How can open banking start a revolution in sports betting

The world of online gambling is incredibly profitable, according to the European Gaming & Betting Association (EGBA), the industry was worth 24.5 billion euros in 2019. The market share is steadily growing, and it is expected to reach 33.6% of Europe’s gross gaming revenue by 2025.

Sports betting, to be more specific, is the most popular activity in Europe when it comes to gambling. In 2019, according to a EGBA report, sports betting reached a 41% share of Europe’s gambling online revenue, and it was worth 10 billion euros.

To add a little context, this impressive share is followed by casino games (34%), lottery (15%), poker (5%) and bingo (4%).

The easy access to online gambling is being facilitated by a transition to mobile, with mobile reaching 58.2% of all online bets expected by 2025.

Although many regulations and safety measures have been instated, there is still a big gap in the sports betting industry that fails to control who’s gambling and where. Each country has specific regulations and licensing is needed for a company to be active in this industry. 

Moreover, there is a fundamental need to be able to control users’ age and financial status.

Open banking can help make the sports betting industry safer

According to an EGBA report, in 2019 the organisation helped to protect self-excluded customers by closing 800,000 accounts, conducted 1.2 million direct interventions to promote safer gambling and saw a 37% increase in the use of safer gambling tools.

Even though the situation is improving in terms of safety, there is still a long way to go. Most of the measures implemented can be easily overruled by users, rendering them ineffective in most situations.

On the other hand, if open banking would be implemented as a requirement in online gambling, many new security layers could be added.

5 security measures that could be facilitated by open banking

1. Fast and reliable identity verification

2. Real-time analysis of financial situation

3. Assessment of possible gambling addiction by analysing transaction history

4. Calculate income/expense flow to measure effective betting limits

5. Avoid geo-restriction violations

With the adoption of open banking, gambling companies would be able to streamline the process of onboarding new customers, automatising the KYC (Know Your Customer) process and making it more reliable.

Instead of leaving it up to the user to decide when there might be a problem with gambling addiction, algorithms can be designed to identify dangerous gambling patterns by analysing bank account transaction history.

With quick access to financial data, companies would be able to immediately identify possible red flags on customers’ accounts, making it possible to become more proactive in the protection of their users.

Even though sports betting houses have limited reach in terms of which countries they can operate in due to licencing needs, it is far too easy to find loopholes. By using services like a VPN (Virtual Private Network), users can gain access to services that are not available in their country.

With open banking, companies can easily identify various details about their customers, such as registered address and country where their bank account is located. With that, customers would be automatically denied access to sports betting houses outside their country.

There are many ways how open banking could help revolutionise any industry, and sports betting is a fantastic example of an entire market that could be enhanced with this innovative tech.