I suspect it's something your dealer did to make some Paul-son reject chips into home-game chips. I've never seen Paul-son go to this amount of trouble to cancel or convert a chip.

There are several collectors who have developed a very good system for machining away an inlay or the cancellations on an inlay of a Paul-son chip.

I've de-cancelled lot of Paul-son riverboat chips myself but just to the extent of removing the gold foil. The impression of the stamp still remains. It's a lot more work to get the impression off.