Effective Methods of Combating Fraud in the Gambling Niche

The more the digital casino world comes into contact with the real one, the more competent and sophisticated schemes criminals use. To protect themselves against machinations with payments, bonus hunting, and hacker attacks, operators need efficient and universal solutions.

What is Fraud in the Casino Sector

This means any illegal activity aimed at tricking honest players and official brands. Of course, the industry has control mechanisms, but attackers can bypass them.

When we are talking about cheating in the field of games for money, it can be described as:

• leak of personal data from the server, which allows the criminal to get rich;
• unauthorised use of information resources;
• stealing funds, utilising someone else's bank card details, and other actions.

According to Onfido's Identity Fraud Report, in 2024, the average rate of scams in iGaming and betting companies was 7.6%. In 2022, this figure was much lower, only 4.2%. Thus, the number of hacker attacks and other abuses in the niche has increased by 80% in just a year.

Such high indicators are explained by several factors:

• fragmentation of legislation in different countries, which is why offenders quickly find loopholes;
• disregard for safety measures;
• the appearance of new types of fraud.

The study shows that in gambling, this crime is higher than the average for other sectors. For comparison, 2.6% of illegal transactions were recorded in tourism, 3.2% in healthcare, and 3.8% in retail.

Common Kinds of Scam

Let us consider what violations operators most often face.

Multi-Accounting

In this case, attackers create several fictitious profiles and, thanks to this, gain a significant advantage in the game. Often, their number can be tens or hundreds of thousands, which is why digital platforms are experiencing a real bot attack.

The most common schemes are the following:

1. Gnoming. This is the creation of several fake accounts to affect the operation of an online casino. On betting platforms, it is possible to bypass the restrictions on the maximum bid and win a big jackpot.
2. Bonus hunting. Here, we are talking about the theft of personal incentives that every new user receives after the registration process. Fraudsters often log in with only one goal: to receive a welcome gift, withdraw money, and block the account. In this case, there can be no long-term gambling, and business owners will not receive any profit.
3. The loss of chips. Attackers control multiple accounts at the same poker table to manipulate the gameplay in favour of one of these profiles. An illegal advantage is achieved by deciding to drop.

It is worth noting that every year, scammers become more creative. Thus, almost all of them are registered from different personal devices (PCs, laptops, and gadgets) and will be tested for compliance with IP addresses in the future.

According to Onfido’s Identity Fraud Report, casino entertainment has far more cases of digital identity fraud than any other industry.

Criminals use electronic falsification of passports/ID cards/driver’s licences and pass them off as real ones. To do this, they change dates and document numbers (43%) and also add photographs of completely different people (41%).

Manipulation with Credit Cards

This is one of the most common methods (almost 40% of offences are accounted for by it). Attackers act alone or in groups to cause financial damage to virtual casinos.

Such an offence can take various forms:

• conducting unauthorised transactions on gaming sites;
• the use of stolen cards to make deposits and withdraw funds;
• money laundering and terrorism financing.

Analysts claim that 48% of fraud cases occur at the time of payment on entertainment portals.

Hackers find weaknesses in the customer information protection system, change data, and take over accounts. Then, they quickly make an online purchase using the “card-not-present” type of transfer and cash out the player’s prizes.

In recent years, iGaming platforms have increasingly faced BIN attacks. “Brute force” methods are used to guess the combination of credit card numbers, expiration dates, and CVV codes.

Such an attack includes 2 stages:

1. Finding the right combination. To do this, criminals use special software that checks hundreds and thousands of numbers.
2. Card testing. At this stage, the offender tries to make small transactions to check whether the payment option is active and protected from fraudulent actions. If not, a hacker can use it for further illegal settlements or sell it on the dark web.

Bots as Attackers

Online casino fraud is on the rise, and bots are increasingly appearing. These are special programs that imitate human behaviour during sessions and hide themselves well, thanks to fake profiles.

ThreatMetrix claims that the number of violations of this type in the gambling niche is growing exponentially. Today, almost 60% of daily Internet casino traffic is generated using bots and scripts. Scammers even create huge farms where they manage thousands of false accounts.

The application of such programs is closely associated with cheating in affiliate marketing, especially under the CPA scheme. Dishonest affiliates often attract fake customers, receive rewards from entrepreneurs, and disappear.

Operators suffer losses because behind hundreds of nicknames there are bots and not people who are really interested in the placement of bets.

