Cashless casinos have been around for a long time, but there is still reluctance among some casino visitors to accept card-controlled systems. so what does the future hold? Phil Clegg attempts to find out...

It is almost a decade since the first ‘cashless’ casino opened its doors in South Africa.

At that time we could have been forgiven for thinking that, 10 years on, all casinos will be like this. That, of course, has not happened, but there is still an inexorable move away from cash and towards the use of card systems instead.

In the meantime various other pay/reward systems, such as TITO, have emerged, providing the operator with the widest range of options ever. Seasoned casino players still say you can’t beat the sound of coins spilling into the payout tray of a slot machine, but is it the sound of the past, except where it is recreated electronically?

Operators don’t want to deal with money. The processes are labour intensive and the security problems are obvious, which is why various companies in the industry have been coming up with technology designed to render it obsolete in the casino environment.

However, in an industry that is usually quick as lightning when it comes to the implementation of new technology, it could be said that movement towards cashless gaming has been remarkably slow in some jurisdictions.

“My opinion is that new technology sometimes takes time to be integrated,” said ex-Suzo executive and PR consultant John Carroll. “It’s a natural phenomenon that people are sceptical about anything new. It’s the old adage of who’s going to go with this first and are they going to be successful?”

Anette Jauch of Atronic Systems, developer of the Chip Cash cashless system, said: “We don’t believe that its progress has been held back as such. If you look at it closely, coinless operations are widespread and work very well. We have had great feedback from our current customers operating with the Chip Cash smart card solution.”

Jauch is firmly of the opinion that we should be talking about ‘coinless’ and not ‘cashless’ operation. “Cashless is the wrong word as pure cashless gaming is not mainstream and in our view it never will be,” she said. “We believe the bill validator will always be in use for the next several years or more. So we like to refer to it as coinless.

“In any case, we have many customers going more and more towards coinless in places such as Austria, Malta, German, Lithuania, the Netherlands and, of course, South Africa since the inception of our Chip Cash products in 1999. We are seeing that operators are convinced that coinless is the future and that it brings benefits to both them and they players, not just for their bottom line, but also in terms of customer service.”

Jauch believes that if anything has held the industry back, it is the issue of being ‘tracked.’ She said: “In some countries in particular, being tracked with a card causes a bit of hesitation. This remains one of the main things that prevents its acceptance, especially when some cashless systems on the market require you to register in order to use the cashless functionalities, despite the fact that, technically, players can also play anonymously. Unless required by law, registration is not necessary in order to play with a card.”

Mark Greenawalt of payment solutions company MEI has similar reservations about terminology. “it all depends greatly on the definition of cashless,” he said. “Certainly TITO is a form of cashless redemption and it would be hard to argue that the technology is not widespread in the US casino market and, increasingly in the world casino space. In terms of a purely cashless gaming environment, for example one that is card-based, there is a very different story. When MEI last looked at the issues, there were fundamental barriers to adoption. These, largely, were not technological barriers, but market facing or social issues.”

So what, if anything is holding back the progress of cashless gaming? “Placing any step, such as the issue of a card, that causes a player to do something else prior to establishing game credit will inhibit impulse play,” said Greenawalt. “This is particularly true in destination environments, where there may be thousands of potential players waling in the doors of a major property every hour. In these circumstances, issuing the redeeming cards is just non-viable due to the logistics. Putting any barrier between a consumer’s decision to play and establishing game credit is not in a gaming property’s best interests.”

He also believes there is an issue regarding privacy and anonymity. “Cash is an anonymous transaction medium. A TITO ticket again is anonymous. Obviously, card-based systems can be constructed to provide anonymous play, but the psychological barrier for the player is much greater. In our modern society, we are very familiar with debit and credit card systems and we intuitively know that all those transactions are tracked for account billing and reconciliation purposes.

“Frequent gaming patrons generally are familiar with slot club cards, gaining loyalty points by tracking their play. To suddenly reverse years of personal experience and accept that a computer-based casino card system is private and anonymous is a big leap of faith. Furthermore, we have all seen issues to identity theft in the news and each of us continues to be more cognisant about who we give our details to and how they are used. To provide these details to yet another system may not seem inviting to many who want to simply play and enjoy.”

