"The Future of Gaming is on the Cards"
©Copyright Security Magnetics Pty Ltd, June 1997
Author:  Doron Ben-Meir, Managing Director, Security Magnetics Pty Ltd

As published in "Gaming & Leisure International" magazine, Autumn/Winter 1997

For the last 40 years Australia has been at the forefront of innovation in the gaming (slot) machine market due to the unique Club and Hotel structure of its Gaming industry.

New South Wales (NSW) was the first State to legalise and regulate Club and Hotel gaming with the remaining States having entered the industry over the last decade. Whilst the regulatory structure of each State jurisdiction is different, the majority run a large number of Clubs and Hotels with anywhere from 10 to 1500 machines each.

Unlike the high volume transient population of Las Vegas, venues derive the vast majority of their revenue from regular patrons/members who live within a 5 km radius. The need to keep the same patrons entertained over the years, particularly in NSW, has resulted in continuous gaming product development and prompted the introduction of new gaming technologies.

NSW Clubs were amongst the first machine operators in the world to substitute push buttons for handles on machines - delivering better mechanical reliability and faster game play. They were the first to move from traditional spinning reels to video based machines. Now touch screen, multi-game machines with bill acceptors are common place.

account play

In 1992 when the State of Victoria first legalised the wide area operation of gaming machines, Tabcorp Ltd, one of two Licensed State Gaming operators, introduced a cashless gaming system to the market. To do so, they developed their own touch screen machines, proprietary games and centralised monitoring network. Tabcorp currently operate approximately 12,500 machines across 250 venues. Of these machines, half are card based with the remainder being traditional coin activated machines similar to those installed in NSW and the other States. Since introducing cashless gaming, Tabcorp have issued more than 5 million cards with turnover of several billion dollars annually. Interestingly, perhaps even predictably, the cashless system found favour with the younger generation of players between 25 and 40 years old. Having introduced entirely new gaming machines to the market at the outset, Tabcorp learned some hard lessons about machine and game design and the marketing nuance of the gaming industry.

The NSW Club industry analysed Tabcorp's experience and are now ready to adapt card based gaming to their environment. Rather than introduce new specialised machines as did Tabcorp, the NSW Clubs will simply add the card option to their existing machines, thereby continuing to take advantage of current game popularity and not threatening their patrons with too many changes at once. (The term, "card based gaming" rather than "cashless" is introduced as cash will not be completely eliminated overnight)

The tremendous cost savings for venues and the substantial marketing opportunities introduced with a card based gaming system are well understood. Moreover, NSW Club managers are certain that their customers will embrace the new services which the card offers them. One of the key issues from a system perspective is which card technology best suits the application ?

Everyone has heard of smart cards and many are promoting them, but is a smart card the answer ?

Is there an alternative ?

As with all good technology decisions, one must evaluate existing infrastructure and system trends, isolate the most critical application requirements, and determine the most cost effective solution. Those just pushing card technologies are putting the cart before the horse !

Of recent times there is a world wide trend in the gaming industry toward the installation of networks linking gaming machines. This is indeed true of the Australian industry. These networks provide any one or all of the following functions:-

  • On-line machine management data to assist gaming managers with the analysis of each machine's performance including turnover, service histories, faults, alarms etc
  • Player tracking and bonus points systems designed to increase player loyalty and track market trends to continuously enhance customer service and optimise the appeal of the gaming product.
  • State regulators are installing wide area machine networks to monitor overall gaming statistics and ensure taxation revenues are optimised.
  • Venue, State and even Country wide linked jackpots - offering players the chance at much larger pools of money than they could ever expect to win from a single machine.

All of these functions deliver tangible benefits to venues including a real time account of the performance of their machine network. All venue managers interviewed confirmed that the introduction of a card based system in no way diminishes their need for this real time accounting. Logically, this means that every card transaction must be centrally logged via these networks.

It is therefore desirable to establish a set of player accounts within the central computer system where card holder money resides until it is played through any one of the machines on the network. Technology to secure the network has been around for a while and can be readily implemented as demonstrated by Tabcorp.

Procedurally, players deposit money into these accounts at the cashier and access those funds by inserting a plastic card into any machine. The card acts solely as an identifier for the purposes of opening the account and transferring the funds, via the network, to the credit meter of the selected machine. This is known as "Account Play".

Whilst Tabcorp may have been ahead of its time with respect to developing its own special machines, they had the foresight to establish an Account Play network and so demonstrated to the rest of the industry just what an operational success it could be.

The basic principal of card based gaming is therefore quite simple. Gaming Regulators all over the world are particularly sensitive about the integrity and security of operations. It is critical that Account Play operates securely and that players' money is safe and can only be accessed by the rightful owner. The security of the card technology is therefore very important and has been the subject of much research and analysis.

Tabcorp initially retained two independent consultants to select the most secure, cost effective card technology to ensure system integrity. The technology had to be able to provide a unique account identifier that could not be copied, erased or altered. Importantly, the technology had to facilitate anonymous as well as member based machine play. A player should not be obliged to identify himself in order to open an account on the system unless he wishes to benefit from the various player tracking promotions offered by the system. This not only protects the privacy of those who wish it but it allows the venue to re-cycle used cards thereby delivering still further efficiencies.

The technology chosen was Watermark Magnetics®, a product of Thorn Secure Science International (TSSI). Security Magnetics Pty Ltd, an Australian based secure card technology company, developed the card security, production and distribution model and together with TSSI established local card production and provided the necessary reading hardware/software solution.

Watermark Magnetics has a 20 year security pedigree having been chosen by the U.K and Australian Ministries of Defence, British Telecom and many other high security agencies for the purposes of personnel ID and Access control. It has been tested by numerous independent laboratories and was recommended by both the consultants retained by Tabcorp. Since Tabcorp's system was launched, not one instance of card based fraud has occurred in over 5 years of continuous operation.


Whilst Watermark does not have the memory capacity of the more widely publicised Smart cards, it has never been compromised in the field and is substantially less expensive (app. one tenth the cost). As Account Play only requires secure ID, the cost of Smart cards ruled them out as a viable solution.

Moreover, Watermark Magnetics was not only chosen because of its low cost and high security. It was chosen because it is also a magnetic stripe medium with the same magnetic properties as the standard magnetic tape currently used on billions of cards across the globe. Watermark Magnetics tape is applied to cards in the same way as normal magnetic tape. The difference between the two is best explained by analogy:-

Imagine taking a pen and writing a number on your finger. Whatever you write on the finger can be washed off, re-written or changed, but the fingerprint itself is unique and unchanging.

Likewise, Watermark Magnetics is a fingerprint for magnetic tape. You can encode it just like normal magnetic tape but that encoding is like the ink on your finger - it can be erased, altered or copied - the underlying fingerprint (Watermark) remains a permanent feature of the tape. Watermark is better than a fingerprint in that it can read with exceptionally high reliability and relatively low cost.

The standard magnetic properties of Watermark Magnetics mean that you can encode on the tape using the ISO Standard Tracks so that the new Watermark cards are backward compatible with existing systems - that is their encoding can be read in all of the magnetic stripe readers already installed in venues throughout the world. One need only read the Watermark where the additional security is required eg Account Play.

Today the major gaming machine suppliers in Australia are building Watermark based Account Play functionality into their networking systems. Demand from the Club industry, in particular, is very strong as they have been an integral part of the system's development.

The future of gaming, now more than ever before, is on the cards !

Go To:
Card-Based Gaming Model
(endorsed by Leagues Clubs Association of NSW)
Comparative Analysis of Various Card Technologies
Security for Paper Documents

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