THE IMPACT OF TECHNOLOGY ON CASINOS AND THEIR PLAYERS

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The gaming industry has historically had a reputation for lagging far behind when it comes to implementing technology. While casinos are presented with frequent opportunities to advance both the “tech” available to players and the managing of the casino, actual deployment continues to be slow. Technological changes are most likely introduced when they result in significant financial benefit or become mandated by players as a competitive requirement. One of the objectives of this article – yes, the article has objectives – is to discuss concepts that have made it to the field, yet may not be widely adopted and should be considered by casino operators as opportunities to enhance their operations and their players’ experience.

At times, regulatory restrictions can make the introduction of technology challenging. Innovations that could be introduced overnight in other industries can take years to be adopted by highly regulated casinos. There are some excellent examples that will be discussed later.

Ticketing and Account Based Wagering

Probably the most vital cost-saving and customer-benefitting technology in the last 20 years was the introduction of ticket-in ticket-out (TITO) slot machine transactions in the late 1990s and early 2000s. It took more than five years to transition the vast majority of slot machines to what is now a common feature for casinos. Slot machine manufacturers loved the feature because casino operators were often forced to buy new machines to reap the efficiency benefit. The next great technology change, but one that never really materialized, was “server-based gaming.” Server-based gaming allows centralized control over pay tables offered to players and the ability to make on-demand changes to games and hold percentages. Historically, you could poll slot players, and the majority would believe the slot manager had a knob to turn in the “back room,” behind the curtain, to tighten the slot machines whenever they wanted. But once this capability became a realistic option, it did not cause a revolution at all. In fact, once available, it was almost never used.

One of the more interesting evolutions will be the transition from TITO to wagering using electronic funds from a player’s account. While most retail industries now have minimal cash transactions, the vast majority of casinos operate in a cash and ticket only environment. At least we got rid of coins. To get a glimpse at what is coming, you can look at how major casinos operate in South Africa. In the 1990s, South Africa casinos started using smart cards. Keep in mind that TITO did not exist until the late 1990s, so that was not an option. By using smart cards with a computer chip embedded, the casinos could enable players to gamble using wagering accounts and avoid the hassle of dealing with coin. Smart cards could be, and still are, loaded using currency at the cashier cage or at the gaming machines. Once the player finished playing, the funds would be loaded back onto the card and into the computer system. The unique advantage of smart cards with the chip is that if the computer networks were down, the value on the card could still be read and downloaded at the slot machine. In today’s environment, the option to use regular mag stripe cards versus smart cards has become an excellent solution since the computer networks are now far more reliable. It is interesting to note that this technology is often referred to as “cashless wagering,” though in reality that is a misnomer since cash is still inserted into the bill validators at the slot machine. My favorite feature was that once a player’s balance on the slot machine dropped below a certain level, the system automatically downloaded a preset additional amount from their account – a feature probably not appreciated by the problem gambling community.

While the use of wagering accounts is dominant in South Africa, the technology is used in many other casino environments including mobile wagering, mobile sports wagering, internationally in officer’s clubs operated by the U.S. military, Mexico and even a few casinos in the U.S. where this type of solution is mandated. However, in almost all North American casinos (U.S. and Canada), the use of wagering accounts is very limited and usually non-existent.

The technology and method of operation will no doubt become more prominent in the next five to 10 years as players will expect it. In my opinion, the use of cash to fund wagering accounts will evolve to electronic funding from players’ bank accounts or other funding sources. It will be a slow evolution and not a revolution. The bottom line is that we should expect TITO to remain a primary transaction system that will not go away at the majority of casinos for at least the next 15 to 20 years.

Technology Innovations Impacting Player Experience

From the perspective of the slot player, changes have slowly improved their experience in both entertainment value and efficiency of play.

Here are a few of the changes that players appreciate for those casinos that have moved in that direction:

•Automatic Credit Keyoff – Systems in conjunction with slot machines can identify a player as a “known IRS player,” which means all ID and other information is already on file. When the player hits a W2G jackpot of $1,200 or more, the player can elect to have the winnings directly loaded on the slot machine without the need for interrupting play by having a slot attendant process the jackpot and pay off in cash. Jackpots are still recorded and accumulated for IRS purposes. A word of warning – this is a difficult feature to implement since the slot employees do not appreciate the impact on tips.

•Reserving Games – As you walk the casino floor you will often observe chairs leaned up on slots or even an attendant guarding a machine for a high roller. Systems in conjunction with slot machine technology can put the game into a reserve mode, which can only be released by the player or overridden by a slot attendant. Based on player club level and value, systems can allow a range of lockout time periods to suit the situation.

•What’s Your Phone Number? – While player cards have served their purpose for about 30 years, the expectations of players will force casinos to create more options. One of those options is to use a phone number or other unique number in lieu of a player card. By entering the number and a PIN, players can now access their accounts and get rewarded for their play. This is a great solution for players who forget their player card and don’t want to stand in line at the Club Booth. The key word here is “options” – allowing players to decide which option they prefer, player card or phone number. And with the use of slot machine to system communications, several triggers, such as a period of inactivity or a cashout, can be used to terminate the player’s session.

•Time for a Cocktail? – In addition to other communications, players can now order drinks for delivery by the cocktail server. When players place the order, the system can retain their favorite drink(s) for quick selection, inform the server where the player is located, if they have moved, and even limit their drink options based on player club level. Naturally the system could also alert someone after the player has consumed too many alcoholic beverages.

