The phrase that pays has gotten a raise.
Know Thy Customer no longer simply describes the small business edge gained by additional hustle. It has become the lifeblood, data sustenance and policy handbook for gaming’s multibillion-dollar industry. Grasping this dynamic, now spread across several areas, significantly impacts operators.
Data reveals customer habits, marketing addresses them, mobile apps greet younger players and security innovation connects them all. Each sector is prominent for casinos viewing razor-thin margins and cutthroat competition. They can’t over-comp or under-perform. And what they interpret must be implemented at the figurative speed of light.
A looming wild card further raises the stakes. Gaming has become increasingly subject to Bank Secrecy Act requirements and enforcement efforts in the last 10 years. The BSA requires institutions to report information to the Financial Criminal Enforcement Network about their customers’ transactions, primarily the source of funds. Gaming properties must thus also Know Thy Regulator.
Knowledge has thus become more than power in the gaming business. It’s the Bible.
Enter the innovators, who direct them to chapter and verse.
Operators need a deep grasp of customer trends, according to Joe Pappano, senior vice president and managing director for Vantiv Entertainment Solutions. The company was formed in 2013 as a subsidiary of Cincinnati, Ohio-based Vantiv Inc. Its specialties include payment processing, security and fraud, data and analytics and cashless gaming. Vantiv Entertainment’s gaming contribution emerges through the payment-solutions, security and data-analytics realm. It also has a partnership with Sightline Payments.
“The industry has evolved from this concept of knowing your customer to now understanding your customer,” he indicates. “What is driving this evolution is payments. When you introduce payments into the gaming ecosystem—which Sightline Payments and Vantiv Entertainment Solutions have done through innovation—you bring a different lens through the convergence of gaming and non-gaming activity. Because a large portion of a casino’s revenue can be driven by non-gaming activity, it’s never been more important to truly know who your customers are. By having access to the payments data, it allows operators to enrich the customer/player persona by establishing a DNA through buying behavior, spending habits, affluence and what their preferences are.”
How do you drill that down?
“The convergence of all the disparate technologies, or points of interaction within a casino or resort, is also driving this notion of understanding your customer,” Pappano says. “From a social site to a self-service kiosk, to interactions at a retail facility—we are working to bring those technologies together to provide an understanding of who the customer is. Vantiv is the nucleus of payments innovation and embedding/enabling disparate technologies that are being consumed within a casino. We can create an output that is meaningful and extends the breadth and depth of casino’s knowledge of a player—something they have never been able to do before. With that knowledge, casinos can better optimize and grow their revenue base.”
Pappano says the industry knows what consumers do before and after entering the casino because of advancements like data science. The concept is tied in with Vantiv iQ, which touts several benefits to business. The user-friendly interface allows quick access to transaction data while analytics and reporting drive efficiencies to help customers view snapshots of processing and payment history.
This category includes key historical reports containing information related to reconciliation, interchange management, fees, possible fraud, exception handling, etc. Vantiv iQ customizes data and provides proactive notifications that help customers monitor their business with alerts including chargebacks, statements and reports. Actionable insights are available at the click of a button.
“Data science deciphers a customer’s total spend by category,” Pappano says. “This leads to smarter decisions about who to partner with in a business or co-marketing sense, whether online or in a brick-and-mortar setting. There are also geo-spatial opportunities. You can know exactly where, in a given area, a consumer is most likely to transact. This information can be incredibly valuable in terms of determining shuttle bus placements, outdoor advertising and, potentially, additional locations to target for expansion.
“Now, we can truly create a single view of the customer where the casino and entertainment industries have traditionally had an abbreviated version. Being able to take data points, provide them in a meaningful manner and supply a user interface that is seamless across platforms… That becomes a powerful tool that can empower any business.”
Pappano notes that customers have a discretionary income which they partly spend on entertainment. This spend equates to 8 percent to 10 percent of their total income, he says.
“By having access to payment data, we have a different look and feel of their behaviors when it comes to their entertainment spend,” he asserts. “From an operator’s perspective and with respect to their spend, we know that the cost to acquire players has never been higher. By tailoring offers that resonate with their targets, we can help reduce that cost.”
Security has always been the flip side of gaming’s fast-paced innovation. Pappano told GGB last year that chip technology would improve brick-and-mortar security to the point where hackers would be driven toward the online space. He indicates that the online realm plans to enhance its safety when MasterCard pilots facial recognition for an online transaction this fall. Pappano says this unprecedented step will tie back to the industry goal of a frictionless experience.
Finding Deep Understanding
Omer Sattar, the co-founder and executive vice president of strategic initiatives for Las Vegas-based Sightline Payments, believes knowing the art of knowing customers must eventually yield to predicting them.
“Gaming started out anonymous—casinos didn’t know their customers,” he says. “Then along came the loyalty card system, which meant that you could know something about your customer, like how long they sit at a slot machine or what type of slot machine they like to play. Loyalty programs started out very rudimentary, and it was a touch-and-feel ‘Know Your Customer’ environment. Eventually, systems became more electronified, and things were stuck in a phase of solely knowing the basics of players’ gaming habits for quite some time.
“Post-9/11 and the legislation that ensued, businesses were asked to better know their customer—legally they have to know names, addresses, phone numbers and more details about who they are doing business with.”
He notes that in the post-9/11 world, Nevada passed legislation around a unified wagering account. There used to be separate sectors for race and wagering accounts, interactive and brick-and-mortar accounts, he says. Those three have now been consolidated into a single wagering area with the stipulation that a provider of that account must “know their customer.”
