With an estimated compound annual growth of 11.94% from 2020-2025, the online gambling industry is considered one of the fastest-growing industries today. Forecasts show that by the end of 2027, the market would have grown by a whopping $127.3 billion.

But with bigger opportunities come bigger risks.

Payment fraud, identity theft, underage usage, and money laundering are just a few of the many risks that online casinos face.

Because of this, identity verification became a legal requirement for all gambling firms, especially online casinos. In the United Kingdom, for example, online gambling companies can be charged as high as $10 million for non-compliance to the “Know Your Customer” (KYC) guidelines.

In this guide:

Identity Verification and Why it Matters

Identity verification is a process undertaken by institutions and businesses to confirm that a person’s identity matches the one that it’s supposed to be.

We’ve seen email service providers implement this process, as well as job search platforms.

Gambling companies employ different steps or approaches to verify the identity of their users. Since it’s a tedious process, identity verification is performed here by a credible this-party provider.

As mentioned earlier, verifying customer identity is essential to alleviating the risks involved in operating an online casino. It also benefits players by protecting them against issues like identity theft.

Let’s dive deeper into why identity verification matters.

Age verification

In countries where gambling is allowed, people can only play if they are at least 18 years old.

Multiple account checking

Cyber attackers often use multiple accounts using fake personas to gain an unfair advantage over other players. For example, the same player can bet on multiple poker tables, without the other players or the casino operator knowing. With multiple accounts, they can also gain new signup bonuses, coupons, and other attractive offers.

Credit card fraud detection

Many criminals use other people’s identities to pay for their gambling debts or bets. In poker sites, they use fake credit card info to fund their fake accounts.

Money laundering prevention

Since a lot of money goes in and out of online casinos every hour, it has become an ideal spot for money launderers. Identity verification is a way to ensure that criminals particularly those under authorities’ watch lists are unable to hide laundered money to their fake gambling accounts.

There are many other types of gambling fraud going on today. They include cashback abuse, gnoming, chip dumping, and phone top-up abuse – all because of identity fraud.

Confidentiality of Information

In complying with the local and national policies on identity verification, gambling companies and their partners are required to maintain high accuracy and legitimacy of their processes.

More importantly, they need to ensure that users’ information remains secure and confidential.

There are still several challenges that online gambling companies face when it comes to identity verification. One is selecting a reliable partner that implements strict verification measures. With the massively growing number of online gamblers, such companies tackle a high volume of identities that need to be verified, which can either prolong the process or affect the quality of results.

Lastly, regulations are continuously updating, as technologies. Hopefully, there will be a much better, safer, and easier approach to verifying user identities of gambling sites in the next few years.

Laws on Identity Verification

According to the updated guidelines of the American Gaming Association (AMA), no one in the US can open an account with any gambling platform without providing basic PII information, such as their full legal name, address, and SS number.

They also cannot do any monetary transactions with gambling companies unless they have submitted a copy of their official government ID and proof of permanent address.

Online casinos can hold the user’s deposit or prevent them from withdrawing funds and betting on games until they have been verified.

In the UK, KYC guidelines also cover verifying identities who have self-excluded themselves from gambling. Voluntary self-exclusion programs let gambling addicts add their names to watchlists, so gambling companies can ban them from joining. However, some users use fake identities to still access gaming platforms.

The European Union has more lenient policies on identity verification for gamblers. Users are not required to verify their identities until their deposit hits 2000 EUR.

Identity Verification & KYC “Know Your Customer”

KYC is an acronym for “Know Your Customer” – a business process that is used to implement identity verification in the online gambling industry.

Knowing who is making transactions before an online casino is a key to eliminating fraud and making gambling environments safe for everyone.

KYC involves asking players and customers some documents to verify their identities, such as valid IDs and utility bills to confirm their home address.

Some casino operators also require players to verify their source of funds by asking them to submit scanned copies of their debit or credit cards), bank statements, income statements, payslips, etc.

How Identity Verification Takes Place

As customers sign up for an online casino website, one of the first things they need to do is verify their identity.

This process changed massively over the years. Today, players will need to verify themselves using tools online. It’s important for a gambling company to partner with a trustworthy identity verification partner that will take all the necessary measures needed to screen players.

Verification processes take anywhere from one to two weeks. However, some providers are able to conduct real-time verifications using technologies like facial recognition and artificial intelligence.

Some verifying companies will ask for more than one valid ID, others will conduct a video chat to verify the information. In most cases, players will need to take a photograph of themselves.

The company verifying accounts of online gamblers can look into databases that hold a range of information about the user. However, in case there are similar names or similar addresses, or when people’s names were spelled incorrectly, further verification is conducted and additional documents will be required from the person.