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Bulging Wallets

Payment processing takes the next step with technological advances

Bulging Wallets

Wallets sport enriched cache.

Diversified and efficient, they aid gaming’s courtship with the electronic funds access world. The multibillion-dollar industry awaits a seismic shift from cash in real wallets to funding from digital, online and even cryptocurrency wallets.

Gaming officials cite reports indicating that only 12 percent of consumers, across many industries, prefer cash as their method of payment. While most businesses outside gaming have essentially gone cashless, casino patrons use a substantially higher number of cash transactions.

But change is coming. Younger demographics, combined with the mobile-app-driven legalized sports-betting world, provide a long-term upside for payment systems and their new wallets, often contained on smartphones.

It’s part of a larger, significant trend. Global payments are expected to reach $3 trillion annually by 2023 because people are switching from cash to digital payments.

This redefines the very meaning of wallet. The term has migrated light years from its original purpose of a folded leather devices in one’s pocket. It contains credit cards, driver’s licenses, pictures and perhaps the most obsolete component in all of regular commerce, money.

What about the modern “W” word?

Digital wallets for electronic transactions, online wallets to enable purchases from retailers and even cryptocurrency wallets, still ahead of their time in standardized gaming, are being utilized in non-gaming amenities.

Operators want to embrace and lead that trend. It’s a matter of time before the steady march toward cashless becomes a stampede.

While vendors celebrate the speed of transactions and patrons relish the organized, compartmentalized information, gaming seeks new venues to capitalize upon them.


At The Forefront

Joe Pappano, the senior vice president of U.S. gaming for financial giant Worldpay, laid the groundwork for this perfect storm in recent years. As an executive at Vantiv, he educated operators and financial institutions about enhanced safety in the electronic-transfer world. He enlightened them about encryption and chip technology, coaxing institutions to slowly relax their reservations about cash access on cards.

It was significant that Pappano represented a company that seamlessly handled billions of transactions in other industries. Vantiv later bought Worldpay and the new company processes 40 billion transactions annually worth about $1.7 trillion, through more than 300 payment options in 120 different currencies.

Earlier this year, Fidelity National Information Services (FIS) purchased Worldpay for about $35 billion. Amid that backdrop, Pappano has long viewed gaming as fertile ground for the cash-to-funds-access transition.

“A majority of wallets today are used in an online environment,” Pappano says. “The difference between global markets and the U.S. gaming market is that the primary proliferation and growth has been in online gaming. Over time, with wallets and related accounts, we’ll see greater usage and prevalence in skill-based games, and we are just now rolling out with more widespread sports betting.

“Security-wise, many of the same features and controls—geolocation and age verification, for example—will be attached to the wallet experience,” he adds. “What we will see for wallets is a unique identifier—like biometrics or facial recognition—as additional safety recognitions for funding and utilization.”

As security concerns abate, operators observe the transformative effect of the wallet world.

“The industry is looking at how wallets will be utilized, and there has certainly been a focus on the build-out of them,” Pappano indicates. “We ultimately want to create an omnichannel experience, which bridges together online gaming, sports betting and more. The best way to create that frictionless experience is an online wallet or online account.

“Some companies are looking at a single, proprietary account for a single operator, while others are looking at a Switzerland-like approach, which may be used by any operator,” he adds. “What’s helping drive the momentum is the American Gaming Association’s Payments Modernization initiative, dedicated to creating a cashless and integrated casino resort experience.”

All the innovations forge a prospering market. Projections indicate nearly 1 billion people will make a smartphone payment in 2019. Analysts used to talk about wallets being on tablets and home computers. The phone usage of the wallet compared to those devices has recently skyrocketed, giving casino wallets more clout.

“The smartphone will absolutely be the driver, and apps, across all mediums, are important,” Pappano asserts. “The wallet is embedded in a mobile application stemming from an operator. Within that app, there is ideally an ability to fund the wallet or use it as a form to move monies in and out of a wagering account and/or to an electronic gaming device.”

The 2018 repeal of the federal sports betting ban, which lifted the shackles off the betting world, brought wallets into a new, prosperous era. Legalized sports-betting proponents had forecast a brick-and-mortar paradise when they’d lobbied for it unsuccessfully over several decades. Their revenue projections were in the millions.

When legalization occurred, they had the under.

Officials could never have forecast the explosive growth of technology and online gaming, making each smartphone a hand-held sportsbook.

Mobile accounts for 80 percent of the betting in New Jersey, dwarfing initial sports-wagering revenue projections.

“It’s massive,” Pappano says with excitement. “If you think about it, there are apps already being utilized in sports betting and the landscape is only growing. We have 13 states that are live, and we have another 20 states in the queue. That’s 30-plus states that are live or have passed/pending legislation surrounding sports betting. That’s the linchpin that ties back to the sportsbook, state lottery and/or racetrack in many cases.

“For the states that have passed legislation, the mobile app and that form of an account/wallet is critical to move monies in and out and get folks back into the retail establishment.”


Digital Dynamite

Everi, an industry force in the financial technology, games and intelligence sectors, relishes the wallet movement.

“We have seen over the past 18 months an imperative for a digital transformation across the casino,” says Darren Simmons, executive vice president and fintech business leader at Everi. “The digital wallet is a key piece of this transformation, which is being driven by demand for self-service options from patrons, the convenience of accessing and managing funds via a smartphone, and consumer adoption that is already occurring in the retail space with the likes of Apple Wallet. In gaming, we see the pivot to cashless as having both revolutionary and evolutionary components.”