Manipulations with Chargebacks

This is a so-called friendly fraud, which is often initiated by players. For example, if a person has dozed off and lost a huge amount of money, then naturally, they will want to win it back. To do this, the user creates a request for a refund.

For disputing, various stories can be invented:

• unauthorised transaction;
• lack of promised goods or services;
• theft of a card or personal device, etc.

Why Casino Owners Need to Protect Themselves from Intruders

The actions of offenders can cause bad consequences for the gambling business:

1. Financial losses. Entrepreneurs may waste money due to bonus hunting, chargebacks, and hacker attacks. The sum can reach tens of thousands of dollars if we are talking about a large company.
2. Reputational damage. Frequent cases of fraud create a negative information field around the iGaming brand. Image indicators suffer and website traffic/overall profitability of the business decreases.
3. Non-compliance with legislative requirements. The provision of fair and transparent gameplay is the responsibility of businessmen. If they neglect basic security measures, they will have to pay fines. In some cases, the regulator even has the right to revoke a licence.
4. Operational issues. The scam has a negative impact on all basic processes in online casinos. These are timely payment of prizes, transparent settlements with B2B partners, and fair bonuses. Due to the actions of attackers, the number of complaints from players increases, which floods the support service with requests.

All these problems can be avoided by implementing a balanced prevention policy.

Anti-Fraud Measures in the iGaming Sector

Let us consider how entertainment portals can improve their security.

Multi-factor Authentication (MFA)

Each user must undergo a strict identification process to eliminate bots and minimise illegal activities.

Large companies typically use multi-level verification to protect themselves from fake accounts. If 5 years ago, it was necessary to simply create a nickname and password, then today, these actions are no longer enough. Criminals successfully forge documents, which is why many gambling platforms are switching to three-factor authentication.

The procedure includes:

• reconciliation of IP addresses and geolocation data;
• checking the device used to log in via a one-time SMS or voice call;
• biometrics-based identification (fingerprint or retina scanning).

MFA allows business owners to filter out bots and potential attackers even at the stage of registration on the website. This not only protects casinos from offenders but also allows them to better interact with those customers who are actually interested in placing bets.

The tool is part of the KYC procedures. Most regulators require licensees to conduct a thorough screening of visitors to their iGaming resources. The purpose of such an action is to make sure that there is a real person on the other side of the screen and not a bot or hacker.

Data Encryption

Entertainment portals use advanced mathematical algorithms to secure players' data and financial transactions. Thanks to this, personal details will remain confidential and protected from unauthorised access.

The process involves converting data into an unreadable form. Only those who have the correct key can decrypt it. This approach serves as a kind of barrier to fraudulent activities.

The main cyphers used in the online casino industry:

• Secure Socket Layer (SSL). The cryptographic protocol provides a safe connection between the server, browser, and gadgets. It was developed by the famous American company, Netscape Communications.
• Transport Layer Security (TLS). The algorithm is based on asymmetric encryption and X509 certification.
• Advanced Encryption Standard (AES). This is a highly secure method that contains a 256-bit key. It is believed that it cannot be hacked or counterfeited using modern technology.

Large gambling brands additionally protect their databases, as well as verified accounts, transactions, and game logs. This strategy ensures that information remains unreadable in the case of an external attack or system failure.

Effective access key management will help entrepreneurs ensure the safety of a casino platform. Many providers use rotation (regular change) of encryption keys, which also increases security.

Transaction Controls

This is the monitoring and review of money transfers, which is aimed at identifying suspicious activity that may indicate abuse. Payments are scanned in real time to eliminate any forms of cheating.

The signs of fraud include:

• unusually big bets;
• frequent deposits from several accounts;
• failures at the time of making payments;
• frequent requests for refunds, and much more.

Cooperation with financial organisations will help strengthen control over transactions. These are banks and providers of settlement methods that take the lion's share of responsibility for the safety of transfers. They offer advanced fraud protection systems, perform AML scanning, and instantly block suspicious operations.

An excellent solution would be to connect a cryptocurrency gateway. Payments in digital currency have several undeniable advantages, such as high speed, reliability, and anonymity. Additional hash encryption securely stores confidential information and makes it impossible for money to be stolen.

Firewall Installation

This is a protective barrier that blocks external threats from penetrating the internal network of an online casino.

