Slabbing started with coins and then went on to other collectible items like baseball cards. For coins, slabbing served three purposes:
1) To protect the slabbed coin from the elements;
2) To authenticate the coin; and
3) To grade the coin.

All three of these features are needed to some degree by coin collectors. But, as most things do, things got out of hand. The slabbing companies and those who send coins in to be slabbed got greedy. They began to slab common coins in great condition to build an artificial market in high grade coins making them seemingly rare. And there were many other slabbing abuses and many collectors got burned.

Several years ago the slabbing companies made an attempt to break into the casino chip hobby. The reasons that coin collectors needed slabbing are not valid for casino chip collectors:
1) Casino chips do not deteriorate from exposure to the elements, other than direct light;
2) Counterfeit casino chips do exist, but are not a problem in the hobby; and
3) Grading casino chips is relatively easy and grade differences in casino chips do not effect value nearly as much as they do for coins.

But the slabbing companies persisted to try and break into the hobby and even took a table at one of the conventions. So chip collectors got smart and organized an effort to educate collectors about the downside of slabbing and were able to prevent slabbing from making any inroads into the hobby.