Online games are growing in popularity, and regulators are starting to worry as more players are using real-world currency for in-game purchases. To fend off bad actors attempting to capitalize on this growth, gaming and gambling websites need to protect against fraud and money laundering while also verifying their players’ ages. The new Digital Identity Tracker includes a Deep Dive that focuses on what these companies are doing to assuage legislators’ fears and prevent crime.
Online gamers are increasingly using real currency to pay for in-game goods, drawing scrutiny from legislators around the world. Regulators allege these exchanges open up new pathways for criminals to commit fraud and launder money. In addition, it’s possible that online gaming could be damaging to young players, fostering gambling addiction issues. These concerns are prompting regulators to push for identity and age verification in the online gaming world, but each game faces its own set of challenges when authenticating its players’ identities.
The following Deep Dive explores how online gaming and gambling sectors use digital identity solutions to keep users’ identities safe and ensure age requirements are followed.
The Evolution of Online Gaming and Gambling
The U.S., Australia and the U.K. have all passed legislation regulating – or banning – online gambling. Despite this, the activity has continued to flourish, prompting several markets to rethink their regulations. This includes the U.S., which legalized online gambling in 2011.
Adding to the complexity, the line between online gaming and online gambling is becoming blurred. Gamers are increasingly trading in-game items, gambling for things that are typically won as part of events or using them as digital currencies.
A lack of regulation in this area has come at a cost. The number of U.K. children with gambling problems increased fourfold over the past two years, totaling 50,000. A study conducted by the nation’s Gambling Commission showed 450,000 children aged 11 to 16 gamble regularly – a number far greater than those who drink, smoke or use drugs.
Governments considering legalizing online gaming are thus left to figure out how to regulate gamers’ ages. This is no small task, either, as American gamers play illegally on 1,700 sites worldwide.
The Game of the Ages
It’s not just governments that are faced with this struggle, either. Gaming and gambling sites that implement too many security measures will cause friction for their customers, forcing them onto other sites. If they don’t have enough security, however, they’ll fall short of government regulations or become susceptible to fraud. Incorporating protocols that don’t impede users’ experiences while meeting necessary requirements is a tricky task, but there are tools that accomplish it.
Online gaming companies can have players scan government-issued IDs, and identity verification companies can automatically extract the information necessary to legitimize players. One of the major problems with this method, however, is that players can use others’ IDs without businesses being aware. To mitigate this risk, some companies now require players to submit selfies along with their IDs. If they don’t match, players are not granted access to the platform.
Another solution is liveness detection, which requires players to be physically present during the verification process so they can submit photos, video playback or audio recordings to confirm their identities. Unfortunately, these are all methods that can be easily mimicked by fraudsters. Identity verification companies, such as AI identity solutions provider Jumio, are creating new solutions to ensure best practices, including scanning users’ faces with cameras to confirm they are present.
Companies could also verify players when they make purchases. Credit cards must be authenticated at this stage of a game, and companies could use this to confirm identities. Firms could take time to look into players when they make a certain number of transactions, stopping fraudsters from making in-game purchases or using stolen credit card information.
Following the Rules of the Gaming World
Though there are several verification options for online gaming and gambling companies, many don’t want to implement them at all. These companies view KYC and AML procedures as impediments that create frictions and drive customers away from their games. They are facing increasing pressure from regulators to comply, however, as the world of online gaming will otherwise become fertile ground for criminal activities. Gaming companies may be reluctant to implement such procedures now, but such processes will protect their communities in the long run.
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