The online gambling industry is on track to surpass $107 billion in global revenue by the end of 2024, driven by the opening of new markets in Latin America and the tightening of regulations in established regions such as the UK and Canada.
As the sector grows, gambling operators face an increasingly complex compliance landscape. From combating fraud to navigating shifting regulations, operators must balance security with user experience to remain competitive.
To better understand the compliance challenges facing gambling operators, IDnow partnered with SBC Media for an in-depth survey of 104 global compliance professionals in the gambling sector.
The findings offer crucial insights into the key pain points that operators must address in 2024 and beyond, from managing regulatory requirements to preventing fraud and improving onboarding processes.
The Key Compliance Challenges for Gambling Operators
The survey revealed that source of funds checks are the most pressing compliance concern for operators, with more than 20% of respondents, and nearly 30% of those based in Europe, citing this as their top challenge.
Source of funds checks are essential for ensuring that players are not involved in money laundering or other illicit activities, but they are also time-consuming and complex to implement.
On the other hand, age verification and identity verification were less of a concern for operators, with many respondents noting that robust third-party solutions make these processes more manageable.
Despite the advances in technology, source of funds checks remain a significant compliance hurdle.
When it comes to expanding into new markets, operators are also grappling with the length of time it takes to fulfill regulatory requirements.
According to the survey, 40% of operators report that it typically takes between six to twelve months to complete the necessary compliance steps before launching in a new territory.
Though speed to market is important, operators recognize the need to carefully navigate regulatory processes to avoid costly mistakes.
About 60% of survey participants identified the ability to leverage existing compliance software (e.g., identity verification and AML solutions) and speed of implementation as crucial factors when entering new markets.
Fraud Prevention: A Persistent Concern
Fraud remains one of the most critical concerns for gambling operators.
According to the survey, bonus abuse (65%) and document fraud (57%) are the most common types of fraud affecting operators. Despite advances in fraud detection technologies, such as AI-powered tools, these issues persist.
Looking ahead, operators are particularly concerned about social engineering attacks (54%) and facial recognition spoofing (33%), which pose significant risks as fraudsters become more sophisticated.
Interestingly, more than 70% of operators either already use or plan to implement AI-powered fraud prevention tools within the next year, indicating a shift toward leveraging technology to combat these emerging threats.
Roger Redfearn-Tyrzyk, Vice President of Global Gaming at IDnow, emphasized the importance of adopting a multi-layered approach to fraud prevention.
“The results of this survey should serve as a wake-up call for gambling operators to prepare for the evolving fraud and compliance challenges ahead,” Redfearn-Tyrzyk said. “Operators will need to employ comprehensive identity verification and fraud prevention strategies that enable seamless gaming experiences while staying compliant with regulations.”
The Importance of Streamlined Onboarding
Onboarding is a crucial touchpoint in the customer journey, and the survey highlights the balance that operators must strike between offering a fast, seamless registration process and adhering to regulatory requirements.
Speed and simplicity are essential, with complex and lengthy onboarding processes cited as a significant barrier to completion by 55% of respondents.
Document submission, particularly for ID verification and financial information, remains one of the most significant pain points for global players. 51% of respondents indicated that submitting necessary documentation was a key obstacle during onboarding.
As a result, operators are increasingly focused on streamlining this process while ensuring that all regulatory checks are met.
Financial Risk Checks: A Controversial Development
One of the most polarizing issues in the UK gambling sector is the proposed introduction of financial risk checks for players.
While no operator has yet implemented these checks, the survey suggests that 66% of compliance professionals fear that they could result in lower sign-ups for licensed operators.
This, in turn, could lead to an increase in activity in the unregulated, black market.
However, there is a more nuanced view among some operators. A portion of survey respondents sees potential benefits in financial risk checks, such as improved trust among players, reduced fraud, and a more level playing field for smaller operators.
As the UK prepares to implement these checks, the industry remains divided over the long-term effects.
How IDnow Supports Gambling Operators
As gambling operators continue to navigate this complex regulatory landscape, IDnow offers solutions to help streamline identity verification processes and maintain compliance without compromising user experience.
Through IDnow’s automated and expert-led identity verification solutions, operators can quickly and accurately verify player identities, fight fraud, prevent underage gambling, and ensure compliance with both local and global regulations.
IDnow’s tools are designed to be seamless and secure, allowing operators to focus on providing a positive user experience while maintaining a strong compliance posture.
Whether it’s managing age verification, fighting bonus abuse, or complying with AML and KYC regulations, IDnow helps operators reduce friction during the onboarding process and ensure that all regulatory requirements are met.
Looking Ahead: What’s Next for the Gambling Industry?
The gambling industry is in the midst of rapid change, and staying ahead of emerging trends is crucial for operators.
As new markets open up, regulations tighten, and fraud threats evolve, gambling operators will need to continue refining their compliance strategies.
IDnow’s survey and solutions provide valuable insights into how operators can navigate these challenges and ensure they are well-equipped for the future.
For operators looking to stay ahead of the curve, IDnow offers a range of resources, including case studies, webinars, and industry reports, to help them understand the latest trends and best practices.
Ready for Euro 2024? Discover what gambling operators need to know to ensure compliance during one of the industry’s busiest events.
Check out our blog, 5 Things Gambling Operators Need to Know Before Euro 2024 for essential insights, or explore our resources on the evolving regulatory landscape in regions like Latin America and the UK.
In conclusion, the gambling industry in 2024 faces numerous challenges, from navigating complex regulatory frameworks to tackling emerging fraud risks.
By leveraging advanced identity verification and fraud prevention tools, operators can meet these challenges head-on, ensuring a secure, seamless experience for players while maintaining compliance with evolving regulations.
