Problem Gambling - ATM/EFTPOS functions and capabilities (in gambling venues) 

• 5.1  United StatesThis section of the report reviews ATMs and EFTPOS in the international gambling environment.
• 5.1.1 National Gambling Impact Study Commission (NGISC) Report
• 5.1.2 A case study
• 5.1.2.1 Access to casino credit
• 5.2 Canada
• 5.3 United Kingdom
• 5.3.1 The Budd Report
• 5.3.2 Provision of credit and access to ATMs
• 5.3.3 Conclusions

This section of the report reviews ATMs and EFTPOS in the international gambling environment.

In undertaking this desktop review we have focused on gambling in the United States, Canada and the United Kingdom considering the relative maturity of gambling in these countries and the increased focus of these countries on problem gambling.

This section of the report:

• where possible, identifies state and Commonwealth regulation surrounding the use of ATMs and EFTPOS in the gambling environment;
• identifies international research relating to access to cash facilities and the prevalence of problem gambling;
• the impacts associated with the regulation of cash access; and
• identifies issues within United States, Canada and the United Kingdom that have either promoted or inhibited the development of responsible gambling strategies, particularly with respect to ATMs and EFTPOS.

In undertaking the above research we have primarily completed desktop research, sending requests for relevant information to key stakeholders, including:

• problem gambling and gaming industry research organisations;
• gambling and gaming industry stakeholders, for example casino and gaming associations and the United States National Indian Gaming Association; and
• relevant state and province gambling regulators.

In total, information requests were sent to 18 organisations, of which 10 responded.

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5.1 United States

In the United States gaming licences are granted to private enterprise with the regulation and licensing conducted at a state level.

The following table highlights the extent of the various forms of gambling in American states:

The American Gambling Association identified:

• of the 50 states, only Hawaii, Utah and Tennessee have no legalised gambling;
• in 1989 the United States Congress passed the Indian Gaming Regulatory Act (IGRA) allowing the development of casinos on Indian reservations. There are now approximately 260 Indian Reservation casinos in the United States;
• gambling revenue generated from the Native American Casinos provides the primary source of funding for tribal governments;
• gambling in each state is regulated by the states with the exception of Indian gaming which is regulated by the IGRA, a federal act;
• in the early 1990s, the ‘riverboat states’ (Iowa, Illinois, Indiana, Missouri, Mississippi and Louisiana) commenced the operation of casinos on large riverboats; and
• prior to 1990 only Nevada and Atlantic City allowed legalised casinos. There are now a total of 11 states offering commercial casinos. The state of Nevada alone offers approximately 430 individual casinos.

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5.1.1 National Gambling Impact Study Commission (NGISC) Report

The NGISC report was the culmination of a two-year study into the social and economic implications of gambling in the United States. The Commission was created by public law and represented the most comprehensive review of the United States gambling industry.

The scope of the study incorporated six major themes:

1. a review of existing policies and practices of all levels of government with respect to the legalisation of gambling;
2. an assessment of the relationship between gambling and crime levels, and the regulatory practices to address the relationship;
3. an assessment of problem gambling and the resulting social and economic impacts;
4. an assessment of impacts on individuals, families, social institutions generally, the general economy, and particularly in depressed economic areas;
5. an assessment of the extent to which gambling provided revenues to states, local, and Native American Tribal Governments, and the extent to which possible alternative revenue sources may exist for such governments; and 
6. an assessment of Internet gambling and its impacts.

Based on the findings of the study, the Commission made a total of 76 individual recommendations. The recommendations centred on improvements to gambling regulation, problem and pathological gambling, Internet gambling, Native American Gambling and gambling impacts on people and places.

