5 Questions Sportsbooks Should Ask Before Choosing an Identity Verification Solution

image of person holding phone . Phone is showing a selfie capture with a computer in the background showing sports betting website. Image text reads: Identity Verification for Sportbooks. 5 key questions

Online sports betting has exploded across the U.S. in the past few years. Sportsbooks like DraftKings Inc. and FanDuel Inc. are ubiquitous on TV, radio, billboards and social media. All the major U.S. sports leagues now have partnerships with betting platforms. In August 2023, ESPN struck a 10-year, $1.5 billion deal with Penn Entertainment to license its widely known brand, capitalizing on the surge in interest in sports betting as more states have legalized it.

According to the American Gaming Association, 38 states have passed legislation to enable sports betting. And according to Statista Market Insights (November 2023), the U.S. sports betting market is growing at a compounded growth rate of 13% through 2028 and is expected to reach $15.75 billion and 52 million users by 2028.

Some states have reaped a total of over $4 billion in tax revenue from more than $280 billion wagered on sports since 2018. While sports betting has grown into a multi-billion dollar industry, it is facing greater scrutiny by regulatory and law enforcement agencies.

Criminals seeking to launder proceeds of crime continue to exploit weaknesses in Know Your Customer (KYC), identity, fraud and anti-money laundering (AML) controls. Regulators are moving up a gear and have urged sports betting operators to perform effective customer due diligence and greater care in how they identify and interact with customers.

Gaming operators are flocking to the legalized states, and to operate in those states bookmakers must develop and implement a sports betting KYC compliance program that defines how they identify, manage, mitigate and report financial crime risks. The program must include a KYC and AML policy, procedures, processes and controls for both identification and preventative measures.

Bookmakers must:

  • Protect the company and users from bad actors and financial crimes
  • Comply with the relevant regulations, both domestically and internationally
  • Ensure online sports betting identity verification delivers a user-friendly customer experience

It’s clearly not all about compliance. To succeed in this crowded market, gaming operators must focus on a streamlined onboarding experience, abandonment rates, online fraud and other criteria. This is why it’s important for sportsbooks to ask the right questions and get the right answers before teaming up with any identity verification solution provider.

5 Key Questions to Ask an Identity Verification Vendor

1. How quick and automated is the identity verification process?

When it comes to identity verification in sports betting, speed is key. Many identity verification solutions are slow, onerous and painful for new players to navigate. In many cases, more than 50% of players abandon the onboarding process during the proof-of-ID, proof-of-address, or proof-of-funds steps. Some abandonment is inevitable and likely helps prevent fraudulent actors from signing up, but you want to optimize and simplify the experience for good players. Thanks to machine learning and AI, the verification process can now happen within minutes.

2. How much experience does the identity verification vendor have with sportsbooks?

There’s an art and a science in identity verification. More experienced vendors know how to introduce the right type of friction to weed out bad or fraudulent players while still enabling a fast and simple online experience for legitimate players At Jumio, we are the global leader in providing identity verification services to sportsbooks and gaming operators, including serving 9 of the 10 largest operators in Europe and several of the largest sportsbooks in the U.S.

3. In which states is the identity verification vendor licensed or authorized?

Operators are required to conform to a patchwork of regulations, which differ from state to state, and they must set up verification/KYC procedures to meet those regulations. Like gaming operators, identity verification vendors must also conform to each state’s set of regulations in order to operate in that state. Some states don’t require the vendor or the operator to actually go through a formal licensing step. Other states require a pretty onerous process to get licensed. Jumio is either directly licensed or authorized to provide identity verification services in the majority of states where sports betting is legal.

4. Can the identity verification vendor verify the age, identity and address of players?

There are a number of verification services that sportsbooks need to include as part of the identity verification process.

  • Age Verification: To prevent underage individuals from participating in gaming activities, age verification is an essential component of responsible gaming. KYC requirements mandate that sports betting operations verify the age of their users and ensure that they are at least 18 years or older (21+ in some states.)
  • Identity Verification: Operators need to ensure that players are who they claim to be. Instead of relying on self-reported information, sportsbooks should require the user to provide a picture of an authentic ID document (e.g., driver’s license) along with a corroborating selfie to provide that level of identity assurance.
  • Address Verification: Make sure that the player lives where they claim to live by checking their ID document. In some cases, you may need to check acceptable proof-of-address documents that clearly display the player’s current billing address and full name, such as utility bills, mobile phone bills and bank statements.

5. Is AML screening embedded in the identity verification process?

Sportsbooks have a duty to ensure that adequate controls are in place to ensure that their platform is not being used for money laundering and terrorist financing purposes. Anti-money laundering (AML) screening should include checks for sanctions, politically exposed persons (PEPs) and other watchlists. Unfortunately, most sportsbooks have two separate processes: one for AML screening and another for identity verification, which is not efficient. Leading identity verification vendors integrate identity verification and AML screening into a single dashboard, which streamlines compliance, simplifies your backend workstreams and reduces player abandonment.

How to Win

Bookmakers don’t want to lose customers to competitors due to cumbersome and time-consuming onboarding processes. KYC, efficiency and speed of onboarding are fundamental, but at the same time bookmakers must not compromise the quality of compliance checks. Balancing compliance risk, profitability and the user experience is paramount.

Creating the right workflows that dynamically optimize time, quantity and quality of checks can be difficult with multiple vendors. Using an all-in-one KYC service provider for identity document verification, liveness detection and AML screening can help drive efficiencies that put you ahead of the pack. To learn more, contact Jumio today.


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