Online gambling has transformed gaming, offering unmatched convenience. Players can enjoy games from home or on the go, fueling a booming industry projected to grow from $93.26 billion in 2024 to $153.21 billion by 2029. However, this surge in online transactions has also attracted scammers eager to exploit vulnerabilities.
Fraud in online gambling goes beyond individual losses; it enables money laundering and threatens the financial system. This article explores common fraud tactics and highlights the importance of proactive detection strategies to protect platforms, maintain fairness, and ensure a secure experience for all players.
What Is Online Gambling Fraud?
Online gambling fraud refers to any unlawful or unethical practice aimed at exploiting online gambling platforms to extract funds, bonuses or other benefits—or to facilitate other forms of fraud such as money laundering. These schemes are carried out by both amateur and professional fraudsters targeting the vulnerabilities of gambling operators.
This type of fraud can take many forms, including multi-accounting to abuse bonuses, affiliate fraud, arbitrage and money laundering. Due to the accessibility of online gambling and its historical association with financial crimes, the industry is especially susceptible to fraud. This vulnerability has drawn the attention of regulators, making it critical for poker rooms, online casinos, slot websites, bingo rooms and bookmakers to adopt robust fraud detection measures.
Common Types of Online Gambling Fraud
Fraudsters continually devise creative ways to exploit online gambling platforms, but these seven types of fraud are among the most prevalent:
Multi-accounting: The foundation of many gambling fraud schemes. Fraudsters create dozens or even hundreds of accounts using fake credentials to manipulate outcomes. These accounts often serve as tools for further schemes, such as:
- Bonus abuse: Exploiting sign-up bonuses, coupons, and promotions through fake accounts, potentially driving your platform into a loss.
- Gnoming: Using multiple accounts to deliberately lose in head-to-head games, funneling wins and bonuses to one favored account. This tactic is common in poker.
- Chip dumping: Similar to gnoming but focused on poker tables, where multiple accounts join the same table to manipulate results in favor of a specific player.
Payment fraud: Since gambling platforms process deposits and withdrawals, they are vulnerable to various payment-related attacks:
- Carding: Using stolen card information to top up accounts, enabling fraudsters to turn illegitimate money into real wins.
- Chargebacks: When stolen credit cards are used on your platform, legitimate cardholders often request chargebacks, leaving the gambling operator to cover the losses and incur processing fees.
- Phone top-up abuse: Fraudsters use phishing and social engineering to trick victims into funding their gambling accounts through phone payment systems, stealing money directly from unsuspecting users.
Money laundering: Just as in physical casinos, online platforms processing large sums of money can attract criminals seeking to legitimize illicit funds. Gambling operators must remain vigilant to avoid being exploited as conduits for financial crimes.
How Does Fraud Affect an Online Gambling Site?
Fraud has a serious impact on online gambling sites, affecting both operations and reputation:
- Revenue loss: Fraud leads to costly chargebacks, lost bonuses, and time spent managing fraudulent activity.
- Processor issues: High chargeback rates can harm relationships with payment processors, risking bans that limit players’ deposit options.
- Resource strain: Combating fraud drains time, money, and effort, impacting overall efficiency.
- Customer support overload: Fraud increases complaints and overwhelms support teams with excessive requests.
- Compliance risks: Regulatory scrutiny is high. Missing fraud or self-excluded players can result in fines or legal trouble.
- Customer dissatisfaction: Poor fraud management frustrates players, driving them to competitors.
In multiplayer games like online poker, unchecked fraud can cause active player numbers to drop rapidly, damaging the site’s appeal and profitability.
How to Stop Online Gambling Fraud
A crucial strategy to prevent fraud for any online business is adhering to robust KYC (Know Your Preventing online gambling fraud requires a comprehensive, multi-layered approach that goes beyond ID verification and AML checks during onboarding. While these steps are essential for compliance, operators must implement continuous fraud detection strategies throughout the entire player journey to effectively safeguard their platform.
Monitoring from Onboarding to Every Touchpoint
Device intelligence and digital footprint analysis form the foundation of effective online gambling fraud prevention. These tools are essential for detecting multi-accounting, bonus abuse and other fraudulent behaviors at signup—long before costly and high-friction IDV or AML checks come into play. By analyzing device signals, IP activity and online behaviors, operators can flag suspicious users early, reducing fraud without disrupting legitimate players.
