The iGaming industry is consistently growing, and this type of success generally means one thing: people will try to take advantage of it.
This can lead to long-term damage for iGaming brands because it chips away at the trust, bleeds their budget, and sends them through regulatory nightmares.
Implementing measures to safeguard your enterprise is a prudent course of action, as it instills confidence in your customers to engage with you.
This article will elaborate on the significance of fraud detection and outline how to establish an effective strategy.
Let’s begin!
Key Takeaways
- Understanding why is iGaming fraud prevention is crucial
- Looking at the common types of fraud
- Discovering the top fraud detection strategies
- Uncovering some expert tips
Fraud detection is important because it protects iGaming providers from financial losses, fines, and reputational damage that can affect business integrity. Fraud eats significant portions of real revenue, usually when it comes to promotions and withdrawals. This creates a budget hole because everything on your platform costs real money.
Players’ reputations suffer when fraud becomes so widespread that they become aware of it or dispute it. Moreover, license problems, fines, and even the platform’s total shutdown may result if it occurs regularly and operators are unable to resolve the issue.
Since fraud rates increased by 73% from 2022 to 2024, iGaming operators have to pay close attention to their prevention strategies.
Fraud prevention is also important because this type of illegal behavior leads to distorted metrics. Increased activity boosts the KPI as signups and deposit rates increase. This puts operators under the impression that their business is growing when it’s actually standing still, or even dropping in real revenue.
Interesting Facts
Fraud in the iGaming industry increased by 64% from 2022 to 2024.
iGaming fraud can take on many forms, and the first step to preventing it is to know where to look. Here’s what you can expect:
Fraudulent individuals exploit promotional bonuses, such as welcome packages or referral programs, to make quick withdrawals. They create multiple accounts to claim the incentive, withdraw the money quickly, and then abandon the platforms.
Fraudsters may use bots or automatic scripts to play games at a large scale or with a pattern that a human usually can’t achieve. For example, they can set scripts for rapid repetitive action or manipulate game outcomes in their favor, earning those rewards fraudulently, cent by cent.
The same person can create multiple accounts on one platform, using different emails and names. They use these fraud patterns to avoid betting limits, take advantage of bonuses repeatedly, or regain access to an account that was previously banned.
Gnoming is also a common type of multi-accounting, where multiple users get together to manipulate betting outcomes.
A legitimate player’s account is hacked into, usually because of poor security or leaked credentials. These accounts are used by fraudsters to change payments, make unauthorized deposits and withdrawals, or claim bonuses to which they are not legally entitled.
Chargeback fraud is a recurring issue that affects an average of 95% merchants, including those in the iGaming industry. With this method, users deposit the funds, place the bets, and file a dispute with their financial institution to reclaim the money. The iGaming provider has to cover the payment when this happens.
iGaming fraud comes with a series of patterns that alert you to suspicious behavior early on. Here are a couple of strategies to try out:
Device fingerprinting can be used on browsers, operating systems, or hardware ID to detect when someone uses the same device for multiple accounts. A VPN or IP switching may also be recommended in response to geolocation and IP anomalies.
iGaming providers can also use iGaming fraud prevention tactics to detect “impossible travel,” where the same account is logged into from multiple locations (usually in different cities/countries) within a short time.
iGaming companies can examine transaction patterns with the use of specialized tools. To find out whether the deposit-withdrawal process is unusual, they can examine deposit volumes, payment method histories, and withdrawal trends.
Platform owners can use behavioral analytics to look for red flags such as rapid account creation, repetitive actions, and odd session lengths to find out if the account belongs to a bot. Changes in game patterns can also link to multi-accounting, gnoming, or account takeover.
Monitoring affiliates is a good option for fraud detection because it tells you about the kind of users the affiliates send your way. Are they actual users or referrals, or does the traffic only feature bots and fake leads? Look at the conversion rates, registration metrics, and user LTV to check whether the traffic is fake.
The best way to protect your iGaming brand is to keep the fraudulent activity from happening in the first place. Below are some effective fraud prevention tips that can discourage suspicious users from taking advantage of your platform.
Robust KYC and onboarding procedures evaluate a user’s identity and assess their risk right away.
For example, casinos may use ID verification and a live selfie to confirm the user is a real person. Many iGaming providers implement this strategy before the user can withdraw any money.
AI-powered scoring relies on artificial intelligence and machine learning to assign a risk score to an account. It uses signals such as device fingerprinting, online behavioral patterns, and IP/Geo data to determine if the person accessing the website is a real person or a bot.
Those under suspicion of fraudulent behavior may be placed under scope or prevented from accessing entirely.
In order to draw in legitimate users and deter those who wish to circumvent the system, iGaming companies should plan and manage their bonuses. For example, they can feature minimum deposits, wagering requirements, or other play-through conditions that restrict players when withdrawing the money.
Strong payment and withdrawal controls provide good defense against account takeover and money laundering. In addition to setting thresholds for new users, iGaming providers can use their ID to confirm the owner of a payment method.
This is useful because fraudsters tend to exploit payment flows such as chargeback or stolen credit cards on betting platforms.
Dynamic friction uses AI and machine learning to implement different levels of verification based on their risk level. These verifications use profiles such as IP, device, or other relevant browser data to determine if extra verification is needed.
This way, real users are not annoyed by endless verifications, whereas fraudsters are delayed or prevented from accessing the platform.
Not to mention, employee training guarantees that the human element can identify suspicious behavior or see the risk. Given that no automation system is ever flawless, this is a crucial fraud prevention tactic.
Fraud evolves every day, and human oversight can catch if something is actually fraud or just a tech-caused false alarm from a real user.
Fraud detection and prevention should be the first step of setting up an iGaming platform. It protects brand owners and website users, ensuring you don’t become another victim of fraudulent behavior. Get assistance today and protect your domain!
Interestingly enough, the FTC revealed that millennials are actually more likely to be victims of fraud than the elderly.
The most common form of occupational fraud is asset misappropriation.
Pretend, Problem, Pressure, Pay.
