Can someone tell me what it means when a machine is said to be "chipped"?

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"People shouldn't be afraid of their government. A government should be afraid of its people."

It's when a mechanic for the machine company inserts a chip into the machine's motherboard to interfere with the normal payout. Once it's installed, the machine will payout far less than before.

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"I am in so far in blood, that sin will pluck on sin" - Richard III

That isn't the only thing that can happen with a chipped machine. One guy that worked for a major slot company in Vegas chipped several machines with chips he'd programmed with an algorythm he wrote that caused the machine to recognize a set betting pattern and make major payouts at a point in that pattern. He them gave the pattern to a few of his buddies and they split the jackpot winnings. He got busted, of course and the whole thing was uncovered. He didn't trust his buddies so he went with them and sat nearby while they played. Got spotted by the eye in the sky.