Effective Fraud Prevention Methods for Casino Operators

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As our beloved digital casino world keeps blending more with the real one, it's sad but true that criminals are getting smarter and sneakier. To keep up with these tricky fraudsters—whether they're messing with payments, hunting bonuses, or hacking systems—operators need some top-notch, all-round solutions.

Combatting Casino Fraud: Key Insights​

Our partners over at Gaminator System have shared some great tips on how entertainment platform owners are fighting off these offenders.

What Exactly Is Casino Fraud?​

So, what are we talking about when we say "fraud" in the casino sector? It's basically any shady activity aimed at tricking honest players and legit brands. Sure, there are control mechanisms in place, but these bad actors often find ways to dodge them.

Here are some common scams:

• Data breaches: Thieves getting rich off personal data leaked from servers.
• Unauthorized access: Sneaking into and using information they shouldn't have access to.
• Financial theft: Stealing money by using someone else's bank card details and more.

According to Onfido's Identity Fraud Report, in 2024, the average fraud rate in iGaming and betting companies jumped to 7.6%, up from 4.2% in 2022. That's an 80% increase in just a year—yikes!

Common Kinds of Scams in Online Casinos​

Features of Online Casino Fraud​

Let's dive into the most common violations that operators face.

Multi-Accounting​

Attackers create multiple fake profiles to gain an unfair advantage. They might have tens or even hundreds of thousands of these accounts, launching a bot attack on digital platforms.

Common Multi-Accounting Schemes:

• Gnoming: Creating multiple fake accounts to manipulate an online casino’s operations. On betting platforms, this can help bypass max bet restrictions and hit big jackpots.
• Bonus Hunting: Fraudsters create accounts just to claim welcome bonuses, withdraw the money, and then block the accounts. There’s no long-term gambling, so business owners see no profit.
• Chip Dumping: In poker, scammers control multiple accounts at one table to manipulate the game in favor of one account by strategically folding.

Fraudsters are getting more creative, often using different personal devices (PCs, laptops, gadgets) and ensuring their IP addresses don’t raise red flags.

Identity Fraud​

According to Onfido’s Identity Fraud Report, the casino industry sees more digital identity fraud than any other sector. Criminals use fake passports, ID cards, and driver’s licenses, often altering dates, document numbers, and even photos.

Credit Card Manipulation​

This is one of the most common methods, accounting for nearly 40% of offenses. Fraudsters, either solo or in groups, aim to cause financial damage to virtual casinos. This can include:

• Unauthorized Transactions: Conducting transactions without permission on gaming sites.
• Stolen Cards: Using stolen cards to deposit and withdraw funds.
• Money Laundering and Terrorism Financing: Using casinos to launder money or fund illegal activities.

Analysts say 48% of fraud cases occur during payments on entertainment portals. Hackers exploit weaknesses in security systems, take over accounts, and make unauthorized online purchases using card-not-present transactions. Recently, iGaming platforms have faced BIN attacks where criminals use software to guess credit card details and test small transactions to find unprotected cards.

Bots as Attackers​

Online casino fraud is on the rise, and bots are playing a big role. These programs mimic human behavior during sessions and hide behind fake profiles. According to ThreatMetrix, about 60% of daily internet casino traffic is now generated by bots and scripts. Scammers even run bot farms to manage thousands of fake accounts.

Bots are often used in affiliate marketing scams, especially with CPA schemes. Dishonest affiliates attract fake customers, claim rewards from entrepreneurs, and disappear, leaving operators with losses from fake profiles.

Chargeback Manipulations​

This type of "friendly fraud" is often initiated by players. If someone loses a lot of money, they might request a refund with various stories like:

• Unauthorized Transaction: Claiming they didn’t make the transaction.
• Goods/Services Not Received: Saying they didn’t get what they paid for.
• Stolen Card/Device: Reporting their card or device as stolen to get a refund.

Why Casino Owners Need to Protect Themselves from Intruders​

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

1. Financial Losses:
   • Entrepreneurs can lose substantial amounts of money due to bonus hunting, chargebacks, and hacker attacks. For large companies, these losses can reach tens of thousands of dollars.
2. Reputational Damage:
   • Frequent fraud cases create a negative perception of the iGaming brand. This can lead to decreased website traffic and overall profitability as the brand's image suffers.
3. Non-Compliance with Legislative Requirements:
   • Providing fair and transparent gameplay is a legal responsibility for business owners. Neglecting basic security measures can result in hefty fines and, in severe cases, the revocation of their license by regulators.
4. Operational Issues:
   • Fraud negatively impacts all core processes in online casinos, including timely prize payments, transparent settlements with B2B partners, and fair bonuses. The actions of attackers increase the number of player complaints, overwhelming the support service with requests.

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

Anti-Fraud Measures in the iGaming Sector​

Protection Against Fraud in Gambling: Methods​

Let's look at how entertainment portals can enhance their security.

Multi-Factor Authentication (MFA)

Users undergo strict identification to eliminate bots and reduce illegal activities. This includes:

• IP and geolocation checks
• Device verification via one-time SMS or voice call
• Biometric identification (fingerprint or retina scanning)

MFA helps filter out bots and potential attackers during registration, ensuring genuine interactions with customers.

Data Encryption

Advanced algorithms secure player data and financial transactions, converting information into an unreadable form that only authorized parties can decrypt. Common encryption methods include:

• Secure Socket Layer (SSL)
• Transport Layer Security (TLS)
• Advanced Encryption Standard (AES)

This approach protects databases, transactions, and game logs from unauthorized access.

Transaction Controls

Monitoring money transfers in real-time to identify suspicious activity such as:

• Unusually large bets
• Frequent deposits from multiple accounts
• Payment failures
• Frequent refund requests

Collaboration with financial institutions and using cryptocurrency gateways can enhance transaction security.

Firewall Installation

A firewall acts as a barrier against external threats, handling tasks like:

• Controlling traffic
• Tracking suspicious data packets
• Preventing unauthorized log-ins
• Blocking cyber attacks and data leaks

This measure helps protect against bots, phishing attacks, and malware.

Monitoring of Accounts​

Account monitoring is crucial during fund replenishment, withdrawals, and other interactions with iGaming sites. Here’s how it can be done:

Password Hash Analysis

• Pattern Detection: Attackers using multiple profiles often reuse passwords. Simple checks for matching hashes can reveal accounts operated by bots.

Digital Footprint Study

• Profile Examination: Scams often involve profiles lacking social and digital presence, using VPNs, or having recently created email accounts.

IP Fraud Assessment

• Usage Analysis: This provides insights into a user’s Internet behavior, location, and potential for illegal activities. Continuous transaction and profile scans can uncover multiple accounts registered from the same IP address.

Behavior and Speed Monitoring

• Activity Tracking: Unusual gameplay speed, frequent restarts, and illogical actions often signal fraudulent activity.

Installation of Wagers​

Implementing wagering requirements can prevent criminals from illegally withdrawing bonus funds. Business owners can:

• Set Scroll Numbers: Define how many times a bonus must be played before withdrawal.
• Select Bet Types: Choose which types of bets count towards the wagering requirement.
• Establish Time Limits: Set time frames for fulfilling the wagering conditions.

Integrating wagering requirements helps filter out bots and bonus hunters, ensuring that incentives go to players interested in long-term engagement.