ID Verification Regulations and Online Sports Betting

Earlier this year the Supreme Court of the United States repealed the Professional and Amateur Sports Protection Act (PASPA) of 1992. The PASPA was a law that outlawed sports betting in the United States, except for in states that already allowed it. Now that the act has been deemed unconstitutional, any state that wants to enter the sports betting arena can pass legislation to do so. As states begin to do this, companies will have to create effective Know Your Customer (KYC) processes to meet stringent ID verification regulations.

States where Online Sports Betting is Legal

There are a few states where sports betting is already legal in the United States. These states legalized sports betting either before PASPA was passed or shortly after it was repealed. They are taking the lead to create effective online sports betting programs that other states can learn from and follow.

Nevada: Nevada has been in the sports betting market for decades. Until this year, Nevada has been the only state where gamblers could legally place bets on sports in the US. As other states begin to legalize online sports betting, they will most likely turn to Nevada’s program for guidance on things like oversight, risk management, liquidity, and line monitoring.

Delaware: After the Supreme Court decision was made, Delaware became the first state to allow all three of its casinos to start sports betting. This operation will be expanded to the online arena soon.

New Jersey: New Jersey was the state that challenged PASPA and brought the case to the Supreme Court. The state legalized sports betting soon after the act was repealed.

West Virginia: The state passed a bill allowing sports betting in early March. Soon, sports betting could be expanded to the online arena in the state.

Mississippi: In 2017, Mississippi updated its laws to allow sports betting. It determined that betting would become legal on July 22. Casinos must apply to participate in sports betting, and then they can proceed with their operations.

Sports Betting

States where Sports Betting will soon be Legal

Connecticut, Iowa, New York, and Pennsylvania are all states that have passed laws to allow sports betting. They are in the process of creating the processes to allow it in their states. Each state has a timeline to get it up and running within the next 6 months.

States with Upcoming Sports Betting Legislation

There are a variety of states interested in allowing sports betting. These states have introduced legislation to begin the process of legalizing sports betting:

  • California
  • Illinois
  • Indiana
  • Kansas
  • Kentucky
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Missouri
  • Oklahoma
  • South Carolina

There are also two states that could expand current sports betting legislation:

  • Oregon
  • Montana

Online Sports Betting Regulations

There are over 20 states that are interested in sports betting. A lot of these states want to make it as easy and convenient for consumers interested in online betting platforms. As online sports betting becomes normalized, these businesses must verify customer identities for KYC purposes.

Sports betting operations must be compliant with KYC and AML standards. KYC requirements mandate that sports betting operations verify the age of their users and ensure that they are at least 18 years or older (21+ in some states.) They also dictate that online sportsbooks must conduct a Know Your Customers verification to prevent fraud and mitigate risk. Online sports betting operations must follow KYC processes to protect users from different types of gaming fraud such as account takeover, bots, arbitrage or friendly fraud.

ID Verification Regulations for Sportsbooks

While users may perceive ID verification regulations as a cumbersome and time-consuming process, it is integral for online sports betting platforms to perform. These processes help verify customer identities are real, determines their age and prevents fraudulent account creation. It also builds trust with regulators which is essential in this emerging market.

Sportsbooks have a responsibility to create a streamlined and effective verification process. They can do this by using automated services that verify users within a matter of minutes, compared to current ID verification procedures which are much more cumbersome and time-consuming.

Currently, users are wary of consumer verification procedures, mainly because sports betting has been around for years now and did not require identity verification to receive funds. Legal sportsbooks must educate consumers and make them aware of how important the verification process is for their safety and security. They must also set clear expectations for users about how legal sports betting operations must work in today’s digital world.

Many states are interested in developing sports betting operations. They are a lucrative opportunity for states to make money and provide more revenue for their citizens. As more and more states implement online sportsbooks, lawmakers must also create the standards for running fully legalized operations, including id verification regulations. This will help them maintain KYC and AML compliance that will be required by regulators and is imperative to prevent the perpetuation of fraud and mitigating risk.

Alex McGinness
Alex McGinness

Alex is passionate about making the world a better place. She believes she can change the world, and one way she can do that is by helping businesses grow online through digital marketing. She excels at branding, graphic design, web design, social media management, and content writing. Alex finds the most success when she is working with companies that produce services or products that make the world a better place. She enjoys working with a collaborative team that is organized, goal-oriented and harmoniums. At IDMERIT, she manages their digital presence online as their in-house marketing coordinator. Her goal is to showcase the IDMERIT brand as a leader in global identity verification services.

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