The following recommendation related directly to the access of ATM and ‘credit machines’

"7-1 Because the easy availability of automatic teller machines and credit machines encourages some gamblers to wager more than they intended, the Commission recommends that states, tribal governments, and pari-mutuel facilities ban credit card cash advance machines and other devices activated by debit or credit cards from the immediate area where gambling takes place’²⁸

The following comments from the NGISC report give an indication of the current gambling environment in the United States. In particular, the forces driving problem gambling and harm minimisation regulation, the depth of problem gambling research, and the extent of legislation adopted by the states:

• available information regarding the economic and social impacts of gambling is inadequate ‘for informed discussion let alone decision’²⁹;
• ‘in almost every state, whatever policy exists towards gambling is more a collection of incremental and disconnected decisions, than the result of deliberate purpose’³⁰. One of the criticisms of the various levels of government involved in the gambling industry was the short term pursuit of revenues rather than the long term impacts on public welfare;
• with respect to the regulation of the commercial casino environment, the NGISC suggests the states with casinos have adopted two very different approaches to their regulation, depending on the state government’s perceived public purpose of casinos:
• the Nevada approach – weighted towards gambling as a business. The public purpose of gambling in Nevada being the maximising economic benefits (tax revenue, jobs, investment). This approach emphasises granting gambling a relatively free hand to respond to market demands (location, number of facilities, types of gambling, technological innovations). This approach to regulation has been a key factor in establishing Nevada as the centre of casino gaming in the United States; and 
• the New Jersey approach – focuses on the potential negatives of gambling. The result being a more in-depth role with respect to regulation and monitoring. The casinos have a strict and comprehensive regulatory structure.

The NGISC recommended further research into the prevalence and causes of problem gambling as a priority. The Commission respectfully asked all states to act on all the recommendations surrounding problem and pathological gambling.

Following the release of the National Gambling Study Impact Commission report Congressman LaFalce of New York State introduced legislation to Congress in September 1999 (the Gambling ATM and Credit/Debit Reform Act) to remove ATMs, credit card terminals, debit card point of sale machines and other electronic cash machines:

• from gambling halls (bingo halls); and
• banning casinos and other gaming establishments from having ‘cash facilities’ on the gambling floor.

This bill did not proceed and was re-introduced by Congressman LaFalce in July 2001. It is understood the bill has been referred to the Congress Sub-committee on Financial Institutions and Consumer Credit and as yet has no co-sponsor.³¹

LaFalce argued the proposed legislation is implementing one of the major recommendations of the National Gambling Impact Study Commission.

The American Gaming Association (AGA) argue the NGISC recommendation was directed to the states as the primary regulators and any legislation at a federal level intrudes on the states rights to regulate gambling as they see fit, and sets a dangerous precedent. In addition, the AGA argues the wider ramifications of such legislation may extend to shopping centres,‘any place where those who want to impose their views on others who think individuals might be tempted to ‘overindulge'.³²

The AGA president, Frank Fahrenkopf suggested that the bill would not find the necessary support.³³ By comparison, this proposed legislation is considered the absolute minimum regulatory standard in Australia.

In March 2002 the American Gaming Association completed a review of the ‘Statues and Regulations in Commercial Casino
States Concerning Responsible Gaming’. The following table shows responsible gaming measures (and restrictions on practicespromoting gaming).

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Table key:  I = Implemented  R = Regulated by yet to be implemented

The following comments relate to the above table:

• there are currently no regulations in Colorado or Indiana that addresses problem gambling;
• Illinois places restrictions on the issuing of credit and cashing of cheques by casino operators;
• in Iowa a casino operator is not allowed to accept a credit card to purchase gambling products;
• in Louisiana procedures prevent any person placed on a self exclusion list from having access to credit or from receiving complimentary services such as cashing cheques;
• interestingly, Indiana and South Dakota have no formal responsible gambling regulation but funds are allocated for the treatment of problem gambling;
• in Michigan, ‘Electronic Funds Transfer Terminals’ are not allowed to be within 50 metres of the casino floor. Taking the restriction a step further, Michigan has identified future technology as a risk and has prohibited the installation of any game that is played with a device that allows a player to operate the game by transferring funds from a debit or credit card;
• in March 2000 a bill was introduced in Michigan to ban ATMs from the casino however the bill was opposed by the Bankers Association and was subsequently not passed; and
• in Nevada a person may request to be placed on an exclusion list so credit cannot be extended to that person in any Nevada casino.

