For several years, cashless payment systems have been a staple of conversation in and around gaming, and have long been considered to be the next evolution of the user experience for both retail and online operators.
The majority of those discussions, however, have been just that—vague and speculative talks about what the technology will look like down the road, rather than the current reality for most companies and properties. But that’s not for lack of trying. Regulators and providers have collaborated on the topic for years; it’s just that the process of crafting and enforcing sensible and secure guidelines for any new technology takes time, especially for an industry that prides itself on doing things the right way, the first time.
Cashless providers may lament the fact that gaming has not caught up with most other retail industries with regards to payment processing, but they also recognize that the opportunity is there for those patient enough to see it come to fruition. This is especially true with the rapid expansion of all three pillars of the U.S. gaming industry—land-based casinos, mobile sports betting and iGaming.
Of course, the variation between states inevitably makes it difficult for large-scale adoption and implementation of cashless technologies, but by and large, it feels as though the general tone of the conversation has shifted from hesitant and cautious to willing and responsive. The last thing to do now is put pen to paper.
The Pandemic Giveth
The Covid-19 pandemic was, and in many ways still is, an inflection point for the gaming industry at large. The cratering and subsequent resurgence of revenues is a good indicator of this phenomenon, but for cashless companies, the sudden abhorrence of cash was an undeniable and unforeseen boost to the sector’s regulatory efforts, which were not necessarily gaining momentum before the spring of 2020.
For Omer Sattar, co-founder and co-CEO of Sightline Payments, the conversation around cashless and the belief in its adoption have been influenced by three key factors in recent years: 1) the Supreme Court’s 2018 ruling to strike down the Professional and Amateur Sports Protection Act (PASPA), which showed state officials that “the backbone of a successful online sports betting market was the ability for customers to deposit and withdraw money using digital payment methods;” 2) endorsement of cashless by leading organizations such as the American Gaming Association (AGA); and 3) “consumer trends away from cash due to and through the pandemic,” which greatly “accelerated regulator interest in cashless.”
Sattar notes that the latter changed regulators’ perception to the extent that they now “increasingly view cashless as inevitable, and as a result, we’ve worked closely with them to help educate them on payments and how to implement a safe and seamless customer experience.”
And of course, despite what operators may sometimes think, regulators are people too, and taking a cautious approach is inherently part of the job. One of the difficulties of cashless, however, is that it is fundamentally not a gaming-related technology, which in turn raises more red flags than other advancements.
In recent decades, Pennsylvania has emerged as one of the premier gaming markets in the U.S., and the Pennsylvania Gaming Control Board (PGCB) has had to work hard to stay abreast of all the moving pieces that must work in tandem to facilitate optimal cashless play.
“Without a doubt, Covid-19 accelerated the move toward cashless and contactless payment technology in the gaming industry as casinos reopened in July 2020 after a four-month closure,” the PGCB said in a joint statement to GGB.
“Casino operators were responding to customer demand to eliminate the need to handle cash and player rewards cards at slot machines, table games, ticket redemption machines and the cage. For a variety of reasons including health and safety concerns of patrons and employees and a huge shift toward digital payments everywhere from drive-through lanes to parking meters, we understood the importance of allowing cashless wagering as another option for patrons to fund their gaming experience.”
For younger patrons, cashless and contactless payments have become increasingly commonplace outside of gaming, and they’ve grown accustomed to the speed and convenience of the technology. Thus, as the board says, “we anticipate the adoption of cashless gaming will continue to grow.”
As we transition further away from the eye of the Covid storm, however, providers want to keep momentum going for as long as possible. Everi Holdings, due to its unique arsenal of offerings which includes cashless technologies as well as games, is well accustomed to regulatory dialogue, and similarly to Sightline, it has seen this relationship improve greatly in recent years.
According to Victor Newsom, senior vice president of product management, payment solutions for Everi, the process between the two sides has “gotten more collaborative,” and officials have become much more interested in “how these technologies can meet the needs of their constituents as well as remain compliant.”
That said, Newsom also cautions that “as the novelty of the pandemic and the crisis kind of fades, there’s a temptation to go back to business as usual and not finish what we started in some cases. While it was a galvanizing force, it’s not a long-term driver of change. I think it just got the ball rolling.”
As mentioned previously, cashless technologies represent a unique challenge for regulators due to their complex nature—there are more safeguards to put in place and more boxes to check than nearly any other gaming-related innovation that’s come to market in recent decades. While jurisdictions may vary in terms of their desires and expectations, they all must ensure that patrons are able to safely move their money from Point A to Point B and back again, and that licensees remain compliant with anti-money laundering (AML) guidelines, which have long been a staple of all commercial gaming markets.
“Ensuring that the solutions are compliant with federal AML laws remains a priority for all regulators,” explains Christopher Justice, president of Global Payments Gaming Solutions. “In particular, gaming institutions must comply with Title 31 of the Bank Secrecy Act or risk costly fines. The increase of cashless and mobile gaming has also increased awareness around fraud and security issues.”
