Cycling toward cashless: ATM provider tests linking bank accounts, player cards

By Liz Benston

Monday, Aug. 23, 2010 | 2 a.m.

We live in an increasingly cashless society where consumers use credit cards to purchase just about everything — including a gambling jag at the casino.

And yet, while slot machine technology has progressed by leaps and bounds from the days of two-dimensional cherries and 7s, the day when gamblers can insert bank cards directly into slot machines, instantly draining checking accounts or racking up credit card debt, won’t be here anytime soon — if ever.

Regulatory concerns about compulsive gambling, a little-known state law and the complexities of banking systems all play a role.

Still, the No. 1 provider of ATMs in casinos and a front-runner in the processing of gambling transactions is working on slot technology that could eliminate the use of cash altogether.

In the meantime, Global Cash Access says slots that accept bank cards are simply off-limits — at least for the foreseeable future.

“We’re not going to push an agenda of putting a credit card in a slot machine when it isn’t accepted,” said Scott Dowty, executive vice president of business development. “We really do care and focus on social responsibility as part of our business. We want to process as many transactions as possible, but we’re not interested in processing transactions for people who have gambling problems.”

It would be difficult for the company to implement systems enabling bank cards to communicate directly with gambling systems that network slot machines, said Mike Rumbolz, a former Gaming Control Board regulator who now advises Global Cash on business strategy. Such systems would be nightmarishly complex and cost-prohibitive because of technology required to keep track of continuous, rapid-fire gambling transactions that would add and delete money from the gamblers’ accounts — an ability bank cards lack today, he said.

Banks, which control where their cards can be used, probably would nix the ability to connect to a slot machine because of the credit card industry’s historic queasiness about processing gambling transactions, he added.

In an attempt to capitalize on the obvious profit potential of such technology, an enterprising inventor years ago patented a system allowing gamblers to swipe their bank cards in slot machines.

The inventor had demanded such a rich sum to license the concept that nobody explored the technology, and casino suppliers instead embarked on a different path involving the use of paper tickets, Rumbolz said.

Gamblers didn’t take to ticket machines at first but now prefer them by a wide margin to coin-operated machines. Ticket-in, ticket-out technology, which dominates the U.S. market, also benefited casinos by reducing the need for change handlers and the labor costs associated with collecting and stocking coins.

A 1995 law prohibits the use of credit cards in Nevada slot machines. Lately, Global Cash has pursued more acceptable forms of cashless technology here than the direct use of bank cards.

Last month, the Nevada Gaming Commission unanimously approved technology giving ATM customers the option of receiving cash or a slot machine ticket worth the same amount. Tickets are compatible with any ticket-in, ticket-out machine.

Some problem gambling advocates theorize that the use of tickets encourages irresponsible behavior. Much like consumers who overspend using charge cards, gamblers might be more likely to run through money in the form of a paper ticket than cash. There’s little evidence of that, though, in wide-ranging, government-authorized studies of gambling technology in Australia, Canada and the United Kingdom, said Bo Bernhard, a sociology professor and director of gambling research at UNLV tapped by Global Cash to gather research on the use of ticket-in slots.

Mostly, though, Nevada regulators approved Global Cash’s QuickTicket software because they concluded it wasn’t much different from what’s available. Groups such as the Nevada Council on Problem Gambling, agreed.

Global Cash intends to install the ticketing software onto existing ATMs, which spread into casinos in the 1980s. Just as replacing coin slots with ticket-dispensing ones slashed labor costs, QuickTicket is expected to reduce casinos’ cash-handling expenses.

Regulators mostly take a libertarian approach toward new gambling technology, and are not required to consider its potential effect on problem gamblers. And yet, some regulators say advances can go too far.

Historically, the Gaming Commission has taken a more conservative stand than the state Gaming Control Board by rejecting industry efforts to bring cash transactions incrementally closer to slot machines.

In 2007, the Gaming Commission voted against a Global Cash kiosk that would have allowed gamblers to receive slot tickets they could then insert into gambling machines. Global Cash intended to install EDITH (Electronic Debit Interactive Terminal Housing) devices — now in use in other states — at the end of banks of slots, and thus closer to gamblers than existing ATMs.

Gaming commissioners rejected the kiosks, uncomfortable with the idea of flooding casino floors with additional, and more accessible, ways of getting money.

And in 2003 commissioners rejected portable card-swiping technology that casino workers would carry with them as they walked about the floor, making change and otherwise helping customers. What sound like minor differences in casino ATMs are major considerations for some Nevada regulators.

“It was simply too close to the machines,” Gaming Commission Chairman Peter Bernhard said in an interview last week. “If you can put some sort of a time and distance gap there, it would cause people to think two or three times about drawing additional money from their bank account.” (He is the father of the UNLV professor, who did not opine on the QuickTicket technology for regulators or conduct his own research on it.)

Gambling equipment makers and cash handlers say they’re just trying to stay competitive in an increasingly cashless world. Global Cash’s quest for a truly cashless gambling transaction in Nevada has only just begun.

At the Fantasy Springs casino near Palm Springs, Calif., the company recently tested technology allowing gamblers to link debit or credit cards to wagering accounts accessed by their player cards. After funding their wagering accounts, gamblers can withdraw money for play by inserting player cards and entering personal identification numbers into slot machines.

The company’s Power Cash technology avoids the potential security risk of linking a slot machine directly to the player’s bank account — not to mention any problematic legal or policy considerations that might arise, said Rumbolz, who developed the technology.

After it reviews the results of the test, the company expects to offer the technology in tribal casinos across the country before applying for approval in Nevada — mostly because of the state’s typically longer approval process and regulatory caution on the subject of cash transactions, Rumbolz said. Power Cash isn’t expected to conflict with state law, which governs credit cards in slots, though that would need to be debated by regulators first, he added.

Control Board member Mark Lipparelli said he welcomes the discussion.

“I personally don’t have a problem” with gamblers accessing their own money from slot machines using debit cards, or having easier access to bank funds via wagering accounts, he said. There could be a side benefit to having companies such as Global Cash monitor problem gambling behavior and limit gambling transactions for those who request it, as they do with ATMs, he said.

Charging slot play to a credit card without getting up from the game, however, makes Lipparelli uncomfortable.

“You’re going a step further,” he said. “But I’d give them due consideration.”