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Gaming licensee seeks change to remote account verification rules

A Nevada gaming licensee hopes to convince regulators to change the rule requiring in-person identification verification for bettors who want to wager on sports via mobile apps.

It’s a change that some say could potentially boost sports betting revenues and also further promote use of cashless technology in gaming.

New Jersey sports books won $66.4 million in sports wagering on apps in December, a 125.6 percent increase over December 2019’s total.

For the year, that state’s casinos won $398.5 million in that category.

Nevada hasn’t released its December win totals from apps, but the November amount was $23.5 million.

Much of the difference has to do with population, since New Jersey has about three times more residents than Nevada’s 3 million people. And, New Jersey is able to claim customers from neighboring New York where logging on with a mobile app involves a quick trip over a bridge or through a tunnel to access online gaming in the Garden State.

In-person registration

There are also some who argue that it’s far easier for customers to establish a mobile account in New Jersey because of a Nevada regulation that requires a player to show up in person at the sports book to verify the player’s identity.

In New Jersey the process can be completed remotely.

Las Vegas-based Sightline Interactive LLC and Sightline Payments LLC, a financial transaction provider working on cashless gaming solutions, hopes to change that policy after submitting a petition to gaming regulators seeking an amendment to the rules that require in-person ID verification. The matter will be heard Thursday by the Nevada Gaming Commission.

Sightline first submitted the petition to regulators in September.

“Cashless solutions have proliferated across banking, e-commerce and online shopping and have become a preferred mode of transaction between businesses and consumers,” Jennifer Carleton, an attorney representing Sightline, said in a petition before the commission.

“Cashless transactions are quickly replacing traditional cash-based payment methods and the conversion has been further accelerated by the worldwide pandemic,” she said.

While enabling more cashless transactions is the end game for Sightline, removing the restriction on account verification is viewed as a key difference maker for the technology.

AGA backs cashless technology

The development of more cashless solutions in casinos is one of the top initiatives endorsed by the Washington-based American Gaming Association.

“Advancing opportunities for digital payments has been one of our top priorities since my first day at the AGA,” Bill Miller, president and CEO of the gaming association, said in June. “It aligns with gaming’s role as a 21st century industry and bolsters our already rigorous regulatory and responsible gaming measures. The COVID-19 pandemic made it all the more important for us to advance our efforts to provide customers with the payment choice they are more comfortable with and have increasingly come to expect in their daily lives.”

Cashless gaming has other benefits.

Responsible gaming advocates say cashless systems can be programmed to place limits on a player’s spending. With a digital record of transactions, law enforcement can better identify money launderers and other transgressions through payment analysis.

Nevada’s regulatory landscape has two different sets of rules for wagering accounts. Interactive wagering, which includes all authorized games, is covered in Regulation 5A. Wagering involving race and sports pools is covered in Regulation 5. Both address deposits, withdrawals, debits and credits.

The biggest difference between the two regulations is that Regulation 5A allows remote identification verification, but Regulation 5 doesn’t.

“To establish an interactive wagering account under Regulation 5A, an operator can register an individual as an authorized player and verify the information remotely,” Carleton said in the petition. “Regulation 5A currently allows for an operator to utilize digital (knowledge-based authentication) tools to verify an individual’s self-reported information after the patron has opened an interactive wagering account.”

Knowledge-based authentication

Knowledge-based authentication, or KBA, involves a series of questions asked, such as “What is the street where you lived when you were 16 years old?” Applicants can also produce mailings from utility companies to their home addresses.

“We request that Regulation 5 be amended to allow for digital KBA verification of a player’s wagering account information, similar to the current digital KBA verification process for interactive wagering accounts established and utilized by licensees under Regulation 5A.”

But according to Nevada Gaming Control Board Chairman Brin Gibson, the argument isn’t that simple.

Many casino licensees — particularly those with race and sportsbooks — oppose allowing remote registration because some prospective sports-betting providers have little or no investment in brick-and-mortar operations in the state.

Brick-and-mortar investment

While some critics have said existing sportsbooks want to keep in-person signups so that customers can place bets or play slot machines when they come in to sign up for an account, Gibson said he hasn’t seen any data that suggest companies get much revenue from that.

The opposition, he said, is more likely the result of casino companies investing millions of dollars in their books only to see smaller out-of-state companies enter the market with no investment in Nevada.

“Some licensees feel very strongly about their investment in brick and mortar and that’s a big challenge,” Gibson said. “The realities of the industry are unique in Nevada because we have so much brick and mortar here.”

There’s been no written opposition to the Sightline proposal posted on the Control Board’s website, but testimony about brick-and-mortar investment could become a part of Thursday’s consideration.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

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