To help combat these issues, providers such as Global Payments need to be as transparent as possible—Justice says that the company’s VIP Shield offering comes complete with a flurry of acronyms to help keep track of transactions, including “Multiple Transaction Log (MTL), Negotiable Instrument Log (NIL), Monetary Instrument Log (MIL) and chip log transactions, as well as Suspicious Activity Reporting (SAR).”
Even though physical cash has seemingly become embedded into the ethos of the land-based casino experience, the fact remains that cashless is miles better in terms of visibility and traceability. And for gaming to expand into new markets and be successful long-term, security will have to be top-of-mind for all involved.
“Payments are complicated,” says Sattar. “Consumers do not see this, but moving your money has a lot of steps involved. I like to say that customers have never cared and will never care about payments—they just expect it to work. But for a regulator, they need to know about the movement of funds and who controls them at any given stage in the process. And we’ve spent a lot of time educating them about that to help them get more comfortable with the process—and most importantly, understand that the process is safe and secure.”
In addition to the laundry list of protections that must be put in place on the operator’s side, regulators must also concern themselves with responsible gaming initiatives, as things like loss and deposit limits and exclusionary lists become more commonplace not just in the U.S., but around the world. Thankfully, today’s cashless providers understand these concerns, and have implemented the technologies necessary to promote responsible gaming like never before.
Per the PGCB, the ability to implement various limits “is key to responsible gaming.” The board says that with regard to cashless, it requires “self-limit tools that are very similar to what we have in iGaming,” in the sense that “patrons can set deposit and spending limits and track their spending by viewing their transaction history just like they would review their bank statement.”
Before the technology even reaches the floor, however, it must undergo strict testing via third-party labs as well as the board’s in-house gaming lab. Then, each property must run a trial testing period “to ensure the cashless wagering system works under the stress of live gaming.”
For Justice and Global Payments, cashless is “simple and readily accessible to allow a patron to gamble responsibly and efficiently,” and it encourages guests to “play responsibly to build and support the integrity and sustainability of the gaming industry,” thanks in part to benefits like “pre-set spending limits, cooling-off periods, voluntary exclusion,” and more.
Although much work has been done, there’s still a long way to go for both sides before cashless becomes the industry standard that most believe it will be at some point in the future.
Sattar notes that uniformity for cashless providers from a regulatory perspective is the first step in the right direction.
“In many markets, licensing does not even consider payments and payments companies,” he says. “Now, we want to be licensed. We want to be regulated. But in some markets, Sightline is a vendor, others a supplier, others a payments registration. It stifles market innovation by not having a consistent definition for payments companies and certainly restricts new entrants in many jurisdictions. We’ll continue to work with regulators on gaining consistency as this market continues to grow.”
Additionally, the lack of physical presence and interaction when signing up or registering for cashless accounts has been a sticking point that is slowly starting to iron itself out.
Justice applauds the Nevada Gaming Commission’s (NGC) decision in January 2022 to update its regulations “to allow patrons to remotely establish and fund cashless gaming balances without being on the casino floor,” which he describes as “a huge step for casinos and patrons alike because it proved the value that cashless technology has for the gaming industry.”
It is vitally important, he says, for “cashless technology to seamlessly integrate into the casinos’ existing management systems without requiring a total overhaul of their existing infrastructure,” and the NGC’s ruling represents a “massive” step forward.
Similarly, Newsom points out that there is an inherent assumption that “there’s always a casino employee involved in the transaction,” which is not always the case. Instead, he asserts that one of the key reasons for Everi’s growth in the sector is its “tremendous technological capabilities” for facilitating easier enrollment.
“I can go put a driver’s license into a Veridocs scanner and prove it’s a legitimate driver’s license,” says Newsom. “I can have my Everi camera take a picture of my face, use facial recognition to match it to the driver’s license, and I could then say that I believe that this is a human equivalent process. But the assumption that there’s a casino employee or a casino employee-like behavior is in many cases becoming a gating problem to all the downstream benefits of a fully cashless, omnichannel operation in jurisdictions unwilling to change.”
Gripes aside, the PGCB reminds us that going from implementation to widespread adoption takes time, and does not solely fall on regulators’ shoulders. In a lot of ways, consumers themselves have to be willing to change as well, and they also have to trust that the technologies made available to them have been vetted properly. Competition among providers will also have a say in what products are successful long-term.
“Cashless gaming is still very new and similar to TITO tickets that were introduced in 1992 but not widely adopted until the early 2000s,” says the board. “We anticipate that as patrons get better acclimated to the digital payment world and cashless gaming, the adoption rate will continue to increase. As with most new technology products, consumers are wary until they understand how the product works and learn the benefits they can obtain from using the product.”