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The Coming of Cashless

Many patrons will demand that casino transactions, like others in their lives, be cashless, but the two methods will coexist

The Coming of Cashless

Former New Jersey Governor Chris Christie, the keynote speaker at the annual Global Gaming Expo (G2E) in Las Vegas in 2019, used a compelling prop to make a compelling point to the audience.

Christie noted that his 26-year-old investment banker son “doesn’t have this,” as he took out a well-stocked money clip.

The point was that while his son has disposable income, he doesn’t carry cash with him. That led to his being disappointed, for example, when—after receiving his car from a valet after a wedding reception—he was unable to offer a tip because the valet did not have a Venmo account.

Christie said the U.S. gaming industry must adjust to a new generation of such potential customers on numerous fronts. “If you don’t make mobile easily accessible to them, then they will not bet—they just won’t,” Christie said. “And don’t make them go to a casino to sign up, or to collect their winnings. They just won’t use your product.”

So, three and a half years later, how much has the industry done to heed Christie’s advice?

An overriding theme in interviews with industry executives for Global Gaming Business can be summed up by Leighton Webb, vice president and general manager of online sports betting and iGaming for PayNearMe, as: “Cash isn’t going anywhere.”

“Although ‘cashless’ is a hot topic, cash will continue to be an important tender type for a certain segment of the audience,” Webb adds. “For a variety of reasons, some players will always prefer to use cash, and eliminating cash entirely would alienate that segment of the consumer base. It’s a tangible, reliable form of payment that will always have a place on the casino floor.”

Or as Christopher Justice, CEO of Pavilion Payments, Inc., puts it, “Casinos are beginning to implement cashless solutions, but cash still tends to be a popular method for many players.”

So it turns out that “cash” versus “virtual” is not an “either or” issue—it’s more like an “and.”

That said, Sightline Senior Vice President Jonathan Michaels points out that “around 50 of the 1,000 casinos” in the U.S. already have gone cashless.

“When 41 percent of Americans don’t use cash in a given week and 58 percent of previous-year casino visitors want to use digital payment options, it is important that we give our customers the option to pay how they want,” Michaels says.

Dave Kubajak, senior vice president of sales, marketing and operations for JCM Global, says, “Casino players are consumers, so to understand how consumers use cashless options in a casino, we can take a lesson from consumer behavior in other businesses.

“When we look at it through that lens, we can see that consumers have a lot of choices as to how they pay for things at the grocery store, at the gas pump, at the mall, at the movie theater, etc. Consumers like to have choices, and that will continue to be the case when we think about cashless gaming at casinos. Our industry’s own history with cashless gaming also informs this view. The first wave of cashless gaming appeared as ticketing. Players could use tickets or cash, and the two have existed side-by-side since tickets came onto the scene.

“There will be players who will use digital wallets, others will use ticketing, and others will pay with cash. That’s simple consumer behavior. Given that, our philosophy is that operators will be most successful when they give players the choices and options they expect in virtually every other consumer transaction.”

Marker Trax President Charlie Skinner adds, “Just as cashless technology hasn’t eliminated cash transactions from other industries, removing cash from the gaming environment isn’t an inevitability.

“It’s impossible to pinpoint when cashless becomes the most popular type of transaction in gaming, whether we’re talking about funding an account or actually playing games. But consumers have come to rely on cashless options in nearly every other facet of their lives, and the drumbeat is getting louder: ‘When will I have that same flexibility in gaming?’

“Two things have been true about our industry over the years: Change is inevitable, but it is also deliberate. Operators have been enthusiastically embracing technology, fully understanding the efficiencies that cashless solutions encourage in their businesses. These factors continue to make (cashless gaming innovations) a matter of ‘not if, but when.’”

Skinner underscores the point made by others that older customers need not be concerned about being “phased out” in terms of payment options such as cash. “The most important thing to point out is that our industry has never shrunk in focusing on some customers to the exclusion of others,” he says. “It has always grown to embrace more preferences—and that trend will continue with cashless.”

Justice, who describes his company as “the largest fully integrated payment provider in the entertainment and gaming industry,” says Pavilion Gaming’s VIP Mobility feature enables patrons to complete all transactions on their mobile devices. Meanwhile, Pavilion’s e-check network VIP Preferred directly connects the customer’s wagering account to their bank account.

Pavilion’s VIP Financial Center is a kiosk located on the casino floor that can provide self-service ticket redemption, bill breaking, e-check, ATM, and cash advance options for casino guests, decreasing the amount of time customers wait in line at the cage.

Kubajak says a recent AARP study found smartphone use by older American consumers was at 77 percent, so the survival of cash as an option isn’t purely driven by a stereotype of most older Americans supposedly being unable to “go cashless.”

Instead, advances in cashless gaming are supplementing cash for all age groups. “Cashless payments and digital wallets will continue to evolve, and we can expect them to become more user-friendly and provide easier ways to sign up—within the confines of each jurisdiction’s regulations, of course,” Kubajak says.

Omnichannel’s the Goal

Webb says he believes that for younger gamblers, most are finding access to payment types they prefer.

“One payment platform might offer PayPal and Venmo, while another offers debit and ACH,” Webb says. “In a perfect world, would all platforms offer every tender type? Of course. And that’s what PayNearMe and its MoneyLine platform aim to achieve. We already offer cards, ACH, PayPal, Venmo, ApplePay, and even cash payments within the digital space, and there’s more to come that will be attractive to the younger generation.

