The multi-billion-dollar industry of sports betting has grown in popularity in the past few years, in part because of new technological transformations that now allow consumers to easily and seamlessly engage in the process. In fact, sports betting is poised for exponential growth because of this increase in ease of participation and an increased demand for virtual and online betting. However, great transformations often bring greater risks in the form of organized crime.
Sports betting has a long history of attracting various forms of financial crime, and as organized crime continues to find new footholds in the sports betting process, many businesses are at greater risk of financial exploitation. AML regulators are requiring sports betting companies to be more vigilant by practicing effective due diligence, strengthening KYC requirements, and establishing more effective customer ID verification solutions. Breaching these regulations can negatively affect your company’s reputation, cause financial loss, or even lead to a suspension or revocation of your sports betting license.
5 Main Forms of Illegal Activities in Sports Betting
According to AML sports betting compliance standards, all businesses have an obligation to avoid participating in illegal sports betting activities, and these laws extend to all virtual betting platforms. If your business has recently entered the arena of sports betting, or you’re looking to mitigate financial risk while growing your sports betting clientele, you must ensure compliance with KYC and AML requirements as well as each US state’s regulations.
Whether your company would like to enhance its online security measures or provide the necessary background checks to comply with federal regulations, EVS is here to help. First, let’s take a look at the five main types of illegal activities reported in sports betting—money laundering, fraud, illegal betting, organized crime, and cybercrimes—and how each of these illegal activities pose serious risks to the sports betting industry. Then we’ll examine how EVS product solutions can set your business up for ID verification success.
1. Money Laundering
Money laundering is the illegal process of making large amounts of money generated by criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. Sports betting is highly vulnerable to money laundering because it collects money from such a wide array of sources, including proceeds from ticket sales, concessions, and merchandise at games.
Sports betting fraud is the illegal practice of fixing results or odds to ensure pre-determined results. Most commonly involves sports fixing, match fixing, game rigging, hacking, and users working the system. In just one year—from Q2 of 2020 to Q2 of 2021—sports betting fraud attempts increased by an astounding 114%.
3. Illegal Betting
Illegal betting operations are notoriously run by criminal gangs that pose as legal betting sites but actually operate without any legal licenses. An influx of illegal betting sites and operations are cropping up worldwide, duping customers into betting money by pretending to be above-board. Illegal betting rings not only mislead and defraud the public, but they may also lead to more serious crimes like doping or match fixing.
4. Organized Crime
Sports betting organized crime consists of crime syndicates that attempt to convince users to join their ranks. Users are often required to pay mandatory member fees to join the syndicate and open a sports betting account, as well as make continual deposits to the account. Organized crime rings often make empty promises to use these account funds to place bets, and to return a portion of all profits to users.
Cybercrimes are targeted, complex crimes that breach computer security and data systems. Cybercrimes include hacking, phishing, ransomware, manipulating betting lines, and complete account takeovers. Just as new technologies allow customers to more easily participate in sports betting, cybercriminals are utilizing new technologies to attack company infrastructure and users.
How EVS ID Verification Product Solutions Can Mitigate Sports Betting Risks
To fight against these illegal activities, EVS offers flexible solutions for ID verification. Current KYC requirements mandate that all sports betting operations must verify that all users are at least 18 years old, or 21 in some US states. To prevent underaged gaming and fraudulent account creation, EVS developed IdentiFlo Consumer+, a product solution that creates alerts to prevent minors from accessing restricted content. IdentiFlo Consumer+ verifies consumer names, addresses and email addresses, and phone and social security numbers through document verification, consumer data verification, integration API, dynamic KBA, and fraud reports. You can use this product to eliminate age-restricted product sales to minors and to confirm application information.
EVS also offers PolitiWatch, a robust product solution that scans and identifies Politically Exposed Persons (PEPs) among potential customers. PolitiWatch features integrated API and batch processing. Businesses may choose to integrate PolitiWatch to streamline their KYC process, perform due diligence, ensure compliance with federal regulations, avoid high-risk transactions, and protect against fraud.
EVS also offers elevated Watch List solutions to provide detailed screening, help your business monitor your professional relationships, and ensure compliance with applicable law. Our custom Watch List capabilities not only provide PEP screening, but also screening of Office of Foreign Asset Control, Consolidated Sanctions Lists in the EU and UK, Denied Persons Lists, Entity Lists, and Unverified Lists.
With more than 20 years of experience, EVS provides comprehensive ID verification solutions that combat identity theft, reduce cost, and satisfy compliance requirements. Our mission is to empower businesses of all sizes to protect themselves and their customers from identity fraud, and we accomplish this by providing solutions that are cost effective, easy to use, and adaptable.