Former NSW gaming regulator Paul Newson examines the pros and cons of the state government’s current push to introduce mandatory cashless gaming across all venues within the next five years.
If you are familiar with key trends within the wider payments landscape, such as the pandemic-induced acceleration towards digital payments, and the appetite of central banks globally for developing digital currencies, it’s not a long bow to acknowledge an inexorable runway towards cashless retail transactions at large, including cashless gaming.
But like most controversial policy matters, the nub of the matter is obscured through the fog of political posturing, worsened by media reporting seemingly uninterested in complexity, due diligence or straying from a preferred narrative.
On one view the mooted shift towards cashless gaming is inevitable and recognizes the trend in commerce generally, an entirely sensible transition, where caution ought only to extend to the manner of implementation and avoiding undue fettering of recreational players. If this view isn’t offensive, then the legitimacy and likely success of any government-mandated transition really does turn on the manner of implementation, the need for comprehensive consultation with the sector, and focusing on where the risks and harms are greatest – not blanketing recreational players with intrusive arbitrary restrictions.
It’s relevant to observe that senior industry stakeholders had been advocating for the adoption of digital wallets in the gaming environment well before Australia’s Crown Unmasked revelations, and before the subsequent cavalcade of formal inquiries lifted the curtain on serious leadership, governance and compliance shortcomings in the casino space. The framework for a regulatory sandbox to promote innovation and advance responsible gambling and anti-money laundering outcomes within NSW regulatory settings had been established in 2018, and digital wallets were the initial focus and priority.
But for the NSW Government’s ill-fated decision to dismantle the gambling regulator in early 2019, and reorient it within its Customer Service department, the merits of digital wallets would have been rigorously tested and evidence-informed policy decisions made for the betterment of regulatory and industry outcomes.
In my experience there are important parallels between anti-money laundering and responsible gambling risks, and I think that an orderly adoption of digital wallets and transition towards cashless gaming environments is appropriate and positive. The opportunity to collect and harness player activity data and interrogate for suspicious activity or harmful gambling presents enormous potential to prevent and mitigate financial crime and gambling harm. It’s not a panacea though. The marvel of human nature, especially when exercised by blunt restrictions, means the system will be gamed and the risks not so much cured as transferred in an ongoing shell game.
To the extent there is evidence concerning the merits of digital wallets or mandated cashless gaming, it paints a complicated and conflicted picture. Curiosity if not scepticism should be awakened when the principal or only case study cited for the benefits of mandated cashless gaming is Norway.
Norway maintains a state-run gambling monopoly, and prior to the 2007 ban on slot machines, subsequent replacement with video lottery terminals and enlarged participation in online gambling, slots were easily accessible including in shopping centres and trains stations and the problem gambling prevalence rate was reported as 1.4%.
When weighing the relevance of this problem gambling prevalence rate, an instructive benchmark is the 2019 NSW problem gambling prevalence research which identified the problem gambling prevalence rate at 1%. Though this was an increase from 0.8% on the previous study, it was not statistically significant and the rate had been stable for some 15 years.
While the success of the 2007 Norwegian Government intervention in the gaming sector remains contested, a 2022 study by the Norwegian National Competence Centre for Gaming Research estimated the cost of gambling harm in Norway at US$585.5 million annually and reported the problem gambling prevalence rate once again at 1.4%, up from 0.9% in 2015.
While not an uncritical cheerleader, I am an advocate for the significant anti-money laundering and responsible gambling potential of digital wallets and cashless gaming, but any transition towards a cashless environment should be in cadence with the trends in retail payments more broadly or an acceleration by industry as created by by leading operators in other major jurisdictions.