As online gamblers all but feast on the odds and brackets of the ongoing NCAA Division I Men's Basketball Tournament in the U.S. – the first March Madness since the U.S. Supreme Court decision that legalized sports betting – lawmakers in the U.K. are considering a crackdown on digital wagering. What the regulator (or lawmaker, or court) giveth, the regulator (or lawmaker, or court) can taketh away.
All the action on the legalized gambling front is putting authentication and verification services under a bigger spotlight – and making them major players in this growing area of digital payments and commerce. In a new PYMNTS interview, Karen Webster and Yossi Zekri, CEO of Acuant, an ID verification services provider, took a deep dive into the role such firms have (and will have) when it comes to online gambling – and how that role might evolve in the coming years.
Like so much else in commerce and payments, this is a story that revolves around one of the central questions of the digital era: How much friction to introduce to customers – and where and when to do it – so as to strike a balance between seamless transactions, security and regulatory compliance.
“Customers want to make sure they are protected,” Zekri said – a desire that extends to making sure their winnings and deposits are secure, and that funds are available for efficient withdrawal.
In that spirit, most consumers understand the need for a relatively involved onboarding process when first signing up for an online gambling site or service. The time spent there ideally reflects the level of verification and security on the other end, a sign that the service provider is protecting the customer against account and identity takeovers (while also protecting against money laundering and other nefarious activities).
But after that first time, consumer expectations change, Zekri told Webster.
“Too much verification makes customers wonder what’s happening, why are (service providers) asking” so much, or asking again, he said. Too much friction where it’s not expected makes customers suspicious, and they might consider jumping ship to other online gambling providers. “When you think about onboarding, you want to reduce that friction,” he said. “As it moves forward, those elements (for recurring users) will have to become simpler.”
Of course, that’s not the only type of pressure that comes to bear on friction for customers of online gambling services. Regulations are another huge factor.
In the U.S., the Supreme Court last year gave its thumbs-up for states to legalize sports betting. This means a variety of different, state-by-state approaches to what constitutes legal gambling, and the challenge of making sure gamblers are old enough to play, among other considerations. In the U.K., there exists the possibility of a pullback. Some lawmakers there, from the country’s Labour Party, reportedly are keen on such measures as placing tight restrictions on how much gamblers can bet and how quickly they can make wagers, and even banning credit cards for online gambling.
That also provides opportunities and challenges for authentication and verification services, which are being called upon by many online gambling services to shoulder the burdens of regulatory compliance, lest the industry attract unproductive negative attention from the public and politicians. The best practices in providing authentication and verification in the world of online gambling is still a work in progress – it’s not easy to balance friction, security, seamlessness and compliance in the best of circumstances, and gambling operators are under relatively heavy regulation – but some tactics are indeed emerging.
Perhaps most noteworthy is the use of government-issued ID documents – passports, drivers’ licenses – as the backbone of authentication and verification in the online gambling space (along with the sale of e-cigarettes and other age-restricted retail areas, as PYMNTS has covered). Such documents represent the successful completion of a “whole vetting process” already undertaken by the prospective gambler “to gain that credential,” Zekri said. A digital authentication and verification process can then use facial recognition – or, more specifically, a liveness detection test conducted via smartphone selfie – to confirm the person is who he or she says they are.
“Then you get a token for going forward,” or use relatively quick liveness detection, to gain access to online gambling the next time, he said, reducing friction and the chances of being impatient or frustrated enough to bail for a competing gambling provider. Unless a big deposit is made into that person’s account (a possible sign of money laundering) or other unusual activity takes place – such as big changes in the amount or frequency of bets – the friction should be, and likely would be, kept to a minimum. “You can find a right balance between those elements,” Zekri said.
In other areas of retail, there are more backend safeguards when it comes to authentication. A retail site like Amazon will recognize the consumer, and is unlikely to ask for password confirmation unless unusual behavior is detected. Zekri said such tactics – some of which fall under the label of “behavioral biometrics” – are theoretically possible in the world of online gambling. But he cautioned that gambling is a different environment than traditional retail, “one with a lot more regulations” that influence authentication and verification activities to a large degree.
That said, biometrics hold great promise for further use in online gambling. “If used the right way and linked to that trusted anchor,” he said, “it can create a frictionless process for the future.”
A few things hold true about gambling, whether conducted online or not.
First, gambling providers, no matter how compliant and above-board they might be, have a strong financial interest in attracting as many bettors as possible. Second, as Zekri told Webster, more regulation is all but certain. Online gambling is still in its early stages, after all, and that holds especially true in the U.S. Third – and this is a truth throughout the larger world of digital payments and commerce – fraudsters will always find a way.
“If I’m a fraudster, I am always moving around,” he said. That does not negate the need for strong defenses built around verification and authentication technology, of course, but it does indicate that the fight against fraud will never end, and it’s better to shore up as many potential weak spots as possible.
As gamblers congratulate or kick themselves over their bracket and team choices for the NCAA Tournament, the world of online gambling continues to evolve globally, with authentication and verification taking on increasingly vital roles.