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Understanding Payments in the Gaming Industry: A Conversation with Global Payments
This episode was recorded at the Money 20/20 event in 2019. On this episode, PaymentsJournal’s editor-in-chief, Ryan McEndarfer, sat down with Christopher Justice, president of Global Payments, to talk about payments in the gaming industry.
PaymentsJournal:
Christopher, thank you so much for joining me on today’s
episode. For our first question here, Global Payments is a large multi-billion
dollar brand. Can you tell me more about the gaming division’s role within the
industry?
Christopher Justice:
Oh, absolutely. Thanks, Ryan. Global Payments is a $50
billion company operating in well over 100 countries with over 30,000
employees, and it’s very much focused on a vertically targeted tech-led payment
strategy. The gaming division really started the core of that strategy. It’s
one of the oldest divisions in the company, and has been solidly focused on the
gaming industry for the last 20 years. The business itself is licensed in more
than 140 jurisdictions across the country and is highly targeted, highly
specific to deliver the hardware, software, and services required by the gaming
industry. We support over 500 of the world’s entertainment leaders and more
than 90% of all of the interactive gaming and news sports betting locations
that have popped up. One thing that’s really unique about Global Payments’
investment in gaming is we’re the only processor that has a direct investment
in the gaming space. We don’t utilize third parties in the delivery of any part
of our service. Being 100% dedicated to the industry means that from our call
center, to our innovation teams, to product delivery, to service technicians,
to field service, etc., when you’re talking to somebody in this division, the
only thing they deal with is gaming. Whether it’s the customer, the Ultimate
Casino guest, or the casino itself, it’s people that know the business. They
understand the rules, the regulations, and all of the various things that come
into play in a very complex industry. Through that we’re able to then deliver,
as I mentioned, the hardware, the software, and the systems, things to support
a complete resort experience. So, it’s not just the casino floor; it’s the
restaurant, retail, online, and entertainment venues that are throughout the
property.
PaymentsJournal:
Oh, excellent. Thank you for that. I think it’s very
interesting, and I also think it’s very smart on your company’s behalf to
essentially own the whole part of it there. Because the payments industry
itself has its own rules and regulations that it has to abide by, but then the
gaming industry also has its own regulations and rules that it has to comply
to. Having them both together, you need somebody who has that specialization
skill that’s solely looking at that particular industry vertical because
between the two of them, I imagine there are a lot of hoops that you have to
jump through to make sure you comply with essentially serving two masters here.
On that end, would you say that’s an accurate description in terms of just an
overwhelming amount of regulation and compliance that has to be met because of
the two different industries that you’re playing in? Or is it kind of a
“no, things might be a little bit easier.”?
Justice:
It’s probably more complex than even how you’re categorizing
it. Because while certain things like the Department of Justice will regulate
things like the Wire Act, it is a state-led or jurisdiction-led initiative when
it comes to gaming. So you’ve got, for example, the state of Nevada that
obviously governs gaming regulations here. But then when you get to Oklahoma,
each of the individual tribal jurisdictions makes up their own rules. We’re
licensed in more than 140 jurisdictions, so we not only have to comply with
PCI, GDPR, Visa, and MasterCard rules and regulations, but we’ve got to deal
with regulations in Nevada, which are going to be different than regulations
for a particular tribe in California or Michigan. And now with sports betting
new rules and regulations are coming out for Tennessee and Colorado. So online
gaming has its own set of rules and regulations typically, certainly as we get
into the interactive lottery space there’s, again, another set of rules. As
we’re implementing solutions, we’ve got to be very well-aware and configurable,
where certain things are allowed in one jurisdiction, but not allowed in
another. Our systems are all configured to operate and work effectively in all
of those environments, so that we can deliver up to the extent of what the
regulations will allow us to deliver in that particular market. So yeah, it’s a
lot of complexity. We have full teams of people, who all day every day really
work exclusively on licensing, compliance, and all of these regulatory issues
to make sure that everything we do is 100% compliant in the industry.
