As the COVID-19 pandemic has kickstarted and accelerated digital payments to a full-blown sprint, very few industries have managed to stay cash-centric. One such industry, somewhat unexpectedly, is transitioning away from cash to digital payments is casino and gaming.
A view from above
A number of fintechs have managed to make a splash in the casino and gaming sector over the past few years, specifically during, and even after, COVID-19 lockdowns. Digital payments, blockchain and cryptocurrency are all making their way into gaming, with record numbers following.
Some numbers and news: The global gaming industry is predicted to reach $565 billion by 2022, an increase of over $100 billion from 2018, according to FinExtra. Sportsradar is going ahead with plans to launch its IPO, with hopes of a $12 billion valuation.
Earlier this year, gaming cash access provider Everi, listed on the NYSE under the ticker EVRI, posted record revenue with a $172.6 million Q2, up 33% from its pre-pandemic quarter of 2019. The company currently is sitting at $22.50 per share.
A unicorn pressing forward
Last week, cashless gaming fintech Sightline Payments became Nevada’s first ever fintech unicorn. The company’s $244 million private equity round led by Cannae Holdings brought Sightline’s total money raised to $347 million through five rounds, and helped pave the way to crossing the big $1 billion threshold.
The company offers a platform, Play+, which casinos and gaming providers can integrate into existing systems to offer digital, cashless experiences to patrons and users.
I spoke with Omer Sattar, co-founder and EVP of Sightline Payments, about the current wave of fintech in gaming, challenges facing casinos and what the future holds for cashless gambling.
“Sightline was built and founded with a dream, or a vision, or a hope — our goal was very straightforward. We wanted to reduce the usage of cash in the US casino gaming industry,” Sattar said. “It never made sense to us that when you walk into a casino, you can do almost everything in the casino with electronic or digital payments, except gaming.”
He says that vision has evolved in the past 10 years, with new technology and the COVID-19 pandemic accelerating the idea of cashless, digital payments into a reality.
Although the company has already been successful in helping launch the country’s first fully cashless casino, the Resorts World Las Vegas, Sattar says Sightline plans on using its $244 million funding round to continue pushing innovation and adoption of new technology.
“As we continue to scale and build as a technology and our goal is very straightforward, we’re very focused on just one thing, which is the historic entertainment and hospitality industry. We scour as much as we can [around] the United States and around the world for the newest technologies that are coming out. That makes payments faster, cheaper, easier and more visible, and to think about how to adopt that into our verticals.”
According to Sattar, there are four primary pillars of cashless infrastructure when it comes to casino gaming:
- Making sure patrons feel their money is safe and secure.
- Patrons can access their funds anytime and anywhere.
- The existence of loyalty programs within the platform.
- Lack of friction when it comes to using money.
He says these four core values influence everything Sightline develops and works for, in order to make sure that customers are comfortable using digital applications instead of cash.
The impact of COVID
In regards to the COVID-19 pandemic, Sattar reaffirmed it has been a huge accelerant for the business.
“March of last year, effectively every casino in the country got shut down. April and May were extremely quiet, but in June we started getting calls saying, ‘Hey, we need to open our properties’,” he said.
“It’s not that we’re going to say a patron is going to have this on day one, but we need to give our customers the ability to move, digital transactions. How can we do that? So it’s been a massive accelerant.”
“Resorts World Las Vegas opened up in Las Vegas, a couple months ago now. Its a first casino resort to opening on the Las Vegas strip in more than a decade, it’s a 4.5 billion dollar property, and it is open with a completely cashless system,” he said.
“You can, you could walk in with your cell phone you can play a slot machine with table games, fully integrated to Apple Pay, and once you see that movement takes place in the Las Vegas Strip, we will see that get exported to gaming jurisdictions around the country and eventually around the world.”
One of the biggest challenges for integrating cashless and digital payments in gambling isn’t making a platform that looks and feels good, but creating a framework that can be used across the many gaming jurisdictions that dot the US.
“It’s a regulatory patchwork. The kind of work that you have to do is the ground-and-pound game of going to state-by-state, jurisdiction-by-jurisdiction, tribe-by-tribe,” Sattar said, explaining the struggle in simultaneously meeting differing gaming regulations and consumer uniformity demands.
“But from a consumer standpoint you want a uniform way of doing things right. When you have Apple Pay, it works one way everywhere. If things work differently in different places, the consumer is going to say ‘well, this is a pain I don’t want to do it, I’ll just use cash’,” he said.
Sattar says this is also a large reason that the market hasn’t seen much activity from large, outside-the-industry payment companies, which are usually quick to stretch into burgeoning sectors.
“That’s also a challenge; that’s a reason why you need vertical specialists. All these big companies choose to partner with someone like us because we’re sector specialists, as opposed to trying to build it out themselves. It’s such a ground-level game in terms of getting the regulatory work done.”
Sightline Payments’ cashless system for casinos is just one way financial technology is changing the ‘game,’ with a number of companies creating new technologies for use in the industry.
Cryptocurrencies and blockchain-linked assets are another key factor that will continue be integrated and adopted in the gaming sector. Patrons will be able to use digital wallets, and operators will be able to use blockchain for account and currency security.
Look forward to changes at your local casino — not just the lack of cigarette smoke at the slot machines, but for the person next to you to be flashing their phone, not cash, for chips at the roulette table.