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Finnbar said:
How does it know its the game inside? or if its broken ect... couldnt you just scan and throw in an empty case?

The machine scans the disc first:

http://s669.photobucket.com/albums/vv59/jazzking2002/Game%20News/wallmrt%20trade%20games/SSPX0070.jpg

Then you need to scan the code bar of your case to get all the info about the game (price, year, rate, etc.)