“PayNearMe has historically been bringing cash payments into the digital space by allowing deposits and withdrawals to be done in cash for iGaming and online sports betting platforms,” Webb says. “That crossover between brick-and-mortar and digital payments—the ‘omnichannel payment experience’—is really what operators need to be looking at. Bridging the gap to allow everyone to pay and withdraw is how to capitalize on the growing market of players.”

Michaels also brings up the word “omnichannel,” saying “it is on the minds of every operator we speak with. Omnichannel is the reality that we live our lives in between something that is physical and something that is digital.”

Justice describes young adult gamblers as “digital natives”—hence the industry’s extensive efforts to offer cashless payments for the growing revenue streams of iGaming and online sports betting.

“Casino operators, whether they are land-based or online, want to be involved in this growth,” Justice says.

Sightline’s Michaels stresses that it will be a long time, if ever, before innovation in cashless gaming is complete. “There is always more work to be done to deliver a great customer experience,” Michael says. “Just look at how long it has taken ApplePay, which was initially launched in 2014 and really only has taken hold in the last few years.”

Sightline’s Play+ system, Michaels says, features funds being held in accounts with FDIC insurance—a way to reassure customers that their money is safe even in spite of the occasional scary headlines about the financial health of some banks.

As for online casino gaming, Webb says his company’s research shows that debit card payments were important to 63 percent of surveyed players, while credit card payments were important to 57 percent. The most preferred payment, he adds, was PayPal—at 64 percent—with Venmo being a preferred payment method for 48 percent of respondents.

Says Skinner of Marker Trax: “The secret to the success of any technology is that it never remains stagnant, and there’s always more work to be done. Overall, though, the technology (for cashless payments) is at a much better place than it was in its infancy. We understand that from our own internal reporting and modeling, through the operator dashboard that Marker Trax provides to all of our property partners, but also from the rigorous, thorough consumer testing we constantly are engaging in.”

Kubajak says JCM Global’s business model is to “connect, listen, and partner” with consumers.

“It’s not our blueprint that matters—it’s our customer’s,” he says. “Specific to cashless gaming, players want payment options, and we work with them on that.”

Skinner adds that while its technology initially was targeted to slot gaming, “we’re looking at several exciting avenues for growth, including expanding to table games in casinos, sports betting, and online gaming.”

Seamless Experience

For Webb, the core focus for consumers—and therefore, for PayNearMe—is “a streamlined, seamless experience.”

“At the first sign of a hiccup or glitch in the online payment process, players—especially new ones—can become leery of the entire app or site,” Webb says. “In addition to ease of use, there’s the issue of speed, especially when it comes to payouts.

“A major ‘pain point’ in the online gaming industry is how long it takes a player to withdraw their winnings, which can result in operators losing out on customer loyalty and retention. MoneyLine solves this by offering nearly instant payouts through a variety of tender types including debit, cash, PayPal, and Venmo.

“We’ll continue to see progress as far as new digital payment types and emerging technologies for the younger and newer gaming audience,” Webb adds. “We always talk about ‘future-proofing’ your business, meaning that we want our platform to set operators up to succeed no matter what new technology might hit the market. The work we’re doing currently definitely will help with that.”

Traditional cards, Webb says, “can be subject to higher decline rates than some of the newer digital payment types. We already know that declines are a player deterrent, so that’s something to consider. In addition, the rising rate of new and younger players will likely cause the preference in alternative payment methods to rise with them.”

Skinner explains that the company’s product is “a cashless version of the traditional casino marker system.”

“One of the most important differences, though, is that traditional markers become literal cash. And at that point in the transaction, there’s absolutely nothing preventing the player from taking that cash elsewhere—whether it be another gaming property, depositing into their own bank account, or something else.

“But Marker Trax is tied directly to the property and the player’s account, digitally. Inside that property, those funds have all the value of cash. But outside the property, they’re unusable. It’s helping to protect operators’ bottom line in a way our industry has never seen before.”

Another important attribute, he says, is that Marker Trax reduces the approval process for traditional credit that elsewhere can take days, or even weeks, and shortens that time frame to “just minutes.”

Responsible Gaming

A report issued in March by the University of Nevada, Las Vegas International Gaming Institute identified a variety of customer payment behaviors from data provided by Sightline Payments. The purpose of the study was to identify how such data can support responsible gambling efforts.

A cluster of customers comprising 1.2 percent of the sample showed a high volume of deposits and withdrawals, as well as a significant variability in the size of the deposits. The researchers concluded that “it is possible that these customers engage in unsustainable gambling behaviors.”

A second cluster, about double the size of the first one, had the highest deposit activity—about 15 per week. These same customers also had the highest number of “declined transactions—a potential red flag that might indicate their frequency or limit amounts had been reached.”

Finally, the study concluded that “88 percent of customers exhibited patterns of behavior that were not suggestive of any unsustainable or harmful behavior” at all.

Whether these numbers are higher or lower than any particular person might expect, they help identify the likely extent of irresponsible gambling. While privacy and security issues rightly are a potential concern these days in the tradeoff for convenience, at least the industry and state regulators have somewhat of a handle on the magnitude of the problem.

What isn’t known, of course, is how many brick-and-mortar casino patrons go to a window to exchange hundreds or thousands of dollars for casino chips with money that may not truly qualify as “disposable income.” If they leave broke, only they—and quite possibly their impacted family, and under potentially serious circumstances—know what happened.

But to sum up Christie’s initial point, both he, with his money clip, and his son, via online payments, indeed each are able to seamlessly find their own respective ways to gamble should they choose to do so.

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