into the nationwide poker phenomenon, fueled in part by cable networks that give viewers a steady diet of poker tournaments such as the World Series of Poker’s Main Event. This year in Las Vegas, 8,773 players each paid the $10,000 buy-in for the to! urnament. Organizers expect to see 12,000 players next year.

Raising the stakes

Poker players at casinos in Nevada and New Jersey spent $207.2 million in 2005, a 130.2 percent increase from 2002, according to the American Gaming Association’s 2006 survey of casino entertainment.

Eric Pozzo, chief operating officer and finance officer of CSI Digital in Sherwood, Ore., found Schwatka’s design-your-own poker chip idea intriguing enough to invest $60,000 in TheChipLab.com.

“I’m a serial entrepreneur,” Pozzo said. “My gamble, as an investor, is on Chase as much as anything.”

Pozzo met Schwatka last year at the University of Portland, where Pozzo was serving as the college’s entrepreneur in residence for the business school. Schwatka, now a senior at the college, had taken TheChipLab concept from a theoretical exercise for an academic competition at school into the real world.

Pozzo was so intrigued he became the company’s single largest inves! tor, a move he previously had never made despite years of working with University of Portland students.

Schwatka has brought in two more investors and to date has raised about $120,000, much of it spent on perfecting the computer software that allows TheChipLab customers to design their chips online. The site allows a buyer to select one of 17 chip templates and then customize it by adding photos, artwork, designs and wording. A chip manufacturer in Maine produces the final product.

Competing chip-design businesses largely rely on customers sending mock-ups back and forth. It’s a more cumbersome process.

In the first two weeks of operation, TheChipLab generated $3,000 in sales.

“Not great,” Schwatka said.

On Friday, the Web site had one day of orders worth $1,500.

Focus on marketing

Pozzo said with the software design complete, Schwatka’s focus is now on creating the right marketing mix to drive people to the company’s Web site. Schwatka wants the business to grow to the point where it can sustain a ! 30 percent profit margin.

How soon the company reaches that point will be critical. Schwatka leaves next summer for pilot training with the U.S. Air Force and wants a seamless transition to new business leadership.

“There is a sand dial that has been turned,” Pozzo said. “Most companies have time.”

Jonathan Nelson covers retail for The Columbian. He can be reached at 360-759-8013 or via e-mail at jonathan.nelson@columbian.com.