The digital wallet remains a nascent technology with only a few implementations, Simmons asserts, but the company believes serious penetration will occur within two to five years. Regulatory approval and operators’ ability to invest in new technology in order to introduce a digital wallet are two of the big obstacles.

Everi applied a gambler’s hunch several years back, devoting resources to where it expected a trend.

“The digital wallet for the casino space is a technology that we began exploring more than three years ago and continues to be a significant focus moving ahead, particularly in terms of research and development effort,” Simmons indicates. “Today, Everi is involved in programs of our CashClub Wallet at two large properties where we are tailoring our solution to these operators. They each have different operating goals and objectives.”

Simmons says Everi’s digital wallet shows operators how they can help their guests seamlessly move financial value across the gaming ecosystem. “We believe we will continue to see more operators adopt the technology, but it will require longer implementation cycles since it impacts the entire organization,” he maintains.

Everi has been excited about CashClubWallet, a fairly dramatic shift for operators in terms of enabling patrons to access cash. The interactive wallet consolidates payment options for guests, allowing them to store multiple payment methods, easily move funds in and out of the casino, and manage their spend limits in the context of responsible gaming.

“The digital wallet integrated into our Everi Compliance AML platform is also supported by more than 30 money-transmitter state licenses, which is a tremendous asset for Everi,” he says. “It gives us the ability to hold funds on account for payments and does not require guests to sign up for a prepaid card.”

This is an FDIC-insured account Everi holds through its money-transmitter licenses. Its fintech business is also connected to more than 840 casinos across the U.S. and Canada, which have been vetted and verified by both gaming and financial regulators.

“We are aiming to transform the guest experience through delivering an increasingly immersive entertainment experience that is free from the disruptive mechanisms of conventional payments, compliance, and loyalty, all enabled by this ‘digital neighborhood,’” Simmons indicates. “The addition of a loyalty marketing platform to our solutions set has enabled us to put forward yet another touch point for casino guests while helping operators maximize funds to their floors efficiently and responsibly.

“This loyalty platform will serve as the activity hub for all product touch points—games, financial technology solutions, and interactive. More specifically, we are exploring even more ways to integrate CashClub Wallet into this ‘digital neighborhood’ of solutions for operators.”

Designed to optimize security, functionality and efficiency of casino operations, the community of products is built on platforms enabling coordination across product lines, according to Simmons. This hub will help coordinate guest interactions across the full life cycle of their visit—from the time they step onto the property, enroll in a loyalty program, and access funding through game play and cash-out interactions—resulting in a seamless, premium guest experience.


Expanding the Playing Field

Regardless of the sector, industry giants IGT and Scientific Games will leverage their resources to become significant players.

That’s also true here.

IGT, renowned in the slot-machine production realm, also casts a shadow in the sectors that interact with that.

IGT signaled the importance of Resort Wallet at NIGA 2019 and continues to roll with its innovative mobile solution, used in conjunction with Cardless Connect to slice through lines in restaurants, reward centers and the gaming area. Both products are part of the IGT Advantage system.

A slick video presentation outlined the practical application of a phone that becomes a wallet.

“Wouldn’t you rather win than wait?” a voice inquires, demonstrating the vehicles by which “Bob Today” glides through the lines “Bob Yesterday” was stuck in. Today’s Bob purchased coffee, settled a bar tab, generated funds and activated play via his phone. He also cavorted between games and settled his accounts without entering a line.

Resort Wallet supports cashless payments internally across the enterprise and with other gaming apps, along with externally via third-party funding. The video illustrated why one would want to stay and play longer at a property.

The product communicates with third-party gaming apps to share wallets. It also works with third-party funding sources to enable players to use credit or debit cards to fund play in jurisdictions that allow it. Simple, secure payments can increase coin-in while staying compliant to local regulations.

Industry powerhouse Scientific Games addressed this market niche with Unified Wallet, unfurled to a couple of properties early in the year. The product will be tested, evaluated, tweaked and perhaps eventually rolled out to the mass market by the end of 2019. It is a software solution available for properties, which can help them customize offers and drive brand loyalty. Ultimately, it can be used for a spectrum of activity including social gaming, electronic games, sports betting, lottery, table games and retail purchases.

The Unified Wallet enables players to show the phone at a game site, deduct money from the wallet and join the action.

Company officials anticipate a surge in the cashless sector amid an array of outlets. They equate it to the TITO revolution dating back to 2000. If industry estimates of 25 percent ro 35 percent of casino patrons adopting cashless and cardless systems in the next year are accurate, this market niche will experience a windfall.

Ted Keenan, the Scientific Games vice president of product management, systems, was one of the first to point out another operator benefit, the hidden psychology of casino wallets. Leftover money from real wallets will be blended and spent with other cash.

Funds not used in a casino wallet will usually stay right there, ready to be re-deployed.

Given the numerous gaming touch points, from restaurants, spas and shows to the brick-and-mortar gaming floor and online wagering platform, wallets have never bulged with so much money. Even if they aren’t leather.

Casino Connection Sports Editor Dave Bontempo is an award-winning sports writer and broadcaster who calls boxing matches all over the world. He has covered the Philadelphia Flyers in the playoffs, as well as numerous PGA, LPGA and Seniors Golf Tour events, and co-hosted the Casino Connection television program with Publisher Roger Gros.