Every year, billions are spent and lost across the sports betting and online gambling industries. From poker to snooker and horse racing to motor sports - online gambling has evolved into one of the most lucrative online businesses today.
Over the next four years, the online gambling market is expected to grow by $114.21 billion. While this definitely signals exciting opportunities for the industry, it also attracts risk.
At its foundation, gambling is all about learning to calculate and exercise risk, but there are other outside forces that are harder to predict and control that will influence how we measure success or failure and they include money laundering, fraud and cybercrime.
What are some of the risks?
1. Payment fraud
This is one of the more common risks that online businesses face. Criminals capturing and using stolen identity information to pay for their gambling accounts or bets.
2. Using different accounts
Fraudsters may create multiple user accounts with fake credentials to perform fraudulent transactions. Here’s a quick example: One account may be positioned to win, while enabling the others to lose intentionally.
3. Money Laundering
Online gambling is vulnerable to becoming a safe haven for money laundering. Reports cite nearly $1.6 billion (and more) of criminal proceedings are converted into legal untraceable income every year via money laundering. With stricter regulations coming into effect, online gambling platforms have to mitigate this risk.
4. Underage usage
While there are regulations that prevent underage users from gambling, online platforms need to have a secure online age verification tool in place to verify the user’s age remotely.
Why does identity verification matter?
Identity verification is often viewed as an unnecessary hurdle in the industry. It is true that adding any additional steps to your onboarding flow is likely to impact conversion, but with a mindful and adaptable verification partner, the increased probability for beating bad actors outweighs any potential downside.
Moreover, with growing regulatory pressure and public attention, user identification is becoming crucial for managing a sustainable business in the space. We put together this small guide for the regulations guiding user verification in the online betting and gambling industry and what to look for in a provider helping you through it.
Identity verification’s role in complying with regulations
In countries where online gambling is allowed - such as the US, UK and throughout Europe, it is heavily regulated and strictly enforced. To cite an example, the United Kingdom’s Gambling Act of 2005 set up a Gambling Commission to regulate the industry.
Failure to comply with a sound Know Your Customer (KYC) process can attract up to tens of millions in fines. Recent cases reveal that penalties skyrocketed to more than £6.2 billion in the UK last year alone.
Apart from the ability to levy hefty fines and suspend licenses, the UK also enforces strict age restrictions to prevent underage users from taking part in gambling. Identity verification solutions like Passbase ensure compliance and regulatory requirements are met by using biometric authentication and official ID documents to verify the user’s age and identity credentials through a secure channel.
What to look for in an identity provider
It will always come down to a balance between security and seamless user experience -Here’s what you should be looking for when making that call:
1. High conversion rates and premium user experience
Identity verification shouldn’t decrease the platform’s conversion rates. In fact, it should enable a more seamless and secure user experience and act as an important selling point compared to manual document upload. With identity verification providers like Passbase, businesses can easily integrate the solution into their website, app or checkout with a few lines of code.
Once the user begins the verification workflow, the platform gives real-time feedback to help them detect flaws on time and pass the verification. The seamless experience makes onboarding, conversion rates and customer retention simpler - and safer - for businesses.
Be it cross-platform support or integration options, businesses need to tap into customizable identity verification providers. Each business has their set of unique needs and that’s why selecting an identity verification provider that meets the business’ requirements is critical.
For online gambling and sports betting platforms, it’s important to leverage solutions like Passbase that help remove any regulatory or customer due diligence burdens. Another pointer to keep in mind is how the solution’s pricing fits the business needs. At Passbase, our pricing plans are hassle-free and pay as you go.
What’s more, the first 50 verifications are on us!
3. Speed and accuracy
Ideally, the quicker the verification process - the more appealing it may seem. However, speed should not be at the cost of accuracy. This sweet spot is where Passbase makes a difference. Passbase’s identity verification system ensures that computers tackle the main evaluation before manual review is done. This process ensures fewer error rates and faster processing - all within 90 seconds of submission.
Better yet, our low friction re-authentication process only requires a selfie to validate that it is still the same individual who originally signed up. This feature improves speed and accuracy rates and ensures that a credentialed user is accessing their account.
Combating risk and fraud with strong ID verification
Selecting the right identity verification partner is crucial to enhancing security and trust in the online gambling industry. Hopefully, this guide provides insights on how to get started with the selection process and what kind of risks and requirements apply for online gambling businesses.
Reach out to us at email@example.com to chat more about how digital identity fits your business’ goals.