The online gaming industry in India will touch $2.8 billion by the end of 2022. As per a recent report by Boston Consulting Group and Sequoia, the industry is expected to triple to over $5 billion by 2025. In 2019-20, Indian gaming beat the growth of television, OTT, and social media platforms, making a new record. According to EY, the online players in India grew by eight per cent which is from 36 crores in 2020 to 39 crores in 2021, and will cross 45 crores in 2023. Top factors contributing to growth are increasing mobile users and networking capabilities, digital payments, integration of cloud, apps, and social networks and growth of local gaming platforms.
As the craze of online games and securing cash winnings is only increasing, fraudsters and cybercriminals are not behind in making illegal profits and ruining the experience of genuine players. From making fraudulent bets to using stolen IDs purchased from the dark web to programming bots for affiliate frauds, different types of online frauds have come to the fore. These frauds get intensified during the peak seasons such as IPL, World Cup, and so on as more players bet online.
Top frauds in real money gaming
- Multi Accounting: Many users create multiple accounts using fake/stolen IDs to claim sign-up or welcome bonuses – resulting in bonus abuse and collusive play. This makes monetary health of the business go south and results in reputational damage within the players’ community.
- Affiliate Fraud: Many platforms offer referral bonuses to the users to invite other players to start playing. Bad actors sign-up to the referral programs, and make conversions using stolen IDs and credentials purchased from the dark web. Further, bots are programmed to automate the process at scale. This sends junk traffic to the platform and deteriorates marketing budgets.
- Chargeback Frauds: A common fraud not only in online gaming but across all online businesses. Once a bank detects an illegitimate transaction made by a user using stolen credentials, the business has to endure chargebacks and fines.
- Money Laundering: As stakes are involved, bad actors make illegitimate use of platforms to launder illegal gains. Businesses must assess money laundering risks, filter out suspicious accounts, and ensure that transactions happen from verified accounts only.
- Underage Playing: Underage gaming is strictly prohibited in real money gaming and can lead to reputational and regulatory risks. Age verification is important to onboard age-appropriate users and prevent minors from getting unlawful access to the platform.
- Location Spoofing: Due to the high volume of cross-border traffic, verifying players’ location at scale becomes challenging. As infringing regional restrictions by disguising location is common for bad actors these days, address verification becomes vital to adhere to respective state laws and restrict users from a banned state.
Due to the ubiquity of gaming fraud, including money laundering, the industry has been on the radar of regulators. To prevent fraud and safeguard the interest of the platform as well as players, gaming businesses must comply with anti-fraud regulations like Know Your Customer (KYC) and Anti-Money Laundering (AML). AI-powered KYC verification systems are important here to prevent money laundering, location spoofing, underage playing, and other frauds.
Role of verification in online real money gaming
The rise of the dark web and data breaches have made it easy for the fraudsters to get access to personally identifiable information. What’s easier than purchasing or stealing IDs is forging them to dodge the KYC process and make illicit gains.
Therefore, gaming businesses must verify players, and bank account details, and conduct background and criminal record checks to stay compliant. With the help of AI-powered authentication and onboarding solutions, businesses can ensure identity verification in real-time and filter out a stolen/altered ID right at the entry of a player onto a platform.
Why is a smart onboarding and authentication solution Important?
Combating gaming frauds and ensuring compliance with KYC and AML regulations isn’t the only challenge that online gaming businesses face. In this fast-paced world, they must also meet the expectations of modern players who want to create accounts and play for real cash winnings without going through a lengthy onboarding process.
A lengthy verification process to validate age, address, and identity can become exhaustive for players and shoot up drop-out rates. Platforms also risk losing users to competition. Therefore, it becomes crucial to strike a balance between safeguarding their business and improving the player experience for future growth and loyalty.
AI-powered authentication solutions are the answer
To make player onboarding future-proof, a smart onboarding solution is required that can take care of a gamut of checks such as identity verification, age and address checks, KYC/AML checks, and more. AI-backed technologies such as Biometric Identification, OCR, Digital Address Verification, Database-Driven Document Verification must power these checks to help businesses onboard genuine users at scale. KYC journeys combined with cutting-edge technologies for document tampering, liveness check, and real-time verification can detect frauds and make onboarding faster and seamless.
In the absence of clear regulation, online real-money gaming platforms have a long way to go to realise their full growth potential. But greater growth will be guaranteed to those who keep ready to scale while also tackling fraud and keeping players happy when the regulation catches up.
(This article has been contributed by AuthBridge Research Services senior vice president,Arjit Bhargava and AnimationXpress does not necessarily subscribe to these views)