Heavy regulation still challenges gambling payments innovation
In recent years, changes within the gaming industry, from the Supreme Court’s ruling on sports betting in 2018 to online gaming’s growth in popularity, have generated interest from outside organizations who now see business opportunities within the sector.
What these companies are learning, however, is that despite an apparent relaxation of rules and regulations, the industry is still heavily regulated and closely monitored with requirements varying state to state, county to county and tribal community to community.
Adding to this level of complexity, consumer expectations around payment options are evolving at an unprecedented rate, yet gaming remains one of the few – possibly only — industries where cash still reigns king. Though a majority of Americans say they carry minimal cash, casino operators have been resistant to implementing modern solutions on the casino floor. As a result, casino guests are growing increasingly frustrated with the industry’s reliance on cash. Consumer frustration around payment options also extends to online gaming companies, with iGaming and sports betting operators currently experiencing around a 60% daily card-decline rate.
Managing both the regulatory constraints and the payment modernization demand from consumers, payments processors entering the industry must answer one major question: “How do I help operators simultaneously delight guests with propertywide modern payment options, improve back-office efficiencies and still meet or exceed regulatory requirements?”
First, payments experts need to recognize that, when it comes to supporting the gaming industry, there are two sides to the regulatory coin: 1) gaming requirements and 2) payments compliance requirements. It is critical that any solution seamlessly fit into the gaming environment while meeting all requirements from gaming and payment regulators. Compliance must reside at the center of any innovation or gaming operators simply will not take a chance with that solution.
Second, it is important to remember that outside of regulatory requirements, payment options must meet (and even exceed) guests’ expectations. Any modern solution should provide a solid funding foundation that encompasses the entire guest experience. For example, guests should be able to use their smartphone to reliably and easily fund their favorite games, whether a slot machine or table game, and then be able to easily use those same funds or winnings to place sports bets, buy show tickets, dinner or go shopping. Unfortunately, card-issuing banks do not frequently support their card customers' desire to play and consequently decline more than 50% of attempted transactions, which destroys the guest experience that casino operators are working hard to provide.
Because it is difficult, costly and complex, this problem has been deceptively challenging for the payments industry to solve. Too often, the focus has only been on supporting the processing of a payment, but success will be defined by those who can deliver the best guest experience from self-service to mobile solutions.
For companies attempting to break into the gaming industry, they may consider partnering with an organization that can help provide easier, more cost-effective entry into the market. As an example, companies that are not licensed in every jurisdiction within a state or region often have trouble deploying services to an enterprise because they can only service some locations, not all. In order to be successful, it is imperative that payment providers understand the gaming industry’s infrastructure challenges and requirements, the industry's regulatory complexity and operators’ concerns and desires related to payments.
The player experience has changed very little over the decades while virtually every other industry has seen significant technological advancements. Gaming has simply been stuck in the past for too long and despite the inherent challenges that come with supporting gaming operations, the industry is primed for innovation in 2020 … and beyond.