The surge in online gambling participants in recent years suggests that the global sports betting industry is showing no signs of slowing down. The gambling and betting industry ranks among the world’s fastest-growing sectors according to the Online Gambling Global Market Report 2023. Its growth is propelled by the multitude of sports enthusiasts who enjoy both watching and wagering on their favorite teams.

In the United States, where the industry is experiencing explosive growth, the forecasted number of online sports bettors was anticipated to rise from 19 million in 2022 to 23.1 million in 2023, driven in large part by the popularity of the National Football League (NFL).

With the 2023 NFL season underway, an astonishing number of Americans are eagerly participating in the excitement. According to a survey conducted by the American Gaming Association (AGA), a staggering 73.5 million American adults, equivalent to approximately 28% of all adults in the United States, intended to place bets on the NFL during this season. This represents a significant 57.7% surge compared to AGA’s survey prior to the 2022 NFL season, when a record 46.6 million Americans were estimated to participate in betting activities. Notably, a staggering 39.2 million American adults have placed sports bets in the last year, as reported by the American Gaming Association.

(source: American Gaming Association)

The 2023 statistic encompasses individuals intending to make informal wagers among friends, such as participating in fantasy leagues or betting pools. Nonetheless, a substantial 49.7 million American adults, equivalent to 19% of the population, have plans to place bets either online, at a casino, or through a bookmaker this season.

Breaking down this figure further, 35.1 million of them (14%) are inclined to bet online, while 13.6 million (5%) are willing to place their bets at physical sportsbooks. This leaves a minority of approximately 1 million (<1%) opting to engage with a bookie for their betting endeavors.

Registering with an online sportsbook allows you to legally bet on NFL games, provided you are in a state where online sports betting is permitted and meet the age requirements. The sports betting landscape has undergone significant transformation since the 2018 Supreme Court ruling that legalized gambling across the United States, laying the foundation for increased adoption rates both online and offline within the industry. Despite each state having its own distinct laws and regulations concerning gambling legality, 33 states have already rolled out legal betting markets, and others such as Kentucky, Maine, and Nebraska are gearing up for forthcoming launches.

Online gambling: industry challenges

Nonetheless, there is a drawback to the growth of the gambling industry: with the rising number of sports enthusiasts and bettors, the risk of abuse increases. The sector stands as one of the prime targets for fraudsters and financial criminals, who are continually improving their ability to exploit vulnerabilities of the system, posing both reputational and monetary risks for the sports platform operators. Criminals employ various tactics to outsmart the system: from fabricating identities to bypass KYC checks^[1], creating duplicate accounts under different names, and tricking real-time facial recognition with screenshots and video deepfakes. These activities pose a real threat to the overall safety of the betting environment.

The gambling operators also encounter a range of additional challenges, such as preventing gambling by underage individuals who need protection from the potential harms of gambling, managing user onboarding during peak traffic periods, and addressing various security and compliance issues associated with:

• a complex legal landscape: adherence to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations,
• licensing requirements,
• ensuring responsible gambling and player protection,
• safeguarding data privacy and security, and
• navigating advertising and marketing restrictions.

Online gambling: regulatory framework

In the pursuit of maintaining a secure, transparent gaming environment and protecting all players, gambling regulatory compliance becomes increasingly stringent. Gambling operators must diligently adhere to anti-fraud measures, including Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements.

• Know Your Customer (KYC): KYC, an important part of Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF), is a process used by online casinos and online gambling platforms to establish and verify the identities and age of players. It involves requesting proof of identity from clients, which typically includes verification of personal credentials such as name, address, postal code, date of birth and national ID number such as SSN or the final four digits of the player. Secondarily government-issued identification documents such as ID cards, passports, or driver’s licenses are used when data verification is not available or not sufficiently complete. Additionally, the process may include verifying the authenticity of these identity documents, requesting proof of address, which can be supported by documents like utility bills, bank statements, and paychecks. Furthermore, it encompasses verifying financial data and assessing sources of income. The KYC process enables a precise risk assessment for each client, helping prevent underage participation, problem gambling, and fraud. The KYC procedures are essential to ensure that all online gambling practices are conducted fairly and transparently, instilling a high level of trust in players.
• Anti-Money Laundering (AML): AML, also known as Money Laundering Prevention, is a critical framework encompassing various measures and policies designed to detect financial crimes and combat money laundering activities. This multifaceted process involves vigilance in monitoring players’ financial transactions and conducting thorough analyses to identify anomalous patterns and suspicious activities. Timely intervention is instrumental in preventing financial crimes, contributing to the industry’s integrity. In countries with a higher risk of money laundering, it may be necessary to conduct an additional check called Extended Due Diligence (EDD). EDD primarily examines the source of the funding. If the funding source is found to be legitimate, the player can proceed with placing their bet.
  The comprehensive series of checks involves:
• Identity Document Verification: During the financial withdrawal process, players are typically required to submit government-issued identity documents, such as passports or driver’s licenses. These documents are subjected to thorough verification procedures to ensure that the player is not engaged in any form of criminal activity.
• Age Verification: One of the primary objectives of the check is to confirm that players meet the legal age requirements for gambling and ascertain that only eligible individuals are granted access to gambling services.
• Database Comparisons: The submitted government-issued identity documents may also be cross-referenced with authoritative databases to confirm their validity and legitimacy. This step helps detect any discrepancies or inconsistencies in the provided information. Furthermore, the check may offer support to self-excluded individuals who have voluntarily chosen to exclude themselves from engaging in gambling activities.

The significance of these verifications cannot be overstated. Having them in place is not merely a matter of convenience; it is a legal imperative as failure to conduct them rigorously can result in severe legal consequences, such as substantial fines and even the revocation of a gambling license.

