14 June, 2022

IGA Panel: The cashless revolution & the value of going digital

A panel at this year’s Indian Gaming Association tradeshow discusses the role of payments in gaming and the mounting momentum towards cashless


Tamara Hansen, Director of Sales,
NRT Technology

 IGA Panel

Craig Libson, CEO, Flexia Payments

 Earle Hall, CEO, AXES

 Christopher Justice, President of Gaming Solutions, Global Payments

 Jonathan Michaels, Senior Vice President of Development & Government Affairs, Sightline Payments

Tamara Hansen, Director of Sales, NRT Technology: What are the payments trends that you’re seeing surface? How are they driving efforts within the gaming industry? And zooming out, what things can we learn at large as a society? 

Craig Libson, CEO, Flexia Payments: Cashless gaming not only takes care of the funding of accounts, it also provides a product that gets the user into the world of banking. It gets people into Apple Pay, etc. So, it’s of societal benefit to get these products out there. However, until you have a reason to get consumers to go electronic, you’re not going to pull it off. In this industry, where there’s a struggle to turn from cash to electronic, it’s a gradual reflection of society, where technology is gradually becoming more integrated.

Earle Hall, CEO, AXES: Everywhere I go round the world now, especially the US, cashless is confusing. Most people don’t know the difference between open loop and closed loop. What is closed loop? The very definition of closed loop is data; closed loop is loyalty; closed loop is engagement and closed loop is rewards. It’s all about knowing your customer, not from a regulatory side; which is awesome and the foundation of a legitimate industry. But know your customer (KYC) is really the strength you have as an organisation to have fine granular real-time data to bring down your cost of marketing, and bring up your intelligence of the player you’re dealing with. By doing this, you’re ensuring your player is getting what they need all the time to come back all the time. What is open loop? It’s just a money transportation system. It’s a virtual ATM machine; it’s whatever you want it to be, but it’s essentially getting money out of a banking system, out of a fiat system, and getting it into the player’s wallet inside the casino floor. The easiest way to understand what cashless should be in our industry is open up your Starbucks app and look at the difference in the points you make! If you pay with your credit card, or if you pay with the float that you have on the Starbucks app, that’s where it all starts, that’s the baseline. 

Jonathan Michaels, Senior Vice President of Development & Government Affairs, Sightline Payments: What we’re seeing, broadly, is a number of market trends that are pointing towards the mounting adoption of those digital payments.Technology is being adopted more and more. The trajectory we’re seeing is that by 2026, only 6% of transactions will be in cash for retail and other point-of-sale outlets. We’re moving towards a cashless society. Certainly, the pandemic has helped accelerate this, and some of the fears that came up regarding the transmission of Covid-19 through cash. That was proven to be a misconception, but I think it’s clear that people are now very comfortable with using digital payments. The Starbucks example is great. People will only put money into that account knowing they only spend it at Starbucks. But why do it? It makes your life easier and you earn loyalty points. It’s the same principal the gaming industry has. People come wanting rewards, and they want it to be an easy experience. So, taking these things from broader payment trends and putting them into this industry is where I think it is going to be successful.

Christopher Justice, President of Gaming Solutions, Global Payments: Well certainly, thinking about the trends that impact your customer, and your most loyal and profitable customers, everybody’s got a mobile phone; everybody’s got a smart phone. So when you think about this industry going towards cashless payments, better than half of all retail purchases over the holiday season were made on a mobile phone. Where is this industry going? Where are consumer wants and desires going? They’re heading towards a digital space quickly, easily, safely, seamlessly, securely – add all the adjectives you want – but the technology is allowing the consumer to engage with the information they want in a real-time environment. If you can do that you will drive immense loyalty for your best customers and keep them inside your facility.  

