TribalNet: Casinos slow to adopt cashless gaming, but that should change by 2025

September 14, 2022 3:17 PM
  • Buck Wargo, CDC Gaming Reports
September 14, 2022 3:17 PM

U.S. tribal and commercial casinos have been slow to adopt cashless gaming, but payment providers and industry experts expect at least half of properties will adopt it by 2025, in part driven by losing high-worth players to competitors.

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Cashless gaming is coming and tribes needs to be prepared was the message from a panel discussion Tuesday at the 23rd TribalNet Conference & Tradeshow in Reno. Just like TITO technology took over the slot floor from coin-fed slot machines, cashless will become the standard and a competitive requirement in casino gaming, the panelists agreed.

“Cashless technology has been there for a couple of years and you still don’t see large-scale adoption,” said program moderator Ram Patrachari, CIO of Jamul Casino in San Diego, which brought cashless slots to its gaming floor in spring 2021. “I wonder why that is and if we’re at a tipping point.”

Chris Justice, president of Global Payments Gaming Solutions, a cashless provider, estimates that 2% of U.S. casinos have adopted cashless gaming and another 4%-5% are in the evaluation process. He’s not surprised by it, because it took at least five years from introduction of TITO before casinos across the country had implemented it.

“We’re about two years into this current phase, but the key difference between this and TITO is that hordes of grandmas were walking around with buckets full of coins and struggling to get the change. It was Star Wars to think about replacing a coin with a piece of paper. It was ridiculous. But who in here doesn’t have a mobile phone? How ridiculous to think that I can use my mobile phone to pay and enjoy the experience. It’s happening everywhere.”

Justice said about 20 properties have implemented cashless gaming thus far. The early adopters are paving the way and the industry is at a tipping point where the followers are rapidly evaluating after experiencing what cashless has done in terms of taking their top-tier customers.

Justice said a lot of casino executives are questioning what happened to some of their name players and why they aren’t coming in as often. Players who move the needle are more likely to adopt cashless, he said.

“Now, all of a sudden, you have to be a fast follower just to stay up in the marketplace,” Justice said. “The challenge for fast followers is that once your competitor has done this, how much more will that cost you to get those customers to come back? Their tier status is higher elsewhere and the relationships they developed are becoming further cemented. There’s a lot of disadvantages to being a fast follower or laggard follower, as a lot of folks will ultimately be.”

Noah Acres, chief marketing officer at Acres Technology, said one of the problems with adoption is the way casino technology works. Providers of slot systems, for example, want to monopolize access and charge casinos when data is read or input.

“When it comes to cashless, they’re saying, ‘Now we’re payment processors and you have to take our payment systems,'” Acres explained. “The casino-management systems have really slowed down cashless and I think 2023 will be a really big year for cashless, because operators are starting to catch on that there are other ways into the game outside of the slot system. That will give operators a lot more freedom than they had historically.”

Chris Blevens, product manager at JCM Global, said that customers trained how to use a cashless wallet at one property likely have to go through the signup process all over again at another.

“One of the things that will hold back cashless is that with all of these different casinos and different solutions, customers receive the proper training where they have a single path to get into the solution,” Blevens said. “It might be people trying to standardize this process, so it looks very familiar to get in. Until we get that figured out, it will always be a barrier.”

Bethany Seidel, director of marketing strategy at Sightline, a cashless-gaming provider, said innovation will be the key to adoption by developing new and easier ways for products to work in the cashless environment.

“Mobile is key,” Seidel said. “When we went through COVID, people who had never used mobile phones before started using them. The argument in the casino industry has always been that a customer’s demographic isn’t right for mobile implementation. When you talk about a tipping point, it’s not that there’s going to be a tipping point. We’re talking about whether you’ll be ready when the tipping point actually happens.”

Acres predicts that the “vast majority” of slots and other devices in casinos will be cashless by 2025. The first NFL stadium went completely cashless before the 2019 season; before the 2021, season 29 of 30 stadiums were cashless, he said.

“I think gaming will follow a similar path. If you want to maintain relevance going forward, you’ll need to be cashless. If you don’t have cashless capability on your slots and tables, you’ll be an outlier,” Acres said.

Justice predicts the adoption will be even greater, because top-tier players will be spending more at cashless locations, which “puts the squeeze on everyone else to bring up the water level.” He said casinos take big steps to get a 3%-5% lift, but when they start to see 15%-20% of top-tier spend walking out the door, organizations “will do amazing things to figure out how to solve that problem, and this is the tipping point that will create and drive that change.”

Blevens was the most pessimistic. He predicted that only one in three casinos will have a cashless solution by 2025 and not until 2030 to 2035 will a high percentage of overall transactions in casinos be cashless.

Seidel predicts cashless play will be about 50% by 2025.

Justice said it’s impossible to predict the percentage of cashless transactions by 2025, but only that the majority of facilities will be cashless enabled.