The table and associated comments highlight that responsible gambling and harm minimisation approaches by the United States are at best ‘patchy’. Even when some states have looked to regulate cash and credit access, the approaches are inconsistent. The impacts, if any, at this stage are unclear.

It is evident that the greater the reliance a state places on the gambling industry to support their economy, the greater the reluctance the regulator has to impose regulation that may significantly impact on gambling revenue.

The current federal bill before Congress, legislating a ban on cash and credit machines from the gambling area has struggled to receive support and suggests the overall reluctance of government and regulators to introduce any measures that may have a significant impact on the gambling industry.

Therefore it is unlikely the United States will accelerate further development of harm minimisation and responsible gambling legislation in the short term.

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5.1.2  A case study

A case study – Iowa Racing and Gaming Commission – Credit machines and ATMS in the gambling environment

In 1999 the Iowa Racing and Gaming Commission (IRGC) introduced an administrative rule effectively prohibiting the location of ‘satellite terminals’ (ATMs and credit machines) on a gambling boat or within a racetrack.

This caused some concern and debate by the Administrative Rules Review Committee (a Committee chartered to review rules implemented by Iowa Government agencies/departments) because the rule sought to adopt failed legislation.

For several years the Iowa General Assembly debated a proposal to legislate the ban of credit machines however every proposal was unsuccessful. Therefore if legislating a ban was unsuccessful it was argued no rule could be made to have the same effect.

After some debate about the proposed total ban of credit machines and ATMs from the gambling venues, the IRGC compromised by amending the rule to ‘ban only those satellite terminals which give credit to the customer through the use of a credit card’ effectively allowing ATMs to remain at the gambling venue. In response the Administrative Rules Committee would allow the strengthening of this rule to move ‘ATMs (debit cards) away from the gambling floor’.

It is important to highlight the subtle differences in the mechanisms for gambling patrons to access credit. Credit machines fall into two categories, in both cases the licensed gaming venue operator does not issue credit, they only facilitate the issuing of credit by a financial institution:

• in the first case, the customer inserts a credit card into the machine to initiate the approval process; a printer under the supervision of the venue staff then issues a cheque (which may be made out to the venue) for the loan amount. A service charge is imposed for this transaction. The customer then signs the cheque and is cashed by the venue. In this case the facility is actively involved in the transaction; and
• in the second case, either the credit company (financial institution) employee controls the machine or the machine itself accepts credit cards and automatically dispenses a cash advance (similar to ATM capabilities in the Australian environment). In this case the venue plays a more passive involvement.

In the Iowa example, the IGRC argued that it had the authority to implement the rule to ban credit machines because the Iowa Gambling Code contained provisions such as:

• banning venues from providing credit or loans; and
• accepting credit cards as payment for gaming products.

The IGRC argued the ‘objective sought’ in those provisions was to prevent the immediate access to credit by the patron.

This raised the issue of whether statutory regulation prohibiting a venue from providing credit can extend to when the gaming venue is only a passive participant (only providing floor space).

The counter argument was that the legislation was only really intended to restrict gambling venues in Iowa from providing credit (the provision of credit by the venue to the patron is common in Nevada and New Jersey).

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5.1.2.1 Access to casino credit

Casino credit is different from credit issued by commercial credit card companies and financial institutions. In some casino jurisdictions, cashing of cheques is the only form of credit offered (as in Iowa). In other jurisdictions casino credit is an expanded form of cheque cashing, in that ‘markers’ are signed by the customer as counter cheques. The period between when the cheque is signed and when it is presented by the venue to the bank is the defined time period for that credit. In the traditional sense, some casino states allow gaming venue licensees to issue lines of credit to approved patrons.

