To protect operators and customers, the state of Illinois is required to enforce KYC rules and anti-money laundering (AML) regulations in Illinois sports betting. Failing to comply with these regulations could result in a sportsbook losing their license — just like any financial institution.
Illinois further aligned their regulations with the federal Bank Secrecy Act of 1970 (BSA), which enforces KYC policies for financial institutions. This requirement extends to most businesses engaged in monetary transactions, as specified by the amendments introduced by the 2001 Patriot Act.
KYC regulations’ importance
Similar to other countries, legal sports betting in the U.S. operates in a high-stakes environment, both in terms of financial transactions and potential risks. The significant amounts of money and the remote nature of online sportsbooks make the industry an attractive target for various malicious individuals.
Illinois implements KYC sports betting regulations for several key reasons. These include;
- Safeguarding the integrity of U.S. sports
- Verifying the legal age of all bettors
- Preventing identity theft and fraud
- Combating money laundering
- Restricting access to prohibited individuals such as sports league employees and self-excluded problem gamblers
Sportsbooks often collect crucial information such as social security numbers (SSNs) to ensure reliable identity verification. In many states, including Illinois, local regulations mandate licensed sportsbooks to collect either the full or partial SSN of each new customer as part of the onboarding process.
The SSN serves as a valuable piece of data that allows sportsbooks to cross-check it against various databases, both public and private, to verify the accuracy of the provided information regarding the customer’s name, age, and address.
When sharing personal details with an online sportsbook, the level of safety is comparable to that of sharing them with a banking institution or billing payments provider. While online transactions carry inherent risks, state laws hold licensed sportsbooks to stringent security and data management standards.
Preventing fraud
Understanding KYC is vital to avoid gambling fraud, as such a case recently occurred in the United Kingdom. A man named Jon Howard was jailed after committing fraud by creating multiple accounts under his name against online gambling company Bet365.
The 40-year-old man is estimated to have received £236,000 (around $253,061) before getting caught and received five years in prison for conspiracy to commit fraud.
The case serves as a stark reminder of the risks involved in the betting industry and the critical role that robust customer identification processes are essential in safeguarding against fraudulent activities.
By conducting proper KYC checks, licensed sportsbooks and online casinos can help provide a secure and reputable gambling environment.
So far, there haven’t been any notable instances where Illinois customers have openly tried to bypass KYC regulations by creating multiple accounts or finding ways to evade restrictions.
This suggests that implementing KYC regulations has successfully prevented such actions and maintained the system’s integrity.
However, many bettors have voiced their frustration regarding limitations imposed by sportsbooks on Twitter. There is a growing concern that some individuals may resort to operating multiple accounts with a single operator to bypass imposed limits.
In the end, KYC exists to protect all parties involved and trying to bypass the KYC system can lead to legal issues. It is possible to face prosecution for gambling fraud if users operate multiple sports betting accounts to exploit bonuses and evade limits.
