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Cashless Is King

Gaming came late to cashless payments, but is full-speed ahead now. Here’s where things stand in 2022.

Cashless Is King

In almost every business and industry, cashless payments are the norm. For consumers, cashless is fast and easy. For businesses, it reduces the need to handle and replenish cash and also limits theft.

While cashless has been around for some adults’ lifetimes—Paypal was founded in 2000, Google Wallet in 2013, Apple Pay in 2014—gaming was a late adopter, held up by cautious states, regulators and banks. Boyd Gaming didn’t introduce cashless gaming until late 2020, in a pilot program at the Blue Chip Casino in Indiana. Penn National didn’t join in until a year later, introducing its mywallet at the Hollywood Casino in Columbus, Ohio. Nevada commissioners didn’t approve cashless gaming and digital payments at casinos until 2020; only in January did they agree that customers could register cashless wagering accounts remotely.

When Resorts World Las Vegas opened last June, it set a new, high bar for mobile technology. Visitors there can pay for everything—gambling, entertainment, lodging, the works—through its branded app, developed with Sightline Payments. At the time, Sightline co-founder Omer Sattar said, “We finally believe we’re on the cusp of deploying modern payment technologies across casinos, not just in Nevada but throughout the country.”

Catching Up with Consumers

In an overwhelmingly digital world, “it’s more important than ever to bring gaming operations in line with the needs of today’s consumers,” says Craig Lisbon, CEO of Las Vegas-based fintech company Flexia Payments.

The Flexia system “bridges open- and closed-loop systems” with an app that loads from the user’s bank account, moves funds in real time, displays account balances and accepts casino promotions.

Lisbon calls the process “simple and seamless, from player onboarding to funding through cash-out, and provides benefits beyond the core function of moving money between wallet and wagering accounts.”

The customizable platform provides seamless connectivity with financial networks and creates a digital trail that reduces the risk of money laundering and tax evasion.

The same digital profile “allows operators to better understand their players’ behaviors, spending habits and interests, on and off their properties,” so marketers can push “tailored in-app promotions.”

Payment apps must be quick, trouble-free—in the parlance, frictionless. As gaming opens up to cashless, the race will be to the swift.

“If one operator is giving me a convenient, intuitive, frictionless guest experience and the other isn’t, that has an impact,” says Victor Newsom, senior vice president of payment solutions for Everi Holdings. “It might not affect my loyalty behavior, but then again, it might. In competitive markets, you definitely want to be on the front end of that.”

Everi’s cashless solutions can be customized, says Newsom. “We have 700 different land-based casinos and they’re all highly configurable; you can deploy on your own mobile app or ask us to build one. All our wallet services are available without any specific hardware requirements; it’s all software-driven. We don’t ask you to change your business to support our product—our product supports your business.”

For example, in December Everi introduced its CashClub Wallet at the WinStar Casino in Oklahoma and also at casinos operated by the Seminole Tribe of Florida (under the WildCard Wallet brand).

Beyond ease of use, the goal of cashless is to “reduce overhead, provide better reporting and data, and simplify reconciliation of all of these things,” Newsom says.

Some banks still decline to process digital transactions related to gambling, “but the good news is it’s fewer and fewer banks,” says Leighton Webb, PayNearMe’s vice president of iGaming and sports betting. “The number of tender types that support gaming as a category continues to grow and improve from an acceptance rate standpoint.”

The PayNearMe platform facilitates cash, debit, credit and ACH payments, and neutralizes the obstacles thrown up by some financial institutions.

Say a gambler tries to link to a Bank of America debit card. PayNearMe knows BOA won’t process that transaction. “So we can quickly redirect you and suggest a payment type we know is going to be successful,” says Webb. The solution takes what could be a bottleneck and turns it into an opportunity for engagement. “If people get declined and don’t know why, they drop off,” says Webb. “This solves the problem, and enables the operator to send out a message: ‘Hey, here’s a bonus for you to make a deposit.’ The payment experience is more than just processing the transaction. It’s a way to offer service.”

Playing It Safe

“Cashless payments reduce overhead, provide better reporting and data, and simplify reconciliation of all of these things.” —Victor Newsom, senior vice president of payment solutions, Everi Holdings

Some consumers aren’t convinced that security is airtight in the mobile payment space. Everyone is aware of credit card breaches like the 2019 cyberattack that hijacked the personal information of some 100 million Capital One card users.

