The Convergence of Cashless, Mobile and Internet Gaming

Cash has been king in the casino business for decades. In Nevada alone, gamblers drop more than $10 billion into slot machines on an annual basis.

For decades, money used at casinos solely came in the form of coins or special purpose coupons. Then, in the 1990s, casino companies moved to paper money.

Now, in a modernized gaming world, cash could go the way of the coin-operated slot machine. Prepaid cards may soon become the preferred method of payment for casinos. But, like any sweeping change, it will take some time for the gaming industry to catch up to retail operators in terms of electronic transactions.

In the retail world, less than 10 percent of transactions are in cash. Most retail payments are made electronically, based on using credit, debit or prepaid cards as well as mobile devices in some instances. However, in gaming, 95 percent of transactions are still conducted in cash. This cash-based ecosystem in the gaming industry comes at a significant cost to an operator and the patron.

According to Harry Hagerty, president of Sightline Payments, it costs casinos across the United States billions of dollars a year to source and handle cash. The cost burden can also end up falling on the consumer, upward of $1 billion per year.

In recent years, operators have slowly moved toward cashless gaming to improve patron convenience and operator efficiency. Now they are starting to pick up the pace.

Responsible Gaming and Cashless Gaming Find Middle Ground
Gaming regulations in many states have prevented casinos from accepting credit and debit cards.

Those days are over in Nevada, where gaming regulators have approved significant policy changes that, for the first time, allow a prepaid card to be used to fund gaming play at slot devices and at table games. Several other states are now considering similar regulatory changes.

Proponents of responsible gaming say there are safeguards in place with cashless gaming that protect people from the impulsive decisions that can get gamblers in trouble today. For example, customers must wait at least 15 minutes before they are allowed to reload their cards.

This delay is important to allow consumers to think about what they’re doing and make a conscious decision as opposed to becoming impulsive. Direct deposits from paychecks are not allowed, and links to responsible gaming websites will be shown during the reloading process.

And, unlike a credit or debit card, there is no ability to run up a credit balance or overdraw a checking account with these prepaid cards—once it is out of money, it is out of money.

When a patron opts for a casino gaming prepaid card, they are opening an account with the bank that issues the card. Money deposited on the card is protected by FDIC insurance and the card includes federal loss and fraud protections.

Casino patrons can fund their prepaid accounts with a transfer from their bank account or from a credit or debit card. Funding can be done online with a mobile app or at the cage. There are limits on how much can be put into the prepaid account over various timeframes, configurable by the gaming operator.

These accounts allow players to electronically move funds to and from gaming devices. The cards may also be used for non-gaming purchases at casinos or everywhere Discover is accepted.

The cashless gaming system matches a patron’s player card number with the prepaid card number and their gaming account for a seamless casino experience. The key for gaming operators is not altering a customer’s gaming routine; rather it is to enable gaming in whatever format the player prefers.

The prepaid card resembles any other debit or credit card, but carries the casino’s brand and logo. On the casino floor, once a customer is finished gambling, winnings or unused funds can be moved back to the prepaid account and are available instantly.

A New Level of Marketing Power
These prepaid cards give casino operators new insight into their customers’ preferences. Casinos will be able to see what goods and services their patrons are buying using the prepaid card. And they will be able to offer electronic coupons for those purchases as a way to drive loyalty.

The prepaid card allows customers to use one account to fund both online gambling and brick-and-mortar play, keeping the consumer’s experience consistent and the process familiar.

At the slot machine, the player still inserts their player card as he or she normally does, uses their PIN to view their account balances and initiate the funds transfer.

While these cards look and operate like regular credit and debit cards, there is a key distinction that makes them allowable to gaming regulators. Once a patron is out of money on his/her prepaid card, it’s just like having an empty wallet. The difference is in how they now access additional funds; no trip to the TITO device or cashier window is required.

Casino and payment operators commonly describe these prepaid cards as the “convergence of payments” or the idea of “gaming coming together.” There are three points of emphasis in the new payments world—utilizing the card for Internet gaming, in the mobile space and in traditional brick-and-mortar casinos.

The gaming industry is also trying to reach a new generation of casino consumers—the Millennials. These consumers are generally comfortable with alternative payment methods, including mobile apps. Casino operators also expect prepaid cards to lower the cost of customer acquisitions and to disclose what motivates their spending behavior.

Overall, the notion of this convergence is all about one singular channel for paying for online gaming, mobile, social gaming or brick-and-mortar play.

Beyond the Slot Machine
Bally Technologies, a leading slot manufacturer across the globe, will be the first to retrofit existing machines with the cashless option by the end of the year. According to John Connelly, senior vice president of business development and interactive, the company’s vision is to use the technology for table games and online, giving traditional casinos a seamless view of the player, incorporating a player-centric rewards program.

The payment solution, similar to an eWallet, will allow players and casinos to transfer currency, credits and promotions across these channels. Most traditional casinos need these payment systems for online wagers.

The prepaid movement is also expected to reduce the cost for casinos, which handle millions of dollars in cash. Operators of race and sports books are also heavily dependent on cash for payments—sports bettors can use cash online, but with one funding mechanism, the use of cash will be reduced in race and sports books in several states.

The prepaid card can be used at any merchant in the U.S., or online, where credit cards are accepted. The prepaid card provides a sense of familiarity while allowing casinos to track and absorb precious consumer insights.

For example, a consumer uses the casino prepaid card to purchase a steak dinner at a local restaurant or clothing at a casino gift shop. These purchases allow the casino to offer tailored rewards or other benefits pertaining to the consumer’s habits both on- and off-property.

The prepaid cards are legal bank accounts and all gaming transactions are run off Sightline Payments’ SPAN® Network, eliminating involvement with traditional payment networks and providing a real-time experience.

The SPAN Network also eliminates the high decline rates of credit cards to fund gaming accounts. For gaming purposes, cardholders can transfer funds immediately utilizing a closed-loop, secure network to and from traditional casinos, race and sports books and for Internet gaming. Using the open-loop general purpose reloadable prepaid cards, which runs on the Discover network, cardholders can make cash withdrawals, including from ATMs, or purchases within or outside the casino property for travel, dining, hotel and locations wherever Discover is accepted.

Why the Change from Cash to Cards?
Casinos hope that reducing the amount of cash they handle with save tens of millions of dollars. But it appears unlikely that the switch to cashless gaming will have a significant impact on employment. Consumers will still be using bills and bill validators, and casinos will still need people to count that cash. Some customers, though, are going to prefer the card.

As slot machines move into the cashless age, these cards will inevitably become the standard throughout the casino. The technology exists to bring this to the table game side of the gaming business, to retailers within a casino and well beyond a casino’s walls.

Many regulators are already on board and embracing the convergence of casino payment options. The prepaid card is the present and future of gaming… and it’s here to stay.