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I first became aware of the lead issue last spring when I was alerted to the pending California lawsuit by the CEH on behalf of the cardroom dealers in that state. This is from GPI's prospectus:
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On or about August 25, 2006, the Company received a 60-day notice from the state of California Center for Environmental Health (“CEH”), stating that CEH intended to bring suit against the Company in California for alleged failure to provide a warning required under the California Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65” or the ‘Act”). We had previously learned that a number of operators of card rooms throughout California received similar 60-day notice letters from CEH alleging that the card room operators have failed to meet warning requirements contained in the Act. We have sold gaming chips to some of these card room operators. The Act requires, among other things, that businesses in California must provide a “clear and reasonable warning” if they expose persons to any chemical listed by the State of California as a carcinogen or reproductive toxicant, unless the business can demonstrate the exposure is below a “No Significant Risk Level” for that chemical. Failure to provide the warning can be enforced by the government or private citizens in an action for civil penalties and injunctive relief. In this case, the environmental group alleges that gaming chips contain lead and/or lead compounds above the California standards and that no warning was given by the card room operators to its employees or customers. We have received a demand from one of the card room operators to defend and indemnify it in this matter and expect that other card room operators who purchased such gaming chips from us during the past three years may ask us to defend and indemnify them in this matter. We have engaged outside counsel who is reviewing this matter and has initiated discussions with counsel for CEH. While the maximum amount of statutory penalties for failing to provide a required Proposition 65 warning are substantial, due to the preliminary nature of this matter, we are unable to determine whether this matter will have a material adverse effect on us or our business, operations or financial position.
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As a Chipco retailer, this is obviously something that could be advantageous to chip manufacturers (like Chipco) whose chips contain no lead at all. And believe me Chipco management is well aware of this issue and is following it closely. But at the same time, as an ex-chip dealer who still has tens of thousands of PaulSon chips in inventory and in my own personal collection a total recall would be a horrible thing.
Someone down below asked about the composition of other chips besides PaulSon. White lead powder is what some manufacturers use and have used to give the chip weight. However others have used brass flakes and other metals so not every composite chip contains lead. Chipco ceramic chips are NOT the only 100% lead free chips on the market.
But like Gene pointed out this was a reason that PaulSon moved their manufacturing to Mexico (although I'm sure lower employee wages and less government regulations also played a part). From what I've been told the lead issue and pending legislation is also why TR King closed it's doors for good.
So what will come of it... who knows? The California lawsuit has been pending since August of '06. News reports such as the Arizona ABC station one are fanning the flames. Forums like this and ChipTalk.net are bringing more awareness to the issue.
For now, just keep in mind that Chipco chips are 100% lead free so you can't go wrong with ordering yourself some of our great looking CC>CC custom Club chips personalized with your name, club number and the year you joined (how's that for a blatant, down-and-dirty, self promotional plug 
?!?!?!).
Dave
http://www.HomePokerChips.com
Cheques in the Mail, Inc.
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