Eilers & Krejcik Provides Additional Insights On The ... · Eilers & Krejcik Gaming’s new Electronic Money Movement practice provides strategic and operational consulting services

Eilers & Krejcik Provides Additional Insights OnThe American Gaming Association’s Principles

For Casino Gaming Payment Modernization

June 22, 2020

This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited

Introduction About Eilers & Krejcik Gaming

Eilers & Krejcik Gaming, LLC is a boutique research and consulting firm focused on servicing the gaming equipment, interactive gaming, and sports betting sectors within the global gaming industry. Our products and services primarily include market research, company research, and consulting and advisory services designed specifically for land based & online casino operators, equipment & technology suppliers, social gaming operators & suppliers, gaming regulators, and institutional investors.

The AGA published the Principles for Casino Gaming Payments Modernization on June 16, 2020. We would like to provide comments and our perspective of each one of the AGA’s principles. The AGA used the term “Modern” and we will interpret this as the transition from physical currency to digital aka “cashless” options. The sections to follow are copied directly from the AGA’s publication (link above). Our comments are below each principle section.

Jerry Rau

Managing Director of Electronic Money [email protected]

Author


https://www.americangaming.org/wp-content/uploads/2020/06/AGA_Payment_Choice.pdf

https://www.americangaming.org/wp-content/uploads/2020/06/AGA_Payment_Choice.pdf

mailto:jrau%40ekgamingllc.com?subject=

Thoughts On The AGA’s Principles For Casino Gaming Payment Modernization

Responsible gaming limits in the online world for deposits, session times and betting are well developed. These processes can be deployed in the land-based casinos with little effort. But their effectiveness will be limited due to the continued presence of the anonymity of cash.

We believe that the empowerment of self-monitoring could be valuable for the willing customers. In addition to customer imposed alerts, we suggest that anomalous betting or payment patterns alert the player so they can be aware that they may want to consider adjusting their behavior.

Equip customers with more tools to wager responsibly.

Customers should be provided the options they need to set spending limits and monitor their spending and gaming patterns via digitalpayment platforms.

PRINCIPLE

PROPOSAL

RATIONALE

Modern payment options can equip customers with digital tools to help them monitor their gaming and set spending limits. The more customers are empowered to self-monitor and govern their own spending and gaming behavior, the better. Digital payment platforms can provide robust tools that enable customers to wager responsibly.

”This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited


We agree that new payment options should be a regulatory decision and should not require legislation. The “broad guardrail” approach is a methodology that works well in this context.

Ensure state laws enable a flexible regulatory approach, capable of keeping pace with evolving forms of digital payments.

Legislators should craft relevant statutes broadly to allow regulators the flexibility necessary to interpret, implement, and update rules governing payments in gaming.

PRINCIPLE

PROPOSAL

RATIONALE

Overly proscriptive or inflexible statutes can prevent policymakers from adapting to a dynamic market. Even the most knowledgeable regulator or legislator will struggle keeping pace with technology breakthroughs and payment innovations. Consumer tastes and preferences also evolve in rapid and unpredictable ways. Therefore, lawmakers should craft legislation that establishes broad guardrails around digital payments and provides regulators—who are closer to changing marketplace realities—the latitude and flexibility necessary to design and oversee rules governing digital payments in gaming.



As advocates of increased payment options, we agree that the gaming floor’s payment should closely resemble other industries options. But we need to understand that adding convenience adds opportunity for problem gambling. Funds that are not available because of daily limits for cards associated with a bank account could be made available with the addition of a higher limit bank transfer option on the casino floor. We also agree that it will increase law enforcement ability to stop illegal activity. But new payment options bring fraud opportunities that do not currently exist on the casino floor. Converting stolen cards to cash is one of several vulnerabilities that will present themselves. The innovation of cashless options far outweighs the issues, but we need to have mitigating controls to offset the risk.

Give customers payment choice and convenience.

