Pulse
Land-based embraces blockchain
By William - 29 January 2020
Casinos Austria International plans to become one of the first casino groups in the world to offer its players the option to play and cash-out at its land-based locations using cryptocurrency. G3 discusses the ramifications for the land- based sector with Casinos Austria International CEO, Christoph Zurucker- Burda, and the head of the newly established company championing this technology-led proposition, Thomas Staudacher, Managing Director of ALEAx.
Having conducted research on the potential adoption of new technologies and their application within gaming, the Casinos Austria International board of directors has given the green light to the creation of a blockchain ‘bitcoin’ initiative. In July, ALEAx was established and given its first challenge to find a solution that would bring improvements within the land-based gaming payments processing space.
Cryptocurrency isn’t exactly a new invention, but in the land-based casino space it’s not had much of an impact thus far. It’s a scenario that’s going to change in the near future, however, as a casino group with a clear relish for new technology is about to launch full steam into blockchain. Casinos Austria International intends to allow players to cash-in and out using a digital wallet to process bitcoin payments within its land-based locations in 2020.
“We foresee the need for a new payment method to offer greater flexibility for our customers,” outlined Christoph Zurucker-Burda, Casinos Austria International CEO. “To meet the challenge of offering a land-based
cryptocurrency solution for our players, we have established ALEAx as a new venture in Liechtenstein, a country that has become a leader in this field, and where we currently operate a successful land-based casino.”
Exhibiting on its own booth at ICE London 2020, ALEAx enables players to utilise cryptocurrency to purchase chips and cash out back to their digital wallet as part of a quick and easy transaction.
The company is currently undertaking all the necessary approvals from the appropriate authorities to speed this solution to market. Visitors to the ICE exhibition are invited to discuss the project with the ALEAx team in London.
THE DELAY TO PLAY
The issue Casinos Austria International and ALEAx seeks to eradicate is the delay caused by the transfer of cash across borders, which creates problems for both players and operations. Even the transfer of cash from one casino to another is becoming increasingly difficult and time consuming. The ability of cryptocurrency to remove the need for physical cash is an appealing solution for many of Casinos Austria International’s customers, and while it’s not expected to be an option that will appeal to the mass market, Mr. Zurucker- Burda expects to see acceptance and growth from a small, but very important, group of players.
“We have players who want to play with us at different casinos within the group, but struggle with the transfer of funds, as many of these transfers take sometimes several days to process,” explained Mr. Zurucker-Burda. “The adoption of a cryptocurrency payment method solves this issue, making it easy to exchange chips directly from a digital wallet within our land-based locations.”
What’s extremely important in the creation and acceptance of the ALEAx payments solution is that customers understand that while the cryptocurrency itself is provided by a third-party, in this case bitcoin, the facility to process the transaction within each land-based location comes from Casinos Austria International, a trusted brand for the player.
“We are also making every effort to ensure that this is a very successful project, as we strive to champion new technologies within the gaming sector, both now and into the future,” stated Mr. Zurucker-Burda.
ESTABLISHING ALEAX
Thomas Staudacher has worked in the casino industry for more than 15 years, and as an advocate for the adoption of new technologies, has seen developments evolve that provide both risks and opportunities for the gaming industry. As Managing Director of Casinos Austria International’s ALEAx AG, it’s his job to explore new technologies and their application within the gambling sector.
“We are working with experts in both blockchain and IT solutions,” explained Mr. Staudacher, whose own role injects gaming experience to the three-pronged mix. “Our initial project in Lichtenstein is a start-up, with our team drawing in expertise from both the casino and technology sectors within an environment that is at the forefront of blockchain adoption and development.”
Believe it or not, but Liechtenstein – the German-speaking micro-state wedged in the alpine mountains between Switzerland and Austria – is currently at the forefront of regulating this industry. On October 30, 2019, Liechtenstein became one of the first countries in the world to adopt a Blockchain Act (TVGT), which passed into law on January 1,2020. Having established a very successful casino in Lichtenstein in 2017, Casino Schaanwald, Liechtenstein became the perfect proving ground for ALEAx’s first project. “Liechtenstein has a ready- made blockchain/cryptocurrency regulatory framework whose rules we can adopt and comply with form the outset,” explained Mr. Staudacher.
“As we chose for the initial project to accept the bitcoin currency for ease of compliance, Liechtenstein was the obvious place to both locate the company and launch our customer- orientated payments solution.”
The initial project will build from a small base in Liechtenstein were Mr. Staudacher and his team will gather insights with a view to expanding into additional markets in the near future. “I think a host of countries in the EU will follow a similar path regarding cryptocurrency compliance,” stated Mr. Staudacher. “Regulation within the EU is already well established with AML and KYC, whilst countries such as Switzerland, Malta and Lichtenstein have taken this a stage further with the adoption of dedicated blockchain legislation and regulation that exceed the current AML requirements.”
