Effective Ways of Combating Fraud in the Gambling Niche

Reasons for the Growth of Fraud in the iGaming Vertical

The industry is an attractive area for wrongdoers. This is a developing sector of the economy with stable earnings and a rapidly increasing number of players.

Gambling is also becoming interesting for criminals because it is gradually moving into the digital environment. Because of this, the risks of data leakage and disclosure of confidential information are enhanced.

In August 2024, Sumsub published a report on fraud in the iGaming sector for the first half of this year. The provider noted an increase in the activity of scammers (by 16% compared to the previous accounting period), as well as the use of new schemes for taking over personal profiles and stealing funds.

The most common types of violation:

• bonus hunting — 69.9%;
• money laundering — 9.9%;
• unlawful transactions in financial systems — 5.9%;
• illegal chargeback — 5.6%;
• arbitrage bets — 2.3%;
• other actions of intruders — 6.4%.

The leader in terms of the growth in fraud is Bangladesh. 8.5% of all registered accounts in the country turn out to be fake and belong to cybercriminals or bots.

Indonesia takes the second place (8% of problematic accounts), South Korea ranks third (6.6%), and Pakistan comes fourth (6.1%).

The top 5 are completed by Bosnia and Herzegovina (6%). It is worth noting that this is the only country on the list where online gambling is legalised.

The Sumsub company notes that in just 2 years (from 2022 to 2024), the number of scams in the digital casino niche increased by 64%. In the global economy, only the retail and telecommunications industries recorded an elevated amount of problematic transactions.

Main Types of Misconduct

Let us consider what methods offenders most often resort to.

Forgery of Private Documents

Fraudsters use fake documents to register on iGaming platforms, gain access to accounts, and commit illegal acts.

In 2023, the number of such cases increased by 20% compared to the previous year. This creates serious risks for entrepreneurs. They are forced to combat unauthorised access and introduce advanced methods of protecting confidential data.

To create fake profiles, the following unreal documents are used:

• ID cards — 1.7%;
• driver's licences — 0.7%;
• passports — 1.6%;
• residence permits — 1.4%.

The mismatch of selfies is the most common type of fraud used to verify user pages. It accounts for about 73% of all recorded cases of document forgery in the first half of 2024.

Bonus Hunting

In the online casino sector, this means the illegal use of promotional offers.

Operators face such violations as:

• multiple registration on an iGaming site through multi-accounts;
• seizure of incentives intended for new clients;
• accrual of rewards to fake profiles or those that were created by bots.

Steve Yin, vice president of the TransUnion financial corporation, noted:

Bonus abuse thrives and is reported to cost the digital gambling industry 15% of its annual gross revenue.

The most common areas where the wrongdoing takes place are:

• sign-up promotions;
• free spins;
• other initial offers.

Criminals work en masse, trying to collect as many welcome bonuses as possible. The size of the rewards often fades into the background since online casinos rarely offer huge gifts at the start. To steal money on a large scale, fraudsters use bot farms, creating hundreds of fake accounts in a single session.

Machinations with Payments

Massive leakage of information in various sectors of the economy significantly contributes to the spread of digital fraud in the iGaming sphere. Cybercriminals gain access to various types of data, based on which they create unreal identities and profiles.

Experts claim that in 2 years (from 2022 to 2024), the number of payment fraud cases has increased by 51%. In this regard, trust in gambling platforms is declining, and business owners are suffering huge losses.

Among the abuses, we can also highlight the increase in the quantity of chargeback. It can be initiated by both players and criminals.

A customer dissatisfied with the results of the session contacts the support service of the financial system with a request that their money be transferred to the casino account illegally.

The provider immediately responds to the message and returns the funds to the user. Financial losses are borne exclusively by the operator who loses part of the profit.

Money Laundering

iGaming platforms are often used to legalise side income (for example, from the sale of weapons without a special permit). Entrepreneurs may not even know about prohibited transfers because they are disguised as typical transactions.

Thus, in 2023 alone, money laundering took second place among the most common kinds of fraud in the online casino industry. In this regard, project owners face additional risks and difficulties and incur huge reputational losses.

Effective Strategies for Operators

Let us consider the main approaches to machination prevention.

Analysis of the Behaviour of Clients

Studying user habits, playing style, as well as login/logout history helps to understand who exactly is on the other side of the screen. This can be either a typical gamer or a fraudster (it may also be a bot).

