NSW’s cashless gaming trial: An expensive waste of time?

Sankunni K December 5, 2024

SiGMA news

The $3.4 million cashless gaming trial conducted by the (NSW) government has sparked a significant debate about its efficacy and cost-effectiveness. The trial aimed to test the feasibility of a cashless, account-based gaming system to reduce gambling-related harm and address financial crime, but its low participation rate and contentious conclusions have drawn criticism from multiple stakeholders.

A costly experiment with limited scope

Despite its lofty ambitions, the trial saw only 14 “genuine and active” participants from an initial pool of 243 sign-ups, undermining its credibility. The Independent Panel on Gaming Reform, which oversaw the trial, declared it a “success,” arguing that the low engagement itself was a critical learning point, reinforcing the need for mandatory adoption.

Michael Foggo, Chair of the Independent Panel, said the purpose of the phased roll out and decision to keep a limited amount of cash in gaming was to “bring people along” with the idea of account-based gaming.

“We’ve already had … a fairly large degree of pushback from patrons in term of they don’t want to start doing this because they feel that there are cyber security issues, there’s privacy issues, and banks will be more in tune to how much they spend on gambling,” Foggo said.

Foggo also said he was not surprised by the lack of active users in the trial and that contributed to the need to make the technology mandatory.

However, critics argue the limited scale makes it impossible to draw meaningful conclusions.

The trial’s voluntary nature, coupled with the continued availability of legacy cash systems, likely contributed to its poor uptake. Many patrons cited concerns about privacy, data security, and potential scrutiny of their gambling habits by financial institutions as reasons for not participating.

Findings and recommendations

The panel’s proposed a phased rollout of account-based gaming, recommending mandatory adoption by 2028. Key recommendations included:

Mandatory player identification: Linking all gaming activities to player accounts to enhance traceability and harm minimisation.

Limited cash use: Retaining cash as a top-up option with defined limits.

Consumer-centric design: Simplifying the sign-up process and addressing user concerns about data privacy and security.

Comprehensive industry support: Ensuring a smooth transition, particularly for smaller and regional venues.

However, the (AHA NSW) and have raised concerns about the report’s findings, calling them “embarrassing and not credible” due to the small sample size and lack of industry impact analysis. They have urged the government to conduct further research before implementing mandatory reforms.

Criticism of evidence and methodology

AHA NSW’s response to the panel’s recommendations highlights significant gaps, including:

Lack of industry impact analysis: The panel deferred critical assessments of infrastructure costs and employment impacts to the government.
Inadequate trial design: The voluntary, hybrid model failed to test a fully cashless system, rendering the findings insufficient for informed decision-making.

Questionable research methods: The report relied on minimal player data and anecdotal feedback from non-users, raising doubts about its validity.

The organisation also flagged potential costs exceeding $1 billion for necessary infrastructure upgrades, such as transitioning gaming machines to a two-way communication protocol.

Broader implications and future directions

The trial was part of a broader response to the findings on money laundering through poker machines. While the panel sees mandatory account-based gaming as a long-term solution, critics warn of unintended consequences, including potential revenue losses, patron alienation, and migration to less-regulated gambling platforms.

Advocates for gambling reform, however, argue that the social benefits of reduced harm outweigh these challenges. Mandatory systems, they contend, can provide better oversight and tools for harm minimisation.

A controversial path forward

The NSW government’s cashless gaming trial has exposed deep divisions among stakeholders. While the Independent Panel on Gaming Reform stresses the need for mandatory reforms, the lack of robust evidence and stakeholder buy-in raises questions about the feasibility and fairness of such measures.

As the government considers its next steps, the trial speaks of the importance of comprehensive, evidence-based approaches to reform. Without addressing the trial’s shortcomings and engaging stakeholders meaningfully, the vision of a cashless gaming future may remain as contentious as its costly beginnings.