Chris Justice, president of Global Payments Gaming Solutions, says his company’s VIP Mobility app “addresses many of the perceived weaknesses of cashless gaming to create a safe experience for patrons.”

The app lets players load money from a number of sources, then buy chips or slot credit by scanning a QR code with a mobile device. VIP Mobility offers “hardened bank-grade security to casinos’ complex gaming environments to provide patrons with a secure payment experience from funding through cash-out,” Justice says. Its VIP Shield feature enhances compliance by replacing manual processes with electronic reporting.

The app also heightens loyalty. In October, the company joined with Engaged Nation to lead its “digital nurturing strategy for patrons.”

Engaged Nation (with the clever tag: “Recruit & Retain vs. Catch & Release”) will design, build and manage electronic messaging, taking a digital approach to improving the UX for VIP Preferred members.

“Operators can create a branded website that offers patrons daily chances to win entries in cash drawings and enter contests through our Member Rewards Center,” Justice notes. “The program has revolutionized the industry by creating a way for casino operators to build patron loyalty in ways that are not possible with traditional methods of gaming.”

In response to concerns about problem gambling, VIP Mobility “provides additional layers of consumer protection … and the latest advancements in responsible gaming, including configurable spending limits, pre-set cooling-off periods and self-exclusion options.”

In some cases, convenience—the frictionless quality of these transactions—increases utilization. “It’s human nature,” says Everi’s Newsom, “but for most people, the question is, ‘How do I stick to a budget?’ We provide platforms for information-sharing, giving you easy access to all your transactions. More importantly, we’re providing controls that enable you to enjoy this activity safely.

“The operators love it because it’s not a restriction of their revenue potential. The regulators love it because you’re putting both information and control tools in the hands of their constituents, the consumers.”

Cashing Out

More and more, cash is giving way to cashless, and cashless to contactless. According to a 2019 report from the Federal Reserve Bank, “Given the fixed costs associated with accepting cash, it may be simpler and even more cost-effective for some businesses to not accept cash at all.” UK Finance reports that in 2020, cash payments dropped 35 percent, with 13.7 million Brits leading a “cashless life,” almost double the 7.4 million in 2019.

Countries including Sweden and India are already moving toward cash-free economies, and in 2021, Bloomberg reported on China’s plan for digital-only currency. “Citizens have gotten used to the idea Big Brother is listening in on phone calls, watching them on camera and monitoring social media,” the report stated. “Now, the state will be inside their wallets, too.”

For people everywhere, digital surveillance may be the price we pay for increased convenience and choice. And for now, we can continue to use cash.

“It’s a mistake to think about it in terms of one or the other,” says PayNearMe’s Leighton Webb. “Cash and cashless aren’t mutually exclusive. They actually go hand in hand to offer maximum choice. Work still needs to be done, but we’ve made great strides as an industry bringing that together, bridging the online and offline worlds.”

Lisbon adds, “Properties that embrace and implement a cashless environment will gain a competitive advantage.”

Newsom says his philosophy is “No customer segment left behind.”

“Across our customer base, 40 percent of a customer’s journey may still involve cash. So of the $40 billionish that went to the floor last year, let’s say 65 percent was cash from an ATM. That $28 billion may shrink as we go more digital, but a lot of people just like having some dollars in their pocket. The winning platforms don’t restrict choice.”

We’ll give the last word to the policymakers. Earlier this year, when the Nevada Gaming Commission voted to let people remotely create and fund cashless wagering accounts, Commissioner Ogonna Brown said she was less concerned about convenience than “safeguards and protections.”

Commissioner Ben Kieckhefer could have been speaking for the industry when he called the change “very consumer-facing” and a way to bring gaming into the 21st century.

In-person registrations “may not feel like a burden, but I think to consumers it can,” he said. “And that’s more time they have to spend not having fun.”


The Bucks Stop Here

Ryan Reddy, IGT SVP Global PM VLT, Systems, Payments & Poker

GGB: For casino patrons, the advantages of cashless are plain: no need to lug money around or stop playing to tap the ATM. But there may be disadvantages: less privacy, more exposure to fraud, more temptation to overspend. How do you boost the benefits while managing the drawbacks?