Libson: If you’re an operator running a casino in a cashless environment, you know a lot more about the customer, you see their preferences etc. Instead of them taking out $100 over a counter, if you can get them to a retail shop where they use a gaming account for their purchases, you’re not taking $100 out of the balance sheet; you’re basically using the money for a good, and you get the data back from the cost, from the dispersal and usage of that good. Cashless is not just in and out, it’s taking all the data and saying “once that guy wins, how am I going to make them do something with that money that puts even more money in the business’ pocket.” It’s a holistic approach: get them in, know  who they are etc.

Hall: Everyone knows it is the casino float that’s the health of the joint. The float will be low, endangered or exposed if someone has a high win on a table. That being said, the definition of a closed loop system means the money is in the casino float. If the money is not in the casino float, then it’s in an open loop system. That means once the money comes in the door, you’re there to give the customer entertainment. You’re not there to give them money back. So the whole goal of going cashless is: if it comes into a closed loop environment then it can’t go out. That’s where data, marketing, loyalty and rewards kick in, to keep it in the casino float so you’re safe, so your money doesn’t deplete over time. Money will naturally migrate away from the casino particularly when using the open loop. Starbucks figured this out in the beginning of the pandemic; that’s why they started out their loyalty system, to get money into their float and to keep it there.

Hansen: Let’s focus on data. Now that we have these means to pursue customer activities to drive growth, with new technologies, how important is it to keep responsible gambling in mind? How do we leverage these advancements to create an even safer environment for the player? 

Michaels: I think what you see in the digital realm that you don’t see in the brick-and-mortar realm are tools that customers can put in place on their own, whether that be deposit limits, time limits or spend limits. There was a study that was done in Ontario during the pandemic, which asked how people’s behaviour changed. 90% of Ontarians used limit settings as a responsible gaming tool: 90%. That doesn’t exist in the brick-and-mortar gaming sphere. But, as we look to go cashless, there’s now a huge amount of data to say “how do we understand and interpret the behaviour of all these people?” 

So companies like ours, Global Payments and Sightline, help establish a payments collaborative, which is designed to give users access to all transactions, and they’ve tracked over 200 million transactions. That’s a lot of data. What they’re going to do is go through all those and say: How do we understand how payments data can showcase when consumers might have a problem, due to changes in behaviour, deposits, timing, all that, and use data points to build better products that help people? Digital data points can revolutionise responsible gaming, it gives so much input and insight into the player and their type of behaviour; to really make sure they are wagering responsibly. 

Hall: I always get invited once to these kinds of events and never get invited back because I give my opinion! Am I the only one in the industry who doesn’t understand why we’re still fighting with responsible gaming? Particularly when everyone is KYC’d on Facebook, Uber, on absolutely everything other than the gaming industry. And there is the dark side of KYC where they have to regulate and check people out; but in the real marketing world, in the social media marketing world, it’s KYC that drives the whole marketing programmes. If you go to any other industry than ours, everyone is striving for KYC, because that’s the driving force. If there’s one jurisdiction in the world that’s 100% KYC, it’s the country of Poland. When you sign up for a player’s card in Poland you have to get your national ID and loads of other things, after which you have to set your time limit, your spend limit and your visitation limit. 

But once again, you don’t even need those things in the KYC world. When I dig into our data at Axes, just by the change in the speed of the click, you can spot someone having an issue at a machine within 25 feet. I was taught how to do it. With that being said, change the speed of click, change the nomination, change the game; there’s a whole bunch of behavioural changes that when you have the real-time data, all you’ve got to do is set the alert, walk over and tap them on the shoulder like in the good old days; invite them over for a donut and a coffee and allow them to cool off. But you need the real-time data to have the algorithms to work that way. We’ve got to get on that lead in this industry so everyone is KYC’d and get rid of all the bad. Then we can get focused on cranking up the good and get more profit out of every player, because they’re having a freakin’ good entertainment experience. And with the guardrail for anti-money laundering (AML) on the left, and the guardrail for responsible gaming on the right, it’s exactly the same data.

