Online Gambling and Gaming ID Verification: Threats & Solutions

The terms “gambling” and “gaming” have many definitions due to differences in legislation across the globe. 

For instance, the Connecticut department of consumer protection defines gambling as an illegal activity involving online and offline wagering and betting that is prohibited by state law. On the contrary, in Australia, particularly in the territory of New South Wales, online gambling is a legal activity in which you make bets and wagers on the platform of a legal operator. 

In this article, we classify all legal web services enabling users to play games with monetary value included, where the result or prize is based on some combination of skill and/or chance, as online gambling and gaming. 

Examples include:

• Online casinos serving roulette, blackjack, baccarat, etc.

• Sports and horse racing betting

• Platforms with casino-style games

• Virtual poker tables

In the majority of countries, online gambling and gaming operators must obtain some form of license to provide their services to citizens. Customer identity verification for gambling and gaming is also required. 

These restrictions aren’t stopping the industry from growing. Online casinos are expected to gain about 129.5 million users globally by 2029. Interestingly, mobile gaming platforms are now rapidly gaining popularity due to the wide adoption and availability of powerful smartphones.

While services compete with each other by expanding their offerings to attract more customers, regulators try to create a safe and secure environment for consumers. 

Let’s take a closer look at the circumstances companies deal with in this complex yet booming market.

Businesses in the industry face unique conditions depending on their geography and operating area. However, there are at least four problems that all companies will eventually have to overcome.

As previously mentioned, the legal status of online Gambling and Gaming is diverse around the world. 

Some countries, such as Egypt, Jordan, and Japan, declare this type of business totally illegal for operators in their territories. In the European and Latin American regions, it is a strictly regulated industry. However, there are examples like Costa Rica and many African countries where this business is unregulated. That means there are no established licensing procedures or legal requirements in this regard.  

Countries composed of states, like Australia and the USA, leave the final decision to the local authorities. For instance, in Connecticut, online poker is totally prohibited, and in Nebraska, wagering on sporting events is one of the forms of illegal gambling.  

In regulated markets, the industry players have to comply with numerous requirements. Usually, this means they must get a license and meet licensing conditions. Typically, there are standalone licenses for different types of online gambling. For example, in Germany, operators must apply for different licenses to offer online poker and virtual slot machine games. 

Each country involved in online Gambling and Gaming has a regulator whose responsibilities often include the prevention of money laundering (AML) and terrorist financing. As a result, the regulations in the industry are partly similar to the Know Your Customer (KYC) framework established in Banking and Financial Services institutions. Particularly, all online operators should ensure customer due diligence linked to the transactions conducted by the user on the platform. Gaming ID verification is a critical component of the procedure.

Thus, businesses in the industry have to monitor all regulatory updates in the locations and markets in which they operate to ensure compliance with all AML and KYC requirements. Ironically, this is a game where the slightest mistake can lead to substantial losses.

As of April 2024, the total penalties in the Gambling and Gaming industry reached $39,013,048. The stakes are high here because the amount of the fine for violation of legislation in the field can reach from tens of thousands to millions of dollars. 

For example, Bet365, one of the popular online gambling services in the UK, was charged to pay £582,120 (appr. $735,442) for anti-money laundering and social responsibility failures. Among the other aspects, Bet365 was punished due to failing to undertake independent gaming identity verification checks relying on customers’ annual self-verification of KYC data. 

Often, regulators encourage citizens to participate in monitoring compliance with the rules. For example, anyone can fill out the complaint form on the Australian Communications and Media Authority website to notify about law violations by an online gambling and gaming operator. 

Since information on sanctions to companies is usually public, it also may lead to reputational damage for those affected. New customers may doubt whether they should trust their data and money to such services.

Popularity among customers and high profitability attract many fraudsters to the industry. Scammers exploit different schemes on gaming platforms. Here are the most popular scenarios of online gambling fraud:

• Identity theft and fraud: Fraudsters may use stolen personal information during gaming ID verification to run one or more fake accounts. In an industry with client blacklists, they can be used as a workaround for banned or underage users.

• Account takeovers: Malicious actors target customers through phishing and other social engineering attacks to get illegal access to their accounts on gambling platforms and withdraw remaining funds or loyalty benefits.    

• Bonus abuse fraud: By creating multiple accounts under different identities, fraudsters may get unlimited sign-up bonuses and special proposals for new clients.

• Money laundering: Online gaming platforms can also be utilized to launder illegal funds by criminals. Identity fraud often is part of their game plan. 

