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Pondering Payments

The future of iGaming could depend on how smoothly money can be transferred between the players and the online casinos

Pondering Payments

Ready, set, wait.

Vendors cautiously navigate the online gaming labyrinth. They must be ready with enhanced products and set to deliver them while awaiting the high-stakes battle over the industry itself.

The blueprint covers their spectrum of operations. Vendors need to link online effectiveness to new products, in case online supporters survive legal and internal challenges to their operations. If online gaming fades, the companies must still service their brick-and-mortar customers. And they won’t know about that until the battle plays out, on a murky field.

New Jersey, Delaware and Nevada remain the only legalized U.S. jurisdictions for online wagering. California and Pennsylvania, two major-sized markets expected to join the party in 2015, will not. Other states await the outcome of a battle launched by billionaire Las Vegas Sands owner Sheldon Adelson, who seeks to prohibit online wagering with the help of United States senators.

Vendors have a vested, if slow-moving interest. Estimates peg the American market for 15 percent of worldwide online revenue in the next couple of years. Global online revenue approached $37 billion in 2013 and is expected to rise.

Yet Adelson’s influence may slow online gaming growth. He is reported to be the world’s 18th-richest person, with a net worth hovering around $28 billion, and he opposes online gaming. Delays also unfold internally in California, as tribal entities can’t decide who qualifies to run the operation.

Vendors must be flexible. They prepare an airtight case for online security amid the persistent backdrop of money-laundering concerns. They also try to help operators position themselves to capture the online market if it grows.

So they work. And they wait.

Ready Either Way

For Las Vegas-based DiTronics, online gaming resembles the hosting of a large family party. Invite everyone, but prepare for a smaller turnout.

“We stay focused on the gaming industry and whatever direction it goes, we are prepared to service it,” says Jim Kirner, senior vice president of sales and marketing for the Las Vegas-based company. “If land-based casinos have online as part of their enterprise, are we prepared to accommodate it? You bet. If online is going to happen on a large scale, our business supports that. We are a seamless solution. At the same time, we don’t know which direction online is going to go. If it doesn’t happen on a large scale, it doesn’t.”

DiTronics handles nearly $3 billion annually, or about $7 million a day. It has long specialized in check-cashing, ATMs, cash advance, kiosks, etc., while servicing about 450 casino operators. It helps casinos in the compliance area by offering a comprehensive library of over 70 reports. They encompass market offerings as well as financial audit and balancing reports across all applications. Access is provided securely and is available from any internet-enabled device.

By operating in one of the legalized online jurisdictions, DiTronics connects brick-and-mortar products with online gaming. Players who want to sign up for digital wallets that they will use online usually must make an initial deposit at a casino property. They can also draw down funds from their casino wallets on property, Kirner says.

DiTronics offers a comprehensive suite of services to support iGaming initiatives as well as a path to electronic wallets for cashless floor gaming. Not only can it offer straight transaction processing of credit cards and check warranty services, but through partners it can facilitate identity verification, geo-location services and digital fingerprinting.

While waiting for the iGaming world to evolve, DiTronics upgrades its portfolio. The company recently closed deals in a couple of states for the new DFS-500 kiosk, with special features including a camera for surveillance, ticket-printing capability and an interface to casino management systems and player tracking. The kiosk provides exclusive software enhancements for ticket redemption, bill breaking, ATM, cash advance and check-cashing transactions.

The new kiosk facilitates recent add-on software innovations like Transaction Rewards, which integrates funds access with a casino’s player database to provide customized fee structures, the new Smart Dispense, which reduces wear and tear on the kiosk, and Jackpot Pay, which eliminates the need for jackpot dispense units.

All brick-and-mortar-based product advancements are important, regardless of what occurs online.

And as an industry observer, Kirner is curious about where the online debate will lead. Fantasy sports are exempt from online regulatory attempts. They are considered games of skill while casino games like poker are deemed games of luck.

Enter DraftKings, an operation featuring daily and weekly fantasy tournaments in every major sport. It has an audience of millions and the promise to pay more than $1 billion to participants this year. Play on a desktop, a tablet or via mobile device, for starters.

Casinos, especially those in Nevada and New Jersey, can plug into this growth area by recruiting an online player. They can, in theory, provide their own tournaments, fantasy-sports parties or simply lure that patron through its doors for all casino games.

It will create an initial buzz. Then what?

“Fantasy feels to me the way poker did a few years ago,” Kirner says. “There is a groundswell of excitement and this new demographic of the 20-something-to-mid-30s male. Everybody is jumping on the bandwagon. Everybody wants a piece of fantasy sports.

“What’s not certain is whether this is going to trend the way poker has trended. With poker they reallocated floor space because of its popularity, but that is now shifting back because the pros got involved and the average person feels like he can’t win.

“With fantasy, you could be looking at a situation in which the casual player realizes he has to watch the injury reports all day long, get every fantasy news program, track everything all the time. It will take an enormous amount of time and energy to win money, and you might end up being gamed by the experts. I’m not sure how it is going to play out, but it will be interesting to watch.”

At the very least, fantasy sports raises the stakes of the online gaming question. Casinos would have an interest in this because it enables them to recruit new players, cheaply.

And that’s not fantasy. It’s a reality.

Lucky You

Atlanta-based First Data entered the gaming market a year ago with its PayLucky suite of solutions.