Allow customers to make gaming and non-gaming transactions in a form that is convenient and gives them a choice, for example: credit cards, debit cards, or debit-enabled forms of payment such as mobile payment apps, player reward cards, or digital wallets connected to debit/bankaccounts. The ability for patrons to utilize their preferred form of payment will reduce the current friction between gaming and non-gaming segments of an integrated resort and will help customers enjoy a more seamless experience. Forms of payment must adhere to robust, uniform data privacy and security requirements.

PRINCIPLE

PROPOSAL

RATIONALE

Gaming is a source of mainstream entertainment, and consumers expect to pay in the same way they pay for a show ticket or restaurant meal. Increasingly, this means with a credit or debit card. Phone based “wallet” apps are among a host of successful payment innovations currently used at some casinos and resorts, as well as entertainment venues around the world. Customers choose their own payment method for convenience, control, and portability—and to avoid carrying large amounts of cash. As businesses compete to provide customers with a more convenient, seamless experience, payment innovations will also help to identify problem gambling behavior and enhance law enforcement’s ability to identify and stop illegal activity.



We agree and support the industry’s initiative to digitize the payment options on the casino floor.

Address heightened customer public health concerns.

Enable gaming companies to incorporate digital payment options into operational best practices amid the COVID-19 pandemic. Any customers uneasy about using cash on the gaming floor due to health or safety concerns should have an alternate payment option available to them.

PRINCIPLE

PROPOSAL

RATIONALE

In a heightened public health environment, consumers want to use the payment choice that makes them most comfortable. Consumer concerns about handling cash could persist beyond the COVID-19 pandemic. The Centers for Disease Control and Prevention and state agencies recentlyissued guidelines and regulations to encourage contactless payments as a public health priority for American businesses. By providing gaming patrons with digital payment choices operators can foster greater customer confidence, enabling customers to enjoy their experience using thepayment option they prefer.



We suggest more specificity around this section to include the management of PII (Personal Identifiable Information) not covered by PCI and NACHA oversight. Prevention and reporting of data breaches also need to be part of this Principle.

Provide customers confidence in digital payment security.

Make sure payment card providers comply with well-established financial institution security and data-protection standards. These uniform standards should apply across all relevant jurisdictions.

PRINCIPLE

PROPOSAL

RATIONALE

Customers should feel confident in the security of digital gaming transactions regardless of the gaming environment or physical jurisdiction. Financial institution governing bodies (e.g., PCI Security Standards Council, National Automated Clearing House Association) have alreadyestablished well-defined standards and practices to which payment card providers must adhere. Regulators should ensure payment card providers in the casino gaming industry comply with these standards and practices, which will give customers greater confidence that their gaming transactions are secure regardless of their form of payment.



We understand the proposal and the rationale, but “uniform regulatory environment” in the principle is confusing. It would be clearer to have a Principle about compliance to Federal Laws.

Create a uniform regulatory environment for casino operators, suppliers, and regulators.

Applicable state and tribal regulations regarding digital payments should align with relevant federal regulations. This is particularly important with regard to regulations related to anti-money laundering, wire or money transfers, or tax-related issues.

PRINCIPLE

PROPOSAL

RATIONALE

The widespread adoption of digital payments in gaming will enable better regulatory oversight and improved Know Your Customer and anti-money laundering capabilities, even as it enhances the gaming experience for customers. Ensuring state and federal regulations are aligned eliminates complexity, simplifies industry compliance, and makes it easier for regulators to oversee a consistent, transparent framework.



We agree that digital is much more traceable and therefore benefits in investigations. CTR’s will go down, but SARs (Suspicious Activity Reports) should increase. Digital allows for suspicious activity to become more apparent than with the anonymity of cash. Operators will need to adjust to this new increase in payment data to be able to leverage the higher quality of reporting available for Law Enforcement.

Empower law enforcement to better identify offenders through digital payment analysis.

