The Essential Guide to Prevent Online Gambling Fraud

Dennis Pedersen

Dennis Pedersen

Online Gambling Fraud Prevention

Remember the character Ben Campbell in the movie 21? He was a high roller who used covert signaling and card counting to increase his chances of winning at casinos. This ingenious strategy not only allowed him to outsmart the house with unauthorized gambling transactions but also led him to amass substantial profits.

With the online gambling industry booming and technology advancing at a rapid pace, the risk of fraudulent activities and online gambling fraud prevention has become a major concern for operators. 

In 2023, the online gambling market size was valued at USD 70.64 billion. With CAGR of 11.7% from 2023 to 2030, revenues are forecasted to reach USD 153.57 billion in 2030.

US Online Gambling Market Size 2023 - 2030
US Online Gambling Market Size 2023 - 2030

The sheer amount of money involved in the online gambling industry makes it an attractive target for scammers and fraudsters. As iGaming and online gambling websites offer more anonymity, it is easier for criminals and fraudsters to exploit weaknesses in the system. As a result, fraud and risk management for gaming and gambling has become a significant challenge for operators. 

This lucrative market attracts not only legitimate operators and bettors but also cybercriminals who seek to exploit the lack of face-to-face interaction and anonymity to perpetrate fraud. Fraudsters may use stolen credit cards, collaborate with other players to fix game outcomes, or leverage software vulnerabilities to cheat the system. 

Additionally, they may use sophisticated techniques like phishing emails and social engineering tactics to gain access to customer data. Chargeback and frauds are other issues that merchants and online gambling operators face.  

Therefore, it is crucial for operators to implement fraud and risk management for gaming and gambling sites and robust security measures to safeguard their customers’ information and detect fraudulent activities promptly. 

Starting an online gambling business is challenging. As a merchant in a high risk industry, keep in mind to implement measures to protect your business, ensure you get a gambling license, and choose a secure and reliable payment provider that offers fraud protection and chargeback reporting. 

In this guide, you can learn more about online gambling frauds, the common types of fraud, and how you can prevent it.

What is online gambling fraud?

Online gambling fraud involves illegal activities aimed at deceiving legitimate players or online gambling platforms. Fraudsters can manipulate or violate the rules of online gambling to increase their profits. They employ various methods such as rigged games, counterfeit websites, and unauthorized access to accounts. 

Online gambling fraud is not limited to a specific game or platform; it can occur in any form of online gambling, including casino games, sports betting, and lottery games. Players should be vigilant for signs of online gambling fraud and take measures to safeguard themselves. Similarly, operators must strengthen their websites and applications to minimize financial risks for both themselves and their customers.

It is inevitable that you will become a victim of identity theft. Almost everyone in North America has had their identity leaked. The sports betting industry has become a prime target for fraud groups due to its rapid growth and extensive advertising. Fraudsters are constantly attacking gaming operators to take advantage of bonuses. 

However, bonus abuse is not limited to professionals. When operators are not careful, they become vulnerable to members of the public who register multiple accounts and claim multiple bonuses. 

Stay ahead of iGaming fraud trends in 2023 by keeping an eye on multi-account abuse, synthetic IDs, self-exclusion fraud, and deep fakes for video ID. Fraudsters are constantly adapting, so it’s important to stay informed and use the right tools to prevent fraud.

Why do online gambling platforms have an increased risk of fraud?

The online gaming industry faces unique challenges in balancing the acquisition of new players and managing risk, while also keeping existing players satisfied due to intense competition.  As technology improves and more people turn to online gambling, fraudsters are finding more ways to exploit loopholes in the industry. Different regions experience varying levels and types of fraud, highlighting the wide range of risks that operators have to deal with.  Scammers, fraudsters, and money launderers target online gambling and casinos for several reasons:

High level of anonymity and privacy

Online casinos provide a high level of anonymity and privacy for their customers. This creates an ideal environment for money laundering and other fraudulent activities. Criminals can easily create fake identities or steal others’ identities, making it extremely difficult for authorities to trace the origin of the funds. 

