The year 2023 witnessed a series of regulation and policy framework changes that were implemented to foster responsible gaming within the country. Indeed, an effective regulatory framework can help strengthen safety and user protection as well as provide a conducive environment for legitimate skills-based gaming platforms to grow and innovate.
One such parameter for ensuring the safety and security of users engaging in online gaming is digital payments. Digital payment methods such as credit/debit cards, e-wallets, and mobile payment solutions make it convenient for players to deposit funds into their gaming accounts instantly without needing cash transactions.
Additionally, digital payments allow for tracking and maintaining transactions while indulging in iGaming. Such payments are fast catching up and becoming more convenient as they enable one to pay the last unit digit (this will be difficult if the government plans to shift to Central Bank Digital Currency).
Thus, payments transacted through net, mobile, or applications enable ease of payments, and tracking and maintaining transactions while indulging in iGaming. Many of the digital payment modes are linked to the user’s bank accounts and thus leave a trail of transactions. Additionally, the opening of bank accounts across the globe now requires mandatory compliance with KYC (Know Your Customer) norms, thereby enabling the retention of huge data in the blockchain.
However, there has been an increase in the number of fraudulent transactions, which could also be attributed to the mistake of sharing the data incorrectly or overtly. Thus, by constantly educating the users and setting up multiple layers of verification through OTPs, passwords, etc. these fraudulent activities can be checked and curbed. Additionally, it is a matter of concern that other trade-based money laundering activities are recorded to soar by 5%.
The positive side of blockchain analytics and machine learning (ML) algorithms applies to the digital modes of databases that enable identification, deduction, and recording of the patterns of any money laundering practices taking place.
Whether in cash or any other mode, money laundering incidents were taking place. However, with the rapid spread and access to digital payment options, many platforms are employing advanced encryption and security protocols to safeguard users’ financial information. This provides players with a secure and safe environment to conduct transactions, reducing the risks associated with handling cash. Thus, digital payments enable real-time quick deduction while simultaneously enabling the regulator to take systemic and legal steps in cases of money laundering. A machine learning algorithm is a boon.
Gaming, especially iGaming platforms, gets their payments, whether for usage, platform fees, or the amount put on the table to bet, through digital mediums. The KYC documents of the players and winners are digitally recorded which assists the government and its agencies in recovering player details and transaction trails associated with all the IDs, in case the platform is used for money laundering or to facilitate any illegal activities.
The availability of the KYC of the players and winners on digital records enables easy tracking and detection if the iGaming platform like any other digital payment mode is used for money laundering. The real-time deduction and also the blockchain record enable tracing, deduction, and understanding of the pattern. Thus, putting money into play cannot be a doubtful activity as the player transfers money from the bank account, ie, the known source, and the winner also gets it in their bank account or wallet with tax deductions at the source.
Moreover, iGaming platforms do not necessarily contribute to money laundering as digital trackability and payment transactions but rather ensure the curbing of money laundering activities that were otherwise flourishing offline and through cash-based transactions. Thereby, the use of AI and ML will enable more and more fine-tuning and monitoring to ensure the legality of transactions.
Furthermore, instead of taking a stern approach such as banning online gaming or gambling that is skill-based, adequate regulations and policy framework must be established to prioritize the protection of Indian players, which cannot be overstated, given the prevalence of exploitation by numerous malicious entities. The absence of market regulation and detrimental policies have already caused international iGaming companies to avoid India, thereby sending discouraging signals to potential foreign investors.
The need, therefore, for prevention, early detection, and then leading to legal proceedings for deterring money laundering and terrorist funding is a rightful concern, and a progressive initiative like enabling digital payments has alleviated certain concerns around illegal activities and reduced the manual process of tracking, deduction, and verifications.
Digital payment scenarios are enabled through AI (artificial intelligence), ML (Machine learning and more and more automation to revolutionize the prevention and deduction of money laundering and terrorist funding. FinTech banks are also to abide by these digital transaction disciplines of ensuring KYC and CDD (Customer Due Diligence in blockchain record of every transaction. The FATF (Financial Action Task Force) should come out to build confidence in digital payments for the iGames as they enable better detection of transactions and AI and ML are tools for prevention, deduction, and understanding patterns.
The concerns of regulators are directed to not the horror of digital payments but how the digital payment mode has brought a complete change in using the tools (AI and ML) and enabling legal actions on a real-time basis. This has been seen in regulators taking serious steps in canceling the banking licenses or blocking the apps being used. Gaming or even physical Gaming places if insist on digital payment will be a boon for the regulators to deduct, analyze, prevent, and proceed with legal action as all the transaction records will be in the blockchain and digital mode for progeny.