THE ADVANTAGES FOR LAND-BASED OPERATORS
At this stage, ALEAx intends to only offer bitcoin as its preferred blockchain token, explaining that this is presently the most secure and reliable coin in circulation. However, Mr. Staudacher does not rule out the possibility Casinos Austria International could mint its own coin, primarily as a means to restrict volatility and add even greater security, but this is not something currently in development.
“Another potential area for consideration is the processing of payments in both the land-based and online space,” stated Mr. Staudacher. “However, despite this being a very interesting area for future expansion, we are starting with the land-based payments solution that has the potential to take the next step into the online gaming side.”
ALEAx believes that cryptocurrency is the perfect solution for international guests who enjoy the experience of travelling to multiple destinations to play land-based casino games. One of the challenges ALEAx faces is that the tech-savvy millennial familiar with this type of cryptocurrency technology is not a match for the international traveller profile. Taking the less technically sophisticated player on a complex technology journey is one of the issues ALEAx must overcome.
“There are several ways to explain and describe the advantages presented by cryptocurrency, while at the same time we must educate players in the security and safety of bitcoin usage,” described Mr. Staudacher.
“Guests will be responsible for the security of the keys to their bitcoin account and need to be aware of the potential risks this could pose. However, we believe that the advantages are significant and as we educate and explain these benefits the case for adoption will become overwhelming clear for international guests.”
Asked whether he expects cryptocurrency to become the predominant form of payment within land-based casinos in the near future, Mr. Staudacher is dismissive of the idea, explaining that such a proposition is very unlikely on a major scale in the short- term. He believes we’ll see the adoption of blockchain payment solutions as a supplementary payments option that resolves a specific issue for a relatively smaller number of, albeit very important, guests.
“I don’t believe that we’ll see this type of payment solution in the mainstream in the near future, but as rather a mid-term development,” said Mr Staudacher. “However, I do believe there are several interesting niches in which we could see the adoption and take up develop much faster. In the VIP segment this is a solution that could see widespread adoption by casinos in a relatively short time period.”
COMPLIANCE NOT AVOIDANCE
In terms of compliance, Mr. Staudacher is convinced that the adoption of cryptocurrency does not present a problem for regulators, since the casino environment, regardless of the payment method being adopted, already has appropriate KYC and AML measures in place.
These same measures are applicable to the governance and scrutiny of cryptocurrency, in addition to analytics that are specific to blockchain currency, which allow operators to analyse the precise transaction history of the currency, affording even greater transparency in relation to current and previous transactions conducted by the user.
One of the points stressed by Mr. Zurucker-Burda is that Casinos Austria International is not seeking to find a path to circumnavigate the checks and balances all operators must undertake with KYC and AML. CAI will conduct exactly the same level of player scrutiny with regards to player cryptocurrency funds.
“We conduct the same AML measures with cryptocurrency as we would with cash or credit cards,” explained Mr. Zurucker-Burda. “The ALEAx solution is simply a means by which to make the transfer quicker and easier from a provider they know and trust.”
The development of ALEAx’s bitcoin payment solution is not the end of its blockchain ambitions. Cryptocurrency is the focus at launch, but thereafter the company will explore the use of blockchain across a range of gaming- related applications.
ALEAx has been created to offer the perfect blend of cutting edge- technology and gaming industry specific knowledge and experience. While the focus of ALEAx initial forays into the blockchain will concentrate upon cryptocurrency, Mr. Staudacher is clear that his remit regarding blockchain technology is much wider.
“I think you have to separate the functionality of bitcoin from the blockchain. While the initial focus will be squarely placed upon cryptocurrency, we are also exploring the use of blockchain in relation to infrastructure and slots,” explained Mr. Staudacher.
“Blockchain and bitcoin have immutable properties, which have applications in anti-fraud controls to mitigate risk in many areas within the casino environment.”
Having been a successful developer of casino hardware in the past with the successful product “Shuffle-Star” by CARD, Mr. Zurucker-Burda confirmed that ALEAx nor Casinos Austria International are interested in developing slots or table devices.
However, he does see the group offering cutting edge technology for gaming operators worldwide, establishing B2B solutions that drive forward the land-based sector as a whole.
The goal is to create solutions not just to enhance the operations of Casinos Austria International, but to pioneer tailor-made solutions for the entire international gaming community.
The second example of such an innovation is the SMART TITO solution, which has the potential to replace current cashless systems. This product will also be presented on ALEAx booth at ICE London. To learn more – visit the ALEAx AG booth at ICE – stand No. N4-302.