Reduce the overwhelming number of currency transaction reports (CTR) forms from the gaming industry by allowing customers to use modern payment methods. Shifting from cash-based payments to digital transaction networks creates transparency and enables the gaming industryand law enforcement partners to focus on the highest-risk patrons, allowing authorities to more easily obtain and analyze relevant evidence.

PRINCIPLE

PROPOSAL

RATIONALE

The casino industry is viewed as a model for other industries in its efforts to combat money laundering. Creating new payment options for customers provides law enforcement additional insights into sources of funds and customer backgrounds; it also reduces the time law enforcement spends on lower-risk patrons.



Eilers & Krejcik Gaming’s new Electronic Money Movement practice provides strategic and operational consulting services for companies looking to create or optimize their digital payment process for both online as well as land-based gaming operations.The Team at Eilers & Krejcik Gaming, LLC has significant real world operational experience and has assisted many of the largest gaming operators and payment providers in the world with their electronic money movement operations. The Team’s experience dates back to the development of the first regulated online poker site in the U.S. and has continued with the emergence and growth of the U.S. Sports Betting Market.

On call industry expertise

Payment abilities andgap analysis

Digitization of the casino floor

eWallet expertise

Money Transmittal guidanceIntrastate vs Interstate operational guidance

Referrals

Eilers & Krejcik Gaming, LLC Launches Electronic Money Movement (EMM)Consulting Practice led by Jerry Rau

WHAT IS ELECTRONIC MONEY MOVEMENT?

Electronic Money Movement (EMM) is the flow of payment related data and subsequent authorization and settlement of funds. It also involves ancillary processes including customer identification, compliance, risk mitigation, business intelligence, product development and operational support.

HOW TO REACH US?

Please contactDJ Leary at

[email protected] or call at

310.742.6239

SERVICES OFFERED

Real world payment and gaming expertise. Our clients are able to leverage our deep and wide base of knowledge. Giving a quick and accurate response to any question asked is our secret sauce.

We are your partner. We don’t just advise, we participate. We can provide the c-level with a comprehensive strategy or add value to integrated product development meetings. We play in all sandboxes.

Deep industry relationships. We have worked on projects with every payment processor participating in online gaming in the U.S. Some we consult for and others we have integrated their product into a clients offering.

KEY BENEFITS FOR OUR CLIENTS

•

•

•

•

•

•

Personnel assessments

Reports requirements

Training

Payment vendor assessments

Regulation guidance

Benchmarking analysis

•

•

•

•

•

•

Contract assessment

Integration assistance

Friction reduction toincrease revenue

Fraud mitigation assessment

Start up services including establishment of processes, procedures and backoffice support

•

•

•

•

•

1

2

3


Disclosure: Eilers & Krejcik Gaming, LLC is an independent research firm and is neither a registered broker dealer nor a registered investment advisor. No information contained in this report shall con-stitute as a recommendation or solicitation to buy or sell a security. Individuals receiving this report should consult with an investment advisor or registered representative before making an investment decision related to any information contained in this report. In addition, Eilers & Krejcik Gaming, LLC either does, or may seek to do business with any company mentioned in this report. This report was prepared for and distributed to clients of Eilers & Krejcik Gaming, LLC. If you are not the intended recipient and/or received this report in error, please delete this document and notify Eilers & Krejcik Gaming, LLC at [email protected], or call 310-743-6239. This report is also protected by federal copyright law. Any unauthorized review, dissemination, or copying of this communication is strictly prohibited. By accessing, reading, storing, distributing and archiving this research report, you hereby agree, fully, and without dispute, to all terms and conditions outlined above.

5 C O R P O R AT E PA R K | S U I T E 1 1 0 | I RV I N E CA | 9 2 6 0 6 | W W W. E KGA M I N G L LC . C O M


Documents

Eilers & Krejcik Provides Additional Insights On The ... · Eilers & Krejcik Gaming’s new Electronic Money Movement practice provides strategic and operational consulting services