Justice: Well, I would say, fortunately it’s a free country so we’re not going to require all of our customers to do things that may make them uncomfortable or drive them out of our ecosystem. Going back to what Jonathan was saying, part of it is around giving your customer the control to manage their own business. In a cash environment it’s very difficult to keep up with the amount of money a customer has in their pocket, or what it’s going to be spent for. If I have an electronic measurement where I can control my spending, I can manage my money; as far I’m concerned, I can manage my money for the rest of my life. Electronic measurements give people the ability to control themselves. 

Likewise, that same technology can then track and provide behavioural analytics to where, as an industry, we can start to understand when customers are getting ahead of themselves; when they’re getting out of control, and then we can start thinking about what actions can be taken to nudge customers in the right direction. At the end of the day, it’s about giving control to the customer, as well as to the operator.

Hall: There’s a jurisdiction in the United States that just made a change in the laws yesterday. Three months ago, they were going to go obligatory KYC. During those three months we showed them how to better use loyalty rewards and now they’re against that. In other words, you make a clear distinction between a cashless loyalty programme and a cash loyalty programme. Why? Because you’re trading data for knowing who they are. So another point about going cashless outside
of closed loop and opened loop, is what is your rewards strategy? It’s loyalty and rewards that drives deep meaningful KYC. 

Hansen: How are we keeping data, security and transparency in mind as we move forward?

Libson: Well, this topic is the bane of my existence because we’re owned by a bank, so everything my company does has to go through their banking systems and security. We’re working with them and how they secure their debit card and credit card securities to ensure we’re in line with that. Our security is tied to the bank so it’s tied to our devices, whether that’s our machine or devices in store. 

But, right now, we’ve got a world where every slot machine is connected to Data Mining Systems (DMS) via a wire. And, sooner or later, these wires are going to go away, so the security in the internet world will need to be at the same level as that that we have in brick-and-mortar stores. Hopefully the focus turns here and it’s successful, and hopefully there isn’t a major online disaster; but that’s the way things are going online.

Justice: As you’re exploring how solutions work, having your IT team go through to make sure they have the greatest security so that these online services are as safe as they can be. Our approach has been to go down the path of leveraging the ticketing system that’s been tried and true, and has been proven in the casino industry for decades. But there’s always checks and balances to be had so that the information can be put across your ecosystem. This way, the same challenges you have today you’ll have tomorrow, but this won’t introduce any new unexpected challenges if done correctly. 

Michaels: We’re pretty much there in terms of ensuring everything is done in line with the regulator; but we also deal with a whole banking structure too, whether that be banking commissions, state, etc. We have to be in line with all those protocols too. One such thing is PCI compliance, making sure that all the terminals we have, regardless of how they’re delivered, fit within our ecosystem. At the end of the day, you’re ensuring everything is working and there’s a deep understanding of the processes involved; these are things all the other companies are doing.

Hall: Well, once again I’ll have to play the black sheep of the family. We started our cloud over 12 years ago; pure cloud. What does that mean? Well, I’m inherently scared of local servers. Why? Because most of the time local servers have 16 holes in them in real-time that a hacker could patch. Especially depending on how many people you have plugged into that local server. So our solution was to piggyback on the people that were paying hundreds of millions of dollars on security each year; the Microsofts, the Amazons, the Googles, etc. We wanted to ensure we were using their security packages as our base.  

That being said, about five years ago internet security started becoming scary, and that’s where blockchain comes in.
All blockchain means is that you put passwords before a piece of data, after a piece of data and every single piece of data has an interlink password all through them. What we had to do to make sure we were secure when we started working in Eastern Europe; where we saw some scary things, was to upgrade to the Microsoft security package blockchain. But, once again, to take away, how can we really be that secure with a local server? The answer is not that easily in today’s world. The world of cloud today is possibly the safest place you could be. In the old days, you didn’t know bank accounts were on the cloud because it was all on a closed network. It’s not only banks that need a certain level of security representation, but a number of other organisations. Security in today’s world? If it’s not the cloud, it’s scary.