Over the last few years, the growth of the online real-money gaming (RMG) industry has been truly astounding. If we talk about numbers, the Indian fantasy sports industry alone is projected to reach INR 1,65,000 Cr by FY25 from INR 34,600 Cr in FY21, clocking a CAGR of 38%. The findings are detailed in a report titled ‘Fantasy Sports: Creating a Virtuous Cycle of Sports Development,’ published by the Federation of Indian Fantasy Sports (FIFS) in collaboration with Deloitte.
According to The Mobile Game Advertising 2022 report, India is the second largest gaming market in the world now with over 9.33 Bn mobile games downloaded in 2022 alone. India has recorded about 390 Mn online gamers in 2021, out of which 95 Mn gamers paid to play.
The numbers are a testament to the fact that the RMG industry has evolved well beyond its nascent stage. Multiple factors including increased internet penetration, a tech-savvy millennial population, growing users outside metropolises, and a wider acceptance of digital payments have opened a realm of opportunities for the industry.
The Indian RMG industry was already on the upswing but the pandemic and subsequent lockdowns added a fresh impetus to the exponential growth. With millions of people locked up at home, gaming turned into a leisure activity across the country.
The growth trajectory has led to an increasing need for a regulatory framework to ensure transparency and prevent fraud.
Easy access to online gaming platforms with a global presence has made regulation a critical issue. The lack of defined regulations, security protection and data privacy are like an open invitation to bad actors to violate the law and misuse the platform for illegitimate purposes.
Strict regulations should be implemented to prevent illegal activities and to remove roadblocks to the growth of the RMG industry. In states like Telangana, Andhra Pradesh, Arunachal Pradesh, and Odisha real money gaming is prohibited, which impacts the industry’s growth. Certain states such as Goa, Sikkim, Daman and Diu have taken a liberal approach to gaming regulations.
Every year, state governments present a new perspective, making it much more difficult to track the actual regulatory stance in each geography.
Financial losses, identity fraud, counterfeited documents, money laundering, and the addictive nature of the games are among the factors affecting the RMG segment.
While the central government’s establishment of proper regulation is a positive step for the industry, gaming providers must also develop and maintain high levels of governance and self-regulation in light of the current regulatory environment.
Adopting AI-powered identity verification and enacting compliance standards is one such step to preventing cybercrime and remaining on the right side of the law.
AuthBridge alone received incorrect or fraudulent documents from 9% of the players we onboarded for our gaming clients. While 71% of the players passed the screening successfully, 21% of them needed manual scrutiny because of low to medium-risk factors like incorrect documents, information discrepancies from government records, and outdated document submissions.
Multi-accounting is when users create multiple accounts under different names to claim sign-up or welcome bonuses offered by the platform. Fraudsters create multiple accounts using stolen IDs and credit cards (purchased from the dark web) which leads to bonus abuse and reputational damage.
Account takeover occurs when fraudsters use stolen credentials to gain unauthorised access to user gaming accounts. To prevent fraud and ensure that every player’s account is genuine, it is critical to validate identity using technologies such as biometric identification, OCR, video KYC, and so on.
Online real money games are played in different parts of the country which means high cross-border traffic.
Real money games are banned in some states and it becomes a task for the business to meet compliance with geographic restrictions and verify players’ location. It is crucial to adhere to the respective state laws and discourage users from using the platform from a banned state.
Collusion occurs when two or more players work together to achieve a specific goal. This can also be done by a single player with multiple accounts (multi-accounting) to manipulate the game and get maximum gains.
In money laundering, bad actors will use these platforms to conveniently launder illegal gains and profit from them, an act punishable under the Anti-Money Laundering Act. It is crucial to assess these risks to prevent financial crime and track suspicious transactions so that the winning amount is only transferred to verified accounts.
The golden rule for avoiding fraudsters is to use strong identity verification tools to ensure that consumers are seamlessly onboarded into the digital world. This is a great chance to make sure that your compliance practices are current as the online gaming sector is always changing.
Database-Driven Document Verification: NID verification against PAN or other databases such as UIDAI, NSDL, and MCL allows for quick document verification and validates a player’s name, age, gender, and identity in real time.
To prevent illegal activities such as location spoofing, verify the players’ addresses before onboarding.
Digital Address Verification solutions use geo-coordinates to determine a user’s location, allowing gaming businesses to remain compliant and preventing bad actors from circumventing geographic restrictions.
For 360-degree verification, gaming businesses must conduct multiple checks such as age checks, address checks, IP, and KYC/AML checks. Identifying risk factors based on sensitivity and enforcing automated triggers for early warnings helps with agility and compliance. Businesses can even perform these checks and receive a risk score based on the results. As per the scorecard, businesses can decide whether to onboard a particular user or not.
The real money gaming industry is growing at a frenetic pace and to unveil the true potential, it’s important to leverage AI-powered solutions to weed out bad actors with comprehensive due diligence. Building a solid identity verification solution and ensuring data privacy will increase competitiveness, ensure smooth onboarding, reduce the risk of unforeseen fraud in the future and address some of the challenges that lack of regulation presents to the industry.
AuthBridge helps you with fast, friendly, and comprehensive background and due diligence solutions – smarter in every way.