PaymentsJournal:
Yeah, I certainly think that’s very interesting and it
almost kind of sounds like payment gymnastics in the sense that we’ve got to
jump through all these hoops to make sure everything is kosher on all ends here
so there’s no issues. Moving on to the next question here. Gambling is a hot
topic in the payments space right now, from sports betting, to i-gaming, to
mobile payments. I’m curious to get your take on what you see as the biggest
trends heading into the year 2020.
Justice:
You know, I think there’s a there’s a couple of hot topics
that are hitting the market and I think as we look at it, who doesn’t enjoy the
convenience of a modern commerce experience? Whether that’s the popular apps
that we’re using, like Uber, Airbnb, to really neat websites like Amazon or
Apple, or even things that are happening in the brick and mortar world like pay
at the pump. Who doesn’t want to be able to just drive up, fill your car, and
drive off? So payments modernization is a really hot topic in the space right
now. That primarily comes from the fact that the U.S. Supreme Court repealed
PASPA, the professional and amateur sports betting prohibition, which is
enabling sports betting to pop up around the country. Well, it’s really hard to
have a mobile sports betting philosophy in a particular state if the rules and
regulations that were already created in the state don’t allow you to fund the
mobile application.
So payments modernization is now really becoming a very hot
topic. It’s not only making sure that we have the ability to fund the new
solutions states are wanting to deploy, but likewise we want to make sure – and
the regulators, operators, and everybody in the industry want to make sure –
that we are delivering the kind of experience that’s going to meet or exceed
guests’ expectations once they get there. So certainly that’s a very hot item
there. That also moves into conversations in and around cashless gaming, which
is a hot topic that we ought to dive deeper into. Just like today, in anywhere
outside of the gaming world, I love going to amazon.com and placing my order
and, at least where I live and depending on what I order, an Uber driver will
actually deliver it to my door within a couple of hours. Everybody wants that
kind of modern convenience and it hasn’t previously been allowed in gaming. So
cashless is a hot Item. But going back to your previous comment, regulatory and
compliance are the things that are top of mind. So we as an industry live by a
culture of compliance philosophy. Whether it’s all of the payments stuff, like
PCI and GDPR, or FinCEN rules and regulations, or gaming rules and regulations,
it’s really a hot topic to make sure everything that’s happening follows a very
tight line to meet all of the requirements in our space.
PaymentsJournal:
I’m really glad that you brought up the whole cashless
gaming part there and it does strike me as very interesting. Particularly as
you look around Las Vegas and just in other industries you go, you see where
the payments industry as a whole is kind of starting to go in the direction of
payments modernization and cashless
being part of that. Seeing how that may translate into the gaming industry,
from your perspective, where does the industry stand now in terms of cashless
adoption?
Justice:
You know, it’s really at the forefront. Gaming has really
been stuck in the past when it comes to payments. The player experience truly
hasn’t changed in decades, while every other industry has made monumental
advancements. I think the difficulty when you think about this from a payments
perspective is that the payments industry as a whole really lacks the
understanding of the regulatory complexity, and certainly doesn’t understand
the infrastructure requirements in a very complex gaming space. So many people,
as well, hear “mobile” and they assume everything should work like
Apple Pay. “I’m going to load money into a wallet; I’m going to load the
money from that wallet directly into a slot machine”, which opens up a
myriad of regulatory landmines that are going to blow up in our face, if you
will. The other part of it is that while you’re able to use your credit and
debit cards everywhere else you go in the world, that’s not the case in gaming.
While Visa and Mastercard have opened up the rules and regulations to allow
gaming transactions in the U.S., financial institutions still don’t want to
support the wager of the player. So in the interactive space, we see more than
50% declines, even though a guest may have the credit limit or funds in their account
to actually participate. It’s just that the financial institution doesn’t want
to allow that to occur. So thinking about that, if you wanted to roll out a
mobile solution into the gaming space, and you’re basing it off of the payments
mentality of loading a wallet with a credit or debit card, you’ve got
regulatory problems. These problems are going to create massive cost components
to outfit things to cover up the regulatory components. And then you’ve got a
solution that’s in no way going to meet the guests’ expectations of a seamless
experience, when half the transactions are going to get declined. There are
just a significant amount of challenges there. The good thing about it, though,
is our focus in the gaming space has allowed us to really drive some
significant innovation into the space. We’re launching a solution called VIP
Mobility that fits into the gaming environment. It meets the regulatory
requirements. It’s got the solid funding solutions that enable an incredible
guest experience so that just as reliably as Apple Pay is going to work
everywhere else, VIP Mobility works in the gaming space and allows a player to
participate within their favorite games. Whether it’s the slot or the table, or
they want to go to their sports betting account, or they want to go to their
interactive gaming account, or they want to take their winnings, go to the
restaurant ,and buy dinner, or go to the gift shop, or buy tickets to Cirque du
Soleil, or whatever it may be. We’re really excited about the future of mobile
and feel that we have a very unique advantage in terms of how we’re approaching
it.
