Importance of Identity Verification in the Online Gambling Industry

Online gambling is not just a fun and exciting pastime. Online Gambling and Betting Market, which is generally known as internet gambling, is now a lucrative business earning $64.13 billion globally in 2020. The internet gambling industry is forecasted for steady growth at the compound rate of 11.49% per year.

After the onset of the pandemic, online gambling became a major contributor to the digital economy. Online gambling increased by 64% and 11% of global internet traffic can be attributed to online betting. This includes mobile gambling which has increased exponentially since 2012.

In many countries, online gambling is either illegal or government-regulated. Games such as Bingo, Casino, Lottery, Poker, and Sports Betting fall under the online gambling industry. Major players include Bet365 Ltd, Betfred Ltd, 888 Holdings plc, Paddy Power Betfair plc, and GVC Holdings plc.


Why We Need Identity Verification in the Online Gambling Industry?


Twenty years ago, online gambling was a vastly unregulated industry. Despite the European Union and countries like the United Kingdom implementing regulations on the gambling industry, it still retains some of that wild west atmosphere for players.


Global Issues with Online Gambling


The gambling industry is so fraught with issues it’s hard to pick one singular thing that stands out. Cyber threats are a common global issue within any online industry, but the online gambling industry takes it to another level. Between players and online gambling companies, there is a high level of distrust.

There is not much robust regulation resulting in as little protection as possible and no established methods of recourse for both players and gambling businesses. That’s a topic on its own, so first, let’s start with the legalities.

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Legalities of Internet Gambling


Online gambling is not legal everywhere and many of its players are either unaware or disregard that piece of information. Some online gambling companies can also be blissfully unaware.

As Starnet Communications International (SCI) founders discovered when their Delaware Corporation was fined $100,000 due to the location of their servers being in Canada.

Even within the United States, it wasn’t until 2010 that New Jersey became the first state to legalize online gambling. Up until today, internet gambling, in some forms, is still illegal in the United States. In the United Kingdom, online gambling is regulated by the UK Gambling Commission, which oversees license online operators.

As for the rest of the world, the laws governing online gambling are just as complicated as they are in the US. Russia bans online gambling completely while in Poland, parts of the Caribbean, and the rest of the EU, you only need a license. In India, things are similar to the US, where different regions have chosen to legalize some games, but not others. And in Belarus, Antigua, and Barbuda, it is completely legal.


Online Gambling Fraud


Fraud is rampant in the gambling industry. Hence the legality issues. The introduction of online technology made it even harder to verify business owners and validate ID. Cybersecurity for the industry became a major concern for players, betting site owners, and governments.

Aside from the potential for identity theft, hackers, and age verification scams, internet gambling has a unique set of fraudulent tactics that are crafted by both gambling sites and patrons alike. For the sake of review let’s quickly review a few here.

Abuse of Chargeback – Players play on an unregistered site and notify the bank to not pay any charges if requested from a gambling website.

Bonus Abuse: Each account collects promotional bonuses or rewards for signing up, which the fraudster then cashes in.

Gnoming: The bad actor uses multiple accounts to drive up bonuses and jackpots, then reap the winnings.

Chip Dumping: This is seen as a form of collusion or money laundering. Like gnoming, this involves multiple accounts joining a game and deliberately losing to one specific account.

Betting Fraud: The player pays a monthly subscription for insider tips for a sporting event.

To make matters worse, the prevalence of bots betting has increased. Cybercriminals are known to use bots to perform cyberattacks or place bets. Hackers can change betting sites’ algorithms, passwords, and game results.


Player Perceptions and Problems


Players within the online gambling industry are aware of all its dark issues. Though the purpose of visiting betting sites is to earn money, not all players intend to do so legally. From using unlicensed betting sites to blatant betting fraud to hacking, not all patrons of betting sites are your typical video game player.

Despite age restrictions, minors still end up infiltrating the ranks of the gambling industry. Since, age verification scams are more of an inconvenience to players than gambling platforms, betting sites don’t put strict measures in place to validate ID.

And since they are not wasting the effort verifying age online, they do not have a customer onboarding process. And without basic due diligence, there are no Know Your Customer (KYC) or Anti-Money Laundering (AML) policies in place.

This amounts to players having to take responsibility for their online protection. Not to mention, 1% of the US population has severe gambling addictions coupled with mental health issues. The introduction of various regional regulations has done little to protect players and betting sites from being used for money laundering, scams, and hackers.

As Virtual Reality (VR), Blockchain, Internet of Things (IoT) technology has expanded into every digital space, online gambling is no different. VR allows players to enter virtual casinos while cryptocurrency is now just as acceptable as other forms of legal tender.

We suspect things will only get worse as the metaverse becomes commonplace. However, players are concerned that a lot of online casinos and online gambling sites are not being completely transparent. Though these concerns can be addressed using blockchain technology, few betting platforms have chosen to implement them.

The adoption of smartphones within the gambling industry has increased, outpacing PC and laptops as the preferred gambling device. Smartphone usage in the online gambling industry has already grown by 117% between 2012 to 2018 and is expected to increase by 7% each year.

Mobile users in the UK alone, account for 80% of all users in the internet gambling industry. Yet, mobile ID verification is not part of any plans for real-time identity verification.


How IDMERIT’s Identity Verification Works in the Online Gambling Industry


Right now, legislators and users are fighting for global regulations in online gambling. Age verification, customer onboarding, risk protection, cybersecurity, merchant authentication, and non-compliance are just a few of the pressing issues within the online gambling industry that can be solved with identity verification.

Both players and gambling sites need protection from cyber threats, non-compliant payment platforms, and unscrupulous websites. Gambling sites need to be more transparent in their activities to build trust and be efficient in their onboarding process.

