In a significant move to bolster the integrity of sports betting, the General Directorate for the Regulation of Gambling in Spain has mandated that all licensed gaming operators involved in horseracing or sports betting must join the Global Betting Market Investigation Service (SIGMA). Effective from 28 June 2024, this new requirement is designed to prevent and combat fraud and manipulation within the sports betting industry.

Initiative to Safeguard Sports Integrity

The primary mission of SIGMA is to protect the sanctity of sports by eliminating fraudulent practices that undermine fair play and equity. This initiative has received backing from several key organizations, including the Higher Sports Council, the Royal Spanish Football Federation, the Professional Football League, the Royal Spanish Tennis Federation, and the Association of Spanish Footballers. Law enforcement agencies such as the National Police, the Civil Guard, and the Ertzaintza are actively participating in this effort.

According to the new directive, gaming operators must promptly report any irregular or suspicious betting activities to SIGMA. This encompasses any actions that may suggest fraudulent behavior. Furthermore, operators must supply any additional information necessary to investigate these alerts thoroughly. This resolution marks a proactive step by the General Directorate for the Regulation of Gambling to strengthen the fight against corruption in sports.

Enhanced Transparency and Security in Betting

The Directorate aims to foster a more transparent and secure betting environment by integrating licensed operators into SIGMA. This integration is expected to significantly enhance the ability to detect and address fraudulent activities, thereby promoting a fair and equitable sports betting landscape.

In related news, the Flutter Foundation, a non-profit organization supported by Flutter Entertainment, has recently expanded its operations to Spain. The Foundation’s mission is to promote inclusion and well-being in the lives of disadvantaged communities, further underscoring the industry’s commitment to social responsibility and ethical practices.

Source:

Spanish gambling operators join initiative to combat sports betting fraud, gamblinginsider.com, July 1, 2024.

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Digital fraud continues to plague the online gambling industry, with a recent report from TransUnion shedding light on the alarming increase in fraudulent activities targeting gambling sites. According to the study, over 10% of online gambling transactions in the United States were suspected to be fraudulent in 2023, marking a significant rise from previous years.

The report highlighted promotion abuse as the most common type of fraud within the gambling sector, indicating a trend where fraudsters exploit promotional offers and bonuses offered by online casinos and sports betting platforms.

Steve Yin, senior vice president and global head of fraud solutions at TransUnion, emphasized the shift in tactics among fraudsters, noting that instead of compromising existing accounts, they are now creating new accounts using synthetic identities. Synthetic identities, often assembled from data obtained through multiple data breaches, have become a lucrative tool for fraudsters, contributing to the surge in fraudulent activities.

The study also underscored the role of data breaches in fueling digital fraud, with the number of data breaches in the US increasing by 157% from 2020 to 2023. This escalation in data breaches has facilitated the creation of fraudulent accounts and synthetic identities, posing a significant threat to the integrity of online transactions.

On a global scale, the retail sector surpassed gaming, including online gambling and poker, in experiencing the highest suspected digital fraud rate in 2023, reaching 8.7%, marking a 21% year-over-year increase. Furthermore, the telecommunications industry witnessed a substantial 111% year-over-year surge in suspected digital fraud rate, rising to 4.5%.

Economic Shifts Alter Gambling Landscape

Furthermore, TransUnion’s research highlighted the impact of economic conditions on gambling behavior. Despite the overall resilience of the US economy, factors such as declining consumer liquidity and low consumer confidence have dampened gambling activity as per another TransUnion report released in January. 

In Q4 2023, decreased consumer liquidity led to a 10% decline in overall betting activity, with millennials being the exception, as 77% reported better-than-planned household finances. TransUnion’s report revealed that betting behavior is closely linked to available cash, with high-value bettors significantly influencing the market. 

While land-based channels saw higher participation rates, online platforms attracted more high-value bettors, particularly those depositing over $500 monthly. Despite a decrease in overall participation, strategies focusing on expanding across channels proved successful. 