Main types of data:

1. IP address. Suspicious players are those who use VPN, TOR browser or blacklisted residential proxy servers. Such accounts require careful verification.
2. Login device. Regular visitors use a constant combination of hardware and software to enter a gaming site. Fraudsters typically choose atypical ways to register in the system, such as through previously unrecorded PCs or gadgets.
3. Speed. Questions about high login rates, reception, and cash-out bonuses are usually raised. There is always a probability that a bot is hiding under the mask of an honest customer.
4. Quick exit from the system. Immediate abandonment of the portal after receiving a reward is another sign of fraud. Fake accounts often dump chips or withdraw prizes much faster than real clients. Ordinary visitors, for example, start spinning the reels with extra funds to win more.

It is better to conduct a comprehensive analysis of gamblers' behaviour. This will protect operators from bonus hunting, theft of money, etc.

Multi-Factor Verification

Steve Yin noted:

To avoid fraud and maintain security, companies should initiate full authentication at the registration stage. It is also important to carry out an end-to-end analysis of betting patterns and constant transaction monitoring.

Multi-factor verification includes:

• input of personal data (nickname and password);
• confirmation of the login via voice call or one-time SMS message;
• identification using a selfie or biometrics.

Entrepreneurs can learn from the successful experience of large payment corporations that introduced the described procedure many years ago. Branded products from MasterCard (the SecureCode function) and Visa (3D Secure) provide quick authentication and instant detection of suspicious activity.

Using IT Solutions

The introduction of modern technologies improves the safety of virtual gambling and sportsbook resources, allowing operators to instantly respond to new types of fraud and emerging cyber threats.

Biometrics

It complicates access to accounts and makes it impossible to illegally acquire personal data/create multiple accounts. The technology instantly identifies hacking attempts and any manipulations when logging into the system. For example, thanks to biometrics, businessmen can determine whether a scanned document with a photo is real or not.

The following types of information are used for identification:

• fingerprints;
• face or iris scanning;
• voice exploration (tone and pitch);
• behavioural analytics (manner of pressing keys, pauses between clicks, etc.).

TransUnion experts claim that in 2023, the number of attempts to cheat the gambling system during verification increased by 30%. Every third login to an online casino is considered problematic or requires additional checks.

The biometric authentication method is convenient and practical. A person does not need to use physical documents, remember complex passwords, or worry about account hacks. To enter the platform, it is enough to scan fingerprints or take a selfie, after which the program will instantly confirm the user's identity.

Artificial Intelligence

Sumsub’s report shows that fraud using this technology is developing at an unprecedented rate. In just one year (from 2022 to 2023), the number of recorded cases has grown tenfold. To successfully withstand intruders, it is important to implement advanced security systems based on AI.

It helps to perform the following tasks:

• identify hidden associations for seemingly unrelated accounts;
• conduct an end-to-end analysis of user behaviour throughout their playing history on the website;
• predict the customers’ actions in the future;
• automate the verification of profiles;
• respond to cybersecurity threats and attempts to hack the system.

Security Software Connection

Specialised program components provide comprehensive protection of the casino portals from both external and internal threats. Their advantage is versatility and the ability to resolve various issues.

The software is responsible for the timely verification of clients, access control taking into account different geolocations, IP addresses, as well as the safety of confidential information and data transmission channels.

From the Win Win Casino company, it is possible to order solutions from such well-known providers as:

• Alfa Protection;
• 4Stop;
• Feature Space;
• Afimac;
• Yoti, and many others.

The Main Things about Combating Fraud in the Gambling Niche

The casino and sportsbook industry regularly faces threats from unscrupulous users.

Key aspects that operators need to take into account:

• Among the main offences, we can name the forgery of personal documents, bonus hunting, machinations with payments, and money laundering. Entertainment resources also suffer from multi-accounting and bots that create hundreds of fake profiles in one session.
• The use of effective strategies to combat abuse, such as multi-factor identification, behavioural analysis, and the implementation of IT solutions, gives good results. Biometrics and artificial intelligence are advanced technologies aimed at the prevention of fraud.

From us, it is also possible to order the following popular services:

• installation of payment systems;
• integration of software for land-based clubs, online portals, and mobile applications;
• development of exclusive slots, and much more.