Greenawalt also feels that demographics plays a part. “In our original market research in the late 1990s, the professor conducting the research had a pre-survey ‘bias’ for smart card technology,” he said. “Older players in particular had adverse reactions to smart cards. ‘I don’t want to play with anything smarter than me’ was a typical comment. While this attitude will change with time and newer generations of players, it is still a current consideration.”

The other main issue is security - what happens if you lose your card? “Many experienced players had memories of leaving player tracking cards behind in machines,” said Greenawalt. “If you observe frequent players in casinos, quite often you will se them wearing specialist wrist bands connected to the cards to prevent this from happening.

“They made a logical connection between leaving a smart card behind in a machines and then losing the value. Players thought of the TITO ticket differently because it always prints out in response to the cash-out transaction, so they thought that it was harder to miss or ignore – a bit like getting a receipt at the end of a retail transaction.”

John Carroll is firmly in the Jauch camp when it comes to future development. “It is never really cashless regardless. There’s always going to be a note reader integrated into casino slots. I can envisage coin/token payout being replaced at a much stronger rate in the next three years by ticket/card payout.

“As the move to cashless involves a set amount of money to be invested, I could see the majority of larger and medium-sized casino moving to cashless. The smaller casinos that may not have an online system integrated will remain cash venues.”

Anette Jauch believes the biggest obstacles going forward are user acceptance, cost and the availability of the necessary technology. “The basic technology we currently use for our Chip Cash smart card solution has not changed since its launch in 1999,” she said.

“Operators are becoming more aware of how they can use technology to improve their competitiveness and going coinless is part of this. Our use of the Triple DES logarithm chip, as used with credit cards for security, greatly enhances the attractiveness of the product. And, of course, with the evolution of server-based and server-assisted gaming, it will provide a further boost. Therefore, the more people become familiar with using cards in their everyday life, the more they will accept the systems supporting coinless gaming.”

So is the future coinless? “It will depend on the market you are operating in,” said Jauch. “The decision to go coinless, or even fully cashless, or not should be based on the specific market needs. Currently, we can see countries evolving from a cash market to a card market. A fully cashless environment will come, but will take some more years or even decades.

“As long as there are old gaming machines on the floor that do not support cashless protocols and operators who do not want to replace these machines, there will always be a demand for cash at the gaming machine. Casinos will always be part of a cash market as long as players still carry cash with them for one reason or another.

“Casinos will want to ensure that the players insert this cash into their machines. Additionally, we are about maximising how the player can interact with the casino and offering the best solutions for that depending upon the specific market needs.”

MEI’s Greenawalt also thinks there is a role for cash in casinos “for the foreseeable future.” He said: “There is certainly tremendous innovation in the payments transaction world. For example, developments in near field communications and mobile payments are bringing banking transactions to the mobile phone. But future payment transaction systems in the casino world have to always consider the vital element of social responsibility in gaming.

“Certainly, the payment technology to give players direct access to their bank accounts exists in a variety of existing banking and retail transactions and it is technically feasible to put on a gaming machine. However, it is hard to imagine the set of regulatory conditions where such a payment technology would be approved.

“As a consequence, much of the worldwide technological innovation to make it easier for consumers to access either debit or credit accounts is clearly inappropriate for a gaming environment. Cash acceptance provides a more responsible framework. People don’t carry an infinite supply of cash; they have to mindfully insert a note - make a discrete purchase decision - each time they establish play value and when they are out of cash they need to walk off the floor to get more. Any future cashless system has to be thought about within the social responsibility frameworK.

“Cash is also ubiquitous among the general population, allows an immediate, rapid (but limited) purchase decision and is anonymous. Any substitute system would have to demonstrate those attributes with a more compelling value proposition. Presently, the only scenario where moving away from cash in casinos seems viable is if the general population moved away from cash as a transaction medium.

“However, the evidence is to the contrary; despite the proliferation of all forms of electronic transactions, the central banks of the major economies are increasing the value of money in circulation at a rate higher than the rate of inflation. Cash will be a part of the casino environment for some time to come.”