TransUnion highlighted that understanding the financial signals distinguishing resilient from distressed players is crucial for operators aiming to attract high-value bettors.

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In October, Olympian Nam Hyun-hee posed with her future husband Jeon Cheong-jo for a popular magazine in South Korea. The famous Olympian fencer’s fiancé presented himself at the time as an heir to a wealthy family. This public appearance ultimately led to the downfall of Jeon, who not only appeared to be a female rather than a male but it was uncovered that she was involved in a number of scams.

Shortly after, the engagement between Jeon and Nam was broken off. The public appearance raised quite a few eyebrows of Jeon’s victims, whom she allegedly stole millions from. In November, she was arrested amid an investigation into fraud and false representation.

The photo shoot from the magazine also uncovered that Jeon was involved in different criminal activities primarily related to scams even before her romance with Nam. This led to police authorities confirming her criminal background and biological sex, revealing that although she identified as a man, Jeon hasn’t undergone the official procedure required for sex change in South Korea.

Fraudulent Activity Results in Prison Sentence

After the arrest, Jeon was recently sentenced to prison over fraud. Local media outlets confirmed that the Seoul Eastern District Court sentenced Jeon to 12 years in prison after she was found guilty of defrauding 27 people out of 3 billion won ($2.2 million).

Presenting herself as the heir of the owners of the Paradise Group, a leading hotel and casino company in South Korea, she misled investors. The prosecution found out that Jeon misled investors by offering lucrative opportunities that are only available to the country’s wealthiest families.

As a result, she defrauded nearly 30 victims out of a staggering 3 billion won. During the investigation, it was uncovered that Jeon presented herself both as a male and female in an effort to pursue her victims.

According to prosecutors, Jeon used the fraudulently obtained funds for a lavish lifestyle. However, she claimed that some of the money was spent on gifts that were given to Nam.

Considering those claims, an investigation into the 42-year-old Olympian fencer is also ongoing. It is yet to be confirmed whether or not Nam was aware of Jeon’s fraudulent activities and if she was involved in any way.

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Joseph Garrison, one of the youths who staged cyber fraud involving DraftKings Sportsbook accounts in 2022, has pleaded guilty, accepting an 18-month prison sentence.

The 19-year-old was involved in a credential surfing attack. Along with other conspirators Garrison exploited system vulnerabilities to steal $600,000 from DraftKings users whose credentials had been stolen in other data breaches.

In total, over 1,600 sports betting accounts were affected. Garrison allegedly bragged to friends about the cyberattack, telling them that “fraud is fun.”

The cyberattack not only hurt many victims but also undermined confidence in DraftKings’ ability to protect its customers. As a result, the young man had to receive a sentence that reflected the caliber of the crime. According to attorney Damian Williams, “The sentencing underscores the urgent need for vigilance and the critical importance of our collective efforts in combating cyber threats and safeguarding digital integrity.”

Garrison Will Spend 3 Years on Supervised Release

As mentioned, Garrison is set to serve 18 months in prison. Following that, he will spend three years on supervised release.

In addition to his time in prison, Garrison will have to pay $1.3 million in restitution and $175,000 in forfeiture.

The DraftKings incident, however, is not the only time Garrison has been involved in legal trouble. The young man currently has a legal matter in Wisconsin where he allegedly used Bitcoin to pay another party that would call in several bomb threats to his school.

Two of Garrison’s Co-Conspirators Were Arraigned

In the meantime, Nathan Austad and Kamerin Stokes, two of Garrison’s alleged conspirators, were just arrested and arraigned. The latter allegedly paid Garrison to gain access to DraftKings Sportsbook accounts and then re-sold them online.

Austad, on the other hand, leveraged artificial intelligence to promote a shop of stolen user accounts. In addition to that, he allegedly managed cryptocurrency wallets that received approximately $465,000 in proceeds from credential-stuffing attacks and the sale of compromised data.

As a result of their alleged participation in the conspiracy, the two youths risk up to 20 years in prison.