PaymentsJournal:
Yeah and if we could, I want to dive a little bit deeper
into some of the challenges that you were talking about there at adopting
cashless gaming; you had brought up the regulatory complexity there. You also
brought up a really good point in that the end consumer, when we have a mobile
application, doesn’t necessarily understand or care about the regulatory
aspect. They just look and say, “is this a great experience or not? If
it’s not, well, I’m not going to use it again. And if it is, well, I’ll
continue to use it.” But there’s a lot of things that are going on in the
back end that the consumer themselves might not be aware of in terms of why that
particular thing might not work. Some of it might not be due to just the
application itself. Sometimes it has to do with things that are further down
the chain that unfortunately, the application just doesn’t have any control
over. You were talking about the instance with a financial institution not
releasing funds for whatever reason that they have in their regulations there.
If we could, let’s go a little bit deeper into some of the challenges of
adopting cashless gaming and also, what are some of the operator struggles that
you’re seeing in the industry today?
Justice:
So I think that’s a great question. Firefighters tend to
solve their problems with a hose and a ladder and the gaming industry is really
trying to solve its problems in a similar fashion. Whether that’s the slot
manufacturers who, without understanding global commerce and how to actually
deliver payment type solutions, try to deliver their solutions, for example,
through a highly regulated device that takes more than three years to get
through the regulatory compliance process to be able to drop that into the
gaming floor. Then when you think about the speed of innovation and consumer
products, where there is a new Apple, Android product coming along every six
months, it’s very difficult for people that have been in the gaming industry to
figure out how they shoehorn these external solutions into the market. That’s
where I think Global Payments has had a competitive advantage here in that we
have more than 1000 combined years of gaming experience right within our four
walls. Couple that with the fact that we have tens of thousands of years of
payments experience at a global commerce perspective on how we would deliver
these solutions to the market. As I look at the challenges that are in the
space to be able to roll out a cashless solution, I think it really falls into
three buckets: it has to fit, it has to deliver results, and it has to be
ridiculously simple. To dive into those three just a little bit, when I’m
talking about it has to fit, we’ve already talked about the regulatory
complexity of hundreds of jurisdictions. But then you have the IT
infrastructure. There are dozens of back office software applications that
drive the casino, all of which are regulated. You have a hardware and
infrastructure investment in the front of the house, the connectivity of the
slot machines, which is certainly very complex. And while, of course, the
latest and greatest game is going to come with the latest and greatest of
capabilities, the challenge that most operators have is more than 20% of their
floor is still dedicated to the older games that our parents used to play
because those are the ones that are still making money. Especially when you get
into the high limit room, you’re going to find a lot of older games that
manufacturers are not going to want to upgrade to the latest greatest of
everything because they’re just not there. Then you start coupling that as well
with responsible gaming, which is really the hallmark of what regulators are
looking for: how do I make sure that what we’re delivering is safe, controlled,
and effective, all the while making sure that game integrity is a key
component. So fitting is a very complex topic on its own. Then when you get
into the delivering results, whether it’s the hardware investment, the software
investment, transaction fees, etc., is the operator going to be able to provide
a better experience for the guests to where they’re going to come back more
often and to where they’re going to perhaps spend more money. Ultimately, they
want to gain that additional loyalty from the player, then is that going to
then offset a variety of other expenses? The difficulty with most of the
solutions that have been introduced to the market is it’s millions and millions
of dollars for somebody to upgrade their gaming environment to even test out
whether the solution is going to work or not. There aren’t a lot of real world
examples that are delivering a return on investment that would make a casino
executive want to take a bet on millions of dollars and expenses just to give
it a try. The third key challenge that has to be overcome is it has to be
ridiculously simple – and that’s ridiculously simple for the guests to use. It
has to be like Amazon, where you understand what the buttons do. You have to
have an easy ability to get in, an easy ability to participate, and an easy
ability to get out. Coupled with that, it has to be ridiculously simple for the
operator to deploy and support. The staff on the gaming floor has to be able to
answer the questions for the guests. They have to be able to effectively handle
problems and disputes. They have to be able to do their day job with a minimal
amount of interruption from a new technology. And I think the combination of
those three things are what have slowed so many of the attempts to get into
cashless. It really slowed them down pretty significantly. We think we have
some solutions that are overcoming all of those and are really going to be able
to deliver that effective value that fits into the environment, delivers the
results, and is ridiculously simple for both the operator and the guest.