“You must have a name, address, Social Security number—or a similar identifier—and know who this person is before allowing them to wager. From a Sightline perspective, we’re talking about knowing your customer and understanding your customer.”
Sattar believes the levels of understanding between casinos and their customers continually deepens.
“We continue to talk about the convergence of gaming—not only do we know who these people are and how they comply with financial and gaming regulations, but we know where they spend their money, how they spend their money, what time of day they spend their money,” he indicates.
“We’ve taken traditional casino loyalty, which started with a basic knowledge of their play, and complemented it with promotions where players like to dine, buy their coffee, where they like to shop and what kinds of foods they like to eat. We see ‘Knowing Your Customer’ as the baseline, but we believe ‘Understanding Your Customer’ as truly knowing what they like to do and then being able to cater offerings based on individual preferences.
Small Companies Tout Big Value
Kahlil Ashanti, founder of Vancouver-based SpendSight Technologies, hosted a conference along with Sattar at the Canadian Gaming Summit in Vancouver in June. It focused on player engagement in the digital age. The panel discussion entailed tools, trends and insights about understanding players without losing touch.
The conference underscored Ashanti’s belief that big industries can be outhustled by smaller ones that know their marketplace. He says it also provided validation for his SpendSight product, aimed at linking the quick-decision-making arm of a small outfit with the needs of a large company.
“We have a fully executed contract with a large North American gaming company with an anticipated rollout later in the year,” Ashanti says of his product, now in beta testing.
Ashanti’s company has a proprietary algorithm that allows its software to predict the behavior of players club members and their trends over time. It’s cloud-based, customized and capable of providing a glimpse of 40,000-50,000 players, he says. Ashanti believes companies like his help large ones make faster decisions in their far riskier worlds. Large gaming outfits not only must know their customers and competitors, but must ward off gaming cheats.
“The industry has a closed ecosystem; it needs to open a bit to provide the bridge to the future,” he says. “Casinos can be doing better about their approach to risk. Change cannot come without risk. They need software companies that can help them mitigate this risk (for instance, with security compliance capability incorporated into products).
“A palpable fear of so many legacy industries that die is that they did not know the customer,” Ashanti continues. “Look at Blockbuster, Barnes & Noble, Kodak, JC Penney, Radio Shack. Even Macy’s is closing stores. When I was a kid, they were the Microsoft of their day. The bottom line, though, is industries change. People come up with bold new products and approaches to them. Uber (which turned the taxi-driving business on its ear) asked for forgiveness rather than permission. Everybody lost their mind, but now we think first of taking Uber before selecting a cab.”
Taking ‘Umbrage’ to Fraud
There’s an irony in the area of security. It doesn’t generate revenue, and can be viewed as a necessary evil. Yet one can hardly spend too much on it: one major fraud event can affect balance sheets for years. BSA requirements also force periodic system upgrades.
The security requirements leverage the sophisticated tracking methods gaming operators already apply to their patrons, and reflect a tradeoff. Federal agencies want help determining the source of funds to prevent fraud and money laundering. In return, properties see more financial tributaries flow into the river of revenue.
Biometrica Systems, formed in 1998, helps the industry catch advantage players, cheats and thieves, according to its CEO Wyly Wade. The Las Vegas and Virginia-based outfit supports casino surveillance, security and compliance teams, state regulatory boards and commissions. Biometrica now has a database of 100 million names, according to Wade, and its products are most generally used in the facial-recognition realm.
The company’s relevance stems from federal requirements. Wade cites IRS rules requiring casinos with gross revenues exceeding $1 million to file suspicious activity reports and track aggregate transactions of more than $5,000 per day. This combats money laundering.
“The logic behind our products is threefold,” he says. “You can’t track $5,000 if you can’t track dollar one; you can’t monitor a suspicious pattern unless you realize there is one by tracking events; and you can’t know someone is who they say the are unless you can verify the background.”
UMBRA, the name of a product that will be released this summer, is the only private-sector, law enforcement-verified database, he says. It includes arrests, charges, cases and dispensation, along with photos and bio-graphical information. This helps casinos to better “Know Their Customer,” a requirement as a non-banking financial institution, Wade indicates.
“Think of UMBRA (it means the darkest part of a shadow, in Latin), as something like a Google for criminals. Basically, any authorized person on the system (say, someone in law enforcement, or security or surveillance personnel, for instance) can log on and look up ABC person immediately—just like when you Google someone,” he asserts. “The difference is, this is all law enforcement-verified criminal records; it’s not just everything and anything that’s out there on the internet. That can’t always be verified.”
Wade says this is not Big Brother watching clients. The idea is not mass surveillance, but merely to track verified criminals of all stripes, from thieves to drug and human traffickers, to money launderers to terrorists, to protect and secure people and assets.
Biometrica can help casinos in several ways, he says.
“We have several use cases, be it the investigator who is suspicious of an individual or the actions of that individual, between our desktop tools that work with your surveillance professionals to capture and compare in the video stream,” Wade indicates. “Or the security professional on the gaming floor using their mobile phone to determine if a person has been banned from the property using our mobile app. Or to be able to maintain chain-of-customer for an event at the pool to be able to hand over to law enforcement while being able to document it on the scene rather than going back to the security desk.”
UMBRA is one more tool casinos have to fortify their operations amid a sea of variables. The companies who service gaming have given it a clear blueprint. For customer identification, it is important. In the compliance realm, it is essential. Overall, those who prosper will be properties that take this information to another level.