White Paper Series: Cashless payments – finally bringing the land-based sector into the digital age?
In the year ending March 2021, nearly £910 million was generated from gaming machines in Great Britain (excluding those located in pubs). In total, there were nearly 170,000 gaming machines located in bingo premises (41%), adult gaming centres (35%), betting premises (15%), family entertainment centres (8%) and casinos (4%). In the period April 2020 to March 2021 (during the pandemic), the largest revenues, by a country mile, were generated by gaming machines located in bingo premises (41%) and adult gaming centres (35%), with revenues slowly declining in most sectors. There is no reliable data on the number located in pubs, or associated revenues, but the figure is likely to be in the region of 70,000.
A lifeline in the White Paper is the proposed review of cashless payments on gaming machines with the plan to remove the current legislative prohibition, set out in the Gaming Machine (Circumstances of Use) Regulations 2007 (the “2007 Regulations”), banning cashless payments directly on gaming machines.
The original purpose of the prohibition was to protect players from over-spending as it was assumed players would have more control over their play if they were playing with cash, providing natural interruptions in play by stopping their gambling to obtain more cash. The lack of a break in play is viewed as a lost opportunity for the player to consider whether they wish to continue to play and spend more.
The lifeline offered in the White Paper is hugely positive and could result in the long-overdue modernisation of the land-based sector, bringing it into the digital age.
Cash is dead
Since the 2007 Regulations, especially with the advent of contactless payments and global pandemic, non-cash payments have grown exponentially. Use of cash has declined across society with the expectation that it will not be used by 2035. In 2011, 72% payments in pubs were made by cash and, in 2020, this reduced to only 13%. In 2021, almost a third of all payments in the UK were made using contactless. This societal change has negatively impacted the land-based sector beyond belief, and it has been compounded by pubs no longer giving cashback and ATMs being removed. We now live in a world where hardly anybody uses cash. I – almost exclusively – use Apple Pay and regularly leave the house without cash or a bank card!
The restriction on using debit cards directly on gaming machines (credit cards are banned) has meant the land-based sector has been left behind. Whilst industry has been creative and found ways to make indirect debit card payments and protect players (in collaboration with DCMS and the Gambling Commission), take up has been slow and these are “not a fix-all solution”.
2018 Gambling Commission cashless advice
In March 2018, and in response to significant payment innovations in the retail economy, the Gambling Commission published advice on cashless payments in gambling premises (which remains in force), crystallising its position and key considerations for operators, as follows:
- tracking play and collecting better data on player behaviour to make an informed assessment of those at risk of gambling-related harm;
- providing tailored safer gambling information to players including transactional information on money spent/withdrawn;
- player-led controls to enable better self-management such as a player’s own spend or withdrawal limits; and
- the importance of gathering data both before and after the implementation of any measure to demonstrate the impact of control measures.
The guidance places responsibility squarely on operators to consider what measures are most effective and appropriate to their businesses. Further, it acknowledges the lack of evidence to suggest the optimum duration of a break, but sets out the expectation that, wherever possible, players should at least cease gambling and physically leave the gaming machine. Where players can access new gambling funds with only a limited or no physical break from the gaming machine, operators must nevertheless ensure players are otherwise provided a break from, or an interruption in, gambling before those funds can be used. The guidance also states the Gambling Commission “may consider taking regulatory action in individual cases if, for example, an operator was to increase the risk of harm to its customers without providing appropriate mitigations.”
DCMS will work with the Gambling Commission to develop “specific consultation options for cashless payments” (expected Summer 2023). DCMS is clear that any new or additional player protection measures will need to be in place before the legislative prohibition is lifted.
The Gambling Commission’s view is that the onus is on industry to demonstrate cashless payments can be offered without increasing gambling harm or crime. So, what does this mean for industry?
The White Paper has created a staggering volume of work for both DCMS and the Gambling Commission. As such, all proposals will not be treated equally, and a sceptical view is that cashless will not be a priority. As an important lifeline, it will require great effort by industry to keep it high on the agenda for DCMS and the Gambling Commission. One way to achieve this would be through an industry code, backed by evidence wherever possible, and promoting the associated benefits of cashless payments given, for example, low test-purchasing scores for gaming machines in alcohol-licensed premises. The greater the industry support, the more likely it is the proposed reform will be delivered in a timely, sensible and workable way.
Cashless industry code
Two of the challenges of developing an industry code are, firstly, gaming machines are in different types of gambling premises (each with their own unique “person, product, place” considerations), highlighting the difficulty of agreeing standards or codes of practice. By way of example, pubs are not regulated premises by the Gambling Commission. They are automatically entitled to offer gaming machines as part of their alcohol licence granted by the local licensing authority. Pubs and gambling premises will very likely have different baselines and priorities, and industry must inevitably set higher standards. The industry is better placed to do so and both DCMS and the Gambling Commission will expect them rise to the challenge. It is unclear what this means for pubs, particularly given their unsupervised nature, but given the 84% test purchasing fail rate (in 2019), they would be best placed to embrace a cashless industry code through amendment of the Social Responsibility Charter for Gaming Machines in Pubs issued by the British Beer and Pub Association.
Secondly, there are several types of cashless payment technologies each with different functionality. Unless banks facilitate player protection tools (for example, through online banking), physically or virtually presenting a debit card is very different from using a cashless gaming app or eWallet which connects to a gaming machine.
A practical solution would be to develop a cross-sector industry cashless code to reflect best practice and aim to install a minimum set of standards to address issues of risk. The central commitment would be to allow cashless payments whilst minimising the risks of gambling-related harm and protecting players. Standards may include the following:
- a meaningful forced delay before the funds can be used (for example, 2 minutes, although in a cross-sector industry code it might be sensible to steer away from prescribing a timeframe);
- personalised financial limits (deposit/spend) with clear messaging and calls to action;
- personalised time limits with clear messaging and calls to action;
- time and money spent totals with clear alerts;
- prescribed maximum deposit in a single transaction or day etc.;
- transaction history (ideally, searchable by last 24 hours, last week, last month etc.);
- safer gambling messaging;
- tracking player data to provide targeted messaging and/or interventions;
- automatic disconnection from the gaming machine after inactivity with credit returned;
- digital age verification to prevent underage gambling;
- withdrawals must only be made to registered / the same card; and
- restricted to one debit card.
Once agreed with DCMS and the Gambling Commission, compliance with the industry code could be incorporated as a licence condition in the Licence conditions and code of practice and/or gaming machine technical standards.
At the appropriate juncture, we will of course be happy to assist clients with their responses to the consultation where that would be helpful.
With credit and sincere thanks to Jessica Wilson for her invaluable co-authorship.