PaymentsJournal:
I certainly agree with all the points that you made there. I
really do think it’s all those combined factors as to why you really haven’t
seen what a consumer would expect in the technical world in terms of the new
innovation or the rapid pace of innovation trickling its way there. A lot of that, as we talked about earlier,
you know, has to do with the fact that you’re serving two masters here. There’s
the payments industry, there’s its compliance of regulation, then there’s the
gaming industry. Then there’s all the things you just highlighted in terms of
all of the requirements that this product has to meet to be able to make it
into the marketplace there. With that being said, for our last question here,
do you have anything else that you’d like to add before we close out today’s
episode?
Justice:
So the gaming industry is a unique industry, right? We’ve
talked about the complexity and some of the various elements and it’s really
not about payment services, if you will. It’s around the development and
delivery of a comprehensive ecosystem that’s going to deliver an incredible
guest experience while returning positive P&L results to the Operator and
then guaranteeing compliance game integrity and responsible gameplay for the
regulator. So if you will, it’s aligning the interests of the three key
stakeholders in the industry. From a payments perspective, t’s everybody would
expect “Oh, well, of course, I want to go deliver my payment
services.” But let’s face it, that’s table stakes. As a guest going to the
casino, I fully expect I’m going to have an ability to get money. The real question
is, how do I get that money? How am I allowed to participate? How do I get to
receive an environment that exceeds my expectations for how I want to spend
money in in a safe and secure way, while allowing me to maximize my
entertainment value? I think those are a lot of parts that folks in the
payments industry tend to quickly forget. You know, I think the other parts
that we were talking about a little bit, the regulatory complexity, is truly
significant in the space. It’s understanding the rules and regulations across
hundreds of jurisdictions to make sure we’re doing things correctly, but also
securing the licensing that is required across those jurisdictions. Gaming’s
not about being an angel as much as being suitable. It’s making sure that folks
have fully disclosed indiscretions in their past. In this space, licensing and
regulatory and suitability are key. You get booted out of one jurisdiction, you
get booted out of all of them. The cost of maintaining all of the licensing and
going through all of that stuff can certainly be very challenging. It is a
tough environment, but those tough environments certainly create opportunities
to deploy innovative solutions. That’s one of the things that we think that
we’ve had as an advantage in Global Payments, that ability to see both sides,
whether that’s the gaming rules and regulations or the payment rules and
regulations, and the ability to plot a path. We’ve also done it in a way where
we’re not doing it alone. We’ve created an open infrastructure and a program that
allows other gaming leaders to actively participate and deploy solutions that
have a modern commerce experience, and also get through the regulatory
processes and deliver in a much more expeditious fashion. It’s really been an
exciting time and we have had a fantastic year. Certainly, we’re looking
forward to the future just can’t see it being any more bright and we think the
gaming industry is a fantastic place to be.
PaymentsJournal:
Excellent. Well, thank you very much, Christopher, for
taking the time today to speak to me about the payment challenges and solutions
in the gaming industry. I hope to have you back on the podcast real soon.
Justice: Perfect, Ryan. Hey, thanks so much. I really appreciate your time today.
The post Understanding Payments in the Gaming Industry: A Conversation with Global Payments appeared first on PaymentsJournal.
