Most wear is caused by abrasion which causes the metal to slough off.
This coin was exposed to a type of wear that was like a million little hammers. The metal isn't missing it's just rearranged. Usually this is the result of going through counters and slot machines for a long time. The coin probably had a little light normal wear and then got caught up in a casino somewhere. The counting wheel damage came first and then it's had a little more normal wear for a few years.
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