The company was already known outside the casino realm. It provides secure and innovative payment solutions to more than 6 million merchants and financial institutions around the world, from small businesses to the largest corporations. Businesses in 70 countries trust it to secure and process over 2,000 transactions per second.

The company wants to get out in front of a major trend. In 2014, First Data launched PayLucky Solutions for legalized online and offline gambling. The forums for this activity include land-based casinos, Native American gaming, racetrack betting (parimutuel), lotteries and poker, among others.

First Data makes sure player information is secure and protected—both online and mobile, according to Jonathan O’Connor, the general manager of First Data New Markets.

PayLucky provides options like prepaid cards, ACH, checks and mobile. Online operators can keep the player experience entertaining while playing it safe with First Data’s private, closed-loop payment network,

O’Connor says.

Security is a prime consideration. Malware, which infiltrates computer systems to gather sensitive information or gain access to private computer systems, has increased at rates of over 300 percent in the last two years, O’Connor asserts. First Data’s multi-layered TransArmor solution uses tokenization, which changes payment card information into randomized tokens, eliminating sensitive payment card data within the gaming operator environment.

In the prepaid realm, with the PayLucky MasterCard, players can get their winnings, purchase, and withdraw or load cash immediately. Players are initially issued a virtual prepaid card for funding immediate play, followed by the flexibility of a physical plastic card.

First Data also provides many ACH solutions for the online market,

O’Connor says. In the TeleCheck realm, it features Connectpay, an immediate, secure solution for patrons to fund their play. Online gaming operators also will receive a “Confidence Score” to determine players’ credit. First Data also offers warrantied ACH with advanced analytics to minimize operators’ risk and provide immediate funds to players.

New Codes, Same Dependability

Cincinnati, Ohio-based Vantiv would benefit from increased online traffic. The company positioned itself a couple of years ago for the growth that has yet to unfold.

Vantiv was already a processing giant before entering gaming. It handles 22 billion transactions and more than $700 billion in card volume annually. The powerhouse outfit was known for servicing Walmart and CVS, among others, prior to its casino entry via the 2013 spinoff of Vantiv Gaming Solutions.

Joe Pappano, senior vice president and managing director of Vantiv Gaming Solutions, anticipated an online gaming surge based in part on fantasy sports wagering and social gaming a few years back. He laid significant groundwork with operators, banks and vendors to bring the online process forward.

Vantiv has the ecosystem so that if anyone wants to use a card to fund his gaming purchases, it will provide the connectivity to allow that transaction to occur, he says. The company also provides back-end reporting.

Pappano says $4 trillion was used on debit, credit and prepaid cards in the United States in 2013, and he views Pennsylvania and California as major momentum triggers in this area via passage of online gaming.

The process will now be slower, but the company continues to demonstrate confidence in the card realm. It became a partial owner of Sightline and advocates the Loyalty Plus card, which enables customers to convert points derived outside of a casino inside the property.

Vantiv also stays abreast of security trends. A number of them unfolded in April via new merchant codes issued by the International Organization of Standardization (ISO), which is responsible for helping issuers and others comply with the Unlawful Internet Gambling Enforcement Act of 2006. The ISO issued new codes related to online gaming. While the card networks have allowed card issuers to block merchant card authorization requests using MCC 7995 (gaming transaction), the ISO’s new codes indicate certain forms of legal gambling such as lotteries, casinos, and horse and dog racing. Unlike past transactions, the card networks will not allow automatic blocking of these transactions bearing the new codes. They will still do so, but only if the issuers ask.

For the issuers, usually banks, this opens a new door of uncertainty. They must decide whether to engage a company like Visa in the time-consuming process of blocking perhaps millions of transactions because of concerns over whether they occurred legally. Or they can consult with Vantiv.

Brian Cottengim, vice president of technology and solution consulting for Vantiv, indicates that the new codes represent a potential breakthrough for industry revenue. More online transactions than ever may become authorized once issuers trust the source of funds.

“This is moving in the right direction,” he says. “What this does is allow more transactions to reach the issuer. With more transactions flowing to them, it is allowing us to have more direct conversations with the issuers. We can give them a demonstration of the tremendous technology available to them and tie that in with the rules they have to block certain types of transactions.

“We can demonstrate to them how we worked with Visa to get these new codes and all of the safeguards that are in place. Here are the controls in place, here are all the gates a player went through before funding his transaction, including age, geo-location, etc. It is the kind of situation that allows us to be an ambassador for the industry. If we build more trust with people about these types of things, it is always good going forward. There will be more and more transactions occurring over time.”

Cottengim says Vantiv takes advanced steps to ensure security, especially in the online space many customers are concerned with.

“When someone goes online, we have the technology to tokenize that transaction,” he indicates. “Now they can store that token their systems. Every time you enter that card number, it responds back from the first time.”

In the remote event that someone hacked a system and obtained the information on the token, it could not be used at a merchant’s place of business, he says.

Along with its advancements, Vantiv alerts operators about common industry problems. Point-of-sale and weak password information accounts for roughly two-thirds of data breaches, the company asserts. More than 80 percent of data breaches occur in small and medium-sized businesses. The gaming industry, particularly throughout Indian Country, has a sizable share of small and medium-sized properties.

For all participants in the online gaming saga, from the security to the element of speed and functionality, these are turbulent yet interesting times.

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.

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