The online gambling industry is increasing across the globe. Still, it has to face numerous troubles such as money laundering, credit card frauds, chargeback abuse, and more. Fortunately, identity verification solutions with face verification features can help gambling businesses eliminate such problems. Let’s get to know how identity verification can play an essential role in it.
Gambling is not something that started a few decades ago. If we look at its history, we will know that its origin dates back to the Paleolithic period, approximately 2.5 million years ago to 10,000 B.C.
In Mesopotamia, a historical region of Western Asia, the earliest six-sided dice was made about 3000 B.C. In China, playing cards were first noticed in the 9th century. Though card games are unidentified, cards bear a resemblance to those used today. In Great Britain, betting on horseracing was the widespread recreational activity for over three centuries.
Today, gambling is a significant recreational activity in various countries across the globe. However, due to technological changes, the way of gaming has changed too. Online gambling is a new trend in the industry that is growing faster than land-based gambling.
Undoubtedly, the online gambling industry is growing at a rapid pace; it has some challenges as well. Every year, many gambling businesses fail as they fail to combat online gambling frauds and I.D. verification issues. The majority of online casinos and lotteries are under the risks of online fraud, resulting in inadequate responses from users.
This post will discuss the role of identity verification in the gambling industry. Before that, let’s find out some reasons why some online casinos go bankrupt or do not succeed even though the online gambling industry is flourishing.
Problems in The Gambling Industry
There is no doubt that the gambling industry is thriving. According to Business Wire, by 2022, the global gambling market will reach $565 billion. However, it is also true that around 90% of online gambling startups fail in the first two years.
There are a lot of reasons behind it. Among them, some major ones include poor financial planning & management, lack of leadership, and inadequate promotion & marketing. In modern times, one more reason can be added to this list, i.e., hacking & frauds.
Let’s discuss problems in the gambling industry, specifically related to online fraud, and find out how identity verification can be an ideal solution.
Hackings & Frauds in The Online Gambling Industry
Since the first-ever online casino, InterCasino launched in 1996; hackers had started inventing tricks to defraud online users. Numerous times cyber attackers have presented severe risks to online casinos.
In 2019, a group of Chinese hackers hacked some Southeast Asia-based online gambling and betting websites. According to a report, hackers stole the company’s database and source code, but not money, suggesting that hackers’ aim was espionage.
Some common frauds the online gambling industry is dealing with include:
Nowadays, cyber attackers are creating multiple accounts using fake credentials to use on gambling sites. These different accounts are formed for different plans. The aim is to make one account win while making the others lose intentionally.
Every year hundreds of online casinos lose their licenses because they don’t take necessary steps to prevent the use of their platforms to launder money. Online Gambling companies must make sure that their platforms are not being used to launder ill-gotten money. As gambling firms deal with the vast sums of money, it makes it convenient for money-launderers to use this platform to hide their illegal money from the public eyes.
Credit Card Frauds
Like in various other online businesses, credit card fraud is also quite widespread in the gambling industry. Online fraudsters steal credit card information to pay for their bets and buy luxury items. In poker sites, fraudsters use stolen credit cards to fund their fake accounts and lose funds to friends’ accounts. This is a common fraud scheme in poker sites.
Also known as friendly fraud, chargeback happens when a genuine account holder contacts their card issuers or bank to deny making a charge to an online gambling site. Fraudsters abuse chargeback knowingly because they know that most online gambling firms don’t fight back against chargeback abuse. After all, if they get excessive chargebacks, it can damage their reputation and relationship with card issuers.
How Identity Verification Solutions Can Help Gambling Firms Cope with Online Frauds
Like online financial firms, gambling companies are required to comply with KYC and AML directives. Ignoring these instructions might cause hefty fines to the company. The Gambling Commission of the United Kingdom charged an online gambling company $10 million fine for not complying with the KYC process.
Identity verification is not only the legal requirement for gambling firms but can also play a significant role in preventing fraud and scams in the gambling industry. When a robust identity verification solution is used to conduct KYC checks, it naturally clamps down the potential for fraud.
Identity verification helps you determine if a person’s identity matches the one that is supposed to be. Besides this, you also get to know about the exact age, physical address, and other important information about users via an automatic I.D. verification solution. Thus you can better keep an eye on fraudsters and prevent them from using your platform for illegal activities. Proper identification enables gambling firms to have sound KYC and onboard new users with genuine identity.
If you’re looking for a trustworthy identity verification partner as an online gambling firm, you can rely on iDenfy. Serving more than 150 global brands, we offer AI-enabled, facial recognition identity verification solutions, which can detect 1300 types of I.D. documents from 200 countries. We can also help you meet KYC & AML compliance regulations. To know more about our solutions, you may contact us.