Identity Verification Solves Problems for Online Gambling Companies
It is essential for the gaming industry to ensure that players participating in online gambling are protected from fraud. It is also essential for gaming companies to ensure minors are prevented from gambling. Online casinos have a duty to meet regulatory standards for operation, while also partaking in the exciting and lucrative world of digital gambling. Introducing identity verification solutions to their platforms can help achieve these goals.
It is estimated that there are 2.2 billion active gamers in the world and almost half of them, 47%, spend money while gaming. Game revenue from these users is expected to reach $108.9 billion, with 87% of that revenue coming from digital revenue. $56.05 billion, or 51.5%, of this revenue is predicted to come from the online gambling market.
With these staggering numbers, it is no surprise that casinos are looking to join in on this lucrative sector. In 2018 alone, 7 states have introduced bills to legalize online gambling. These states, which include Michigan, Pennsylvania, and New York, would join states like Alaska, California, Oregon, and Louisiana to allow some form of gambling for residents over the age of 18.
Know Your Customer (KYC)
Companies with a responsible moral compass who are looking to uphold their reputations should make an effort to follow regulations imposed by regulatory authorities. This includes following KYC procedures, which require identification along with age verification procedures for online gamers.
Having an effective KYC procedure in place also prevents online gambling companies from having to pay large fines to regulators. The United Gambling Commission (UKGC) forced 888, a prominent online gambling company, to pay a penalty of around $10 million for flaws in their KYC process. In their flawed system, 888 allowed 7000 customers who had barred themselves from their accounts to still be able to gamble. Furthermore, they failed to notice for 13 months that a customer was betting $1.7 million on their platform before identifying the user as problematic.
Just like there are laws preventing minors from being sold alcohol, there are laws preventing minors from gambling. Online casinos have a social responsibility to uphold these laws and ensure they are enforced.
In Pennsylvania, the Sands Casino Resort has paid $341,000 in fines to the state due to instances of underage gambling. Other casinos throughout the state have also been issued $2.2 million in fines for underage gambling. Sands Casino CEO Mark Juliano states that no one wants to deal with underage gamblers. It’s not good for anybody. He also states that his casino along with others is aggressively working toward 100 percent elimination of underage gambling.
Having a KYC process in place may seem like a nuisance to users, but it is an essential step in fighting fraud and mitigating risk. By knowing the customers they are interacting with, companies who follow a KYC process can protect users from different types of gaming fraud including account takeover, bots, arbitrage, and friendly fraud.
Various state lotteries are increasingly allowing people to buy lottery tickets online or through smartphone apps as well. This has been done in an attempt to appeal to millennials, who, unlike previous generations, do not regularly play the lottery. Online registration makes it easier for people to participate in the lottery since users do not have to wait in long retail lines or worry about losing their winning tickets.
With this type of system in place, it is important to prevent fraudsters from stealing legitimate people’s earnings. It builds credibility for the lottery system, making it more likely for people to continue using it.
Online gambling companies and casinos must invest in identification technologies to mitigate the risk associated with underage users and fraudulent accounts on their systems. These technologies can help prevent users who do not have valid forms of identification from gambling online illegally.
Some of the benefits of having identity verification processes for online gambling include:
- Improved risk management
- Age verification for all users
- Potentially fraudulent user discovery
- Compliance with KYC & AML regulations
- Increased trust with regulators
Identity verification offers peace of mind to online gaming providers, particularly online gambling institutions. It allows them the opportunity to protect themselves by checking the validity of their customers before they join their services. Meeting regulatory compliance makes online gambling platforms more credible and builds trust between them, regulators and consumers.