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Gaming industry lags in shift to cashless payments

Updated October 29, 2022 - 1:59 pm

There are increasingly few places left in the country that only accept cash as payment — and many of them can be found on the Strip.

Visitors at resort-casinos across the state can pay for almost anything with a card or mobile wallet, but when they’re on the casino floor is a totally different story. Every time money changes hands, it’s often cash.

While other industries move forward with cashless payment options such as mobile wallets, prepaid, debit or credit cards, the casino industry is lagging. Yet a growing number of manufacturers and other industry members are getting involved in the network required to shift toward cashless payments.

Gaming executives and analysts say the lag is largely because of regulatory hurdles and the equipment used in slot machines. Creating a network of payment solutions that is simple and intuitive for customers involves multiple systems, services and products. All the while, some regulators are hesitant to quickly change the rules. But more cashless solutions are popping up on the market.

Industry members at this year’s Global Gaming Expo were eager to discuss the importance of establishing cashless options for gamblers. A digital payments panel at G2E argued the adoption will look like a bell curve with low market adoption during the technology and implementation’s infancy then an explosion of growth as operators race to match competition, followed by late adopters.

Attendees also didn’t have to look far on the trade show floor to know the technology will soon arrive. Acres Manufacturing Co. hung a large poster outside The Venetian Expo proclaiming: “Cashless is the future.”

Still, even with the excitement and panel discussions it hasn’t manifested on the Strip.

“When you go somewhere, one of the things you expect and increasingly demand is the ability to pay (any way) … that’s not possible in the casino space,” said Victor Newsom, senior vice president at Everi Holdings Inc., a gaming and financial tech company that built a mobile wallet.

Network of tech and regulations

Much of the progress around cashless payments have been hindered by red tape and old technology. Machines were built to read cash and don’t have the ability to track the financial data involved in a card or mobile transaction. Also, the regulations around wagering are slow to incorporate modern technology.

Cashless solutions have been available at casinos in other states for several years. Everi, a Las Vegas-based company, has partnerships with the Seminole Tribe of Florida and Wilton Rancheria Tribe at their Sky River Casino near Sacramento, California. Acres Manufacturing’s partnership with Penn National Gaming Inc. has yielded 70,000 digital wallet customers, according to statistics from the company’s second-quarter earnings report.

Locally, a handful of operators have embraced the technology. IGT and Station Casinos launched a partnership this month allowing players at Station’s six flagship Las Vegas casinos to load money into a machine digitally through a cashless payment app by IGT. Resorts World introduced cashless options throughout the property when it opened its doors in June 2021.

Newsom said the Nevada market is one of the most difficult to break into because of regulators’ high standards.

“They see themselves as setting the standard for the entire industry, so as such they’re extremely risk averse to moving quickly and throwing new things in there,” he said. “Doesn’t mean they won’t do it, but the process they take to make sure they’re not rapidly endorsing something that’s new and dangerous or uncertain, it can take years to move things in. Whereas in tribal and other commercial jurisdictions, you see things move much more quickly. (Nevada regulators) just by nature just don’t want to move quickly because they don’t want to disrupt the industry and set a bad standard.”

Manufacturers have been making a big push on cashless solutions lately. They showcased their products at G2E while educational panels on payment solutions and tech advancements drew crowded rooms.

Ahead of the massive gaming trade show, which took place this month, Sightline, a financial conduit company for many operators, launched an initiative with Acres to enable cashless gaming on 250,000 slot machines across the country within three years.

The company said it will spend up to $300 million to subsidize the purchase of Acres’ Foundation — hardware that connects with digital wallets and provides real-time player data to the operators — for a casino wanting to use Sightline’s cashless mobile app ecosystem and digital payments solution.

“A lot of people are not seeing that it’s a two-step solution,” Noah Acres, the company’s chief marketing officer, said. “The first step is you have to have an app. You can move money from your bank account to the casino’s app, but you don’t have the ability to move it from the app to the slot machine. What we’re doing is providing that last mile of pipe and making an interface open to anybody the casino wants to authorize.”

Importance of smooth process

Operators choose system partners that can interact with each other so the customer experience is seamless. At Resorts World, five key systems operators are involved for its cashless options in retail, entertainment, dining and table and slot machine gaming.

But friction points can come from outside the system. Resorts World’s cashless casino payment rollout was hindered last year by rules that required a person to sign up in person so staff could verify their identity. Sightline, the payment provider, told the Nevada Gaming Commission that some customers waited in line for as long as two hours to complete the process.

“That creates a bit of friction because of time. It’s just one of those things where the guest just wants to move on and go about it,” said Rick Hutchins, senior vice president of casino operations at Resorts World.

Regulators approved remote sign-ups in January, and the property expects to launch that option in November, Hutchins told the Review-Journal.

Accessibility is expected to determine how widely adopted the technology is at a given location, said Nick Khin, chief operating officer of London-based IGT.

Some in the industry believe customers can easily adopt the technology because of its similarity to making mobile or card payments in a store. But others argue that adding funds to a mobile wallet then moving it to a slot machine or buying into a table is more involved than completing a transaction at a cash register, which usually requires only a tap or card swipe.

In an interview this month, Khin said “ambassadors” are educating players on how to use IGT’s app at Station Casinos. He expects it will take several months for the learning curve to level off.

“The success of this will depend on how easy the players find using it is,” Khin said. “If the players find it frictionless and convenient, then you will see a good level of adoption.”

Though Hutchins declined to specify Resorts World’s internal metrics on customer adoption rates, he said it’s important to first make the value proposition clear to customers and the product easy to use.

“Once we say, ‘Yes, it’s easy,’ then we move on to the next goal,” he said. “That’s really what it’s about. Because it’s not something you want to force into your customer’s behavior. Once it’s easy and has value, then we know we’ve got the solution and the adoption is going to move forward at the pace that it’s going to go.”

Why there’s a push

Acres’ “Cashless is the future” slogan is a mantra repeated by other industry leaders.

“It’s the future. If you think about it, when was the last time you hopped into a taxi and paid cash?” Khin said. “Most of us jump into an Uber or a Lyft and don’t even think about taking out our wallets because it’s all cashless and really convenient. This is where the world’s going, and gaming is no exception.”

It’s not just a service for customers. Operators benefit by seeing reduced costs associated with tracking cash, improved security and anti-money laundering compliance, and more integration with loyalty programs.

If customer adoption is successful, the casino could see players spend more. Industry members have found a 10 to 20 percent increase in spend. High-limit players are also a target customer for a mobile wallet, several industry members have said, because they don’t want to carry large amounts of cash.

Manufacturers also hope a cashless option will expand its pool of customers.

“The hot-button issue in the industry was how are we going to get millennials to gamble because if you go around casinos, especially outside of Las Vegas, that demographic is getting pretty old,” Acres said. “Majority of all consumer transactions (are) non-cash. So if we’re going to only take cash, then we’re turning ourselves off to a huge portion of the economy.”

McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at mross@reviewjournal.com. Follow @mckenna_ross_ on Twitter.

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