U.S. Operators Cautious On Crypto But Embracing Cashless Payments

October 11, 2021
The CEOs of two of the world’s most powerful casino companies responded with caution when a keynote panel at last week's Global Gaming Expo (G2E) turned to cryptocurrencies.

The CEOs of two of the world’s most powerful casino companies responded with caution when a keynote panel at last week's Global Gaming Expo (G2E) turned to cryptocurrencies.

"We don't have a crypto or NFT [non-fungible token] strategy necessarily because of our regulatory environment, but we're paying close attention to it, it's clearly not going away," said Matt Maddox, CEO of Wynn Resorts, which operates integrated resorts in Nevada, Massachusetts and Macau and owns the WynnBET online gaming brand.

"Blockchain is a revolution," Maddox added.

"It's going to change the legal structure, regulatory structure; it's going to change the way we pay things, and it's going to decentralize power," Maddox said. "That's why governments are so scared of it."

Maddox said he expected there to be a "real push-pull between regulatory and decentralized [currencies] and so we've decided to stay firmly out of that until it's more clear, but it's here to stay."

Bill Hornbuckle, CEO of MGM Resorts International, said like Wynn Resorts, MGM has a Macau gaming license.

"We all know how China feels about crypto, so off-limits, full stop," Hornbuckle said. "Crypto is fascination longer-term, but we're going to let it bubble its own way out and figure it out."

Gary Gensler, chairman of the U.S. Securities and Exchange Commission, last week said his agency will not be making a move to implement a ban on cryptocurrency like the second crackdown Chinese officials unleashed last month on digital currencies.

Any ban "would be up to Congress," Gensler told the House Committee on Financial Services.

Although cryptocurrency might not be an option right now for Wynn Resorts or MGM, payment company executives, equipment manufacturers and industry lobbyists believe it will likely find its place in an industry as highly regulated as gaming.

Digital currencies offer potential benefits such as privacy and security, but compliance concerns remain, according to executives.

"Whether we agree or disagree with the policies that have come or not come in terms of crypto, the reality is there is a regulatory cloud hanging over the cryptocurrency assets in the space today," said Nasr Sattar, senior vice president of strategy and innovation at casino industry payment provider NRT Technology.

Sattar reminded G2E attendees that casinos have been considered to be financial institutions under the federal Bank Security Act (BSA) since the 1980s.

"We have reporting duties to FinCEN [Financial Crimes Enforcement Network], you have suspicious activity reporting you must fulfil, there are U.S. Treasury requirements on AML," Sattar added. "So, under this regulatory cloud it is very difficult to frame unless those things have been defined by the greater powers that be."

Sattar urged the gaming industry to come together on cryptocurrency like it did in early 1990s with ticket in/ticket out (TITO) technologies that enabled tickets to be used instead of cash at gaming machines.

He also floated the idea of the industry working toward a central gaming digital currency (CGDC), similar to a central bank digital currency (CBDC).

"Something where the operators can be running a permission blockchain where we essentially have a gaming coin that gets created in the future using the technology that exists today," he said. "I think that would be a very exciting idea and it is very marketable to the next generation of gamers."

Rick Hutchins, senior vice president of casino operations at Resorts World Las Vegas, said the cryptocurrency that already exists in the gaming industry is the casino chip.

"We have a casino chip maybe branded for our property, but I can take the casino chip as a gamer and go across the street, and they'll exchange it and then they exchange it back to the operator," Hutchins said.

Resorts World Las Vegas announced a partnership in June with cryptocurrency exchange Gemini. The partnership makes the resort the first property in Las Vegas to adopt cryptocurrency as a potential future option to gamble or pay for a stay.

There is still no official date for the launch of crypto services at the resort. That approval by the Nevada Gaming Control Board is not expected anytime soon.

Outside Nevada, Wyoming's newly approved sports-betting regulations are so far unique in the country in terms of expressly allowing crypto or digital currencies as potential payment methods for online wagering.

Joining Sattar and Hutchins on a G2E panel on digital payments were: Jacob Lanning, senior director of business development for payments at IGT; Jonathan Michaels, senior vice president of strategic development and government affairs at Sightline Payments; and Mark Hemmerle, vice president gaming and compliance counsel at Shift4 Payments.

"I think from a regulatory environment … there are still real questions around crypto, whether it's around source of funds, know your customer or anti-money laundering protocols that really need to be further defined and improved to get gaming regulators comfortable with the idea," Michaels said.

Michaels supported the idea of "working together" as an industry but urged his colleagues to bring regulators into any discussions about the use of digital currencies on the gaming floor.

"Bringing them along as partners … would be valuable in this realm because I think in the next one to five years crypto is going to continue to grow and grow, both in use and in utilization by consumers," he said.

Lanning said there is also a core infrastructure challenge that the industry faces, which is that cashless gaming technology is not yet broadly adopted.

"We are on a bit of a serial path here, not to say there couldn't be work done on ultimately building out the blockchain technology, but we are just at the start of this journey on cashless," Lanning said.

"We need to get more broad adoption of the cashless technologies, have more wallets that exist, and then the operator and then this blockchain could feed right into that as a payment option."

This article was first reported on our sister publication, VIXIO GamblingCompliance.

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