Cashless Gaming on the Way

Credit cards, once reserved for corporate highflyers, started to become more prevalent but really took off after Visa and Mastercard introduced “tap and go” contactless payment systems. Today, it’s the smartphone and smartwatch that are rapidly becoming the payment method of choice. It’s anyone’s guess where things might go next, but some sort of biometric cashless payment option is probably on the cards.  

All these innovations have meant that when it comes to payments, cash is no longer king. In recent times, cashless payments have rapidly overtaken cash as the dominant form of payment — a large driver of this being the COVID-19 pandemic and the desire to avoid the potential spread of the virus through physical contact with cash. The accelerated decline in the use of cash is perhaps the most significant change in payments since the introduction of metric currency on Valentine’s Day in 1966.

While other businesses have been able to readily embrace cashless payments, legislation has prevented its integration into the gaming environment. Since 2016, ClubsNSW has been seeking regulatory reform to introduce cashless payment options for gaming machines. The reason it has taken so long for the Government to consider making the necessary legislative changes is the concern that cashless payments could in fact exacerbate problem gambling. 

That concern is borne out of research that shows the ‘pain of payment’ is much less when paying digitally than when handing over physical currency. Research suggests people tend to spend more with cashless transactions than they otherwise would. 

Neither the club industry nor the Government wanted to see an explosion in problem gambling due to the introduction of cashless payments, so an agreement was reached to set up a ‘regulatory sandbox’, where cashless technologies for gaming machines could be trialled with various harm minimisation safeguards to ascertain what impact they might have on problem gambling. The Aristocrat digital wallet trial at Wests Group in Newcastle is the first of these sandbox trials. 

So, how did cashless gaming go from being a clear risk of exacerbating gambling harm to an apparent panacea for problem gambling? That seems likely due to a recommendation made by the Finkelstein Royal Commission Inquiry into Crown Casino in Melbourne. The Inquiry recommended a cashless gaming card as a mechanism, it believed, that would help reduce the risk of problem gambling and money laundering. 

The Finkelstein recommendation came as somewhat of a surprise, given it seemed to be in direct conflict with the research which indicated that cash rather than cashless payments was the best way to protect gamblers from overspending.  

For example, the UK Gambling Commission, the British gambling regulator, recently published research that found “cash is viewed as the best way to maintain control over gambling spend” and “while the UK is shifting towards cashless payments it’s important that land-based gambling venues continue to allow cash payments to help gamblers keep control of their spending”. The research acknowledged that app-based cashless payment methods could incorporate features to help gamblers control their spend, but cautioned that “to protect gamblers, this should be in addition to not instead of the option to pay via cash”.

Notwithstanding the academic research, the notion of a cashless gaming card to tackle problem gambling very quickly gained traction both in the media and with other gambling inquiries. The Bell Inquiry into The Star casino in Sydney followed Finkelstein’s lead and recommended a cashless gaming card for casinos in NSW. Shortly thereafter, the NSW Crime Commission Inquiry into Money Laundering in Clubs and Hotels also recommended mandatory cashless gaming cards for pubs and clubs, albeit this time to address money laundering risks.   

Given the levels of gross misconduct identified in the two casino inquiries, the NSW and Victorian governments had little choice but to adopt all the recommendations made. Both governments quickly passed legislation to implement cashless gaming cards for their respective casinos.

The NSW Crime Commission’s inquiry was different, given it found that the cleaning of dirty cash through gaming machines in clubs and pubs was high risk, inefficient and therefore not widespread. It did however find that some criminals were spending the proceeds of crime on gaming machines.  

Some stakeholders raised concerns as to whether the Crime Commission’s recommendation for mandatory cashless gaming was proportionate to the risk identified. Especially since its report contained no analysis of the costs or other potential impacts of introducing a mandatory cashless gaming card. With the introduction of the Opal card on Sydney’s public transport network costing over $1.2 billion, this system — being far more complicated and widespread — would surely cost more. 

As a result of the NSW Crime Commission’s recommendation, both the Coalition and Labor have committed to further exploring cashless gaming after the election. The Coalition has announced its intention to move to a mandatory cashless gaming system on all gaming machines by 31 December 2028, while Labor has said it will conduct a trial of a mandatory cashless system on 500 gaming machines to collect further evidence about the potential impacts before finalising its position.  

ClubsNSW actively supports the introduction of cashless payment options for gaming machines, subject to appropriate harm minimisation safeguards, however, it remains concerned about the impact a mandatory cashless gaming system might have on clubs, recreational gamblers and problem gambling in NSW. ClubsNSW has committed to working constructively with whichever party forms government after the next election to help ensure that cashless gaming is introduced in a practical and cost-effective manner that ensures a vibrant and sustainable industry. 

Afterall, a cashless society seems inevitable whether we like it or not.