This is a guest contribution by Jon Southurst, a writer with CoinGeek.com. He intereviewed BitBoss CEO Matt Dickson, who made the case for a Bitcoin SV gambling operation shortly after the AGA called for cashless systems in casinos. This article first appeared on CoinGeek.com.
The American Gaming Association (AGA) recently published a report calling for a more rapid move towards cashless systems in casinos and other venues. Despite the damage COVID-19 and its mitigation policies have inflicted on some sectors of the economy, they also present a perfect opportunity for Bitcoin companies like BitBoss to pitch their solutions to operators and regulators.
Jurisdictions in Nevada and New Jersey were among the first to call for an end to lockdowns and get their economies moving again. In Las Vegas many venues have now reopened, albeit with face screens and social distancing rules. But the sheer turnover of cash money moving in and out of their systems—not only on the gambling floor but also in restaurants, hotels and other entertainment venues—still presents a transmission risk.
The AGA’s report is actually the result of 18 months’ research into the cashless issue, but it is now more pertinent thanks to COVID-19 and new, dramatic moves to prevent the spread of viruses everywhere.
With ‘Bridge’, BitBoss is ready to roll
Bitcoin and blockchain gambling app developers have tended to focus more on the online gaming industry. But BitBoss stands out as the company that targeted the entire industry and developed a system that integrates with physical venues just as easily.
Speaking to CoinGeek, BitBoss co-founder and CEO Matt Dickson said his company has already built a blockchain-based gambling system that’s ready to go. The AGA’s cashless call and current public mood mean the concept should be far easier to pitch to gambling venue operators, and BitBoss intends to do just that.
BitBoss has already developed an integrated gambling system called “Bridge” with components for users, venue operators and hardware devices.
As Dickson pointed out, gambling venues have historically been eager to use more efficient payment systems, moving from “quarters in buckets” to ticket systems in slot machines. And casinos themselves have long been cashless on the floor by using chips to represent value. Now the foot is on the gas to implement secure cashless systems as soon as possible, the main challenge is getting them to change any prejudices they might have about blockchain technology. It could reach a point, he said, where casinos became digital asset exchanges themselves.
Casinos, and BitBoss’ competitors, have faced the twin hurdles of compliance and security as they try to build their cashless systems around existing fiat currencies and bank accounts. Using a high-capacity blockchain to do that work instead has allowed BitBoss to build better products while others were busy going through procedures to become licensed payment processors.
‘It solves the problem all our competitors have’: Interview with Matt Dickson
Is BitBoss planning to make a special push to market its products to casinos in the wake of the AGA’s call for cashless casinos?
Yes, we are planning on making a push into land-based casinos. We have been working on a hardware/blockchain solution for over one year now.
What products does BitBoss have ready right now to pitch to venue operators?
Our product is called Bridge. Bridge is our patent-pending, crypto-based cashless ecosystem. It consists of three key components. First, is a crypto-based mobile wallet. We decided on using a crypto/blockchain based wallet because it’s the most secure standard that exists today.
Second, we have a hardware device that is installed in every slot machine and table game. The device for slots/EGMs speaks SAS protocol. This allows us to bypass the casino management system that typically runs the casino.
Of course we can integrate into the casino management system as well, which eliminates the need for the hardware. With the hardware device we are trying to give the casinos leverage against their casino management system provider. Typically these companies are slow to innovate and new products are absurdly expensive.
The third component is a lightweight server that communicates with the blockchain. The flow is simple to understand. Say a customer wants to send credits to a slot machine. The customer’s wallet sends a transaction to the blockchain over the public internet. The casino has this lightweight server listening for transactions sent to the casino. Once the casino sees the transaction on the blockchain it then routes credits to the slot the customer is playing. This is the real magic of the blockchain.
The customer never deals directly with the casino servers. There are no open ports on the casino’s server to hack. It solves the problem all our competitors have: How do you allow a non secure device (the customers cell phone) to communicate with your secure devices (slots/EGM’s) inside the casino’s secure network?
Will your product rollout strategy change at all, or just the marketing message?