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Police in Ontario have charged two individuals from Toronto in connection with fraudulent activities related to online iGaming sites regulated by the province. The arrests come after an extensive investigation into allegations of identity theft and fraud on the Ontario Lottery and Gaming Corporation’s (OLG) iGaming platform.

Ontario Police Collaboration Uncovers Online Gaming Fraud Ring

The investigation, led by the Ontario Provincial Police (OPP) in collaboration with the Alcohol and Gaming Commission of Ontario (AGCO), began in July 2022 when reports of identity theft surfaced regarding the OLG’s online gaming site, olg.ca. 

Subsequent allegations of fraudulent activity on the platform’s sports betting section were reported to AGCO in August of the same year.

Following months of investigation, on July 13, 2023, law enforcement executed a warranted search at a residence in North York. The operation resulted in the seizure of multiple electronic devices and fraudulent documents linked to non-gaming criminal activities, according to an OPP release.

On December 21, 2023, the police formally charged two individuals in connection with the case. Ernesto Rasing, aged 38 and a resident of Toronto, faces a slew of charges including fraud, identity theft, and possession of forged documents. 

Similarly, Elaiza Mae Paculanan, aged 20 and also from North York, has been charged with various offenses related to fraud and identity theft, along with an additional charge for violating probation.

Both accused individuals were subsequently released from custody and are scheduled to appear before the Ontario Court of Justice in Toronto to answer the charges.

Ontario Authorities Encourage Reporting of Cybercrime Amid iGaming Fraud Crackdown

Ontario authorities urge anyone who suspects they may have fallen victim to cybercrime or fraud to report it promptly to their local police department. Additionally, individuals can utilize the Canadian Anti-Fraud Centre’s online reporting system.

The arrests underscore the ongoing efforts by law enforcement agencies to combat fraudulent activities within the online gaming sector. As the popularity of online gaming continues to rise, authorities remain vigilant in their efforts to ensure the integrity and security of these platforms.

At the same time, Ontario’s iGaming market has seen a resurgence, with significant increases in metrics reported in the third quarter of the 2023-24 fiscal year. This includes a notable rise in total wagers, reaching $17.2 million, and total gaming revenue of $658 million, indicating a 22% increase over the previous quarter. 

These figures account for the operations of 49 legal operators and 72 gaming websites in the province, with approximately 1.2 million active player accounts recorded during this period.

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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?

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ARC Gaming and Technologies, formerly known as Lucky Bucks, has filed a RICO lawsuit against its former executives, accusing them of orchestrating a massive fraud scheme that allegedly siphoned off around $200 million from the company before its bankruptcy. 

Lawsuit Unveils Alleged Systematic Looting of Lucky Bucks by Former Executives

The lawsuit, which was announced on January 2, alleges that the accused individuals engaged in a systematic looting of Lucky Bucks, diverting funds through various illicit means. Lucky Bucks, a major player in Georgia’s coin-operated amusement machine industry, filed for Chapter 11 bankruptcy in June 2023, citing increased competition and regulatory pressures.

ARC Gaming and Technologies claims that the defendants, including founder Anil Damani, Tony Kassam, and Imran Ali, orchestrated a complex scheme involving fraudulent transactions, misappropriation of trade secrets, and breaching fiduciary duties. 

The lawsuit also alleges that the former executives utilized shell companies and competing businesses under their control to divert contracts and assets away from Lucky Bucks.

The company accuses Damani and his associates of borrowing hundreds of millions of dollars from lenders, only to distribute the majority of the funds among themselves. The complaint further details instances of selling customer contracts back to Lucky Bucks at inflated rates and the removal of serial numbers from machines before selling them in various states.

ARC Gaming Seeks Redemption After Restructuring Triumph

The lawsuit was initiated after a comprehensive investigation by industry professionals hired by new shareholders in September 2023 to review Lucky Bucks’ operations. Forensic investigators and litigation case analysis, combined with employee interviews, contributed to the formal complaint being filed.

