The rise of the iGaming industry in recent years has been accompanied with an increasing number of jurisdictions across the globe creating regulatory bodies and rules for the industry. While the rules can vary from country to country, one of the universal guidelines iGaming operators must adhere to is having a system to protect against money laundering. Additionally, the rise of iGaming has led to increasing competition amongst iGaming operators, where many offer lucrative bonuses to new bettors, which if not administered properly are prone to abuse by fraudsters.
This article highlights the importance of anti-fraud iGaming technology and having payment processing that includes KYC (know-your-customer) and is AML (anti-money laundering) compliant. If you are interested in learning more about the steps involved in being a legally compliant iGaming operator, email us at [email protected] to learn how we can help you secure a gaming license.
Let’s get started by addressing some common concerns of iGaming operators on this topic.
Having KYC/AML will reduce the number of players my business will attract
This is a common myth amongst some iGaming operators. While it is true that some potential bettors may not feel comfortable sharing their personal information, a supermajority of bettors prefer to bet with sportsbooks that are compliant with the law:
“Research suggests that sports bettors “overwhelmingly” prefer legal operators, with 74% of respondents stating they believe it was important to only place wagers with a regulated bookmaker.” – American Gaming Association
Operators who are not compliant with KYC/AML regulations not only risk penalties from the authorities in their respective jurisdictions, but also risk alienating the majority of potential customers.
Implementing KYC & AML procedures will be a hassle for the user experience
This concern is somewhat similar to the one mentioned above, however operators should rest easy knowing that all of the world’s largest iGaming operators have KYC/AML baked into their technology suite. Moreover, for bettors using fiat currency, it is possible for no additional steps to be required from them when funding their accounts thanks to integrated KYC/AML in most payment processors.
Besides regulatory reasons, why else is anti-fraud & KYC technology important?
Knowing your customer is not just important for maintaining good standing with regulatory authorities, but also crucial to the bottomline by preventing fraud and abuse of bonus programs.
Most iGaming operators offer affiliate programs and bonuses that could be abused through the creation of multiple accounts. For example, if a casino offers a signup bonus consisting of a $50 risk-free bet, in addition to an affiliate program that pays 10% of the house edge, a bettor may be enticed to create two accounts to game the system. If an operator uses anti-fraud technology, they are able to prevent this scenario from occurring.
Is KYC and anti-fraud technology expensive?
Relatively speaking, KYC is one of the cheapest components in the user acquisition process. Many payment processors include it in their processing fee, while others charge a small fee (typically under a dollar) per user. The savings from reductions in fraud alone more than makeup for the marginal costs of implementing this technology.
Prospective and existing iGaming operators are in good hands with providers like Lion Gaming Group as most iGaming technology providers are able to get their clients up and running with experienced and reliable KYC solutions.