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Securing the US market at scale

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There is no doubt that the US sports betting market is an exciting opportunity, with many predicting rapid growth across the market.

However, Jon Karl, executive vice-president of corporate development and co-founder at iovation, a TransUnion Company, says this, combined with regulatory uncertainty, makes the market a “breeding ground for fraud.”

Operators face a delicate balancing act as this market develops, Karl says, and now more than ever must focus on fraud prevention.

Fraud in the US

Currently, there remains a high degree of uncertainty in the US market, and Karl says this is in part due to the emerging patchwork regulatory framework. This in itself creates risk, he says: “Fraudsters love to take advantage of uncertainty, and this combined with rapid growth is a breeding ground for fraud. I think the market will be able to withstand this but operators will need to address this sooner rather than later.”

He continues, explaining that the US is always a high action point for fraud as a result of the amount of variation – not only in terms of regulation, but also technology:  “There are lots of different payment methods, channels for payments and data. The high degree of optionality and growth conspire to make the US challenging.”

To address this, Karl says it will be important to be aggressive and proactive when it comes to fraud, but also to be transparent. “The nascent market with this level of demand will lead to fraudulent concerns such as money laundering. Operators will need to use the opportunity of being new to be as proactive as possible, to show regulators and the public that this industry can work.”

Designing for balance

With such an opportunity to build the gambling market from the ground-up, Karl says the focus should be on the mobile environment, as that is where he believes most of the growth will come from (See graphic, left, from 2019 iovation Gambling Report). Additionally, managing compliance from a location, age, fraud and data perspective is easier in a lot of ways on mobile devices.

User experience and reducing friction are challenges for operators the world over, but Karl says this will be even more important in the US, as the in-game experience will require speed and transparency more than ever. Additionally, he says that as mobile is seen as lower risk, over time it’s opened doors for fraudsters to pretend to be on mobile.

However, there are new solutions to help nullify these challenges, he says: “The best way to tackle this is by adapting with new technology for verifications, a lot of which are embedded into these devices.”

To tackle the challenges facing the US market, Karl says you need to have tools which can adapt to different regulatory environments, while also striking a balance between compliance and user experience.

The ability to take advantage of new technology is already there, with Karl advising: “Operators will have to decide whether they devote resources internally or leverage companies, like iovation, who can help them.”

Karl says it also comes down to how much operators will cooperate with each other, suggesting that a unified message is much more beneficial when it comes to the wider public.

He notes: “Operators are coming around to this, especially with regulators continuing to up the pressure. The question comes down to this: do operators want to own that process, or let it be let by the states and push them into groups?”

The biggest takeaway, says Karl, is that operators must figure this out now, lean on those who know and start from the ground up.

To view iovation’s 2019 Gambling Report and other industry-related resources, click here.