How Online Gambling Is Being ‘Gamed’ by Fraudsters

How Online Gambling Is Being ‘Gamed’ by Fraudsters

Search interest in online gambling hit an all-time high in the UK this year as people were confined to their homes, but when activity increases, so too does the risk of online fraud. Here, we explore how online gaming sites are being ‘gamed’ by fraudsters and what can be done about it.


The rise of online gaming

Online casinos have been around almost since the inception of the internet, however, early users were made to download huge files in order to use them. As technology advanced and internet speeds increased so too did the popularity of online gambling. 

Mobile apps have opened doors to online gaming to anyone who owns a smartphone (5.2 billion people worldwide, as we explored recently). The introduction and rapid increase in quality of mobile apps has led to a huge number of consumers moving away from traditional brick-and-mortar sports betting and towards using an online portal, thereby increasing the number of online players exponentially.

Google Trends data shows that search interest in online casinos hit an all-time high in the UK this year whilst the country was in lockdown. Though, the Gambling Commission watchdog said there was no evidence yet of a rise in ‘problem’ gambling.

The surge of online gambling during the global pandemic has allowed fraudsters to capitalise on the crisis, leaving operators with the challenge of mitigating risk and protecting players. While the global pandemic continues and physical gambling establishments remain closed, the need for reliable security measures is even more significant as players rely solely on virtual options.

A rise in fraud

The gaming industry is evolving fast, and there are unique challenges that need to be addressed now; whether it’s acquiring more players, improving the customer experience, or managing fraud and risk. To stay ahead of regulators, gaming companies should add identity verification services to different points within their gaming environments, to help reduce money laundering and meet compliance standards.

The rise in online gaming, the profit being generated by the industry and its diverse user base demonstrate an increased risk of fraudulent activity, especially to those who do not have the appropriate measures in place to onboard new users and perform appropriate KYC checks. As the industry continues to grow and generate vast sums of revenue, more stringent identity verification checks are more likely to be introduced to ensure players are in fact who they say they are.

While fraudsters tirelessly come up with new creative ways to exploit the system, there are a number of common attacks to watch out for.

  • Collusion/multiple account fraud 

The cornerstone upon which many gambling attacks are built. Working either alone or as part of a team, fraudsters create dozens or hundreds of accounts using fake credentials in order to tilt the balance in their favour online. The other accounts are used to lose deliberately so one can pocket all the wins and bonuses that go with it.

  • Bonus abuse

While exact numbers are hard to come by, there are thousands of online gambling sites all competing for customers. In order to attract and maintain players, many sites will offer different types of bonuses; these can include sign-up bonuses, referral bonuses, bonuses to frequent players or to attract a player back to the site. Players would commit bonus abuse by fraudulently signing up for multiple accounts in order to receive multiple bonuses.

  • Chip dumping

Online casinos have been used by criminal entities to launder money or pay for black market services. Since gambling winnings are considered legal earnings, they can be deposited into a bank account and even claimed on taxes. Criminals who receive large sums of money from illegal enterprises can’t just walk down to the bank and deposit their income without raising suspicion. Instead, they hire people to gamble that money then ‘cash out’ and the money can then be shown as legally earned. In other cases, chip dumping is a way to pay for illegal or black market services.

Then, there are payment attacks. Gambling platforms are essentially digital wallets, so processing payment means additional potential for losses.

  • Stolen credit cards

Fraudsters can use stolen card information to top up their account, which means using illegitimate money to pocket real wins.

  • Chargebacks

Sometimes referred to as ‘friendly fraud’, chargeback abuse occurs when a legitimate account holder will contact their bank or card issuer and deny making a charge to an online gambling site. Since many online gambling establishments are located overseas or may not even be registered businesses, the card company will often reverse the charges, leaving the operator out-of-pocket.

Operators have to make sure they do not become a place of choice for money launderers. Any place that processes large amounts of money can be used to make illegally obtained cash legitimate, and gambling institutions are a choice destination for criminals.

How we can help

Acuant’s suite of identity verification solutions and single universal API, Sodium can help onboard customers faster and more efficiently with more accurate results. Detect fraud and prevent money laundering while onboarding up to 68% more customers than with traditional identity verification methods.

Worldwide, an estimated 72% of active mobile game players are ‘millennials’ and the broader audience for mobile games includes those in parts of the world where smartphones are the primary, if not only, way people connect to the internet. Given young people have very little traditional data (or thin files) it can be tricky to onboard them. For example, the UK has over 8 million people aged 18 to 30, which means you’re potentially missing out on a high proportion of users who can’t be verified to use your platform.

Traditional checks, such as using credit history mean that many good customers are turned away. A vast number of millennials do not have CRA data so if this source is used, they are rejected. Equally in countries with thin files, where traditional data does not exist or is scarce, product offerings such as ours can be used to qualify and verify new customers.

This integrated approach helps increase pass rates in countries all over the world, verifying identities using a number of data sources, which in turn increases revenue, increases customer acquisition with real-time onboarding and creates a better customer experience.

Book a demo today and see for yourself how powerful our suite of solutions are.


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