The importance of KYC technology for online sports betting companies
KYC & AML compliance is at the forefront of sports betting. What can your company do to stay competitive & in compliance in 2021?
By Vanessa Malone
In 2018, the U.S. Supreme Court overturned the Professional and Amateur Sports Provision Act of 1992 (PASPA), clearing the way for states to legalize online sports betting.
In just two years, more than half of U.S. states have either legalized sports betting or introduced legislation to do so. As of November 4, 2020, 19 states offer single-game sports betting to consumers through retail and online sportsbooks, 6 states have legalized sports betting but are not yet operational, and 2 states have introduced bills to legalize sports betting.
According to Research and Markets, the sports betting market was valued at $85.047 billion in 2019. While in-person sports betting has taken a hit from COVID-19 in 2020, many have turned to the world of online sports betting.
As states and fans continue to direct their attention online, sports betting companies are faced with the task of implementing efficient Know Your Customer (KYC) and anti-money laundering (AML) screening processes that meet increasing identity verification regulations without sacrificing seamless sports betting experiences for their users.
In a fiercely competitive landscape, we believe sports betting companies that leverage technology to strike a balance between compliance and user experience will be the ones positioned to succeed.
What are sports betting companies responsible for regarding KYC?
Companies in the sports betting industry are legally obligated to verify user identity, age, location, and source of funds among other categories in order to protect their users and platform from bad actors and fraud.
This becomes increasingly prevalent as online sports betting continues to become adopted across the U.S. When you win a sports bet in person, you typically hand your winning ticket to an agent, get your money, and go about your day. In the online world, sports betting companies have to ensure that they’re delivering funds to the correct person which involves data collection.
Just as reputable sports betting companies prioritize trust when it comes to providing users with fair play and a secure environment, users must be able to trust that information being collected from them is being appropriately safeguarded.
Sports betting companies also become tempting targets for bad actors, especially online platforms that don’t require any face-to-face interaction. These can become honey pots for money laundering, identity theft and other illicit activities which could in turn damage your brand, dissuade users, and invite regulatory action.
Companies looking to stay ahead are seeking advanced onboarding & identity verification solutions to…
- Protect the company and users from bad actors and fraud
- Ensure users are located where sports betting is lawful
- Continuously comply with the latest global KYC/AML regulations
- Deliver a seamless, trustworthy, and user-friendly experience
How technology can solve for this
It’s not easy to balance all of this at once, which is why we put our team of Wall Street veterans and proven software engineers to work on Horizon’s KYC/AML onboarding app KYCware.
Horizon’s solutions and methodology have been utilized by securities issuers and other heavily regulated entities across the U.S. and Europe, so we know a thing or two about staying compliant and pride ourselves on going beyond the standard KYC identity verification methods to ensure your users and brand reputation are safe.
A few KYCware highlights:
- White-label onboarding and identity verification technology, ensuring an on-brand experience for users from the start
- Advanced ID, document and identity verification technology includes antigaming features, MRZ scanner, and liveness detection
- Auto-adjusting questions and forms depending on user entry and jurisdiction
- Continual AML screening against a proprietary database of global sanctions, Politically Exposed Persons (PEPs) and watchlists
- All KYC/AML transactions are logged on an unalterable storage medium
- Data is never saved to disk on our servers and never outsourced to third parties, period
The legal sports betting landscape is growing and, to not waste a perfectly good pun, we believe those that bet on integrating the right technology are favored to win big.