Online gambling continues to grow with an expected growth rate of 7.76% each year, with a projected revenue of $138.1 billion in 2028. Much as the gambling industry sees rapid growth, so do the cases of fraud, leaving gaming operators overwhelmed.
Bonus abuse and affiliate fraud are two of the more common types of fraud in the gambling space with bonus abuse accounting for over 50% of all fraud cases in the space. While these have existed for some time, deepfakes have also been a rising concern, with the number of deepfakes globally increasing by 10x in 2023 compared to 2022. iGaming specifically saw the third most deepfake cases, following crypto and fintech.
When an organization is scammed, it negatively impacts financial stability and reputation, affecting how players view the company – and damage to a reputation is not short-term, this will remain with the company for some time. The digitized nature of the industry, the potential for significant financial gain, and ongoing regulatory challenges create a plethora of vulnerabilities operators are not prepared to handle alone.
Preventing Fraud From the Start
Regulators are taking a closer look at compliance and imposing heavy fines for violations of anti-money laundering and responsible gaming requirements, stressing the importance of secure player onboarding. Know Your Customer (KYC) verifies the identity of new customers, or in this case players, to prevent fraud, money laundering, and more. It has increasingly become required by local and federal governments to maintain compliance.
In iGaming – across 90% of jurisdictions – KYC checks are carried out once funds are withdrawn. However, the majority of gaming fraud such as bonus abuse, multiple accounting and affiliate fraud occurs before the KYC stage, making fraud prevention mission critical.
Though the majority of fraud occurs in the early stages, verification must continue past onboarding to further ensure fraud prevention while remaining compliant. Rather than gaming platforms attempting to develop necessary solutions in-house or using a solution initially created to help other industries, they can work with solutions created exclusively with the gaming industry in mind.
Such offerings enable users to establish sets of rules fully customizable based on the industry, location of players, and user profiles. Such rules can be set up to prevent suspicious users from making deceitful action, flag unusual behavioral patterns, and even detect potential addictions to best stay compliant with responsible gaming requirements. Automation of rules also allows platforms to reduce the cost and time of manual work, while avoiding risks of human error.
Gaming operators benefit from a fast onboarding process and high pass rates by getting more, valid players online and participating quickly, while players want to be able to play and withdraw money now, they do not want to wait. A complicated KYC process creates friction and reduces satisfaction for all involved.
Getting Ahead of Regulations
The regulatory gaming frameworks continue to play catchup. And while these are essential for the wellbeing and safety of individuals, it also means gaming operators are left to play catchup, too, each time new regulations are enforced. To prevent the likely scramble, operators should proactively seek opportunities to remain compliant and secure.
One group encouraging these efforts is the American Gaming Association, a global community of gaming platforms and websites obligated to promote responsible gaming and protect players, otherwise facing significant fines or license revocation. Responsible gaming protects vulnerable players, ensures regulation compliance, mitigates legal risks, and preserves a platform’s reputation. It helps operators implement measures to prevent harmful gaming behavior by offering self-exclusion options, setting deposit limits, and more.
iGaming platforms experiencing high fraud levels and numerous chargeback disputes earn unreliable reputations with banks and processors resulting in not just penalties, fees, and denial of services, but also loss of customers. To uphold reputability within the industry and players, gaming operators should consider technological advancements to help them remain compliant in the face of changing regulations.
A comprehensive solution or one developed internally to ensure secure online gaming is no longer enough. Operators and platforms alike are calling for customized products all from a single vendor to remain compliant while reducing integration or data transfer issues they experienced previously, especially as they expand globally and need to work with multiple regions.
They need to know they are protected at all steps of the user journey to maximize revenue, remain compliant, and reduce fraud, all while cutting costs. Can 2024 be the year we see a reduction in fraud for the industry?