To begin the process of crafting an efficient identity verification solution, you must begin with the goal of automated KYC and AML compliance in mind. Automated KYC helps create a frictionless customer onboarding experience and focusing on AML compliance ensures you take digital identity management and protection seriously.

At IDMERIT, our IDMkyX platform of services can help your gambling business meet KYC and AML compliance. Using artificial intelligence and machine learning, our identity validation service can give your gambling business that frictionless customer onboarding experience while preventing risks and cyber threats.

Here’s how IDMERIT identity validation service makes identity verification work in the online gambling industry.


Global ID Verification

Authenticating players, online betting sites, and payment service providers can cause some degree of friction in your onboarding process. Global ID verification is necessary for ID validation and preventing fraud. To that end, these are just three of the many ways we validate ID.

Geolocation – Use IP addresses and Global Positioning Satellites (GPS) for IP verification. We’ve got a certain set of skills and we will find all fraudsters who think they can hide behind their devices.

Mobile ID Verification – Our IDMautofill makes it easy for players to autocomplete forms on mobile devices. Paired with IDMscan, we’ll be able to validate ID using the biometric features on your customer’s smart device.

Age Verification – Age verification scams are not only dangerous to the gambling business but for the minors themselves. Verifying age online is the one global thread in the online gambling industry. Players must be of legal age to play.


AML Compliance

Shockingly, there aren’t droves of online gambling companies being charged with AML non-compliance. The AML compliance process some online gambling companies do implement is too tame to be any deterrent against money laundering or cyberthreats.

We take security and privacy seriously without being intrusive by performing all these functions and more with our trusted AI technology.

Business to Business – An invalidated payment services provider can be as much of a problem as a fraudulent customer. Plus, some individuals with dire gambling issues may try to onboard use business entities. IDMkyb is our solution to ensure you meet Know Your Business (KYB) compliance.

Risk Scoring – Perform a risk assessment before you do your KYC check. Get your risk score based on IP verification, email age, domain, spam checklist, mobile number, and more.

Behavior Monitoring – Including a behavior monitoring system as part of your ongoing due diligence is one way to mitigate future risk. Your bad actor may be able to synthesize an identity, but falsifying behavior needs real acting skills.

We can use their own devices as the behavior monitoring system and check for behavioral biometrics like finger movements, keystroke dynamics, and voice recognition.


Customer Onboarding

Online gambling companies must balance the need for authentication with the demands of the customer experience. In the gambling industry due to the increased risk, enhanced due diligence should be a normal part of your customer onboarding process. Though the drawback may come with some onboarding issues, with automation, we can reduce the opportunity for cart abandonment.

Automated KYC – Our KYC verification API is designed to give you and your customers a safe and unobtrusive onboarding process. Most of our automated ID verification takes place in the backend, allowing for real-time identity verification in seconds.

Global Coverage – Our services span over 170 countries with over 400 data sources and work in almost every language. We keep our eyes on global watchlists to keep away scammers, spammers, and even global terror threats.

Digital Identity Management – Customer onboarding is one thing, but how are you storing and protecting their personal information? Can you afford the risk of a security breach?

Digital identity management isn’t something you should attempt in such a uniquely regulated industry. Let us take the legal and technological guesswork out of the onboarding process.

In the gambling industry, everyone is a loser when identity verification isn’t taken seriously. The goal of our identity validation service is to turn all participants into winners.

Online gaming companies must have automated KYC and AML compliance to prevent fraud while providing  “the high roller customer experience” for players.


Why choose IDmerit’s Identity Verification Solution?


The complex legalities of the online gambling industry require you to stay abreast of industry regulations, card scheme rules, regional and international law.

With rapid projected growth and technological advancement, creating a solid identity verification solution that gives you a smooth onboarding process, yet gives your gambling business all the protection it needs. Partnering with industry experts in digital identity management can make it easier for you to manage client data.

We can help you marry the different facets of your business strategy with your customer onboarding process as well as ensure you meet all the checkpoints for KYC due diligence.

With a built-in behavior monitoring system and mobile ID verification, AML compliance for your gambling business just got easier. Automated KYC removes complicated site navigation, excessive or redundant fields and makes real-time identity verification faster.

As cryptocurrency takes over traditional banking methods in the gambling industry and more protection is provided for players via their ID validations systems, online gambling companies should not leave ID validation to them. Use an authentic means of real-time identity verification and choose a trusted identity validation service.

Protect your gambling business. Protect the players and keep bad actors out of the online gambling industry.

Bet on IDMERIT and let’s prove how our ID validation systems can keep your gambling business safe online.

Tony Raval
Tony Raval

Tony Raval brings more than 15 years of leadership in data technology as the Founder and CEO of IDMERIT, headquartered in Carlsbad, California. He leads an executive team including top data tech veterans to execute on his passion of creating a global data universe generating true and trusted intelligence. IDMERIT’s competitive success has come from the company’s ability to perform cross-border transactions, for which Tony and his team have developed a meticulous process and progressive technology. The company was launched as the result of a highly effective engagement with a leading global financial institution, whereby the company was uniquely able to triangulate multiple elements to create a comprehensive, and yet, frictionless experience. Tony has provided data intelligence to companies such as Google, SalesForce, and HP as well as clients across financial, government and other sectors seeking a superior partner in compliance and mitigating risk. He holds a Master’s Degree in computer engineering and data sciences, is an active member of the Entrepreneurs Organization San Diego and dedicated mentor to new entrepreneurs in EO’s Accelerator Program, enjoys meditation and running, and he and his wife Sonal recently celebrated their three-year-old son's birthday.

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