Once users are onboarded, continuous monitoring becomes critical. Behavioral analysis, activity tracking and velocity checks across logins, deposits and withdrawals help detect anomalies, such as unusual betting patterns or high-risk withdrawal requests that require further investigation. Machine learning-powered risk rules adapt as more data is collected, making the fraud detection process increasingly precise over time.
Essential Fraud Detection Methods Across the Player Journey
Fraud can occur at any stage of the player journey, making it crucial to have layered detection methods in place.
- Device intelligence: Detects collusion and bonus abuse by identifying multiple accounts tied to the same device and account takeovers by flagging if an account is accessed from a new device and IP address.
- IP fraud scoring: Flags suspicious internet activity, shared usage patterns and potential VPN masking.
- Digital footprint analysis: Analyzes email age, social profiles, and other online indicators to spot risky accounts.
- Behavioral biometrics and velocity checks: Tracks actions across touchpoints to identify unusual patterns, such as repeated login attempts from the same IP or abnormally fast withdrawals.
Extending these measures to critical interactions like deposits and withdrawals helps prevent account takeovers and fraudulent transactions while also reducing operational strain. By stopping more fraud at registration, operators face fewer overall cases, allowing fraud teams to focus on high-risk threats rather than low-value manual reviews. The few fraudsters who do slip through are met with rigorous monitoring at every stage, ensuring efficient, high-impact fraud prevention. This proactive approach enhances security, maintains compliance and builds lasting player trust.
What Tools Do You Need?
If you want to fight against online gambling scams, you should know that cross-referencing huge amounts of data is humanly impossible, which is why fraud managers will need to turn to third-party solutions.
These will include tools, functionality, and touchpoints such as the following – though keep in mind these can be combined into end-to-end and other types of software:
- ID verification
- PEP (politically exposed persons) lists
- Anti-money laundering (AML) tools
- Signup (onboarding) monitoring
- Login monitoring
- Withdrawal and deposit monitoring
- Actual games and table monitoring
How SEON Prevents Online Gambling Fraud
SEON provides a comprehensive fraud prevention platform that helps gambling operators detect and prevent fraud at every step of the player journey, from signups to withdrawals. Leveraging real-time, AI-driven insights from its machine learning engine, SEON empowers operators to tackle all forms of online gambling fraud without compromising their player experience.
SEON’s solution analyzes online footprints from over 200 reliable data sources and the device intelligence collected during signup. This allows operators to flag high-risk accounts, detect bots and prevent fraud rings early in the process. The same level of scrutiny extends beyond onboarding, with continuous monitoring of player activity across deposits, gameplay and withdrawals. By identifying anomalies such as unusual betting patterns or high-risk transactions via preset and custom risk rules, SEON helps operators stop fraud in real time and take proactive action.
Backed by deep expertise in real-money gaming and actionable insights from iGaming fraud patterns, SEON helps operators scale their businesses securely while optimizing efficiency and minimizing costs. By delivering a seamless yet powerful solution, SEON safeguards platforms while ensuring a smooth experience for legitimate players.
SEON is your partner in fighting gambling fraud, offering tailored solutions that protect your platform without blocking legitimate players.
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Frequently Asked Questions
Since gambling operators are categorized as high-risk, a high chargeback rate will ultimately impact an operator’s overall revenue and damage their ability to accept credit card payments. Issuing banks might even blacklist you, not letting you pay using Visa or Mastercard, for instance.
Numerous instances of gambling fraud have led to huge fines and even jail time. For instance, in June 2021, a nun in America was sentenced for embezzling more than $835,000 from a school to pay for personal expenses, which included gambling trips.
Identity theft fraud is one of the biggest issues with online gambling fraud since fraudsters look to use stolen identities for bonus abuse, open new accounts, and ultimately launder money.
Check if you have any unauthorized transactions on your bank statement. In addition, look at your recent gambling history for any behavior you don’t recognize, which could mean that someone might have gained access to your account. An unexpected increase in communication from your chosen operator can be yet another signifier.
You might also be interested in reading about:
- SEON: iGaming Fraud: Its Types, Consequences & Prevention
- SEON: Stop Multi-Accounting Fraud
- SEON: Best Fraud Detection Software
Learn more about:
Browser Fingerprinting | Device Fingerprinting | Digital Footprinting | Fraud Detection with Machine Learning & AI