Our rollout strategy remains the same. We were a huge believer in cashless long before COVID-19. We felt by driving adoption to cashless wallets we could help casinos make their mobile apps much more useful and utility-based. Most casino apps are currently information-based as opposed to being truly useful. There is a constant push to bring younger generations into the casino. The same young people that are using Venmo and Zelle almost demand cashless. Funny story, I asked my teenage son how many times he’s used an ATM machine. The answer had me hit the floor. ZERO!
What regulatory hurdles exist to introducing a blockchain-based payments system like Bitcoin BSV into gambling venues?
Regulators have typically demanded a cooling-off period for gamblers. There has been a nearly universal ban on allowing players to transfer money from their bank accounts directly to the slot machine. The theory is, if a customer needs to get up from the chair and walk to the ATM, then maybe they’ll cool off and think twice before they lose more money.
There is now a realization that the apps can control player spend. During the setup of the app players can set maximum daily transfer amounts. We feel that our blockchain system really shines when it comes to responsible gaming. Not only can players set limits, the regulators have an instant, public, permanent immutable record of the transfers. I think there was a resistance to this insight by regulators in the past. Increasingly casinos want to be seen as compliant and be seen as protecting customers.
Casino gambling is about entertainment, drawing customers into properties where additional revenue is generated from hotel rooms, restaurants, and entertainment. The fines are huge for casinos that fail to protect their customers.
Most of the (Western) world has been rushing to embrace cashless in recent years anyway. Is there a particular resistance to this, or love of hard cash, in casinos?
I think the love of cash isn’t as strong as people think. This same debate happened when casinos moved from quarters in buckets to paper tickets printing from slot machines. Cash is expensive to handle, a major security issue and now a health risk.
The American banking system was generally slower to innovate than other countries. Places like Africa have been huge adopters of mobile banking for years. Much of Africa uses text messaging to send money. Your cell phone statement doubles as your bank statement.
What we’re seeing now in the U.S. is the younger generation rejecting their parents’ way of banking. The sharing economy started the trend. People needed an easy way to split bar bills and Uber fares. Venmo filled the gap, and the rest is history. Casinos have to adapt but in a compliant way. BitBoss feels strongly that done correctly, casino cashless wallets can compete with the Venmos of the world.
To that end, we are about to make a major announcement concerning person to person payments. Casinos have a belief that money transmitters are an essential component to moving money. Our competitors have spent massive amounts of money getting licensed as money transmitters. Blockchains negate the need for middlemen (money transmitters). The cost savings to the casino’s customers will be massive.
Is there such thing as “chipless”? Large casinos (at least the ones I’ve been to) only deal with cash at the bank, but physical chips would have the same virus-transmission problems as cash inside the gaming rooms. (I’m not sure about slot machines… a lot of older style ones are still coin-operated, aren’t they?)
Chipless casinos are relatively easy to implement from a technology perspective. Many companies have created innovative electronic versions of roulette and craps. This was done years ago to save on labor costs. There may be an acceleration to these products because of COVID. They seemed to be gaining in popularity before COVID.
Does Bitcoin present an opportunity to change the culture of casino gambling here too, and is this shift actually necessary? For example, attract a younger clientele, introduce new kinds of games, etc.
BitBoss believes that once casinos understand the benefits of cryptocurrencies there will be a major adoption. Casinos need to understand this isn’t about the cryptocurrencies themselves. It’s all about the underlying technology. Every gaming transaction is a combination of two things; money and data. A $10 bet on banker in baccarat. The internet evolved as a data transfer system with redundancy placed as a higher priority than security. Blockchains developed as highly secure monetary transfer systems first and foremost. Why wouldn’t a casino want a highly secure monetary system that can add data easily?
This obviously ignores the fact that there’s US$300 billion in blockchain digital assets floating around the world. It’s become a very useful funding mechanism over the last few years. Cryptocurrency exchanges have become a very low cost way to convert fiat to crypto and then the crypto can flow into casinos for a fraction of the cost of typical money transmitters.
The largest crypto exchange in the U.S., Coinbase, had a US$8 billion valuation in October 2018. I suspect today’s valuation is many multiples of that. If casinos embraced crypto they would in essence be exchanges. The amount of transactions processed is huge in casinos. I foresee a day when the largest casino companies are crypto exchanges as well. It would add billions to their market caps and increase utility and functionality for their customers.