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Commercial and tribal casino executives believe cashless wagering will inevitably replace cash as the preferred method of betting, even as it creates another layer of anti-money laundering compliance scrutiny for operators.
Among the wide variety of cashless gaming choices there are debit and credit card payments, prepaid cards, and digital wallets designed specifically by gaming manufacturers, such as IGT and Everi Holdings.
These products allow consumers to load and withdraw funds, skip cashier lines and access any slot machines, table games and even sports betting and internet gaming offered by a casino.
“Since we are still coming out of a pandemic and some folks are still wearing masks and social distancing, some don’t want to touch money,” said Tim Cotton, IT audit manager with the National Indian Gaming Commission (NIGC).
Cotton said casinos are “looking at an evolution in the marketplace” as far as ageing out some customers and replacing them with new ones who are comfortable with purchasing products using their mobile phones.
“We all have this technology and it’s easy to transfer money into gaming,” Cotton said last week during a panel discussion at the Global Gaming Expo (G2E) in Las Vegas.
“I don’t necessarily have to go to the kiosk or ATM or the cage to redeem [my chips or ticket],” he said. “I can do everything right there from my electronic devices.”
Cotton was joined on the panel by Jay Song, director Office of Compliance at the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN); Crystal Houston, assistant regulatory compliance manager for the Chickasaw Nation Office of the Gaming Commissioner in Oklahoma; and Steven Brewer, a training manager with the NIGC.
“The U.S. economy has begun to embrace cashless,” Song said. “I hardly go to the ATM these days. It speaks to a broader societal trend.”
From an operator’s perspective, Houston agreed with Song on the benefits of cashless payments, noting that this is where the market was going and that her tribe in Oklahoma and others needed to jump into the digital space.
She added that the operational benefits come from not needing to remove cash from slot machines, so there is less to count, less in the casino cage, and less in the kiosk.
“On a grand scale in five to ten years from now, everybody [will be] cashless,” Houston said. “Think of the benefits then.”
Brewer, who moderated the panel, predicted widespread adoption of digital wallets will come after one casino says they are 100 percent cashless.
Currently, only Resorts World Las Vegas offers consumers a completely cashless gaming and non-gaming experience. The $4.3bn resort allows consumers to load their digital wallets for use in the casino through the Resorts World mobile app.
Additionally, the resort's hotel, dining, entertainment venues and player reward are all digital.
Cotton said the tribal gaming industry expects 60 percent of its casinos to have cashless gaming in their facilities by 2025.
As for why it has taken so long for tribes to embrace digital payments, Cotton said the industry has tried to balance the convenience of the technology against the issues of money laundering, cybersecurity and problem gambling.
From a federal perspective, Song said FinCEN is interested in how the money is being handled, and the reporting requirements even if the transaction is done through a digital format.
He said the recent enforcement action involving the crypto exchange Bittrex may not directly affect the casino industry but with new technology, compliance should be baked in from the beginning.
Bittrex settled charges brought by the Treasury Department and FinCEN that it allegedly violated federal sanctions, agreeing to pay $24m and $29m, respectively, and monitor its compliance program.
Between 2014 and late 2017, Bittrex allowed some 1,800 people in sanctioned jurisdictions, including Iran and Syria, to conduct more than 116,000 transactions worth roughly $260m through its platform, according to the settlement.
Song said the lesson for operators was that they should embrace technology but be in compliance. He also reminded casino executives that Bank Secrecy Act compliance involving third-party vendors that supply digital wallets falls on the financial institution, in other words the casino.
“There needs to be a responsible approach to this where the vendor is on the same page with the financial institution on how they are handling compliance,” Song said. “Casinos have oversight of that [third party] to ensure that they are helping to meet your compliance requirements.”
Houston asked what FinCEN would expect from a compliance relationship between a casino and a third-party vendor.
“Trust but verify,” Song said. “The level of trust is important. You don’t want to call FinCEN and say, I haven’t been able to reach my third-party vendor.”
He added that compliance is there to protect the U.S. banking sector, including the gaming industry. Song also stressed that casinos must not just “buy something off the shelf and turn it on and say we are done with our compliance obligation.”
“The institution is responsible to make sure the vendor has done proper testing and has a compliance program, and they are helping meet your compliance needs overall,” Song said.