Reddy: In addition to added choice and convenience, IGT’s Resort Wallet and IGTPay afford players a range of security and safety-enhancing features. By eliminating the need to carry cash, players could be less susceptible to theft or robbery. Funds are held in a PIN-protected digital account, eliminating the possibility of losing winnings on account of a misplaced or damaged TITO ticket.

A player’s virtual wallet sits within a PIN-protected account on a smart phone mobile app, which has proven, embedded controls including face and fingerprint biometrics and multiple password controls. And patrons can’t create an account without meeting rigid verification of identification requirements.

IGT’s cashless solutions include embedded responsible gaming controls like daily deposit limits, maximum limits for their Resort Wallet balance and a module that alerts players based upon individual budgeting thresholds.

Do you customize these solutions?

Yes, IGT’s cashless solution is scalable and customizable to meet our customers’ unique goals and regulatory considerations. It can be deployed as “carded cashless,” “cardless cashless,” or “cardless with external funding.” Each option enhances players’ flexibility and convenience, reduces reliance on cash handling and provides added security. We also customize the payment offerings based on operator preferences. This commitment to flexibility has inspired some of our strategic partnerships with companies such as Sightline Payments and MarkerTrax. Our goal is to maintain the most convenient cashless payment system possible for the operator and player.

Can you share the advantage of carded cashless/cardless cashless for players? Which seems to be the preferred solution?

As an industry, we’re in the early stages of player adoption, but operators are moving towards offering cardless cashless or both methods. With the proliferation of digital wallets such as Apple Pay, Google Pay, etc., we believe cardless transactions will become dominant over time.

Are we moving toward a totally cashless/cardless society?

We encourage operators to introduce cashless as a complementary option to their players. I don’t believe cash is going away any time soon. But over time, I believe the value and convenience of cashless will make it the preferred option for players.

What innovations are on the horizon?

We’re focusing on the user experience related to deposits, withdrawals and extending liquidity, making meaningful progress toward integrating Resort Wallet and IGTPay with other point-of-sale systems so patrons can move more freely through a resort with the option for cashless transactions. We’ll soon go live with a new funding method powered by MarkerTrax that will allow slot players to access a personal line of credit in addition to the other funding methods that are currently available.


Wake Up & Smell the Coffee

The gold standard in payment apps may be the one created by Starbucks. The coffee chain got it right with an app that’s simple, smart and sticky.

When customers transfer funds to a Starbucks account, the money goes from an open-loop to a closed-loop system. “That might seem like nothing, but it’s everything—it’s the whole thing our industry doesn’t get,” says Earle Hall (l.), whose cloud-based AXES Information Management System (AIMS) performs marketing, security and reporting functions for gaming operations.

In this case, funds are reserved for a cup of Joe, maybe a cruller, and don’t funnel back to a third-party holder. To keep patrons engaged and caffeinated, Starbucks issues rewards points (stars, naturally). Accumulate enough stars, and you may get a free drink. The app also serves up enticing offers: to collect more stars, try the Iced Pistachio Latte.

“It’s the perfect example,” says Hall, vice chairman of the International Gaming Standards Association. “You transfer money from the open-loop system and put it on deposit with Starbucks. That’s why Starbucks is becoming as profitable as any casino on the Strip.”

Ticket-in-ticket-out (TITO), an early cashless innovation from the 1990s, was a “half-step,” Hall says. “TITO got rid of the coin hoppers and all the operational inefficiencies, but it didn’t create a defense against money laundering. It actually may have accelerated it, because instead of coming in with 600 pounds of quarters, all you’ve got to do now is come in with 600 $20 bills, accumulate 10 or 15 TITO tickets, and cash them out. You’re still anonymous.

“In 2022, we’re still doing ‘theoretical’ responsible gaming. And the only time you close the barn door is when the horse has been stolen.”

In the race to cashless, open-loop providers “are trying to grab all the markets,” touting systems that do little more than transfer cash, Hall says. Closed-loop systems, on the other hand, can “personalize marketing programs to each individual and reward them for their loyalty, quantitatively track and detect addictive gambling, and detect money laundering, so we can turn the gaming industry into the most safe, fun, legitimate entertainment industry on the planet.”

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