View all episodes
By The PaymentsJournal PodcastThis episode was recorded at the Money 20/20 event in 2019. On this episode, PaymentsJournal’s editor-in-chief, Ryan McEndarfer, sat down with Christopher Justice, president of Global Payments, to talk about payments in the gaming industry.
PaymentsJournal:
Christopher, thank you so much for joining me on today’s
episode. For our first question here, Global Payments is a large multi-billion
dollar brand. Can you tell me more about the gaming division’s role within the
industry?
Christopher Justice:
Oh, absolutely. Thanks, Ryan. Global Payments is a $50
billion company operating in well over 100 countries with over 30,000
employees, and it’s very much focused on a vertically targeted tech-led payment
strategy. The gaming division really started the core of that strategy. It’s
one of the oldest divisions in the company, and has been solidly focused on the
gaming industry for the last 20 years. The business itself is licensed in more
than 140 jurisdictions across the country and is highly targeted, highly
specific to deliver the hardware, software, and services required by the gaming
industry. We support over 500 of the world’s entertainment leaders and more
than 90% of all of the interactive gaming and news sports betting locations
that have popped up. One thing that’s really unique about Global Payments’
investment in gaming is we’re the only processor that has a direct investment
in the gaming space. We don’t utilize third parties in the delivery of any part
of our service. Being 100% dedicated to the industry means that from our call
center, to our innovation teams, to product delivery, to service technicians,
to field service, etc., when you’re talking to somebody in this division, the
only thing they deal with is gaming. Whether it’s the customer, the Ultimate
Casino guest, or the casino itself, it’s people that know the business. They
understand the rules, the regulations, and all of the various things that come
into play in a very complex industry. Through that we’re able to then deliver,
as I mentioned, the hardware, the software, and the systems, things to support
a complete resort experience. So, it’s not just the casino floor; it’s the
restaurant, retail, online, and entertainment venues that are throughout the
property.
PaymentsJournal:
Oh, excellent. Thank you for that. I think it’s very
interesting, and I also think it’s very smart on your company’s behalf to
essentially own the whole part of it there. Because the payments industry
itself has its own rules and regulations that it has to abide by, but then the
gaming industry also has its own regulations and rules that it has to comply
to. Having them both together, you need somebody who has that specialization
skill that’s solely looking at that particular industry vertical because
between the two of them, I imagine there are a lot of hoops that you have to
jump through to make sure you comply with essentially serving two masters here.
On that end, would you say that’s an accurate description in terms of just an
overwhelming amount of regulation and compliance that has to be met because of
the two different industries that you’re playing in? Or is it kind of a
“no, things might be a little bit easier.”?
Justice:
It’s probably more complex than even how you’re categorizing
it. Because while certain things like the Department of Justice will regulate
things like the Wire Act, it is a state-led or jurisdiction-led initiative when
it comes to gaming. So you’ve got, for example, the state of Nevada that
obviously governs gaming regulations here. But then when you get to Oklahoma,
each of the individual tribal jurisdictions makes up their own rules. We’re
licensed in more than 140 jurisdictions, so we not only have to comply with
PCI, GDPR, Visa, and MasterCard rules and regulations, but we’ve got to deal
with regulations in Nevada, which are going to be different than regulations
for a particular tribe in California or Michigan. And now with sports betting
new rules and regulations are coming out for Tennessee and Colorado. So online
gaming has its own set of rules and regulations typically, certainly as we get
into the interactive lottery space there’s, again, another set of rules. As
we’re implementing solutions, we’ve got to be very well-aware and configurable,
where certain things are allowed in one jurisdiction, but not allowed in
another. Our systems are all configured to operate and work effectively in all
of those environments, so that we can deliver up to the extent of what the
regulations will allow us to deliver in that particular market. So yeah, it’s a
lot of complexity. We have full teams of people, who all day every day really
work exclusively on licensing, compliance, and all of these regulatory issues
to make sure that everything we do is 100% compliant in the industry.