The tasks of the tool are:

• control of incoming and outgoing traffic;
• tracking suspicious data packets;
• protection against unauthorised log-in;
• prevention of cyber attacks, malware infections, and data leaks.

The installation of a firewall will allow operators to block foreign Internet traffic if it is against licensing rules. The solution successfully combats the invasion of bots/utilities, as well as phishing attacks and obfuscation of program code.

Monitoring of Accounts

It can be carried out during the replenishment or withdrawal of funds and other ways of interacting with iGaming sites:

1. Analysis of the password hash. Attackers using multiple profiles rarely create unique codes for all fake pages. Therefore, even a simple check for matches and patterns will reveal those accounts behind which bots are hiding.
2. The study of digital footprints. Signs of scams often include the absence of social and digital profiles, the use of a VPN, a minimum email age, etc.
3. IP fraud assessment. Such analysis provides data about a person's Internet usage, location, and potential for illegal actions. Continuous scanning of transactions and gaming profiles can also reveal how many players registered on the portal using the same address.
4. Behaviour and speed monitoring. The atypical pace of the game, frequent restarts, illogical drops, and other patterns often indicate offences.

Installation of Wagers

These are requirements that make it impossible for criminals to illegally withdraw bonus funds.

Entrepreneurs have the right to:

• determine the number of scrolls;
• select the bet type;
• set time restrictions and other parameters.

The integration of a wager is a great chance to filter out bots and bonus hunters. Thanks to this, business owners will award free spins and other types of incentives only to those players who are interested in long-term and productive placement of bids.

Security Software Acquisition

This is a universal online casino solution which protects digital platforms and instantly responds to hacker attacks or new types of fraud.

The key advantage of such program components is a comprehensive approach. They contain several modules that are responsible for financial security, work with chargebacks, timely verification of clients, and other issues.

Moreover, the software includes a powerful analytics system for profiling customers based on various parameters.

The Main Things about the Protection of Casinos Against Fraud

Fraud Rate in Gambling

(According to Onfido's Identity Fraud Report)

4,2% in 2022

7,6% in 2023

Operators need modern tools to combat payment fraud, multi-accounting, and hacker attacks.

Types of Fraud

Multi-accounting

• Gnoming Creating fake accounts to bypass betting limits
• Bonus Hunting Collecting welcome bonuses and withdrawing money without playing
• Chip Dumping Manipulating multiple accounts at a poker table to gain an unfair advantage

Credit Card Manipulations

• Carding Using stolen cards to deposit funds
• BIN Attacks Guessing credit card details to conduct transactions

Bots

• Using bots to create fake accounts
• 60% of casino traffic is generated by bots

Chargeback Manipulations

• Friendly Fraud Players falsely disputing legitimate transactions to recover funds

Why Combating Fraud is Essential

Financial losses: fraud can cost operators tens of thousands of dollars

Reputational damage: frequent fraud incidents decrease trust in the brand

Regulatory non-compliance: operators may face fines or even licence revocation

Operational issues: increased complaints and a higher load on customer support teams

Anti-Fraud Measures

Multi-factor Authentication (MFA)

• Checking IP addresses, geolocation data, and biometric information
• Three-factor authentication to prevent fake accounts

Data Encryption

• SSL, TLS, and AES are used to protect transactions and user data

Transaction Monitoring

• Real-time monitoring of payments
• Implementing cryptocurrency gateways for enhanced security

Installing Firewalls

• Protecting against external threats and bot attacks
• Monitoring suspicious data packets

Account Monitoring

• Analysing passwords, digital footprints, and IP addresses
• Assessing player behaviour and game speed

Wager Requirements

• Setting wagering conditions to prevent bonus fraud

The entertainment industry faces scams more often than other sectors of the economy.

Aspects that operators need to take into account:

• Common crimes that fall into this category include multi-accounting, manipulations with credit cards and payments, as well as the use of bots. Gambling brands also face hacker attacks and invasions that destabilise their work.
• Effective fight against offences makes the casino business more safe, transparent, and attractive for B2B partners. Business owners do not need to worry about reputational and financial losses.
• Popular methods of combating fraud include data encryption, transaction control, installation of firewalls and wagers, as well as account monitoring. It is also necessary to timely verify users to prevent the creation of fake profiles.

We also offer:

• products for rent;
• installation of the payment system;
• consulting services, and much more.