Recently released compliance survey reveals operators’ most common concerns, why players abandon onboarding and the likely effect of UK’s upcoming financial risk checks.
The online gambling market shows no signs of slowing. In fact, by the end of 2024 the revenue generated from the sector is projected to exceed $107 billion.
As new markets like Peru and Brazil open, and established markets like the UK and Canada revise their regulatory frameworks, the challenges faced by betting and gambing operators’ compliance teams are becoming increasingly complicated.
With this in mind, IDnow commissioned SBC Media to investigate the compliance challenges most likely to affect operators in 2024 and beyond.
The ‘Challenges in Compliance Survey’ features insights and opinions from 104 global compliance professionals from the gambling industry, and looked at four areas: compliance, fraud, onboarding and financial risk checks.
Biggest compliance pain points for gambling operators.
According to the survey, the most common compliance challenge was source of funds checks, which was cited as one of the most difficult issues by more than a fifth of global respondents, rising to nearly 30% of European-based compliance professionals.
At the other end of the spectrum, respondents found age verification the least difficult to deal with, followed by identity verification, reflecting the availability of robust third-party solutions to handle that crucial part of onboarding.
Another question posed in the survey was related to speed of implementation, and how long it took operators to fulfil certain compliance requirements, such as obtaining a licence, undergoing an audit and complying with regulatory requirements in a new market. While being first to market is obviously an important factor, and can be a significant competitive advantage, results from the survey suggest that becoming compliant is not something that should be rushed.
Two-fifths of operators said they typically take 6-12 months to fulfil the compliance requirements ahead of entering a new territory, while around 30% suggested the process took 3-6 months.
So, what is the most important thing to factor in when entering new markets. At around 60% each, respondents were split between the ability to utilize existing compliance software (identity verification and AML solutions) and speed of implementation as the most important factors.
Biggest fraud concerns in the gambling industry.
The second section of the survey was designed to identify the prevalence and trends of different types of fraud and the prevention of fraud attacks.
It revealed that bonus abuse and attempts at document fraud remain most commonplace (65% and 57% respectively), despite improvements to identification and prevention tools.
Looking to the future, there is also concern about social engineering attacks (54%) and the growing threat of facial recognition spoofing attacks (33%).
[Read about the growing threat of social media fraud, which leverages social engineering, in our blog, ‘The rise of social media fraud: How one man almost lost it all.’
There was also broad consensus on whether AI-powered anti-fraud tools were the way forward. More than 70% of respondents either already have such tools or plan to implement them in the next 12 months.
“The results of this survey should act as a wake-up call for gambling operators in the UK and elsewhere to prepare themselves for the emerging fraud and compliance challenges. To address these challenges, operators will need a multi-dimensional approach to identity verification and fraud prevention, that enables seamless gambling experiences anytime, anywhere,” said Roger.
Challenges in Compliance Survey
The importance and dangers of onboarding.
Onboarding is a pivotal stage in the customer journey and can make or break your business. In a regulated industry, like financial services or gambling, the balance between offering a seamless yet safe and secure onboarding experience has never been more important.
The importance of speed and simplicity in the onboarding process was emphasised by the survey responses, with regulatory requirements seen as less of a barrier (31%) to completion than a complex and lengthy registration experience (55%).
Document submission proved to be the biggest challenge for global players (51%), with both ID document submission and personal financial information submission (51%) proving to be an obstacle to the completion of onboarding.
What do operators really think about financial risk checks?
No topic has been more polarizing to the UK’s gambling industry than the proposed financial risk checks.
As no operator yet has experience of working within the scope of these checks, the survey posed two questions: what they expected the impact of such checks would be on the UK market and what effect they would have on the wider international industry. Most compliance professionals (66%) expressed concerns that the move would lead to lower sign-ups for licensed operators, but would, in turn, strengthen the black market.
It is worth noting that some of the answers were nuanced and several respondents were open to the idea that an affordability check could have some positives for the industry such as improving trust levels among players, reducing fraud and helping to create a level playing field for smaller operators.
Play on with IDnow.
Discover how seamless player verification enhances online gaming security, fostering trust and compliance. With IDnow, you can fight bonus abuse, safeguard against underage gambling and comply with local and global gambling regulations – without adding friction or impacting user experience.
- Are you ready for Euro 2024? Read our blog, ‘5 things gambling operators need to know before Euro 2024.’
- Interested about what lies ahead for the future of UK’s gambling sector? Read our ‘From paper to policy: What’s next for the UK’s gambling sector?’ blog.
- If you’re more interested in the opportunities in Latin America, be sure to check out an interview with Brazilian lawyer Neil Montgomery, or ‘Open for business: Navigating the landscape of Peruvian gambling regulation’ blog.
- Or check out an interview with Roger, where we discuss the need for continued industry collaboration, and how to safeguard against the undeniable growth of the unlicensed global gambling market, in the blog, ‘Controlling the comfort zone, with Roger Redfearn-Tyrzyk.’
By
Jody Houton
Senior Content Manager at IDnow
Connect with Jody on LinkedIn