PaymentsJournal:
Yeah, I certainly think that’s very interesting and it
almost kind of sounds like payment gymnastics in the sense that we’ve got to
jump through all these hoops to make sure everything is kosher on all ends here
so there’s no issues. Moving on to the next question here. Gambling is a hot
topic in the payments space right now, from sports betting, to i-gaming, to
mobile payments. I’m curious to get your take on what you see as the biggest
trends heading into the year 2020.
Justice:
You know, I think there’s a there’s a couple of hot topics
that are hitting the market and I think as we look at it, who doesn’t enjoy the
convenience of a modern commerce experience? Whether that’s the popular apps
that we’re using, like Uber, Airbnb, to really neat websites like Amazon or
Apple, or even things that are happening in the brick and mortar world like pay
at the pump. Who doesn’t want to be able to just drive up, fill your car, and
drive off? So payments modernization is a really hot topic in the space right
now. That primarily comes from the fact that the U.S. Supreme Court repealed
PASPA, the professional and amateur sports betting prohibition, which is
enabling sports betting to pop up around the country. Well, it’s really hard to
have a mobile sports betting philosophy in a particular state if the rules and
regulations that were already created in the state don’t allow you to fund the
mobile application.
So payments modernization is now really becoming a very hot
topic. It’s not only making sure that we have the ability to fund the new
solutions states are wanting to deploy, but likewise we want to make sure – and
the regulators, operators, and everybody in the industry want to make sure –
that we are delivering the kind of experience that’s going to meet or exceed
guests’ expectations once they get there. So certainly that’s a very hot item
there. That also moves into conversations in and around cashless gaming, which
is a hot topic that we ought to dive deeper into. Just like today, in anywhere
outside of the gaming world, I love going to amazon.com and placing my order
and, at least where I live and depending on what I order, an Uber driver will
actually deliver it to my door within a couple of hours. Everybody wants that
kind of modern convenience and it hasn’t previously been allowed in gaming. So
cashless is a hot Item. But going back to your previous comment, regulatory and
compliance are the things that are top of mind. So we as an industry live by a
culture of compliance philosophy. Whether it’s all of the payments stuff, like
PCI and GDPR, or FinCEN rules and regulations, or gaming rules and regulations,
it’s really a hot topic to make sure everything that’s happening follows a very
tight line to meet all of the requirements in our space.
PaymentsJournal:
I’m really glad that you brought up the whole cashless
gaming part there and it does strike me as very interesting. Particularly as
you look around Las Vegas and just in other industries you go, you see where
the payments industry as a whole is kind of starting to go in the direction of
payments modernization and cashless
being part of that. Seeing how that may translate into the gaming industry,
from your perspective, where does the industry stand now in terms of cashless
adoption?
Justice:
You know, it’s really at the forefront. Gaming has really
been stuck in the past when it comes to payments. The player experience truly
hasn’t changed in decades, while every other industry has made monumental
advancements. I think the difficulty when you think about this from a payments
perspective is that the payments industry as a whole really lacks the
understanding of the regulatory complexity, and certainly doesn’t understand
the infrastructure requirements in a very complex gaming space. So many people,
as well, hear “mobile” and they assume everything should work like
Apple Pay. “I’m going to load money into a wallet; I’m going to load the
money from that wallet directly into a slot machine”, which opens up a
myriad of regulatory landmines that are going to blow up in our face, if you
will. The other part of it is that while you’re able to use your credit and
debit cards everywhere else you go in the world, that’s not the case in gaming.
While Visa and Mastercard have opened up the rules and regulations to allow
gaming transactions in the U.S., financial institutions still don’t want to
support the wager of the player. So in the interactive space, we see more than
50% declines, even though a guest may have the credit limit or funds in their account
to actually participate. It’s just that the financial institution doesn’t want
to allow that to occur. So thinking about that, if you wanted to roll out a
mobile solution into the gaming space, and you’re basing it off of the payments
mentality of loading a wallet with a credit or debit card, you’ve got
regulatory problems. These problems are going to create massive cost components
to outfit things to cover up the regulatory components. And then you’ve got a
solution that’s in no way going to meet the guests’ expectations of a seamless
experience, when half the transactions are going to get declined. There are
just a significant amount of challenges there. The good thing about it, though,
is our focus in the gaming space has allowed us to really drive some
significant innovation into the space. We’re launching a solution called VIP
Mobility that fits into the gaming environment. It meets the regulatory
requirements. It’s got the solid funding solutions that enable an incredible
guest experience so that just as reliably as Apple Pay is going to work
everywhere else, VIP Mobility works in the gaming space and allows a player to
participate within their favorite games. Whether it’s the slot or the table, or
they want to go to their sports betting account, or they want to go to their
interactive gaming account, or they want to take their winnings, go to the
restaurant ,and buy dinner, or go to the gift shop, or buy tickets to Cirque du
Soleil, or whatever it may be. We’re really excited about the future of mobile
and feel that we have a very unique advantage in terms of how we’re approaching
it.
