How to combat bonus abuse and other types of online gambling fraud

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How to combat bonus abuse and other types of online gambling fraud

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iGaming businesses develop whole strategies to retain gamblers’ interest and attract new ones. But online gambling fraud turns out to be a rough obstruction. Picture this: as a part of your marketing strategy, you offer bonuses to new gamblers. The reason is straightforward – you want them to gamble with pleasure, make deposits, and visit your platform again. It seems to be a winning trade until you meet cybercriminals on your way. They do their utmost to misuse such schemes and infringe on gambling projects’ profit.

Good news! While some online gambling business owners are racking their brains on how to handle such challenges, you got us. In this article, we’ll outline the gambling business' pain points and ways to handle them. Let’s go!

Gambling market background

Companies are proactively tackling cybercriminals and their methods. But despite this, fraudsters keep attacking and focusing exactly on the growing markets. Representing the latter, online gambling & betting markets are expected to exceed $172.23 billion by 2030.

Top 7 online gambling fraud schemes

What are the most widespread types of online gambling fraud? Identity thieves, bonus abusers or bonus hunters, multi-accounters, arbitrage bettors – who else can be enlisted as a threat to online gambling businesses? You'd better know your enemy's face to implement an effective campaign against gambling fraud. Check the list of the most widespread gambling fraud schemes below.

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1. Bonus abuse & chip dumping (multi-accounting)

Affected markets: gambling, gaming, fantasy and sports betting, and lotteries.

Scheme. Bonus abusers or bonus hunters create multiple accounts using their relatives’ or friends’ personal data or buy credentials on the darknet. Usually, such scammers’ intention is not only bonus hunting and chip dumping but also circumvention of limits and blocklists.

Solution. This scheme has a gross weak point – personal data and IP addresses. As long as the main task is to prevent a gambler from creating multiple accounts using someone else’s data, identity verification shows high efficiency. It helps you ensure that the account and document owners match and check whether this person has previously created other accounts within your platform. Seeing the accounts' IP addresses overlap will help you detect a multi-accounter and take measures.

Typical bonus abuser's behaviour:

Apart from flocking around particular games, like roulette, blackjack, baccarat, and others, they usually:

  • attempt to withdraw winnings right after they've completed the wagering requirements;
  • follow specific betting patterns (e.g. max sum allowed by the terms of bonus).

2. Arbitrage betting or arbing

Affected markets: sports betting

Scheme. A performer places bets on each possible outcome of an event – on each team’s or player’s win and a draw, thus guaranteeing personal profit. Usually, fraudsters who utilise this scheme monitor the odds beforehand manually or using certain automated solutions. Some bookmakers even welcome such bettors, for they are helpful in terms of sharpening their odds modelling efficiency.

Solution. Implementing face authentication helps to prevent multiple accounts per user. Employing AML screening across third-party databases allows for investigating bettors’ past involvement in any criminal attempts and making well-informed decisions to cancel bets and make refunds or shutting the account down.

3. Identity theft

Affected markets: gambling, gaming, fantasy and sports betting.

Scheme. Sophisticated cybercriminals buy real people’s documents on the darknet to defraud gambling platforms. Since the documents are not falsified, systems can’t detect any red flags.

Solution. Ensure the presence of a true document holder, introducing face authentication. It can be used at the onboarding or withdrawal step.

4. Malicious affiliating

Affected markets: gambling, gaming, fantasy and sports betting.

Scheme. Fraudsters utilise unlawful tactics to capture unearned commissions. It can be manually entered fake leads into a gambling project’s CRM system or bot-generated traffic. Implementing diversionary tactics, the latter can even register accounts and make deposits.

Solution. Make it a rule to analyse traffic and track new customers’ behaviour. Where does the traffic come from? Is there any specific time when it increases? Another useful tip is introducing device fingerprinting and face authentication at the withdrawal step to ensure that a real person withdraws the winnings.

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5. Money laundering

Affected markets: gambling, gaming, fantasy and sports betting.

Scheme. Cybercriminals deposit “dirty” money to their accounts with the purpose of capturing legit winnings later. Usually, such bets are placed with low-risk outcomes.

Solution. Biometric checks and AML screenings can efficiently cope with such a scheme.

6. Account takeover

Affected markets: gambling, gaming, fantasy and sports betting.

Scheme. Fraudsters gain illegal access and misuse existing gamblers’ accounts.

Solution. Monitor the IP geo and device location, utilise device fingerprints, and sudden changes in a user’s behaviour.

7. Chargeback fraud

Affected markets: gambling, gaming, fantasy and sports betting.

Scheme. Fraudsters misuse stolen personal data to make deposits and place bets, leading to chargeback initiation by the real data owner.

Solution. Automated bank card verification will do good as a first step. It will ensure the genuineness of a bank card and correspondence to the applicant’s identity information. Then you may implement biometric authentication – e.g. a selfie with the bank card. It further allows the system to compare the data at the registration stage with that during the transaction attempt.

Compliance in gambling: 4 essential tactics to implement

💡 The biggest fine in UK gambling history was registered in August 2022. The owner of Ladbrokes has been fined a record $20.6 million (£17 million) for AML issues and failure to enforce players' safety.

The owners of online gambling or betting projects have to keep an eye out not only for fraud issues but also the legal and compliance ones. Here is a list of activities that require gambling business owners’ special attention. Otherwise, things can go south.

Implementing the following practices will help you maintain your reputation and avoid penalties.

  • Identity checks help to detect underage gamblers or fraudsters at the onboarding stage. It includes real-time screening and KYC procedures as a part of compliance with anti-money laundering laws.
  • Source of funds verification allows casinos to prevent using illegally obtained money for placing bets.
  • Ongoing client surveillance should be executed as a rule. Lowering the guard and stopping the checks of sources of funds after the identity check are considered to be severe violations of AML laws.
  • Assessment of affordability allows gambling businesses to keep an eye on vulnerable players and intervene on time. To implement it, projects are recommended to establish a customer base and monitor their affordability, setting certain red flags.

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How Corefy prevents gambling fraud?

Our platform helps online gambling businesses process all payments and payouts efficiently via a range of relevant payment methods and prevent fraudulent attempts. Utilising our Routing & Cascading engine and Firewall features, you can set rules and attributes for the suspicious transactions to be checked.

At different stages of a transaction lifecycle, our processing engine aggregates all transaction data and sends it to Firewall. Guided by the decision tree with the customised rules you set for your organisation or a separate merchant, the Firewall helps to decide whether this transaction should be declined or accepted.

For instance, a gambler registers on your platform and tries to make a deposit. According to the decision tree with your rules, the Firewall makes a check, and it turns out that the cardholder’s data doesn’t coincide with that of the gambler in your customer base. Or the system spots a discrepancy in the fingerprints of the payer’s and gambler’s devices. This means the transaction is potentially fraudulent and subject to decline. Also, you can add this gambler to a specific list for further automatic checks or auto-declines.

With smart payment routing and Firewall capabilities, our platform represents an all-inclusive tool for accepting payments and making payouts for online gambling platforms and operators. But one look is worth a thousand words! Book a live demo and check how your business can benefit from Corefy.

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