Online Gambling Fraud: How It Works & How to Stop It

Today, we'll examine the fundamentals of online gambling fraud, how it impacts organizations, and how you may safeguard yourself using the most recent techniques.



What Is Online Gambling Fraud?

Online gambling scams are cyber criminals trying to exploit or defraud game providers. This can take many forms, from multiple accounts to bonus abuse, affiliate fraud, money laundering, and gray areas such as arbitrage.

  When a fraud analyst talks about gambling fraud, it refers to illegal or harmful activities that professional or amateur fraudsters do to withdraw funds, bonuses, or other benefits from  online gambling establishments and/or to facilitate other fraudulent activities. Refers to a practice or plan.

  Of course, online gambling attracts many scammers not only because of its accessibility, but also because of the offline industry's traditional links with money launderers. Sites, bingo rooms, bookmakers, etc. are also of interest to regulators and legislators.

Most Common Types of Online Gambling Scams

Scammers are constantly finding new and creative ways to exploit the system, but there are some common attacks to watch out for.

Multi-accounting: This is the foundation on which many gambling attacks are built. Scammers use fake credentials to create dozens, or even hundreds, of accounts to gain an advantage online. They are used to facilitate schemes such as: Bonus Abuse: Numerous fake accounts profit from sign-up her bonuses, coupons and other attractive offers. These promotions are a great way to attract new players, but over-distribution can quickly mislead the platform. Gnoming: Using multiple accounts to help one player win. Other accounts are used to intentionally lose in one-on-one games, allowing you to pocket the winnings and bonuses that go along with it.This is common in poker, for example. Chip Dumping: Another form of cheating at the poker table. As with gnome, the goal is to cheat the system by bringing multiple accounts to the same table and swing the outcome in favor or against a particular player.

Then there are payment attacks. Online casinos and gambling platforms are essentially digital wallets because you need to make deposits and withdrawals before you can play. So processing payments means potential losses there too.

Carding: Scammers can use stolen card information to fund accounts. This means that you can use your illicit money to make real profits. Chargebacks: After someone uses a stolen credit card on your platform, the legitimate cardholder will likely realize what happened and file a chargeback with their bank or credit card provider. Unfortunately this means that you will be reimbursed at the gambling operator's expense plus a processing fee for adding insult to injury…

Phone Charge Abuse: If an online casino offers phone charges, scammers can trick victims into charging their accounts. It relies on standard social engineering and phishing techniques to target unsuspecting users and ask for payment over the phone. Payments are sent directly to the cheater's game account. Finally, as with brick-and-mortar casinos, the owner must be careful not to become a preferred place for money he launderers. Places that process large sums of money can be used to justify illegally obtained cash, and gambling establishments are popular targets for criminals.

How to Stop Online Gambling Fraud

One of the most important ways to deter fraud in any kind of online business is to follow good KYC (Know Your Customer) practices. This includes implementing a risk-based fraud detection software solution. This not only helps you comply with KYC obligations, but also addresses the risks inherent in the online gambling sector. To stay compliant and fight fraud, follow these steps from the time of onboarding:

Identity verification with government-issued documents (according to local law)



age verification

PEP (politically exposed person) checks and other AML mandatory checks, including all relevant sanctions lists, watch lists,  crime lists

During signup, the following methods can be used to assess the user's intent and value of cheating:

Device fingerprinting has proven to be one of the most powerful ways to stop collusive behavior such as bonus abuse and chip dumping.

Digital Footprint Analysis – Legitimate emails and phone numbers are often associated with at least some social media accounts and other online platforms and say a lot about their owners. IP Fraud Score Analysis – Similar to device fingerprinting,  IP addresses can reveal a lot about an individual's internet usage, location, and potential for fraudulent activity.

Behavior and Velocity Checks – Modules that examine a person's behavior across different touchpoints and compare them over time. Have many users logged in with the exact same IP within a few hours?

Most of these steps can also be used for deposits, withdrawals, and other touchpoints to ensure  the right people are using the right accounts. For example, device fingerprinting and IP analysis can help flag account takeovers (whether credentials were stolen or obtained through a phishing attack).

  Finally, when topping up your account, it's important to monitor your card information to make sure it's not stolen or poses a risky hazard.

