Gaining favour with millennial and Gen Z customers, who over the next couple of decades will come to represent the core demographic of consumers, is a vital task for any company looking for long-term success and sustainability.

For companies active in high-risk spaces, however, technological and regulatory conditions must be factored into this. At the Canadian Gaming Summit (CGS) in Toronto last week, some views were aired on how the gambling sector can engage its growing Gen Z demographic.

The preferences customers in these two age groups, Gen Z and millennials, have for digital and cashless payments methods is well observed. The convenience of such methods, the wider digitalisation of the economy in general, the impact of COVID-19 on younger people’s consumption habits, are all at play here.

Sim Bielak, President of SUZOHAPP, a cash management software and hardware for betting and gaming operators, remarked: “There has been some adoption of cashless when we started looking at the younger generations, millennials, Gen Z, they’re not used to handling cash.

“If you look at Gen Z, they’re actually one of the generations that is most concerned about their financial situation. They’re very comfortable with technology. If you take a look at the future, I think cashless, whether that’s crypto or credit or any other means, that’s just the nature of the technology shift.”

For firms in the gaming space, crafting a strategy to engage with younger audiences is multifaceted. Marketing, particularly sports marketing and increasingly social media market, is of course essential.

The importance of payments, as Bielak referenced at CGS last week, is vital as part of this. Studies examining other sectors have showcased the significance of payments preferences to young consumers when at checkout.

A study conducted by GoDaddy earlier this year focusing on SMEs, for example, found that Gen Z and millennial consumer demographics are far more receptive to new, digitised payments methods like tap to pay than their Gen X and boomer counterparts.

However, in the gambling space, there is an added factor for firms to consider – regulatory requirements, compliance with licensing conditions, and responsibility, in the latter case particularly player protection.

Regulatory developments in the latter have seen authorities clamp down on certain payment methods. In the UK, credit cards have been banned for gambling since 2021, and a similar approach is being enforced in Australia this year.

Bielak continued at CGS: “I think what we need to do is make sure that we have the right mechanisms in place to protect the players, but at the end of the day, there is a benefit to things being cashless, in that it’s fully traceable, auditable, controllable.

“Looking at markets like Australia, they’ve even excluded certain players from being able to play with credit. There’s a bit of a balance there, but it also enables an omni channel experience once you can enable cashiers, because they can play whatever game they want, when they want to play it, and they don’t have to worry about how they transact. You really create a frictionless experience.”

In his comments about the benefits of cashless gaming, Bielak used a key word – traceable. This relates to another topic he also mentioned, that being cryptocurrency. Again, it is certainly true that crypto is for the most part of a concept and asset most widely used and understood by younger audiences.

After all, Bitcoin, the world’s leading crypto coin, was first invented and first used in 2008. As such, a number of millennial and Gen Z people have grown up, entered the workforce and businesses, and the markets, in the context of crypto’s ongoing development. As such it is unsurprising that many are open to or are actively involved in paying with these coins.

However, relating to the betting industry, the traceability of cryptocurrency has been a sticking point for regulators. Although many customers are keen to use the sector, and according to data from companies like SOFTSWISS many are using it, the risk crypto poses for money laundering is an ongoing concern.

Speaking on the same panel as Bielak, Andrew Darley, a VP of iGaming and iLottery at OLG, observed that crypto is ‘hard to regulate’. This would understandably create some barriers to how operators can utilise it for Gen Z engagement.

“AML is a big thing and it’s interesting to kind of go down the path of credit, debit and cashless, which I think 100% makes sense. Crypto I think is funny, because a couple years ago there was betting with crypto and then that kind of died down.

“Isn’t this just because in an industry where AML is such a concern, crypto is the easiest way to hide money? At least until we figure out a way to be able to properly follow that portrayal and see what the source of funds is. I don’t think we’ll get there. Some folks are coming in and all the power to them. 

“I think from a regulatory standpoint, we need the regulator to send some proposals and figure out what’s doable and what’s not but it’s going to be tough. It’s not going to be quick.”

This is not to say that crypto is not becoming more accepted by regulators, however. In the US, the Securities and Exchange Commission (SEC) has approved ETFs for both Bitcoin and Ethereum, showing that after years of caution, some may say confrontation, the regulator is warming slightly to this highly valuable global sector.

On the other side of the Atlantic, meanwhile, the UK government under PM Rishi Sunak has been keen to foster development in the country’s ‘digital economy’, as policymakers put it – although an upcoming election could change the course.

Ultimately, as and when cryptocurrency is regulated as a payment option for betting, it seems logical for operators to further widen payments options and engage with an even larger consumer pool by seizing this opportunity.