PaymentsJournal:
Yeah and if we could, I want to dive a little bit deeper
into some of the challenges that you were talking about there at adopting
cashless gaming; you had brought up the regulatory complexity there. You also
brought up a really good point in that the end consumer, when we have a mobile
application, doesn’t necessarily understand or care about the regulatory
aspect. They just look and say, “is this a great experience or not? If
it’s not, well, I’m not going to use it again. And if it is, well, I’ll
continue to use it.” But there’s a lot of things that are going on in the
back end that the consumer themselves might not be aware of in terms of why that
particular thing might not work. Some of it might not be due to just the
application itself. Sometimes it has to do with things that are further down
the chain that unfortunately, the application just doesn’t have any control
over. You were talking about the instance with a financial institution not
releasing funds for whatever reason that they have in their regulations there.
If we could, let’s go a little bit deeper into some of the challenges of
adopting cashless gaming and also, what are some of the operator struggles that
you’re seeing in the industry today?
Justice:
So I think that’s a great question. Firefighters tend to
solve their problems with a hose and a ladder and the gaming industry is really
trying to solve its problems in a similar fashion. Whether that’s the slot
manufacturers who, without understanding global commerce and how to actually
deliver payment type solutions, try to deliver their solutions, for example,
through a highly regulated device that takes more than three years to get
through the regulatory compliance process to be able to drop that into the
gaming floor. Then when you think about the speed of innovation and consumer
products, where there is a new Apple, Android product coming along every six
months, it’s very difficult for people that have been in the gaming industry to
figure out how they shoehorn these external solutions into the market. That’s
where I think Global Payments has had a competitive advantage here in that we
have more than 1000 combined years of gaming experience right within our four
walls. Couple that with the fact that we have tens of thousands of years of
payments experience at a global commerce perspective on how we would deliver
these solutions to the market. As I look at the challenges that are in the
space to be able to roll out a cashless solution, I think it really falls into
three buckets: it has to fit, it has to deliver results, and it has to be
ridiculously simple. To dive into those three just a little bit, when I’m
talking about it has to fit, we’ve already talked about the regulatory
complexity of hundreds of jurisdictions. But then you have the IT
infrastructure. There are dozens of back office software applications that
drive the casino, all of which are regulated. You have a hardware and
infrastructure investment in the front of the house, the connectivity of the
slot machines, which is certainly very complex. And while, of course, the
latest and greatest game is going to come with the latest and greatest of
capabilities, the challenge that most operators have is more than 20% of their
floor is still dedicated to the older games that our parents used to play
because those are the ones that are still making money. Especially when you get
into the high limit room, you’re going to find a lot of older games that
manufacturers are not going to want to upgrade to the latest greatest of
everything because they’re just not there. Then you start coupling that as well
with responsible gaming, which is really the hallmark of what regulators are
looking for: how do I make sure that what we’re delivering is safe, controlled,
and effective, all the while making sure that game integrity is a key
component. So fitting is a very complex topic on its own. Then when you get
into the delivering results, whether it’s the hardware investment, the software
investment, transaction fees, etc., is the operator going to be able to provide
a better experience for the guests to where they’re going to come back more
often and to where they’re going to perhaps spend more money. Ultimately, they
want to gain that additional loyalty from the player, then is that going to
then offset a variety of other expenses? The difficulty with most of the
solutions that have been introduced to the market is it’s millions and millions
of dollars for somebody to upgrade their gaming environment to even test out
whether the solution is going to work or not. There aren’t a lot of real world
examples that are delivering a return on investment that would make a casino
executive want to take a bet on millions of dollars and expenses just to give
it a try. The third key challenge that has to be overcome is it has to be
ridiculously simple – and that’s ridiculously simple for the guests to use. It
has to be like Amazon, where you understand what the buttons do. You have to
have an easy ability to get in, an easy ability to participate, and an easy
ability to get out. Coupled with that, it has to be ridiculously simple for the
operator to deploy and support. The staff on the gaming floor has to be able to
answer the questions for the guests. They have to be able to effectively handle
problems and disputes. They have to be able to do their day job with a minimal
amount of interruption from a new technology. And I think the combination of
those three things are what have slowed so many of the attempts to get into
cashless. It really slowed them down pretty significantly. We think we have
some solutions that are overcoming all of those and are really going to be able
to deliver that effective value that fits into the environment, delivers the
results, and is ridiculously simple for both the operator and the guest.