Despite Lucky Bucks successfully emerging from Chapter 11 bankruptcy in October 2023, ARC Gaming and Technologies is determined to hold the former executives accountable for their alleged criminal activities. The company aims to recover the stolen funds and assets, including $200 million in what they describe as “fraudulent and illegal dividends.”

Anil Damani, the founder and former owner, denies all allegations, stating that the claims are baseless and frivolous. Damani’s attorneys assert that he is a successful businessman and a pillar of the community, expressing confidence in defeating the claims in court.

As legal proceedings unfold, ARC Gaming and Technologies remains focused on its future, having completed a successful restructuring process and positioned itself as a strong contender in the Georgia coin-operated amusement machine industry. The company is set to announce new appointments for key executive positions, ensuring a dedicated management team committed to responsible governance and growth.

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The accounting software company that is set to deliver “smart payables that elevate modern business,” Tipalti, has reported Nevada as the top-ranking US state in terms of financial fraud per capita. 

286 Financial Frauds Per 100,000 People

The report, which is based on data from the Federal Bureau of Investigation’s Internet Crime Data in 2022 alongside census data, has shown that the Silver State counted 286 financial fraud victims per 100,000 people in 2022 alone. 

However, in spite of reaching the highest fraud rates from all 50 states, Nevada’s legislation regards fraud as a criminal offense with potential penalties including one to four years in prison and fines as high as $5,000, based on the severity of the fraud.

Nevada’s state law defines fraud as “when individuals deliberately misinterpret themselves to receive benefits they are not entitled to legally, including housing, insurance proceeds, and money.”

The Most Common Types of Financial Fraud 

The Tipalti report also detailed the most popular types of financial fraud, with phishing ranked first with close to 300,500 victims, which is five times higher than data breaching which ranked second with close to 59,000 victims. 

Non-payment or non-delivery is the third most common financial fraud in the US with close to 52,000 victims. 

Phishing happens when an attacker manages to trick a user into installing malware or revealing sensitive information. 

In 2022, Americans who fell victim to scammers pretending to be highly ranked individuals in big organizations and had their business email compromised suffered losses of $2.7 billion. 

At the same time, the US recorded over $52 million in total losses. 

A personal data breach is a breach of security during which an unauthorized party gets access to confidential information which includes personal data. Having the highest impact in the cyber world, this type of fraud led to over 1,800 security incidents in 2022. Together, the incidents accounted for 422 million breached records in the US.

Non-payment scams are scams that happen when sellers who provide services or goods do not process their payment. Similarly, non-delivery scams occur when buyers pay for services or goods online but fail to receive the respective items. 

No In-Depth Explanation

The accounting firm report that also presented Delaware as the second-ranking US state in terms of financial fraud per capita followed by Alaska in the third position did not reveal any detailed explanations regarding the reasons why Nevada has recorded the high numbers. 

The same goes for the FBI data that Tipalti based its report on. However, the Las Vegas Review-Journal presented the opinions of two experts representing the University of Nevada, Las Vegas (UNLV).

UNLV’s chair of the accounting department, Jason Smith, argued that a possible explanation for why the state tops the nation is the fact that there aren’t sufficient residents with a high level of financial literacy. Smith also explained that Nevada’s friendly incorporation legislation convinces many to incorporate their businesses in the state, leading to the high financial fraud rate.

Similarly, UNLV’s director of the cybersecurity program, Gregory Moody, said that the state’s large number of gaming workers in the hospitality workforce might facilitate some forms of fraud. 

Moody also mentioned Nevada’s small population as a potential factor that could make it more susceptible to reaching the top of the list.

In August, the Nevada Gaming Control Board issued a warning regarding the increase in the number of scams that were targeting casinos. 

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The hearing between Andy Sanborn, the owner of the Concord Casino and former New Hampshire Senator, and the Lottery Commission was delayed for the second time recently. The latest delay comes after Sanborn’s defense claimed that he was too ill to effectively defend against the accusations that he spent COVID-19 relief funds for personal expenses.

