Taking a closer look at the challenges in Brazil’s gaming sector, SiGMA News speaks with Roger Redfearn-Tyrzyk, a specialist in digital identify verification.

One of the most common problems faced by gamers in Brazil, and indeed in most new emerging markets, is the lack of access to official identification documents. The very prospect for any player to have to worry about how to overcome this challenge reduces the overall gaming experience. They want to participate in recreational activities in total comfort without having to face any hassle or hurdles before they start the game. Leisure time is valuable and the average gamer today is more sophisticated with high expectations. In such a competitive market, where players want to optimize their gaming experience, operators need to invest in cutting-edge technology that eases the identity verification process. Operators need to ensure that new players are who they say they are before allowing them to open and finance an account. Identity verification also entails ensuring that current gamers are authentic and, more importantly, of the appropriate legal age. Keeping the needs of the end-user experience in mind, it is critical that online gaming ID verification makes smart use of data to minimize a negative customer experience.

Barrier to gaming inclusion

Many people in Brazil do not have access to official identification documents such as ID cards, passports or a driver’s licence, explains Redfearn-Tyrzyk. This creates a barrier to gaming inclusion because banks and financial institutions require official identification to open an account for a player.

Without a state-issued identification document, people will have a hard time verifying their identify be it offline or online. The same challenge applies to gaming operators – to verify a player’s age and make sure that they are not in any way politically exposed persons, documentation is nearly always needed,” Roger Redfearn-Tyrzyk – Vice President, Global Gaming – IDnow

Redfearn-Tyrzyk believes that it is vital for both operators and players to feel safe. The popularity of online betting in the LatAm region is on the rise. “Responsible gaming is all about prevention and it is important,” Redfearn-Tyrzyk points out. “Players want to enjoy themselves, but sometimes things can go too far, or individuals may take advantage of the system. Regulations are getting tighter and easing the process of identification is a step in the right direction.”

Responsible gaming a priority

Protecting minors from underage gambling is a priority. The same applies to vulnerable and marginalised groups. It is known that historically there is a higher rate of problem gambling and addiction from historically marginalised groups when compared to white individuals. Among adolescents, gender-diverse students are more likely to engage in problematic gambling behaviour than their cisgender counterparts. Identification verification solutions are designed to make people’s lives easier and safer, even serving as a deterrent of wrongdoing with harmful consequences. When it comes to the downsides of regulation says Redfearn-Tyrzyk,  the biggest problem is that there are different ways to interpret certain rules or requirements. “Unfortunately, there are many frustrating examples of regulations, which may have four or five different interpretations of the same paragraph. This does not do anyone any good because there will always be bad players and unscrupulous operators who want to grow quickly by exploiting these grey zones. Overall, I would say regulation is absolutely necessary, but it is hard to find well-executed regulation.”

Potential of Brazilian gambling market

Redfearn-Tyrzyk has studied the potential of the Brazilian gambling market and he has identified a range of available opportunities that are still untapped. With a population of over 210 million, the people of Brazil are known for their passion of sports, leisure activities and gaming. It is estimated that the overall gaming market is worth over US $6 billion and sports betting is the largest segment. Presently, the market is not regulated. The Brazilian government announced that its 2018 gaming  reforms and regulations will be implemented by the second half of 2023. The new regime will regulate Brazilian sports betting with new licensing requirements. With the upcoming regulation for online gambling, the market is expected to grow even more significantly.

With the growth of this sector in the region brings  a need for players to be protected so that their money is secure. Gaming operators who are seeking to offer compliant products in Brazil under the new regulation will be required to verify the identity of players before accessing the platform. This process is the Know your Customer (KYC) requirement. Redfearn-Tyrzyk says that KYC not only enables an age verification of players but when a financial relationship is established, authorities will also have access to collect personal data and are able to monitor fraud or other money laundering activities.

With the verification from the Brazilian Cadatro de Pessoas Físicas (CPF), a unique identification number for each user is created and all bets that are associated with the player can easily be identified. Operators must ensure players are not politically exposed persons (PEPs) or part of any other restricted list that is associated with criminal money laundering activities.

Sports betting is not only growing in Brazil but it is also increasing in popularity in  Mexico, Argentina, Colombia and Peru, in particular says Redfearn-Tyrzyk.  “I expect this trend to increase even further as more and more people gain access to online sportsbooks and betting apps on their phones. The regulatory landscape in the LatAm region is quite mixed. Bolivia and Nicaragua, for example, cover online gambling in their overall regulatory framework for the gambling industry. In Argentina, on the other hand, online gambling is regulated on a province-by-province basis. Chile’s Ministry of Finance introduced a bill to regulate online gambling in March of last year, while Ecuador currently prohibits all forms of gambling.”

Influx of new operators in a regulated market

“We are certainly expecting an influx of new operators in Brazil acquiring a licence in the new jurisdiction, following the new regulation” says Redfearn-Tyrzyk. Operators who wish to be properly established in Brazil will have to comply to all licensing requirements, including the KYC mandate.

“I think a regulated market in Brazil will have a very positive impact in the LatAm region. A country legalizing and regulating sports betting is good for all players because they get protected whilst that would not be the case on a black-market site. Protecting players from black-market sites is
absolutely crucial. Plus, I am certain Brazil will profit from the tax income and will be able to invest this money in to contribute to a safe gambling environment for communities across the country.”

LatAm countries will follow Brazil’s lead

Other Latin American countries like Chile are already moving towards regulating online services. However, if Brazil’s regulatory scheme proves to be effective and beneficial for the country, I can see other LatAm countries follow Brazil’s lead.

Solutions are available on our KYC platform of agent-assisted to fully automated solutions including PEP screening for the iGaming sector that deliver the requirements obliged under AML laws. We have one of the broadest identity verification portfolios in Europe with fully automated and hybrid solutions. For example, the AI-based solution helps businesses prove the authenticity of their customers through their identity documents in just a few minutes, making the digital onboarding process scalable, secure and highly assured. Biometric verification techniques, including live video checks, offer a more reliable way of confirming someone’s identity, reducing the risk of fraud and errors. Our solution can be integrated with government databases to verify identities, including those without official documents.” Roger Redfearn-Tyrzyk – Vice President, Global Gaming – IDnow

Identification verification techniques will allow both operators and users to navigate responsibly thus ensuring that the industry thrives and has a sustainable future ahead. “As Brazil and other Latin American countries move towards regulating online services, it is crucial to ensure that solutions are inclusive and accessible to everyone, regardless of their access to technology and documentation,” Redfearn-Tyrzyk added.

Roger Redfearn-Tyrzyk is Vice President of  Global Gaming at IDnow. He is a recognised industry expert in digital identity verification and European gambling regulations. In his role at IDnow, Redfearn-Tyrzyk enables businesses from various industries to offer their users an easy, intuitive and secure onboarding process via the IDnow identity platform. Prior to joining IDnow Redfearn-Tyrzyk worked in various roles in the software industry at purple WiFi, Duuzra Software, and Lord Sugar’s Amscreen. He is expertise expands to cyber security, digitization identity services in the gaming industry.

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