Online gambling continues to be a fruitful market for biometrics providers, as betting platforms seek secure and frictionless KYC, onboarding, ID verification and age assurance tools. But an industry expert says in conversation with Aware that developments so far have merely scratched the surface of an online gambling market that is set to explode in the U.S. and beyond.
As regulatory changes open new doors, biometric technology is positioned to address the challenges of fraud prevention, identity theft, KYC and AML regulatory compliance, and player trust in fantasy sports, sweepstakes and online betting.
SCCG CEO talks sweepstakes, regulations, biometrics
An on-demand webinar hosted by Aware features insights from Stephen Crystal, CEO of SCCG Management, a major advisory firm in the global gambling industry. Crystal, whose company is a client of Aware, is a big advocate for biometrics, which he calls “the lynchpin of where gaming companies need to be as gaming continues to expand.”
In both regulated corners of the gambling industry and emerging trends with fewer regulations, “most operations really begin and end with the KYC process, the onboarding process,” Crystal says. To host Todd Jarvis, Aware’s VP of global channel sales and partnerships, he notes that “when we met Aware, they were already excelling in biometrics.”
Crystal calls biometrics an empowering tool – “a technology that enables other powerful technologies.” Relatively new entrants in the gambling sector, particularly sweepstakes and daily fantasy sports (DFS), need tools to address critical issues. Crystal says that often, the first thing new companies say is, “look, we need to onboard a payment processor, we need to have an age verification process. We need to have the ability to make sure there’s not account takeover or fraud happening with our onboarding.”
For regulated gambling, compliance is the name of the game. But Crystal notes that, in the gambling context, that can translate to opportunities. “Gambling depends on regulation,” he says. Physical slot machines and tables have to be certified, so gamers know they have a legitimate chance at winning. The same goes for online gaming: players want to interact with trusted platforms.
“Biometrics is on the table for discussion everywhere you go, and to think that we could be bringing that best-in-class solution to the gambling industry with all of the issues we have to deal with is an amazing opportunity.”
Tribal gambling market set to explode following Supreme Court ruling
Crystal calls attention to a June 2024 decision by the U.S. Supreme Court that he believes is about to trigger a huge opportunity for biometrics firms offering KYC, age assurance and other digital ID products.
The case relates to Native American tribes’ ability to launch mobile gambling platforms, and hinges on the question of where a bet takes place. A report in Tribal Business News says West Flagler Associates v. Haaland concerned the Seminole Tribe of Florida, which contended that a compact with the state of Florida allowed them to offer mobile betting statewide, since the digital system’s servers were on tribal lands. The court decided in favor of the compact, ruling that a bet takes place when the servers are located.
Effectively, the case opens the doors for tribes across the U.S. to operate what are classified as Class II Mobile On-Premise Gaming platforms outside of the reservation, provided the servers are on their land. SCCG explains it like so: “Class II gaming, as defined by IGRA, includes games such as bingo and certain non-banked card games, differentiating it from the more traditional casino-style games of Class III. The flexibility of Class II gaming is notable; it does not require state compacts and is not subject to machine count limitations. This grants tribal operators significant autonomy to expand their gambling operations without the regulatory burdens often associated with Class III agreements.”
The new operational freedom could be a huge catalyst in states like Oklahoma and California, which are the country’s biggest markets for tribal gambling. Crystal predicts that “more and more tribes will be starting digital operations in coming weeks and months.”
Wallets blur the line between virtual and physical gambling experiences
For Crystal, the use cases for biometrics don’t split into a binary of mobile and physical gambling. Rather they work in tandem to keep the sector’s shifting customer base engaged. “We’re using products like sports betting to get them interested in the gambling activity,” he says, “and we’re trying to find ways to connect them to a brick and mortar experience.” He envisions a fusion between online games and physical casinos, “a 360 degree experience” in which app and casino are connected through digital wallets – and biometrics.
Crystal says that while the technology is available, “it’s very much an education game” in terms of getting biometrics widely integrated into gambling systems. But as regulations emerge for sweeps and DFS, and new markets continue to open up, there will undoubtedly be a desire to learn.
Liveness detection to weed out bots
Youverse also makes the case for liveness detection in a recent blog post, noting its effectiveness in weeding out bots.
“Bots are programmed to bypass traditional security measures, making them a formidable adversary,” the post says. “For example, some bots mimic human behavior by simulating mouse movements or entering CAPTCHA responses through third-party services, enabling them to evade basic detection methods. Additionally, sophisticated threats like deepfakes and video injection attacks can be used to trick systems by presenting artificially generated or pre-recorded videos as live input.”
“Liveness detection combats this by analyzing subtle cues like lighting, movement, and facial behavior to distinguish between real users and bots. This ensures that only real individuals can access the platform, effectively blocking bots and preserving system integrity.
Addressing Brazilian demand from onboarding to cash-out
While the U.S. market is poised for growth, so too is the massive digital ID and gambling market in Brazil. A release from Mexico-based Facephi says the company has strengthened its presence in Brazil by integrating CNH Digital, the electronic version of the country’s driver’s license, used by over 60 million citizens.
Players can upload their CNH Digital in PDF format, from which Faceph extracts and validates the information with official sources for frictionless authentication.
“Brazil is leading the adoption of digital identity in Latin America, and the iGaming sector needs tools that allow it to meet regulatory requirements without compromising the user experience,” says Jorge Sanz, General Manager at Facephi. “Thanks to our integration with CNH Digital and Serpro” – the Brazilian government’s technology and data processing agency – “we provide a fast, reliable solution aligned with market demands.”
Per the release, Facephi already supports the verification of other key documents in the Brazilian market, including RG, RNM (National Migration Registry), Passport and Visa. The company is also introducing new security controls in its KYC process, which cross check data with multiple official sources.
A blog post from Legitimuz says it has processed 40 million facial recognitions for withdrawals in Brazil’s online gambling sector. The firm touts the number, alongside its claim of 99 percent accuracy, as proof that biometric technology has the potential to ensure the security of transactions on a large scale.
“By seamlessly integrating facial biometrics,” says the post, “Legitimuz provides a fast, intuitive and frictionless checkout experience. The facial recognition process occurs in seconds, without requiring complex or lengthy interactions.”
“The accuracy of facial recognition ensures that Legitimuz’s system can quickly identify whether the person making the request is really who they say they are. This eliminates the chances of fraud attempts, such as using photos, videos or deepfakes to circumvent the system.” A key feature is liveness detection, which “drastically reduces the possibility of identity spoofing.”