Access to credit in the casino states falls under the following categories:

• a known, regular gambler at the individual casino – the gambler would have an established line of credit with the casino. Generally, the state regulators do not regulate/monitor these arrangements. The issuing of a line of credit is at the discretion of the individual casino;
• an unknown gambler who requests to play on credit. The gambler must pass a credit check (undertaken by a third party organisation on behalf of the casino) and a line of credit is established;
• cash advances on credit cards via the cashier’s cage. As noted in the Iowa case, the casino takes a passive role in the extension of this form of credit; and
• cashing of cheques, which may be seen as a short-term extension of credit.

The research would indicate that regulating the access to credit (directly from the casino or a financial institution) is of greater significance than the regulation of ATM machines in the United States gaming environment.

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5.2 Canada

The Canadian gambling industry is based on the concept of charity gaming with all casino gaming facilities owned by the government. All profits from gambling must be for a charitable cause. The government is effectively the gaming operator and main beneficiary. The following table shows the extent of the various gambling forms in Canada.

There has been significant growth in the Canadian gambling industry since the introduction of slot machines and full-scale casinos. There are approximately 60 casinos in Canada. With this growth there has been an increase in the level of public scrutiny of the industry. The research was unable to locate specific information with respect to the regulation of ATMs/EFTPOS in Canadian casino environment, other than within British Columbia where ATMs are not allowed within the casino.

Given the growth of the industry and the potential conflicting interest of the government there has been an increased requirement for transparency in policy, accountability and a greater focus on the social costs of the expansion of gambling.

As with the United States the regulation of gambling varies significantly between provinces. However a number of provinces have established agencies to undertake problem gambling research and community education to address the social costs associated with gambling.

Again, as with the United States, the progression of harm minimisation and responsible gambling initiatives are in their infancy and have not extended beyond identifying the requirement to undertake further research into problem gambling and further development of existing harm minimisation and responsible gambling programs.

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5.3 United Kigdom

In examining the gambling industry in the United Kingdom the research examined the Budd Report. This report has been highly controversial and has generated much debate within the community and gambling sectors. The following is a brief overview of the findings of the report.

5.3.1 The Budd Report

In July 2001 the Great Britain Department for Culture, Media and Sport (principal agency for the regulation of gambling in Great Britain) completed a review of the Great Britain gambling industry (the ‘Budd’ report).

The terms of reference included:

• a review of the current state of the industry and potential changes in the future considering trends in e-commerce, general leisure and entertainment trends and international trends in gambling;
• the social impacts of gambling and the costs and benefits;
• making recommendations for the kind and extent of regulation with regards to:
  • the need to protect the young and vulnerable;
  • preventing gambling being carried out that promotes crime;
  • preventing gambling being infiltrated by organisation that promote money laundering;
  • creating an environment that allows creates commercial opportunities and maximises the UK’s economic welfare; and
  • consideration of the availability and effectiveness of problem gambling programs and recommendations to improve this facet of the industry.³⁶

The scope of the review was broad given it was the first significant review of all forms of gambling in Great Britain. As a result there was significant focus on reviewing and updating legislation and regulation of the industry, which was, in some instances long overdue.

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5.3.2 Provision of credit and access to ATMs

The current position is that Casino operators cannot provide credit. Payments for chips must be by cash, cheque or debit card. Cheques can also be exchanged for cash therefore this is one form of short-term credit. Unlike the Australian environment, gaming machines can only be operated by coins or tokens.

The Budd report acknowledges cheques used to pay for gambling in the casino environment may be linked to overdraft facilities offered by Banks (a form of credit). Similarly, people are able to use credit cards to withdraw cash from ATMs, which were increasing in prevalence in arcades in the UK. It should be noted that ‘arcades’ refers to amusement arcades that allows minors to access gaming machines (low betting and winning limits).

In the bingo club environment, ATMs are being installed that can only accept debit cards. The Great Britain Gaming Board has negotiated with the British Casino Association to limit ATMs to debit cards only.