This is partially done by a BIN lookup which you can try  below. Simply enter the first 6 digits of your card number to verify your issuing bank details.


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What Tools Do You Need?

If you want to fight  online gambling fraud, you should know that cross-referencing large amounts of data is humanly impossible. Fraud managers therefore have to resort to third-party solutions.

This includes tools, features and touchpoints such as, but note that these can be combined  end-to-end and into other types of software.

  • ID verification
  • PEP (politically exposed persons) lists
  • anti-money laundering (AML) tools
  • sign-up (onboarding) monitoring
  • log-in monitoring
  • withdrawal and deposit monitoring
  • actual games and tables monitoring

How Does Fraud Affect an Online Gambling Site?

Scams have a negative impact on online gambling sites. The downsides are very obvious and common to all types of online businesses.

Lost sales:

Whether it's spending money on chargebacks, losing bonuses, or wasting time chasing bad players, cheating is costly for operators.


Poor reputation of payment processor:

Online gambling sites are already considered risky by payment processors. If you don't manage your chargeback rate, you risk being banned from using the network. This effectively ruins the business as players will no longer be able to deposit via their chosen method.

Waste of resources:

When you think about all the time your team has to spend chasing down fraudsters and improving processes to reduce risk, you quickly realize that fraud isn't just about financial damage.

Outstanding Customer Support:

Scammers wreak havoc on the business her process. This often leads to customer complaints about his service. Responsibility for resolving these complaints rests with our support team, who can quickly become overwhelmed with the volume of requests.


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Compliance issues:

It's no secret that regulators crack down on online gambling sites. Failure to find cheating or self-excluded players can result in hefty fines, not to mention legal issues.

Declining customer satisfaction:

Failure to solve the legitimate player fraud problem will inevitably put your business at a disadvantage unless you completely switch to a competitor.

The last point is especially important when it comes to multiplayer games. Online gambling sites that offer games such as online poker quickly find their live user base dwindling if they can't control cheating at the tables. 

Why Is Online Gambling at Increased Risk of Scams?

As technology continues to advance and more players turn to online gambling, scammers are finding more and more opportunities to find loopholes within the platform due to the risky nature of the industry.

Our research shows that the online gambling sector varies greatly in the amount and type of fraud that occurs by region. In terms of sophisticated and malicious login attempts, different regions have different vulnerabilities, and the range of risks that operators have to deal with is quite large, with risk spreads of up to 38% across regions.

The online gambling industry is unique because it is difficult to find a balance between attracting new players and managing risk, as well as keeping existing players happy in the face of intense competition in the industry.


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The Rise of Online Gambling

As the internet gambling market continues to grow rapidly, operators are aiming even higher. Today, we'll take a look at the challenges they face and how they can protect their business in the long run.


The iGaming industry is projected to generate a global revenue of US$92.9 billion by the end of 2023, and major markets such as the US, Germany and Spain have all recently legalized aspects of online real money gambling. 

How Does Online Gambling Fraud Happen?

Online gambling fraud occurs when the operator does not recognize the person. Players or partners lie about who they are or what they do. This can happen in a number of ways, including account takeover, bonus abuse, and carding.

Let's see some examples:

Internet gambling scams can occur when scammers use multiple accounts and attempt to exploit bonus her promotions. Alternatively, you can use a stolen credit card or ID to deposit.

In other online gambling scams, the perpetrator actually interferes with the game and disguises himself as an honest player to disguise the original source by laundering money. Scammers will try to take advantage and walk away as soon as they make money, but active and everyday gamblers can also participate in "beat the bookmaker" scams such as: B. Continue gambling in arbitrage or matched betting and unauthorized methods (or outright illegal).


Key Takeaways

For gambling operators, poker rooms and online casinos, monitoring and preventing fraud is no easy task. Since they essentially act as digital wallets, they run into a multitude of risk factors and require sophisticated tools to analyze and label their data.

Both his KYC and AML at iGaming are a pain point due to the strict laws and hefty fines and additional fraud they can facilitate. More importantly, their business is based on user trust and building relationships with players. If you feel that the platform isn't safe or fair, you have plenty of competitors to turn to. Because of this, preventing cheating and showing that you're working for your players will only have a positive impact on your business in the long run. 


Cole Rasmussen

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