The popularity of online gaming is higher than ever, and so are revenues. Online gambling is poised to reach $94.4 billion in revenue by 2024 and eSports has an audience of over 500 million viewers and generates an annual revenue of $1.5 billion. But as online gambling, sports betting, and eSports continue to attract spectators, gaming operators have increasing pressure to secure their platforms, reduce fraud, and ensure fair play.
With the inclusion of eSports in the 2022 Olympics, we can expect its expansion into the mainstream and a continual convergence between online gaming, online betting, and eSports platforms. As revenues for these industries are beating records, governments are tightening their scrutiny, especially on underaged gambling and illegal betting on teams with mostly minors.
In the past, implementing age verification was expensive and detrimental to the user experience. However, modern solutions for user verification make use of biometrics to combine identity and age verification seamlessly into account creation and user login. In this post, we will outline why online gambling, video gaming and eSports businesses can use an integrated age check to stay competitive and grow their customer base.
Identity verification reduces fraud to grow revenue
Fraud has risen sharply since the Covid-19 pandemic, as homebound players took to online gaming, both gambling and video games according to an article in Pymnts. The growing online players gave scammers opportunities to steal user logins and personal information, such as through e-mail phishing or look alike sites, resulting in account thefts. Frauders could also create multiple accounts to game the system, whether for money laundering or other purposes. Whether using stolen or fake identities, fraudsters are a liability for companies. Gartner puts the average cost per stolen record at $148 and a data breach at $3.86 million. In addition, since online gambling, mature video games, and eSports have customer due diligence or age requirements, failing to comply with the necessary KYC processes and age verification can result in fines.
Protecting against player fraud not only reduces business loss, but choosing a secure and seamless solution can actually become a competitive advantage by improving customer experiences and retention. Robust security practices throughout a business, from hardening server security to using unique biometrics for user authentication, improves the end user experience and establishes trust. Below, we will outline how age verification can be applied for online gambling, video games, and eSports.
Combining identity and age verification for gaming operators
Many online services, from sports betting apps for the Eurocup to poker, fall into online gambling, which have AML compliance requirements and age restrictions. Meeting online KYC check requirements also opens up market opportunities. For example, the GlüNeuRStV treaty in Germany is legalizing online gaming as of July 2021, but businesses need to implement effective age verification to obtain a license. The minimum legal age for gambling is 18 in most countries and 21 in some, like the United States and choosing an identity verification solution that can meet market-specific requirements will offload regulatory burdens. For example, automating rejections for individuals who fail age checks during identity verification can mitigate fines, while also reducing operational overhead.
Using age verifications to expand market access for video games and eSports
Online video games also need to address user identification, whether it is for legal distribution of games with mature content or for eSports tournaments to prevent player fraud to build credibility with paying audiences. Australian Counter-Strike competitors were charged for match-fixing and illegal betting, and the issue has attracted the investigation of the FBI in the US. As eSports continues to exponentially grow after the pandemic, the platforms that build trust with their communities will stand to gain most market share.
Age verification is just one component of identity verification that will help online gaming and eSports platforms build trust with users who can pay. In the past, a pop-up asking for a user’s birth date would suffice as an age checker, but increasingly businesses need to verify a user’s age. As an example, Steam, a major online video game distributor, blocked all adult-only games for its German users in 2020, and even users in its forum asked for age verification to have access to games. Businesses can now build their own branded identity verification and age check into signups or purchases with no-code solutions, SDKs, and APIs that have cross-platform support from providers such as Passbase.
In the related industry of eSports, revenue is made when spectators pay to view professional video game athletes playing against each other. Platforms such as Riot Games have pressure to uphold the integrity of their competitions, reduce player fraud, match-fixing, cheating and ensure fair play to retain viewers and attract top athletes.
In addition to cheat detection, platforms also need to meet regulations on minors’ participation in tournaments for certain jurisdictions. As an example, Sweden and Spain, for example, have banned betting on tournaments where all or most players are under 18, which means that operators need to determine the age of their players in order to take the appropriate measures.
Navigating the regulatory requirements while trying to serve global or regional audiences requires eSports platforms to deploy identity and age verification at scale. For example, Passbase client ZLeague hosts tournaments for Warzone and Fortnite and in order to ensure the best gaming and viewer experiences, they ensure that paid entry tournament players are 18+ and legal residents of USA, Canada, UK, Ireland or Germany.
How biometrics offer great user experience while securing identities
While every industry and market can have different regulations online gaming and sports betting platforms that perform KYC checks can cover most requirements. Performing a KYC check can require as little as a scan of an official photo ID document (such as a national ID or passport) and a selfie. Solutions such as Passbase use facial biometrics from a person’s selfie to match it to the photo in the ID document. The ID document can verify a person’s identity and can simultaneously perform an age check with the date of birth. With services like Passbase, this identity verification and age check is performed in less than a minute, providing a great user experience.
Companies using Passbase’s identity verification can also allow end users who have performed identity verification once to use biometric authentication to take a video selfie for future identity verification or passwordless logins, such as just before a tournament.
Age verification is increasingly becoming essential for online gaming operators to navigate shifting regulatory landscapes, prevent fines, reduce player fraud, and ensure fair play. Using a smooth identity verification solution can deliver great user experiences, open up new market and revenue opportunities, and build trust with paying participants and spectators.
Passbase provides a convenient way for end users to prove their age and for your team to manage verifications from a unified dashboard. You can get started with the Passbase API or with SDKs for iOS, Android, and web. To see how age verification can work for your business, try Passbase today for free or book a demo.