Despite current healthy growth in the industry, gaming and fantasy sports operators face special challenges in terms of moving money – specifically funding and cashing out. Such challenges can result in dampened player enthusiasm and loss of revenue for casinos, sportsbooks and poker sites.
In the following Q & A, David (DJ) Johnson, Senior Vice President, Emerging Commerce Products, and Brian Dugan, Senior Vice President, Emerging Commerce Group Executive, team up to lay out the issues facing consumers and operators. They’ll discuss the details of a new prepaid card entry as a win-win solution in Part II on November 17.
It seems as if many of the current funding options such as e-wallets, cash transfers, Bitcoin and even credit and debit cards hold challenges for gamblers and fantasy sports participants. What obstacles exist on the funding side of the gaming business?
Johnson: In today’s environment, one of the biggest challenges facing gaming operators – especially for Internet gaming and fantasy sports operators – is providing an easy and seamless process for funding. With iGaming, the initial load to the account is usually through ACH.
In some cases, credit and debit cards are used, although some sites do not accept certain payment methods or particular cards. Meanwhile, some banks won’t allow their cards to fund iGaming. That leaves the failure rate in funding to 25-30 percent. As a result, some consumers become frustrated from the outset and operators lose out on potential revenue from discouraged consumers.
Dugan: At the same time, we can’t dismiss how fee structures in the credit and debit world can be a deterrent for consumers when traditional underwriting rules apply. Given that certain Merchant Category Classification (MCC) codes are considered to be high risk, fees can be considerable.
What problems do consumers face in attempting to cash out? And how does that affect operators?
Johnson: We live in a time of immediate gratification. At casinos, consumers generally take their winnings in cash on the spot. Cash disbursement then continues the gambling cycle as the money is often put right back into the system.
With iGaming, the majority of disbursement options involve ACH transfers into consumers’ deposit accounts. This often takes around five days and has become a major hindrance to adoption and usage of online gaming. Online gamers expect more – much more – when they win money. They want to be paid out and are willing to pay a small fee to receive funds immediately.
iGaming operators also lose an opportunity when funds are slow to reach consumers. Like brick-and-mortar casinos, they want consumers to have immediate access to their money to put it back into the game.
Dugan: Consumers wanting cash versus a game credit balance have an uphill battle. Their interests are simply not aligned with the interests of gaming establishments – cashing out is bad. However, creating a very fluid, seamless two-way street for funds flow actually works for both parties in the equation. Funds moving in are just as easy as funds moving out, making this a win-win.
It seems as if not being able to access winnings quickly dampens the excitement that consumers associate with gaming and fantasy sports. How do you solve that problem?
Johnson: Pragmatically, we’ve identified the problem to be solved. We’ve determined that people want a solution and are willing to pay for it. Now, we’re on the path to massively simplifying the transaction process to allow consumers to enjoy online gaming and fantasy sports, while also securely and safely moving their money.
Dugan: Seeing credits added to your account still gives the excitement of winning. The only “dampening” of any pleasure comes at cash out, after the game is over. However, by making the cashing out process simpler and more reliable, all opportunities for interaction remain more positive. After all, those interactions and touchpoints are critical in maintaining a positive outcome.