The online gambling industry has grown explosively in recent years. It’s now a market worth around $100 billion — with around 200+ million players worldwide.
Unfortunately, that money attracts more than just players eager to try the latest slot or test their luck at the blackjack table. The potential for fraud and scams is also rising as the gambling industry grows.
This includes a wide range of fraudulent activities, from cheating at casino games to trying to bilk players out of their earnings.
While these schemes should be of special interest to anyone who regularly gambles online, it’s also important to understand their impact on the industry as a whole — and what it could mean for other digital transactions.
Common Online Gambling Scams Explained
Fraudulent activities can come from gambling websites or users through unauthorised gambling transactions and similar methods.
Here are some of the most common scams operators see:
- Phishing Scams: With this type of iGaming fraud, fraudsters create fake websites or send deceptive emails that mimic legitimate online casinos, tricking unsuspecting legitimate players into providing personal and financial data, usually credit card information.
- Bonus Abuse: In this case, scammers exploit promotional offers by creating multiple accounts to claim bonuses illegitimately at an online gambling site, impacting the casino’s financial stability.
- Rigged Games: This type of gambling fraud involves unscrupulous online casinos that manipulate algorithms of online casino games to reduce the chances of legitimate players winning, unfairly boosting the house’s profits.
- Identity Theft: Criminals steal personal information to create fake online gambling accounts or to make unauthorized transactions. These fraudulent transactions can severely impact users’ finances and credit scores.
- Collusion and Online Casino Cheating: In poker and other multiplayer games, individuals may join forces to share information and cheat, skewing the game’s fairness.
- Chargeback Fraud: Users place bets and then dispute the transaction with their bank to reclaim funds, leaving online casinos with financial losses. This can be a form of credit card fraud.
- Money Laundering: Some fraudsters use online casinos to disguise the origins of illegally obtained money, which threatens the integrity of the financial system.
Online Gaming Fraud Stats: How Big Is the Problem, Really?
Online gaming fraud surged 64% in 2024, following the overall rise of online casinos. According to Sumsub data, the surge resulted in $1.2 billion in losses.
Bangladesh and Indonesia stand out as the most affected countries, with a high percentage of fraudulent applicants. The report identifies common fraud types, including bonus abuse, affiliate fraud, and deepfake scams, which have grown tenfold recently.
Demographic trends indicate a widespread impact. Reports indicate that all reputable online gambling sites need advanced measures like KYC and behavioral intelligence.
Notable Examples of Online Casino Fraud
As noted, online gambling fraud can come in different shapes and target multiple types of online gambling sites. Let’s briefly discuss how do scam online casinos work, with three notable examples from the recent past that iGaming platforms can learn from.
MGM Resorts Data Breach
In September 2023, MGM Resorts suffered a massive data breach. A misconfiguration in their cloud server exposed the personal details of 142 million guests, allowing hackers to access and steal data, which was later found for sale on the dark web.
The victims included high-profile individuals such as CEOs, celebrities, and even government officials. This breach not only risked identity theft and financial fraud for those affected but also severely damaged MGM’s reputation.
Clubillion App Data Exposure
In March 2020, the gambling app Clubillion suffered a major data exposure due to a technical glitch on their Amazon Web Services-hosted platform. The breach left sensitive user data like names, IP addresses, and private messages open for access without any authentication.
This, in turn, left the users of the online gaming app vulnerable to further fraud like stolen identities, affiliate fraud, and other cyber threats.
The breach shook the online gambling platform to the core, making it an example of issues sophisticated fraudsters can bring upon online gambling operators.
The Maharashtra Online Gambling Scam
Proving that online gambling frauds are not limited to the United States, a businessman from Maharashtra, India, lost around $7,000,000, after being lured into gambling by a bookie named Anant, alias Sontu Navratan Jain.
Initially, the businessman was hesitant, but Jain facilitated the creation of an online gambling account via a WhatsApp link, where the businessman eventually suffered enormous losses.
The police investigation recovered assets including cash and gold, although Jain reportedly fled to Dubai.
Online Casino Scam Prevention Tactics
Preventing online casino scams comes on two fronts: measures taken by online gambling platforms and things that customers can do to keep themselves safe from potentially fraudulent activity.
Advanced Encryption
Advanced encryption protocols like AES-256 are used by all reputable online casinos to protect customer data. This encryption standard will convert any sensitive information into a complex code that is essentially impossible to decrypt without the correct key.
Online gambling platforms will then update encryption keys regularly to thwart potential attackers.
AI-Driven Fraud Detection
Fraud detection using artificial intelligence will leverage machine learning algorithms to monitor potentially suspicious transactions and user behavior in real time. These systems have the capability to analyze large datasets and identify patterns that indicate potentially fraudulent activity.
Red flags here include multiple failed login attempts for potential account takeover or simply unusual sports betting patterns. AI tools can also learn from their operations and better adapt to new suspicious activities as they occur.
Multi-Factor Authentication (MFA)
Multi-factor authentication boosts security by requiring multiple verification forms before account access. This simple method can significantly reduce potential account takeovers.
MFA makes it much harder to gain unauthorized access because it combines passwords with unique verification codes only available on the user’s device.
Transaction Monitoring
Online casinos can also analyze transaction patterns and detect suspicious activities by continuously monitoring transactions.
Gambling sites typically flag unusual behavior, such as large withdrawals or frequent deposits, which may indicate fraudulent activity, such as using stolen credit cards.
Identity Verification
Data from the gaming industry clearly shows that identity verification is effective in combating fraud. It’s also a key part of anti-money laundering practices and involves simply confirming users’ identities through documents, biometrics, or verification codes.
The process ensures that only legitimate users gain access to accounts, reducing the risk of identity theft and fraud.
4 Things You Can Do to Avoid Online Gambling Scam
Now that you know the most common types of online gambling fraud and the measures online casinos should take to prevent fraud, the time has come to discuss what actual players can do to steer clear of suspicious activity.
1. Verify the Legitimacy, Check Licensing Data
To protect yourself from scams, start by checking the licensing information from reputable authorities. The license number is usually available in the footer menu, and it’s advisable to visit the site of the regulatory body and check the license number.
2. Stick to Secure Payment Methods
Always opt for secure payment methods – credit cards, bank transfers, or trusted e-wallets. These banking options come with fraud protection and dispute resolution options. Also, check that the gambling site uses HTTPS encryption before sharing sensitive information.
3. Set Personal Limits on Spending
Manage your gambling spending by setting personal limits. Reputable sites offer tools to control deposits and losses. Utilize these features to keep your gambling activities in check and avoid overspending.
4. Secure Your Accounts
Use strong, unique passwords for each gambling platform you join. Also, always enable two-factor authentication (2FA) for added security. This can prevent unauthorized access even if your password is compromised.
Future Outlook on Online Gambling Fraud Prevention
Looking at the future of online gambling fraud, the problem may worsen as fraudsters adapt to technological advancements. This includes outmaneuvering existing prevention measures.
But the security measures put in place by legitimate online casinos keep up with the trends to strengthen overall security. Technologies like blockchain and AI-driven security systems offer more than a glimmer of hope, as blockchain can improve transparency and accountability, while AI will enhance fraud detection through advanced pattern recognition.
Ultimately, while the threat landscape is evolving, so too are the tools and strategies to combat online gambling fraud. And as always, sticking to reputable online casinos and knowing how to recognize them is the vital first step in handling online gambling fraud.
