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Identity for online gambling industry a potential market opportunity

Identity for online gambling presents a potential market opportunity, because no suppliers are meeting the industry's consumer identify requirements

The iGaming, or online gambling, industry is struggling to meet business and regulatory demands because there are no tailor-made software applications to manage customer identity.

“The iGaming industry is having a tough time,” Martijn Postma, a freelance consultant on identity and access management (IAM) told Computer Weekly.

On the one hand, there are the business demands to know as much about the customer as possible for marketing reasons, but on other hand, there is a raft of regulatory requirements.

In addition to anti-money laundering regulations that typically require iGaming operators to identify customers, there are often stringent national regulations aimed at protecting citizens from gambling addiction and illegal or unreliable operators.

Consequently, iGaming operators have to go beyond most enterprises in being able to identify customers and link them to specific bank accounts, residential addresses, and other details.

“But the IAM systems that most enterprises are using today are designed to deal with company employees, with only some paying a little attention to online customers,” said Postma.

“That is classic IAM, but it has its limitations – particularly when you are dealing with a lot of external identities or customers,” he said.

Classic IAM, therefore, is not that much use to large iGaming operators that typically have a few million customers.

“It is not really feasible or affordable to use classic IAM offerings for that because that is all maintained on-premise, and then you have to provision identities to that number of users, which requires a lot of work and investment to make it happen,” said Postma.

Following IAM suppliers into the cloud

The other problem, he said, is that classic IAM offerings are unlikely to continue to evolve to the point where they might be useful to the iGaming industry. Most organisations are following IAM suppliers into the cloud, where all new development efforts are focused.

“While cloud-based identity services are ideal for solving the scalability problems of classic IAM for organisations such as football club Real Madrid, which has 450 million members of its fan club, they do not have the same data-rich requirements as iGaming operators,” said Postma.

“In the iGaming industry, customers need to have a far more intense scrutiny process to satisfy either marketing demands or regulatory demands, but that means they cannot use the cloud identity services that are out there today because they lack advanced identification tooling and the ability to provide multiple levels of assurance in the customer identification process,” he said.

With today’s cloud services catering only to standard enterprise customers and low-risk e-commerce services, iGaming providers are struggling to satisfy business and regulatory demands when it comes to customer identity.

“Typically, iGaming companies currently have to resort to a mix of classic processes, such as sending copies of passports around the world just to be able to identify people. That is the legally accepted system, even though it is unreliable, cumbersome and not secure,” said Postma.

As a result, everyone in the iGaming industry is trying to find their own way of dealing with the problem, but this means there is no standard solution.

Disparate gambling regulations

This lack of standardisation is also driven by the fact that gambling regulations differ from country to country, even across the EU, where gambling regulations have not been unified unlike other regulations.

“The single digital market is a huge effort to have borderless communications and an open market system across the EU, but it excludes some industries, and gambling is one of them,” said Postma.

“As a result, in addition to technical difficulties, many iGaming operators have the problem of each jurisdiction differing in their demands and how they allow iGaming to use technology to meet those requirements,” he said.

There is potentially a huge market opportunity for anyone who is able to develop a product that is granular, scalable and flexible enough to meet the particular needs of iGaming companies.

However, suppliers are reluctant to be associated with the iGaming industry because they think it is a “shady business” and are concerned their involvement could affect their business with companies in other sectors.

“Some identity management suppliers choose not to be involved in the iGaming industry, and the same is true of payment service providers. This means not every iGaming operator can buy the services it needs, and has to do its own development,” said Postma.

But this further hampers the development of a uniform system, he said. “It will probably come eventually, but it will take time, and we have to overcome some cultural and legal barriers first.”

Read more about consumer identity

If a standard or uniform system is ever to become a reality, Postma said the industry needs to work together.

“It would also help to get the authorities in different jurisdictions to agree on a basic set of requirements so they are not developing regulations in isolation, and keep talking to the industry to ensure it is clear where the regulators are heading,” he said.

The incentive for building a product that meets the particular requirements of the iGaming industry is that such a system would also meet those of most financial technology and high-risk e-commerce businesses, and therefore be applicable to a far wider market.

In the absence of any tailor-made system, Postma said some big iGaming organisations are joining trust frameworks in which all members commit to support the same framework.

“This means people can sign up with an insurance organisation by providing the required identification means, and then give consent for the insurance company to share that information with an iGambling operator or another e-commerce business,” he said.

A group-led, collaborative approach

Postma supports the idea of trust frameworks, and encourages everyone in the iGaming industry to join their own community of interests, where the rules on levels of assurance and technology decisions are made as a group.

“My appeal is for organisations stop trying to invent things on their own. Find a community that best fits your customer base and services, then come up with decisions on legal matters, technology matters or assurance matters, so there can be a standardised way of working,” said Postma.

Through a group-led, collaborative approach, organisations can reduce the risk of running into problems connecting with the rest of the world, and consumers will get the benefit of having one identity for multiple service providers.

“Operators of iGaming all have the same problems, and yet they are still not working together and designing a framework, or even a specific solution, for iGaming. But that is the way everything is going, so I hope they get there,” he said. 

Postma is to discuss in detail the topic of know your customer (KYC) and CIAM in the iGaming industry at the KuppingerCole Consumer Identity Summit in Paris on 22 and 23 November 2016.

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