Guide to Bonus Abuse in iGaming: How to Detect & Prevent

The world of online gambling is witnessing a surge, with billions engaging in betting. In 2023, 4.2 billion individuals placed bets, and projections show the industry’s value reaching $370 million by 2032. The numbers alone highlight the industry’s vast reach and, inevitably, the accompanying challenge of bonus abuse.

This guide helps you understand bonus abuse and its impact, offering strategies to counteract it, aiming to maintain industry integrity and ensure a smooth and fair gaming experience.

What Is Bonus Abuse?

Bonus abuse, often referred to in the context of online gaming or gambling, is the practice in which individuals exploit promotional offers intended for new users and provided by platforms to gain unfair advantages or profits. It is a sophisticated form of fraud that leverages vulnerabilities in operators’ processes that enable the exploitation of promotional incentives designed for new players. This unethical behavior, also known as promo abuse, multi-accounting or bonus hunting, targets various bonus offers, extra funds, sign-ups, free spins, no-deposit bonuses and other incentives designed to attract new users or reward loyal customers.

Bonus abusers manipulate these promotions through strategies like creating multiple accounts, collaborating with others or employing betting patterns that minimize risk while maximizing the benefit from these bonuses. Such activities violate the terms and conditions of the platforms and can lead to account suspension, forfeiture of winnings, and, in some cases, legal action. In essence, bonus abuse undermines the intended spirit of promotional offers, creating an uneven playing field and potentially causing financial and reputational damage to the service providers.

How Bonus Abuse Fraud Works in iGaming

Fraudsters often create multiple fake identities to repeatedly claim bonuses intended for first-time users or engage in practices such as multi-accounting and using advanced technologies like VPNs or Tor browsers to conceal their activities, making it challenging for operators to track and stop them.

While the methods of bonus abuse vary, including strategies like arbitrage betting, cross betting, bonus hunting and chip dumping, all of them threaten the financial stability of gaming platforms and the fairness of the industry. Central to the issue lies inadequate online identity verification processes that fail to detect signs of fraudulent activities, allowing abusers to exploit these systems repeatedly. 

Operators are countering this threat with stringent terms and conditions, keen surveillance of player activities and adherence to strict regulatory standards, as well as implementing complex bonus terms, conducting rigorous monitoring for unusual sign-up and cash-out patterns and performing thorough Know Your Customer (KYC) checks to prevent bonus abuse better but also to maintain the industry’s integrity and trust of genuine players.

Understanding the iGaming Bonus Market 

Bonuses in the iGaming industry are meticulously crafted to cater to diverse player profiles and market niches, considering regional tastes, legal frameworks, and technological progress. iGaming businesses allocate substantial resources to their reward schemes to draw in and keep players engaged, leveraging advancements in data analytics to finetune the appeal and efficiency of these tactics. 

Top-tier operators allocate up to 18% of their gross revenue on bonuses to attract new customers Meanwhile, tier 2 operators depend almost exclusively on rewards and partnership programs—with affiliate marketing accounting for 25% of their gross revenue expenditure and bonus programs running an additional 25 to 45% of spend.

These figures underscore the pivotal role of bonuses in initiating, expanding, and sustaining a thriving iGaming operation in today’s online landscape.

Seven Types of Popular Bonus Offers

Bonus offerings are a standard strategy operators use to attract and retain players. Here are the top seven types of bonus offerings that are often targeted:

1. Sign-Up Bonuses
   These bonuses are offered to new players when they create an account. To claim this bonus multiple times, fraudsters create numerous fake accounts, a practice otherwise known as bonus hunting or bonus whoring.
2. No-Deposit Bonuses
   As these bonuses don’t require players to make a deposit to claim them, they are beautiful for fraudsters. Individuals might create several accounts to claim bonuses repeatedly without ever intending to engage with the platform legitimately.
3. Deposit Match Bonuses
   These bonuses match a player’s deposit up to a certain percentage, offering them more funds. Fraudsters might use stolen credit card information to make deposits and claim the matched funds, putting the operator at risk of chargeback fraud.
4. Free Spin Bonuses
   Offered as a set number of free spins on slot games, these bonuses can be exploited by players creating multiple accounts or by using bots to maximize winnings without genuine play.
5. Refer-a-Friend Bonuses
   These bonuses reward players for bringing new players to the platform. Fraudsters might exploit this by referring to fictitious players or using stolen identities to create new accounts.
6. Loyalty Bonuses
   Loyalty programs reward players for their continued play and deposits. However, players could abuse this by using schemes to minimize losses while maximizing points or rewards – sometimes through coordinated play or multiple accounts.
7. High-Roller Bonuses
   These bonuses target players willing to make large deposits. Abusers might use these offers to launder money by depositing large sums and withdrawing them after minimal play, often across multiple accounts.

Strategies for Bonus Abuse Prevention and Detection

A major problem for iGaming operators, bonus abuse costs an average of 15% of annual gross revenues. To combat this, operators must implement stringent verification processes, monitor player behavior, and use anti-fraud technologies to detect and prevent these forms of abuse. 

• Leverage Digital Footprinting – Analyze users’ digital footprints to detect patterns consistent with bonus abuse, such as VPNs, proxies or Tor networks, indicating potential evasion attempts.
• Tap Device Intelligence – Apply device intelligence to identify and block users from creating multiple accounts from the same device or using known or suspicious device setups.
• Monitor User Behavior – Analyzing patterns of sign-ups, deposits and withdrawal activities can help identify deviations from legitimate player behavior and root out potential bonus abuse. 
• Implement Advanced Identity Verification – Robust identity verification processes, such as documents, biometrics and proof of liveness, can deter fraudsters by requiring more complex and precise steps to prevent multiple account creations and ensure each user is unique and legitimate before signing up or cashing out. 
• Introduce Dynamic Customer Friction – Introduce variable levels of Know Your Customer (KYC) checks based on risk assessment with higher-risk activities or behaviors triggering additional verification steps. 
• Use Data Analytics and Machine Learning – Utilize data analytics and blackbox and whitebox machine learning algorithms to identify patterns and trends associated with bonus abuse, improving detection over time as the system learns from new data.

SEON’s Recipe for Stopping 80% More Bonus Abuse

SEON sharpens your fraud defense with AI-driven, real-time insights and a rules-based learning engine. Our platform adeptly counters bonus abuse while enhancing player experience, detecting multi-accounting through digital footprints, behavior, and device data.

Utilizing device fingerprinting, IP, and phone+email lookups, SEON extracts detailed metadata to thwart fraudsters, from casual abusers to fraud rings. All data is analyzed and integrated into a tailored risk-scoring engine, providing operators with proactive, actionable insights to stay ahead.

You might also be interested in reading about:

• SEON: iGaming Affiliate Fraud: How to Stop It
• SEON: How to Prevent iGaming Fraud
• SEON: Best Fraud Detection Software

Learn more about:

Digital Footprinting | Browser Fingerprinting | Fraud Detection API | Fraud Detection with Machine Learning & AI