Gambling sites and apps must effectively and continuously communicate to their users that their KYC/AML and identity verification processes serve four key purposes:

– Prevention of Money Laundering and Ensuring KYC,
– Guarantee of Fairness and Transparency,
– Protection of Minors,
– Regulatory Compliance.

Streamlining identity verification for online gambling

In the highly dynamic and competitive gambling environment, online businesses that wish to thrive must ensure they have a robust KYC process. It should be designed to ensure compliance while delivering a seamless and user-friendly experience. The KYC processes relying on manual verification proved to be clunky, error-prone, expensive due to staff training and maintenance, and thus outdated.

Today, gambling operators are increasingly turning to comprehensive technology-driven KYC solutions that provide both convenience and security for all parties involved. These operators look for full service offerings that enable identity data to automate document-driven service operations to allow for least friction related journeys for the consumer that also include anti-fraud and responsible gaming approaches to their services.

They heavily depend on technological advancements leveraging global identity databases, biometric authentication, AI and ML fraud-detection tools to streamline the sign up for players and handle high volumes of verification requests. Automating online gambling with digital identity verification tools has evolved into an industry standard. Implementing efficient and robust KYC/AML and identity verification tools became essential to establish legitimacy of online businesses, preserve trust, enable scalability, and enhance security on online gambling platforms.

Nonetheless, selecting the right identity verification tools to facilitate responsible gambling practices and provide a seamless betting experience for the expanding player base frequently poses a significant challenge for the operators. While clients anticipate a truly effortless and non-intrusive onboarding process, as well as a frictionless use of the platform, operators must ensure a precise and unbiased user onboarding and account authentication to mitigate business risks, meet regulatory requirements, and address player concerns. Therefore, achieving a balance between speed, compliance, and fraud prevention is a formidable undertaking for the gambling operators.

It is not arguable that maintaining top-tier security and privacy standards is also paramount for online businesses as it ensures the trust of their valued customers. Users must have unwavering confidence that their Personally Identifiable Information (PII) remains confidential and well-protected at all times. To mitigate the risk of data breaches, operators have to take the responsibility for implementing robust data encryption protocols and ensuring secure data storage practices.

When effectively deployed, strong KYC and anti-fraud solutions empower sports betting organizations to navigate intricate legal and compliance landscapes, enhancing efficiency through automation. This, in turn, fosters greater customer loyalty, leads to revenue growth, and overall success, while contributing to a heightened sense of integrity and transparency within the gambling environment.

Enhance your players’ betting experience with Aristotle Integrity’s dependable solution

Aristotle Integrity is a leader in identity verification, KYC, and anti-fraud services, offering the ability to utilize the highest data driven KYC solution, Integrity IDV and also the leading multi-technology automated document solution, Integrity AutoDoc  to its customers in the iGaming and sportsbook sectors. This solution is a vital component of Aristotle’s comprehensive suite of identity and age verification tools. It facilitates seamless attestation, protecting against fraud and underage gambling without compromising PII. This AI-powered, fully automated identity verification solution helps gambling and gaming operators achieve the following key objectives:

• Streamline and enhance the user onboarding flow to securely accommodate a large influx of new players.
  Aristotle, licensed in 24 U.S. states and territories, plays a pivotal role in facilitating the majority of transactions within the gambling sector. By powering onboarding for numerous industry giants, AutoDoc ensures a frictionless account sign-up process and seamless authentication, enhancing player engagement. Moreover, the solution boasts scalability, adeptly accommodating volume spikes without frustrating delays.
• Amplify speed and user-friendliness
  AutoDoc relies on a fully automated, biometric authentication technology that offers speed and efficiency for Aristotle’s clients. Unlike many solutions on the market, it relies on a Passive Liveness Detection technology that detects spoofs without any friction to the user. It allows for determination of liveness from a single image with no additional, complicated user interaction.
• Achieve regulatory excellence with precise identity and age verification technologies
  AutoDoc is the bedrock of AML/KYC regulatory compliance and precise player age verification. Aristotle Integrity consistently ensures global alignment with AML/KYC regulations, reinforcing user identity verification across international watchlists. The solution significantly reduces the risk of underage involvement and upholds the highest standards of age and identity verification.
• Offer industry-leading fraud detection and accuracy
  Using both laser-precision OCR (Optical Character Recognition) and industry-leading face recognition, AutoDoc consistently provides top results for accuracy, better than any human reviewer. The solution enables bias reduction for user onboarding and helps gaming and gambling organizations conduct their businesses responsibly. Leveraging AutoDoc’s Beta confirmed Level 2 passive liveness detection technology, our clients can determine whether credentials provided by their customers represent a live person, rather than a deepfake.
• Tackle privacy concerns through a privacy-first approach
  AutoDoc equips clients with better, more robust capabilities that promote privacy and simplify user experience. The solution enables the ability to process users’ sensitive, biometric data right on the edge of the device to authenticate in record time, rather than outsourcing to remote data analysis centers that slows down the process and creates privacy concerns. AutoDoc has incorporated a choice of automated document technologies from Incode Technologies, Jumio, Veriff, and IDVerse that are available on a country by country basis.

This offer undoubtedly creates a win-win scenario for both businesses and consumers alike.

Aristotle Integrity is well-positioned to offer their customers access to extensive identity databases and the next-generation ID verification technology for enhanced speed and ease-of-use across a variety of sectors. The company also operates in other sectors, including crypto, financial services, social media, and adult age verification.

Discover how AutoDoc ensures continuous fraud protection, compliance, and efficient player verification. Reach out to us now.

^[1] It is worth noting that synthetic IDs, the fastest-growing US fraud type, thrive due to frequent data breaches, simplifying access to real identity documents on the darknet. They enable fraudsters to blend counterfeit details with authentic IDs to circumvent KYC checks.