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Better Safe Than Sorry

Cashless payments have great promise as a deterrent to problem gambling, but could also exacerbate some issues

Better Safe Than Sorry

In 2008, researchers at the University of Arizona published a list of the 10 most germ-ridden workplaces. According to the study, teachers and day care workers have the dirtiest jobs, dealing day in and day out with rugrats and runny noses.

Perhaps surprisingly, the No. 2 spot is occupied by cashiers and bank tellers. That’s right—people who handle coins and bills have a germier job than garbage collectors and health care workers (two other professions that made the Top 10).

Kids and cash are rich sources of germs. But in most industries, dirty money has been supplanted by credit cards, e-wallets and other cashless payment options. The drive toward cash-free transactions has accelerated in the Covid-19 age, including in the once cash-dependent casino industry.

“Gaming is sort of the last stronghold of cash,” says Keith Whyte, executive director of the National Council on Problem Gambling (NCPG). “Our concern is that a lot of states and companies are rushing to expand cashless payments without really studying or even thinking about the potential downside”—i.e., whether cashless payments could increase the incidence of problem gambling.

Too Easy to Spend

To everyone who did their holiday shopping online, it seems obvious that payment solutions like PayPal, Apple Pay and Google Pay make it easier to spend—and possibly overspend. PayPal, for instance, requires a one-time setup, which links the payment solution to a bank account. Then it’s just a matter of pulling the trigger, again and again and again. While shoppers know there’s a reckoning ahead, somehow the ease of the transaction makes spending seem—well, irresistible.

Common sense suggests that, as cashless technologies become more commonplace and easier to use, they could heighten the risk of problem gambling. But there’s very little research to back up that assumption. In 2020, the International Gaming Institute (IGI) at the University of Nevada, Las Vegas launched the IGI Payments Collaborative to analyze the industry shift to cashless wagering.

“The Covid-19 pandemic made it all the more important to advance our efforts to provide customers with the payment choice they are more comfortable with and have increasingly come to expect in their daily lives.”
Bill Miller, President and CEO, American Gaming Association

The collaborative, along with payment technology and software providers Sightline Payments and Global Payments Gaming Solutions, have joined forces to provide “a scientific, data-driven foundation for policymakers and regulators to make sound decisions in the future.”

“Prior to Covid, there were a lot of concerns expressed about how cashless systems in the gaming environment would affect responsible gambling and/or problem gambling,” says Alan Feldman, distinguished fellow in Responsible Gaming at IGI. “I was one of those people expressing concern, and I think the concerns are very well-founded.

“But the reality is, there are very few facts or evidence that anyone can point to, so nothing can be proven out. At the Gaming Institute, it’s incumbent upon us to do something rather than wait for a jurisdiction to come to us and say, ‘Help us understand it.’”

To date, Feldman says, the vast majority of player-data research has been based on laboratory studies, in which researchers create computer-simulated games, stake a certain amount of faux cash to study participants, and then watch them as they play. Not exactly a real-world sample. A notable exception is a five-year Harvard Medical School study, funded by U.K.-based online gaming giant GVC, that was established in 2019. GVC turned over reams of actual player data for analysis from its sports betting, online gambling and poker operations to the school’s Division of Addiction. Sightline and Global Payments will do the same at IGI.

“You have to start with the basics,” says Feldman. “Who’s using these systems? How are they using them? How often are they using them? How much are they actually transacting? What’s the decline percentage? On a panel recently, one expert said that, of all ATM transactions in casinos, 50 percent are declined due to insufficient funds. Well, it took one phone call to determine that’s not even close.

“We need publishable data you can point to and say, ‘This is the reality,’” Feldman says. “Absent that, these conversations spin off into political speak, and that’s not a good way to create public policy.”

Omer Satter, one of the co-founders of Sightline, believes by working together, the cashless providers can advance the discussion.

“The rapid digital transformation happening in all verticals of gaming means more than ever that we must fully and comprehensively study, understand, and act upon what this changing world means for responsible and problem gaming,” he says. “The IGI at UNLV under Bo Bernhard and Alan Feldman is uniquely positioned to collaborate with industry towards this goal.”

From ‘At-Risk’ to Endangered?

The vast majority of American gamblers enjoy the pastime recreationally and responsibly. For the estimated 2 percent of players who have a problem, easier, quicker and so-called “frictionless” access to cash may be perilous.

“We need publishable data you can point to and say, ‘This is the reality.’ Absent that, these conversations spin off into political speak, and that’s not a good way to create public policy.”
Alan Feldman, Distinguished Fellow in Responsible Gaming, International Gaming Institute, University of Nevada, Las Vegas

“The menus and features that make cashless gambling exciting for consumers and lucrative for the industry are the very same features that can push gamblers into problems: removing barriers, easing the speed and size of transactions,” says Whyte. “It’s like substance abuse—eventually, it takes more and more to achieve that high. Though people may have underlying psychological problems, money is what fuels the addiction. With access to more money, they can use it much faster. That fuels the flame.”

In fact, Whyte says, readily available cash sources “shift at-risk gamblers into the problem-gambler category.”

The coronavirus outbreak has pointed up the potential dangers of using cash and increased the demand for cashless systems. Earlier this month, Nevada regulators approved the first carded cashless model for slot play in casinos, from industry giant IGT.

Bill Miller, president and CEO of the American Gaming Association, said last year that advancing digital payments was a top priority of the AGA.

“It aligns with gaming’s role as a modern, 21st century industry and bolsters our already rigorous regulatory and responsible gaming measures,” he said. “The Covid-19 pandemic made it all the more important to advance our efforts to provide customers with the payment choice they are more comfortable with and have increasingly come to expect in their daily lives.”

It’s a potential rush to implement these systems that concerns Whyte.

“When they remove the daily limit on debit transactions as well as the limit on number of transactions a day, you can swipe your card theoretically every five seconds. We’re now seeing innovations in what they call cashless markers, like applying for a credit. It’s given to you on a cellphone. It’s like writing a bad check. These are radical changes in gaming payments, but there is no study on the potential impact on problem gambling.”

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