These threats require a strong identity fraud detection system as well as robust gaming ID verification and authentication to be addressed. 

Users primarily go to online gaming and gambling platforms for convenience and accessibility. They want to be able to play at any time of the day from their PC or smartphone while enjoying the comfort of their own home, or while on the road. 

In an attempt to attract different types of customers, online gaming and betting operators provide a variety of products and services matching different customer preferences. However, all users expect to play in a safe and friendly environment ensuring their personal information and money is secure. They also want a smooth gaming experience without interruptions or glitches.

This is why businesses in online Gambling and Gaming have to invest in a perfect UX and attractive UI that’s compatible with different gadgets. The requirements also include a hassle-free instant gaming identity verification procedure. 

Player ID verification is one of the legal requirements in countries where online gaming and gambling operators are under regulatory control. The main idea behind this process is to ensure that there are no illegal players in the virtual room.

As a quick example, according to Connecticut’s Emergency Regulation on online gaming, the pool of individuals for those online games must be restricted on the operator’s part, including, but not limited to:

• Players under the minimum legal age 

• Players who aren’t in an authorized location to make a wager 

• Players placing a wager on behalf of another

• Players involved in criminal activities

This means it’s critical to ensure that the KYC solution the gaming platform relies on must feature gambling age verification, user IP detection and blocking if needed, and robust customer identification and authentication procedures.

By building and improving the gaming ID verification process, the following challenges can be addressed:  

One of the goals of gaming ID verification is to ensure the user is the person they claim to be. At this stage, it’s crucial to detect and sift out suspicious users that can be fraudsters or identity thieves. To deceive the system, they profit from numerous tricks using AI-generated, on-screen, and printed photos of IDs.

In such use cases, a combination of biometric and player ID verification, in which both the user and their identity document is checked, performs effectively. Verifying the ID and matching it to the customer’s selfie helps ensure that you’re dealing with a real individual presenting their physical document. 

In the multi-factor authentication (MFA) approach, biometrics, such as face scans, can also be reliable user authenticators, since many customers tend to use weak login/password pairs that are easy to crack. MFA is a strong method to verify a user’s identity, including scenarios when they want to reset their password or change other account details. 

Another strict requirement businesses in the industry must meet is to restrict access to services for people who haven’t reached the age of majority (typically, 18 or 21 years old). 

For this reason, age verification is a critical component of the gaming identity verification flow. This procedure can be integrated into the regular ID document check and automated. 

To perform gambling age verification, the software simply recognizes and analyzes the submitted ID card, passport, or other proof of identity where the date of birth is indicated. If the ID is genuine, belongs to the adult person who submitted it, and has no signs of any fraudulent alterations, the user can come to play.

Comparing new users against player databases containing entries about known or suspected cheats and banned individuals enables gaming platforms to reduce AML and fraud risks. However, compiling and filling out this database can be time-consuming and involve manual workload that is prone to human error. 

Automated data entry during instant gaming ID verification makes the process quicker and more secure, since there is no room for misspellings or intentional alteration of the data. The whole job is done by software. 

No customer enjoys filling out a long application form or retaking their ID photo and selfie many times to complete verification. A smooth onboarding process is critical if you want to keep your conversion metrics at a high level. 

Deploying instant gaming ID verification is a big contribution to user comfort. For instance, Grand Casino Luzern automated the flow for new users who want to use its mobile gambling service by implementing Regula Document Reader SDK. 

Previously, the casino staff had to manually check all ID photos uploaded by new players, which slowed down registration and was unreliable due to possible human error. Thanks to automation, the casino identity verification procedure now takes a few seconds. The process includes all necessary authenticity checks, from gambler age verification to document liveness detection, accelerates new customer onboarding, and eliminates any misprints or inaccuracies in data entry. 

Regula provides 100% in-house player ID verification solutions tailored to the specific needs of online Gaming and Gambling companies. 

Regula Document Reader SDK, complemented by Regula Face SDK, offers all the necessary features for industry players: 

• A complete set of authenticity checks for identity documents and biometrics based on powerful facial recognition algorithms and neural networks

• Seamless integration into current AML/KYC processes

• 100% compliance with privacy, security, and integrity standards

• Fully automated flow 

• Improved customer onboarding thanks to a user-friendly interface and customization

• Fraud detection and prevention functionality 

• The largest document template database in the world with 13,600+ ID samples from 249 countries and territories to serve players around the world

Get more details by booking a call with a Regula representative at your convenience.