During the course of the review, the British Casino Association (BCA) suggested that credit cards should be accepted in the casino environment on the basis that it would be inconsistent to allow the use of cheques on overdraft accounts but not allow credit cards. The BCA also argued that credit cards have the capacity to reject transactions if limits are exceeded; however the same could not be said for cheque transactions.

Ultimately the Budd report recommended that credit cards be permitted to purchase gambling products (chips), which are not able to be used in poker machines in the casino environment. The review panel could not distinguish between a casino ‘chip’ and any other product that people purchased via their credit cards. The Budd report considered gaming machines to ‘present special opportunities for fast and repetitive play: adding credit cards to the mix would further add to the risk’.³⁷

Therefore the Budd report recommended banning both debit and credit cards from being used for the payment of gaming machines. With respect to the availability and location of ATMs, the Budd report recommended:

‘The location of ATMs should be required to be such that players have to take a break from gambling to obtain more funds. The Gambling Commission should issue guidelines setting out the restrictions on where ATMs may be situated’³⁸

The Budd report acknowledged international trends regarding the relocation of ATMs was the driver for this recommendation.

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5.3.3 Conclusions

The majority of the recommendations of the Budd Report focused on improved regulation and legislation of gambling in Great Britain, particularly in light of the ‘criminal element’ that may have existed in the past.

In part, some of the recommendations in the report are contradictory and have been quite controversial. For example, continuing to prohibit gambling in hotels whilst allowing the growth in casinos (in the UK environment these are similar to clubs in Australia). Or, allowing credit cards to be used to purchase gambling in the casino environment whilst restricting the location and function of ATMs in the gaming machine environment.

It is suggested the contradictory nature of the report is due to the need for a review of gambling in Great Britain with a goal of improving the gambling environment for the majority of participants, at a time when there is an international focus on problem gambling.

5.4 Summary – international and Australian environment

Despite the relative size of the gambling industry in the United States, United Kingdom and Canada, there is an overall absence of integrated regulations supporting responsible gambling and harm minimisation initiatives. Some states are more advanced than others in this area however even the ‘progressive’ states have an ‘ad hoc’ approach that does not assist in the development of effective regulatory packages.

To date restrictions to the access and functionality of cash access facilities have not been a priority by the respective state and local governments.

The key findings of the review of current regulation and research surrounding ATM and EFTPOS in the international and Australian environment in the gambling environment are:

• the extent of cash and credit access in the United States is very prevalent, and there is a perceived reluctance by the majority of stakeholders in the industry to ‘over regulate’ gambling. As a result the progression of problem gambling research and the implementation of harm minimisation and responsible gambling measures is relatively slow;
• all Australian states and territories have acknowledged the need to regulate access to cash and credit in the gambling environment and all have adopted varied approaches in addressing this issue. The key reason for the varied approaches is the lack of specific research to identify measures that would have a positive impact on problem gamblers; and
• in saying this, it is not suggested that the current approach adopted by the states and territories will have no positive impact. However, there is currently no benchmark data or continued data collection to measure the effectiveness of these approaches over time.

27. Source: International Gaming and Wagering Business publication, October 2000 & American Gaming Association website.
28. National Gambling Impact Study Commission, section 7, p 30
29. NGISC – overview p6
30. NGISC – overview p7
31. It is understood that the bill did not proceed due to a range of matters being deferred as a consequence of the events of September 11 2001 in the United States
32. American Gaming Association, website fact, Facts Sheets- ATM/Credit in Casinos
33. Las Vegas Review-Journal, July 20 2001
34. Source: American Gaming Association, March 2002
35. Source: International Gaming and Wagering Business publication, October 2000. * Total of 12 provinces
36. Department for Culture, Media and Sport, Gambling Review Body, Gambling Review Report, July 2001
37. Department for Culture, Media and Sport, Gambling Review Body, Gambling Review Report, page 125, July 2001
38. IBID