At any coffee shop, grocery store, or restaurant, customers tend to pay for purchases with credit or debit cards.
But at casinos, most patrons load slot machines with paper bills. They pay cash at cages for poker or blackjack chips and line up at ATMs for additional funds when their luck runs out.
Why haven’t cashless systems been adopted by more casino operators?
According to Sightline Payments Co-CEO Omer Sattar, it’s “the billion-dollar question” in the gaming industry today.
Sattar says two things must happen for widespread adoption of cashless gaming: consistent gaming regulations throughout the industry and ease of access for customers.
“I will almost put a check mark there,” Sattar says of the regulatory hurdles needed to be met for widespread implementation of cashless-payment systems. “We’re seeing this happen across dozens of jurisdictions.”
But the biggest hurdle remains ensuring “an easy consumer experience” similar to the way Starbucks implemented its cashless system. Noting that Starbucks started cashless with 50 stores before expanding to its properties across the country, Sattar sees a similar pattern happening in the gaming industry.
“A few casinos have taken the leap,” Sattar says, “and suppliers are working with those casinos to make the user experience better.”
In 2021, “cashless” emerged as a buzzword at gaming-industry events. Companies have developed sophisticated technology and systems designed to make the consumer experience frictionless, as natural as buying a cup of coffee or a bagel.
But will cashless payments become more prevalent at brick-and-mortar casinos?
According to the Federal Reserve Bank of Atlanta, the U.S. consumer averaged 68 payments per month in 2020, the same rate as in 2019. Of that total, debit cards accounted for about 28 payments and credit cards were used for 18. The other 14 were made with cash.
And in a survey published by McKinsey & Company in October 2021, 82% of American said they used some form of digital payments – defined as “browser-based or in-app online purchases, in-store checkout using a mobile phone and/or QR code, and person-to-person (P2P) payments” – in the past year.
It’s clear that Americans are increasingly comfortable with cashless payments. Lawrence Shen, an analyst with C3Gaming, says adoption of cashless systems for gaming accelerated due to the pandemic and the emergence of online gaming. But he’s wary of predicting widespread adoption among casino operators.
“I don’t think it will be as quick as some of these companies claim,” Shen says. “I don’t think cashless will completely take over.” He added that in five years, the split between cashless and cash could reach 60%/40%, but no more than two-thirds of all payments.
There are various reasons for the industry’s reluctance to totally embrace cashless payments. One is gaming’s longstanding connection to cash. From the bricks of cash awarded to the winner of the World Series of Poker’s Main Event to the $100 bills doled out during hand pays for jackpots at slot machines, cash is part of the industry’s allure, greenbacks evidence of gambling fortune.
But cashless isn’t an entirely new concept. TITO (ticket-in ticket-out) systems started to appear in casinos in the late 1990s, replacing the coins that used to flow from slot machines when jackpots were hit.
“(TITO) was a fairly revolutionary idea,” says Mike Rumbolz, CEO of cashless-payments provider Everi, adding that it enabled casinos to use “tickets all over the floor. You used cash at the front of a transaction and at the very end, and everything in between was cashless.” Employees who used to work casino floors or in count rooms were freed up to attend to other duties.
Rumbolz says it took TITO about five years to be universally accepted in the gaming industry. As he looks at cashless, the same timetable is applicable. “Cashless is right on schedule if you compare it to other innovations. Maybe it’s a little behind, but not much. It is well within the spectrum that you would expect to see. The progression from coin to TITO to right now using your phone is a natural progression. It’s the natural evolution of cash flow.”
As with any new technology, the deployment of cashless systems has not been without minor setbacks and glitches. It’s not yet the seamless experience the technology promises or eventually will achieve.
Cashless has slowly been integrated at land-based casinos. Boyd Gaming first adopted a cashless payment system in December 2020 and has since had a gradual rollout across its properties.
Boyd SVP and Chief Information Officer Blake Rampmaier says the decision to implement cashless through the Boyd Wallet is an acknowledgment that the technology is “here to say.”
“We know there are customers who prefer to interact with us in this manner,” Rampmaier says. “(Cashless) is for those people who want to do it. If you don’t want to do it, you don’t have to. But if we didn’t believe in it, we would not continue these rollouts.”
Rampmaier says that Boyd’s cashless systems have been adopted by a cross-section of customers. And it’s not just young patrons who have grown up paying for most of their purchases with credit or debit cards.
“We’re certainly finding that our top-tier players are enjoying it,” Rampmaier says. “They’re not having to pull a lot of bills out to put into machines. And believe it or not, some of them just don’t like going to a cage and getting $7,000. They just have a greater sense of security, and they’re able to manage it better.”
While cashless payment systems have started to be adopted by U.S. gaming operators in the last two years, at least one cashless provider has found success deploying its system internationally. Flexia Payments is currently fully integrated into the Win Systems casino-management system used in 20 countries. As of now, the product has been activated only in Mexico, where Flexia Payments has been doing business for about the last six years.
Progress in the U.S. has been steady, according to Flexia CEO and co-founder Craig Libson, notably because “it takes a very long time to convince banking institutions that what we do is, in fact, a fintech platform that moves money between regulated accounts,” he says.
“They think this is scary stuff,” Libson says of banking institutions. “But in fact, what we do is move money funds from an account that a person opened at a bank through a KYC (know your customer) fraud and AML (anti-money laundering) process to another account in that person’s name, which may be a gaming account, but which they also established in the same or similar regulated KYC fraud AML process. And it’s all tracked with electronic records and files and data. And it’s more secure than anything the industry has seen before.”
Libson and Flexia co-founder Scott Walker believes cashless will be more quickly adopted in the U.S. by local casinos – especially tribal operations – that have relationships with customers rather than destination or resort casinos that people visit only occasionally. Libson says the cashless payments may rise to as high as 85% in those local environments.
“Local properties are where (cashless) is going to be adopted and used more by players,” Walker says. “The local situation is the biggest distinction we see as far as adoption.”
While cashless-payment providers have developed and fine-tuned secure, adaptable, and frictionless systems, widespread adoption will ultimately hinge on casino operators.
Everi’s Rumbolz thinks that so far, operators have been very good about not just explaining the benefits of cashless payments but incentivizing its use to patrons. But there’s one benefit he’d like to see emphasized more.
“The one area that casinos haven’t yet chosen to really publicize or pass on to their patrons is something we’ve always identified as being extremely important and that’s personal safety,” Rumbolz says. “The nice thing about cashless is the amount of money that you have or the amount of money you’re receiving back. … It allows you to put that money directly into your checking or savings accounts without ever having to touch that money. When you leave, you don’t have to worry about someone following you and saying, ‘Give me all your money.'”
Responsible-gaming safeguards are also easily put into place through cashless payment systems, Rumbolz adds.
What’s important to remember is that cashless systems in the gaming industry are still in their infancy. Sightline Payments’ Sattar compares this stage of the technology to when Microsoft introduced Windows 3.0 in 1990, “and it changed the entire world.” Within a few years, Sattar expects the gaming industry’s use of cashless systems, which ultimately depends on jurisdictional approvals and are finally being considered and adopted, to become as natural and widespread as paying for a cup of coffee, a meal, or an online purchase.
“It’s not just large commercial casino operators, but tribal operators in jurisdictions that are moving forward (with cashless),” Sattar says. “The product needs to evolve and get better. And what needs to happen is the concept of three minutes – the time between when a player decides to the time they’re actually playing. But we’re getting there.”