PaymentsJournal:
I certainly agree with all the points that you made there. I
really do think it’s all those combined factors as to why you really haven’t
seen what a consumer would expect in the technical world in terms of the new
innovation or the rapid pace of innovation trickling its way there. A lot of that, as we talked about earlier,
you know, has to do with the fact that you’re serving two masters here. There’s
the payments industry, there’s its compliance of regulation, then there’s the
gaming industry. Then there’s all the things you just highlighted in terms of
all of the requirements that this product has to meet to be able to make it
into the marketplace there. With that being said, for our last question here,
do you have anything else that you’d like to add before we close out today’s
episode?
Justice:
So the gaming industry is a unique industry, right? We’ve
talked about the complexity and some of the various elements and it’s really
not about payment services, if you will. It’s around the development and
delivery of a comprehensive ecosystem that’s going to deliver an incredible
guest experience while returning positive P&L results to the Operator and
then guaranteeing compliance game integrity and responsible gameplay for the
regulator. So if you will, it’s aligning the interests of the three key
stakeholders in the industry. From a payments perspective, t’s everybody would
expect “Oh, well, of course, I want to go deliver my payment
services.” But let’s face it, that’s table stakes. As a guest going to the
casino, I fully expect I’m going to have an ability to get money. The real question
is, how do I get that money? How am I allowed to participate? How do I get to
receive an environment that exceeds my expectations for how I want to spend
money in in a safe and secure way, while allowing me to maximize my
entertainment value? I think those are a lot of parts that folks in the
payments industry tend to quickly forget. You know, I think the other parts
that we were talking about a little bit, the regulatory complexity, is truly
significant in the space. It’s understanding the rules and regulations across
hundreds of jurisdictions to make sure we’re doing things correctly, but also
securing the licensing that is required across those jurisdictions. Gaming’s
not about being an angel as much as being suitable. It’s making sure that folks
have fully disclosed indiscretions in their past. In this space, licensing and
regulatory and suitability are key. You get booted out of one jurisdiction, you
get booted out of all of them. The cost of maintaining all of the licensing and
going through all of that stuff can certainly be very challenging. It is a
tough environment, but those tough environments certainly create opportunities
to deploy innovative solutions. That’s one of the things that we think that
we’ve had as an advantage in Global Payments, that ability to see both sides,
whether that’s the gaming rules and regulations or the payment rules and
regulations, and the ability to plot a path. We’ve also done it in a way where
we’re not doing it alone. We’ve created an open infrastructure and a program that
allows other gaming leaders to actively participate and deploy solutions that
have a modern commerce experience, and also get through the regulatory
processes and deliver in a much more expeditious fashion. It’s really been an
exciting time and we have had a fantastic year. Certainly, we’re looking
forward to the future just can’t see it being any more bright and we think the
gaming industry is a fantastic place to be.
PaymentsJournal:
Excellent. Well, thank you very much, Christopher, for
taking the time today to speak to me about the payment challenges and solutions
in the gaming industry. I hope to have you back on the podcast real soon.
Justice: Perfect, Ryan. Hey, thanks so much. I really appreciate your time today.
The post Understanding Payments in the Gaming Industry: A Conversation with Global Payments appeared first on PaymentsJournal.