KYC: The Evolving Landscape of Customer Identification for Gaming, Gambling, & Casinos

The global online gaming industry is thriving, thanks to the digital revolution ushering in a drastic social transformation. With pandemic-induced lockdowns and changed behavioural patterns, people are flocking to online mediums – be it for work, social interactions or recreation. Rapid strides in technology have enabled people to indulge in their favourite activities from anywhere, at any time, and through any electronic medium of their choice. The past few years has seen a spurt in the demand for stay-at-home forms of entertainment that includes online gaming, gambling and casinos. According to Mordor Intelligence report, the gaming industry was valued at US$ 173.70 billion in 2021 and is expected to almost double by the year 2027. Gambling industry is expected to be worth US$ 92.9 billion by 2023, an increase from about US$ 45 billion in 2017, according to Statista.

Bigger opportunities are often accompanied by increased risks and greater responsibilities. The very nature of the gaming / gambling business coupled with massive involvement of funds has attracted a lot of scrutiny by the regulators, at par with banks and financial institutions. A report from GamblingIndustryFines.com has stated that regulators worldwide issued financial fines / sanctions amounting to US$ 54 million in 2021. A major part of the fines were levied on account of gaming industry operators not adequately implementing Anti-Money Laundering (AML) and Know Your Customer (KYC) measures. On the other hand, in the new world order of 24 X 7 X 365 online access, on-demand availability of gaming services and instant customer gratification have become the key for the businesses in order to achieve seamless user experience, promote stickiness and garner market share.

In electronic gaming / gambling, there is no physical contact or interaction between an operator and players or even amongst the players. Lack of industry-wide standardization of documentation and identity requirements to validate the authenticity of the players hinders ascertaining the genuineness of the individuals and their identities. A few typical challenges currently faced by the gaming / gambling industry in regards to on-boarding and validating their user identities include:

• Conventional paper-based / physical KYC verification processes that are error-prone, cumbersome and time-consuming
• With a rapid increase in the number of players availing online gaming services, the cost of compliance has become expensive and increased manifold
• Due to lack of standardization of the on-boarding and Know-Your-Player (KYP) process, players are required to submit their identity data / PII to multiple gaming companies and operators. Apart from exposing these users to identity thefts and frauds, it also leads to a slower on-boarding resulting in poor user-experience and drop-outs
• Gambling industry is also besieged with problems like underage gambling, one user playing with multiple fraudulent accounts and players from voluntary self-exclusion lists attempting to play
• Casinos deal with huge sums of money and are a source of a variety of financial transactions. This makes them an ideal target for money laundering and perpetuation of monetary crimes. In fact, in some countries like the US, they have been accorded the status of non-banking financial institutions (NBFIs) if their revenues cross a threshold.
• Owing to the truly international nature of the gaming industry (for example, while an online casino may be domiciled in the USA, users may be from UK or Singapore) and involvement of huge sums of money, regulators and compliance bodies have started defining stringent AML and KYC rules, with lack of compliance attracting heavy financial penalties. Online gaming / gambling businesses should comply with AML and KYC regulations imposed by most restrictive jurisdictions like the UK, EU and US. Another key aspect to reckon is that KYC rules laid down by bodies like American Gaming Association apply to the player and not the business. Hence it becomes all the more imperative to properly identify individuals and obtain all relevant information from them during the on-boarding / KYC process.

The three main themes that emanate out of these problem areas are – identity verification (KYC), fraud prevention (AML) and compliance. In order to address these pain points, the gaming / gambling businesses should embrace the following goals, and leverage on technology to achieve them.

• Protect themselves from maleficent actors trying to launder money and indulge in identity frauds
• Safeguard their client / users from online fraudsters and cybercriminals; safe upkeep of customer information including PII like name, address, national identification number etc.
• Ensure compliance with regulatory bodies and laws of the land
• Draw a comprehensive set of policies and procedures for data collection, identity verification, information storage, continuous monitoring for compliance and reporting
• Provide best-of-the-breed gaming experience to clients without compromising on security, compliance and anti-fraud measures

The need of the hour, therefore, for the online gaming / gambling industry is fraud-proof digital on-boarding and identity verification platforms like Digid that are powered by technologies like Artificial Intelligence and Machine Learning. Digid helps businesses in secure verification of digital identities and documents thereby reducing customer on-boarding time. Offering easy-to-use selfie-video based identity verification solution (eKYC), it aids in quicker and efficient detection of anomalies, impersonation, forgery or tampering attempts during the on-boarding process, thereby enforcing compliance and reducing risks.

The way Digid assists businesses world over in end-to-end identity verification and online on-boarding of customers is presented below.

Winning highlights of how Digid could help gaming / gambling businesses in their on-boarding and identity verification journeys are as:

Know-Your-Customers / Know-Your-Players norms have become stringent and all-encompassing across the gaming / gambling / casino industry. Establishing the identity of the players is central to protecting both the users and the business from cybercriminals, scam artists and money launderers. Apart from safeguarding the interests of the players and the operators, adherence to KYC norms will ensure compliance with regulators and regulations. It is beyond doubt that the existing manual KYC and customer on-boarding processes are inefficient, fragmented and woefully inadequate to cater to the burgeoning demands of the industry.

Adoption of omni-channel technology platforms like Digid will help the businesses to quickly on-board customers in a safer and efficient manner, leading to better player satisfaction, de-risking and enhanced conversion rates.

Digid – your partner of choice for all identity verification needs!