Even for iGaming operators that are stacking their decks with best-in-class risk management solutions, fraudsters still find a seat at the table. The temptation of shiny bonuses, quick access to money, and de facto online wallets is too alluring for organized criminals and habitually abusive users. To facilitate their fraud, these bad users always seem to be generating new aces, with new sleeves to hide them in.

So what is the state of iGaming fraud, by the numbers? Who is most at risk, and what can we learn from crunching the data from our fraud detection solution? 

SEON’s Top 3 iGaming Fraud Insights

To form answers to these invaluable business questions, and to shine some light in the dark corners where fraud hides, we looked at millions of data points relating to transactions, deposits, bonuses, and other user actions between 2021-2022. Here are some of the most valuable insights from that data.

#1. iGaming Fraud Risk Variance: Up To 38% Across Regions

The first metric we scrutinized was the rate of blocked or approved user signups based on user geolocations. SEON customers may get that information from our IP lookup tool, which takes into account the presence of various tools associated with risky users, such as VPNs and harmful IPs. In conjunction with data for decline rates, manual reviews, and acquisition costs, we can see how regions are balancing risk and profit.

We differentiated the global iGaming market into eight key regions, including Africa, APAC, LATAM, Western/Central, Asia, the US, the EU, and GB.

Upon reviewing the data, there were immediate stand-outs in terms of variance. In the UK and Europe, where experienced gambling operators have established robust risk management practices, including adopting the latest in fraud prevention technology, 64% of players were found to be legitimate. Approximately 25% of new signups fell into the high-risk or fraudulent category, with 10% of those requiring manual review resources. These regions represent the risk baseline. 

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By comparison, Western and Central Asia showed the highest risk variance. As with many verticals in the region, sign-up and welcome bonuses are a common practice for iGaming. The sheer numbers of players make the cost-per-acquisition exceptionally low, but contributes to the region’s whopping 40% decline rate as fraudsters attempt to take advantage of new player bonuses.

Notably, though these two regions represent the two extremes of the risk spectrum, fraud certainly exists across all the regions. Bad actors in the UK and EU, for example, were found more often to be leveraging more sophisticated fraud tools like virtual machines, whereas fraudsters in Asia were less sophisticated, often leaning on the low upfront cost of both physical devices and labor.

#2. Fraud-Fighting MVPs: Device Fingerprints & Password Hashes

There is one area where device fingerprinting and password hashing reign supreme, and that’s when it comes to identifying multi-accounting. In iGaming, this may translate to bonus abuse, collusive play, chip dumping, and other organized exploits.

By scrutinizing the data points that paint a unique portrait of the connecting device, we found that sophisticated fraudsters might be exploiting dozens of fake accounts from a single device. Furthermore, even the most sophisticated account abuse fraudsters had no scaleable method to get around the password hash data point (an encrypted way to store password data). For some of our iGaming clients, our data showed that adding the password hash check to fraud workflows revealed an average of 34 bad accounts, indicating that the fraudster had not taken the time to assign each dummy account a truly unique password. Our data also revealed that many fraud teams are still not leveraging this valuable data point. 

The data suggests that there is a threshold of sophistication that is valuable for fraudsters, and at a certain point, the effort required to evade detection from products like SEON isn’t worth the required time investment.

#3. Variance in Affiliate Network Value

With the SEON platform, iGaming operators can track which affiliate brought in more customers. At a more granular level, the data also shows how our customer’s networks of affiliates performed in terms of traffic quality, by looking at their respective approve-review-decline labels.

The data clearly shows that being discerning when it comes to onboarding affiliates pays dividends. The performance of our customer’s affiliate networks showed a massive variance in added value, both in terms of new customer approvals as well as expenditure of human resources at the review stage. While the best performers saw overall approval rates as high as 90%, declining about 5.5%, the worst performers show declined up to 20% – a 15.5% variance in new customer approvals is a metric that any revenue team would take notice of.

As well, the affiliate networks on the low end of the performance spectrum needed up to 30% of the traffic they brought in escalated to manual review, necessitating a huge amount of people hours to conduct the reviews. Review labels at this magnitude that suggest a higher overall riskiness could be indicative of a fraudulent affiliate partner. 

Unfortunately, affiliate fraud is more common in iGaming than elsewhere: there is still a high risk that you could be onboarding fraudsters, even if they have been referred by a trusted affiliate.

Key Takeaways from Our Data

Part of what our data confirms is that there is a delicate balancing act that every iGaming operator must learn in order to stay in the black. Naturally, the bonuses that are used to entice new players have to be attractive enough to get them in the door, and inevitably there will be a certain percentage of bonus abusers among them. To minimize that percentage of bad actors, operators have to not make the offers too attractive, while keeping security friction within acceptable limits. These same principles have to then be applied to the affiliate onboarding process, in order to bring in the highest returns on new referred customers.

At SEON, we hope these data insights can help keep your balance. Businesses that fail to do so may find themselves lost somewhere in the woods where a fraudster lurks behind every tree, and they might have 34 aces up their sleeves.

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