•Robots are Here – Another new feature is the introduction of robots for beverage service and potentially other service in the casino. While it is much too early to judge the potential, the replacement of the traditional cocktail servers with robots will be fascinating to watch and is already being tested at some casinos.

Marketing and communications to players at the gaming device level have been improved over the last 10 years with in-game displays. The displays can be seen in two different forms. A small screen is inserted in player panel or a portion of the main slot machine screen can be re-mapped to be shared with the game itself. For many years these displays had limited advertisements and status of player accounts. This has now changed dramatically as players can be offered special promotions, check out all kinds of information about the casino, make restaurant reservations, potentially access the internet, view sporting events or other streaming videos and display videos of promotional events that they are qualified for such as live tournament play, horse racing, drawings, wheels and games of chance. The key ability, which systems now possess, is to allow for changing the content dynamically. Obviously, purchasing such display technology is expensive and never changing the content or having outdated content (i.e. last month’s promotion) makes it a true waste of money. While this technology can be used to significantly enhance the player experience and produce a competitive entertainment value, there is a strong potential that casino operators will move to advance casino applications on their player’s mobile devices – which they are looking at all the time anyway – to achieve success in their marketing and promotional programs.

For table games, technology has also provided more opportunities for players and casinos. Probably the most obvious is the addition of electronics to table games in the form of specialty games, side wagers and progressives. The addition of such features increases wager offerings that enhance player experience and casino profits.

The one technology that is still searching for success is the electronic WiFi tables that read the values of gaming chips electronically to track player wagers, table inventories and other transactions. Either the cost of the technology or the perception of the reliability of accuracy has been among the impediments impairing any wide-ranging implementation. Maybe someday.

Regulatory Obstacles and Hurdles

While the majority of regulators are very willing to allow new technology in the gaming sector, their willingness, to say the least, usually does not include moving expeditiously. I can still remember a time when a particular technology was proposed, and a certain regulator stated that it could be introduced in their jurisdiction, “over my dead body.” Regulatory agencies are responsible for protecting the integrity of the industry and the public. That obligation usually results in a cautious approach to tech solutions, especially when there is clear risk of negative impact on players.

The use of wagering accounts is just one example where regulators have professed a slow adoption approach surrounded by many regulations. The passage of highly restrictive rules, such as Nevada Gaming Control’s position that all wagering accounts must have a full set of player identification information, make introduction of this feature very difficult. That policy was adopted, even though TITO vouchers have no such requirement. Anonymity remains an important factor for many players.

In our online mass data world, numerous industries have migrated to use major data centers for hosting computers including such entities as Amazon, Google, Switch and similar. While there should be a natural trend for major casino operators to move in that direction, there will be obstacles. In some cases, regulatory agencies have mandated, although the use of such hosting centers are permitted, that they must be physically located in the state where the casino resides for regulated casino transactions. In addition, some regulations may require a number of employees in these centers be licensed by the regulatory agency. These types of restrictions could potentially leave the casino industry’s ability to take advantage of this trend that is now common in many other non-gaming businesses. Such is the world of casinos.

Excellent progress has been made in the direction of wireless transactions for both players and casino activity, such as mobile jackpots. The comfort level amongst regulators is fairly strong as long as the casino and its vendors can prove that high levels of secure and encrypted communications are in place.

What About The Future?

As technology moves forward, the casino industry will be able to take more advantage of opportunities in the future even though other industries may take the lead.

The wagering account technology, discussed earlier, is critical to broadening the player’s spending to other verticals. The concept of a “single universal wallet” will be a major enabler for players. That concept allows players to use their casino/resort account for all forms of wagering including sports betting, lottery, online and mobile gaming and table games. The same universal wallet can then extend to retail transactions both internal and external to the casino resort environment. In line with the wallet methodology, expect the “tap and go” feature using your phone to transfer funds to be introduced in the not so distant future.

Technology, such as facial recognition and other biometric identification, is already in place for employees and will no doubt be applicable for players. Vision technology is common now with iPhones and airport security for identification of individuals for a variety of purposes. In fact, casino surveillance departments are already using this technology for identifying bad actors that enter the casino. Expect casinos to eventually pre-identify players to enhance customer service and accomplish other objectives.

The player experience is already moving forward with use of geo-location for marketing, increased access and entertainment integrated with player mobile devices, and gaming machines that use player hand motions to trigger on-game activity.

The casino business may lag behind in technology, but the opportunities are there for the taking.

Tom Doyle (Retired CPA) is currently Chief Financial Executive for Thunderbird Lodge Preservation Society. Previously Tom was Vice-President of Product Management and Systems Compliance for Scientific Games. In this capacity he directed the various aspects of Bally System software products and regulatory compliance efforts from August 2002 to November 2017. Prior to Bally, Tom spent about 3 1/2 years as the General Manager of the Spa Resort Casino in Palm Springs, California working for the Agua Caliente Tribe. Tom has been in the casino industry since 1977 and has enjoyed positions with Lodging & Gaming Systems as a Director of Consulting and Financial Officer (4 years), the Peppermill Hotel Casino group as a VP (6 years), and the Nevada Gaming Control Board. At the Nevada Gaming Control Board he was Audit Supervisor and one of the key authors of the original NGCB Minimum Internal Control Standards.

READ MORE IN THE SUMMER 2019 EDITION OF GAMING & LEISURE MAGAZINE.

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