For years gambling venues have predominately been cash-based; however, COVID-19 has accelerated the move away from bank notes and placed demand on the industry to expedite the creation and implementation of digital payment systems. Due to their virtual and intangible nature, digital payments may reduce the perceived importance of money spent on gambling and online bank transfers offer little to no friction or delays which may increase spend beyond intended and affordable levels by some gamblers. Nonetheless, digital payment technologies offer important harm-minimisation opportunities, which if harnessed and regulated, may enhance consumer protection capabilities.
Cash has been king of the gambling venue for decades, but the dark undercurrent of criminal activities such as money laundering as well as consumer preferences for digital payments has meant that cashless options will be required within the coming years. Internationally, by 2023 digital wallets on mobile devices are expected to be the dominate point-of-sale payment method. Digital payments and services such as ATM machines allow for instantaneous funds transfers without consideration or delay and there is also research available indicating that electronic payments contribute to excessive online gambling problems due to ease of funds access. It is known that digital payments are prohibited for some land-based gambling venues by regulators in many international jurisdictions, however, with an increasing proportion of consumers simply no longer using cash, regulators are now facing the challenge of how to enable digital payment systems in a way which will uphold harm-minimisation standards.
The ‘pain of payment’ is an important factor to harness when trying to curb excessive gambling expenditure. Handing over ‘cold, hard cash’ after withdrawing from the bank or ATM machine and then viewing a bank balance can have a salient impact on gamblers. By limiting what gamblers physically carry with them serves a physical reminder when their funds are gone. Obtaining additional cash requires taking a break from gambling, interacting with venue employees, usually walking some distance perhaps off the gaming floor, and engaging with a banking interface – all opportunities to reflect on the decision to obtain further funds to gamble. However, cash is problematic from a regulatory perspective as it does not allow expenditure to be tracked to any specific individual and efforts to limit funds such as ATM withdrawals are easily circumvented.
Digital payments can be tracked and traced, which makes them incredibly important for identifying risky gambling and providing personalized interventions. There are many different systems and processes which could be implemented including establishment of an e-wallet for gambling or direct transfers from accounts to gambling activities. An e-wallet system has several advantages; it requires customer identification verification, thus prohibiting play by minors and self-excluded customers, and tracks all gambling expenditure, which can be shown to customers using a clear activity statements with summaries of wins and losses over time and notifications to indicate risky behaviours with suggested actions. E-wallets can have limits on spend, enforce a delay between deposits and spend, and make automatic withdrawals of large wins to avoid re-gambling. Aggregated data from e-wallets would allow identification of risk indicators, allowing personalized notifications and interventions and regulators can use the aggregated data to see real-time gambling behaviours, thus enabling much more effective evaluation of policies and practices.
Several operators are developing digital payment systems and trials are underway in multiple jurisdictions across the world. However, there is a low evidence-base to inform policy direction, particularly regarding how to implement a harm-minimisation framework that offsets the additional risks introduced. There is little understanding of how digital payments impact gambling behaviour, the extent to which consumers use digital payments compared to cash to track and manage their gambling spend, and whether specific consumer cohorts are at greater risk of gambling excessively with digital payments. Further research is needed to inform optimal harm-minimisation policies such as the extent of delay between deposits and spend to offset impulsive gambling or loss chasing, how to provide customers with feedback on their gambling to promote sustainable play, and encourage customers to set appropriate limits based on their own discretionary budget.
Collaboration between industry including gambling, technology, and payment providers, government, and researchers is important to develop an evidence base to inform policy which should aim to minimisegambling harms and take advantage of the opportunities digital payments bring. Applying the principles outlined will address the risk that digital payments will lead to impulsive access to additional funds and problematic gambling.
This article is based on a peer-reviewed publication: Gainsbury, S. M., & Blaszczynski, A. (2020). Digital gambling payment methods: Harm minimisation policy considerations. Gaming Law Review. https://doi.org/10.1089/glr2.2020.0015
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Harm-minimisation principles to guide regulation of digital payments within gambling venues
Gainsbury, S. M., & Blaszczynski, A. (2020). Digital gambling payment methods: Harm minimisation policy considerations. Gaming Law Review. https://doi.org/10.1089/glr2.2020.0015
Associate Professor Sally Gainsbury is Director of the University of Sydney Gambling Treatment and Research Clinic and Alex Blaszczynski is Emeritus Professor in the University of Sydney School of Psychology
The Gambling Treatment and Research Clinic is Australia’s only university-affiliated gambling treatment clinic and has been operating for over 20 years. Our aim is to use knowledge gained from the nexus of conducting world leading research and treatment to shape policies and practices to minimize gambling-related harms. Our research focuses on understanding gambling behaviours, products, and environments to determine how problems develop to inform the development of interventions to prevent harms and provide clinical interventions. Our research focuses on optimizing emerging technologies to prevent harms while identifying and minimizing unique risks.