As announced by The Concord Monitor, Sanborn’s lawyer, Zachary Hafer, recently confirmed that his client was very sick. “We’re also dealing with lots of medical appointments and side effects from medical appointments. I’d rather not get into the specific details, but he’s very sick, very, very sick,” he explained.

Additionally, Hafer pointed out that he was new to his client’s case and needed more time to familiarize himself with the details. He cited extensive information and documents that are tied to the investigation against his client, asking for a postponement of two months.

“We are asking for two months, which is about a quarter of the time that the investigation took. We think that’s really reasonable here. We think that it would afford a process in which we can defend these charges.“

Zachary Hafer, an attorney representing Andy Sanborn

The latest delay marks the second time the hearing between Sanborn and the Commission has been pushed back. The investigation against the former Senator comes ahead of his gaming operator license expiration set for December 31, 2023. According to the investigation against him, he was unsuitable to hold a license in New Hampshire. Even if Sanborn is found unsuitable to hold a license in the state after the hearing with the Commission, he may appeal that decision with the Supreme Court.

Using COVID Relief Funds for Personal Expenses

An eight-month-long investigation against the former Senator uncovered that he allegedly obtained $844,000 in federal COVID-19 relief funds fraudulently. Accusations against him claim that the money was used for a lavish lifestyle, including purchasing expensive sports cars for himself and Laurie Sanborn, his wife. He allegedly concealed personal expenses as business transactions, transferring some $183,500 into his personal accounts.

The established regulations do not allow casinos to benefit from COVID relief funds. Yet, the investigation claims that Sanborn concealed the identity of his company and instead of Concord Casino, filed the application with the name Win Win Win LLC. According to the investigation, the activity of his business was described as miscellaneous.

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An investment advisor previously employed by Wells Fargo, based in Union County, New Jersey, has been handed a three-year and six-month prison sentence for orchestrating a sophisticated financial fraud scheme, resulting in a total loss of $626,478 for five clients. 

Exploitative Financial Advisor Preys on Vulnerable Clients

The 39-year-old defendant manipulated the trust of his victims, taking advantage of their vulnerabilities, with some being elderly, disabled, or grappling with memory loss. He convinced his clients to transfer money from their brokerage accounts to personal accounts, under the guise of making investments on their behalf. 

However, instead of utilizing the funds for their intended purpose, he funneled the money through a convoluted network of entities linked to friends and family members, ultimately redirecting the funds back to himself.

Federal prosecutors revealed that the defendant had also built excessively personal relationships with his clients, further abusing his position as an investment advisor. This manipulation extended to three siblings, aged 83, 86, and 93, all living together. Despite sharing holidays and personal moments with them, the Wells Fargo advisor continued his fraudulent activities unabated.

The scheme began to unravel when the siblings grew suspicious of the lack of investment returns and confronted the defendant. In response, he sent them falsified documents purporting to show their funds in a separate brokerage firm. This deception was quickly debunked by the alleged brokerage firm, confirming the fraudulent nature of the claims.

Justice Served as Wells Fargo Collaborates in Investigation and Reimburses Victims

During the investigation, Wells Fargo cooperated closely with the authorities, highlighting its commitment to upholding the highest ethical standards for its employees. In addition to cooperating with the investigation, Wells Fargo fully reimbursed the victims, mitigating some of the financial harm caused by the rogue advisor’s actions.

The trial concluded with a guilty plea to one count of wire fraud and securities fraud. The plea deal helped the defendant avoid a potential maximum sentence of two decades behind bars. The sentencing was presided over by US District Judge Madeline Cox Arleo, who imposed not only the prison term but also a three-year supervised release period.

Gambling addiction often drives people to commit fraudulent activities. Another recent case saw a former accountant in Australia admitting to over 100 charges for using clients’ funds to support his gambling addiction. He allegedly defrauded the Australian Tax Office and clients of more than AU$1.4 million ($937,000) over five years. He moved money between clients’ accounts and a personal “fraud account,” using these funds for online gambling, including betting on races.

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