Higher transaction volumes

The high transaction volumes in online gambling platforms make it harder for payment providers and operators to monitor for fraud. With thousands of transactions processed daily, it becomes challenging for law enforcement agencies to detect suspicious activities.  Moreover, gaming websites are prone to encountering a substantial volume of transactions, as players frequently engage in numerous payments. This heightened transaction activity may pose challenges in detecting card testing, or identifying individual instances of unauthorized gambling transactions.

Multiple accounts for money transfer globally

Additionally, criminals often use multiple accounts to transfer money between different platforms, further complicating the tracking of funds.  The international reach of gambling platforms adds another layer of complexity for money launderers. They can transfer money across different countries, making it even more difficult to trace and detect the illicit funds. This allows them to obfuscate the source of the funds and avoid detection by authorities.  The anonymity and privacy offered by online casinos, along with the high transaction volumes and international reach, make them attractive targets for money launderers.  

6 most common types of online gambling fraud & casino scams

Despite the constant efforts of scammers to devise new methods of exploiting the system, there are several common types of attacks to be aware of. 


1. Multiple Account Fraud or Multi-Accounting

Fraudsters seeking to maximize illicit gains understand the significance of scaling their operations. To make their efforts worthwhile, they resort to expanding their fraudulent activities across numerous accounts, sometimes even spanning dozens or hundreds.

This can be achieved through a single machine or, in more sophisticated cases, through coordinated bot attacks across multiple machines. 

One such attack is multi accounting, which serves as the foundation for many gambling scams. This involves creating numerous accounts using fake credentials to gain an unfair advantage online. 

These accounts are then used to facilitate fraudulent schemes such as bonus abuse, where fake accounts take advantage of new signup bonuses and other attractive offers.

While these promotions are an excellent way to attract new players, they can quickly lead to losses if too many are given out. 


2. Bonus Abuse 

Bonus Abuse is when people sign up for a service multiple times using marketing offers meant for new users. This is also known as promo abuse, bonus hunting, and bonus abusing.

In fraud terms, it’s called multi-accounting and it usually targets no deposit bonuses like free spins or free cash.

This problem affects sports betting, casino, and poker sites, as well as any company that offers signup bonuses. Fraudsters try to create as many new accounts as possible, using stolen IDs and prepaid credit card details to bypass KYC checks.

Some criminals even use emulators, virtual machines, and residential-like IPs to get fresh IP addresses.

3. Gnoming

Another common scam is Gnoming, where multiple accounts are used to help one player win. The other accounts are deliberately used to lose in head-to-head games, allowing one player to pocket all the wins and bonuses. This is particularly prevalent in poker. 


4. Chip dumping 

Chip dumping is another fraudulent practice at the poker table, where multiple accounts join the same table to cheat the system and influence the results in favor or against one particular player. 


5. CNP fraud (Credit card fraud) or Chargeback fraud

In addition to these scams, there are also payment attacks to be aware of. Online casinos and gambling platforms require deposits and withdrawals, making them essentially digital wallets. This means that processing payments can lead to potential losses. 

Carding is one such attack, where fraudsters use stolen card information to top up their account with illegitimate money to pocket real wins. 

Chargebacks and fraud are another issue, where a legitimate cardholder requests a refund from their banking or credit card provider after realizing their card was stolen and used on the platform. 

In the world of gaming, bettors may assert that they did not place a losing bet. While these customers may not have the intention of repeatedly engaging in this type of fraudulent activity, they often view it as a one-time opportunity that they can exploit. 

This results in the gambling operator incurring the cost of the refund and processing charges. 

Unfortunately, this problem is widespread. Furthermore, credit card networks frequently modify their dispute rules, making it difficult for merchants to keep track of the required supporting evidence.

As a result, nearly half of merchants choose not to contest chargebacks because they perceive the process as complex or believe that they have little chance of winning. 

It is crucial not to overlook the issue of fraudulent chargebacks. If left unaddressed, it can lead to significant consequences such as fines, audits, or even being prohibited from accepting major credit card brands.


6. Bot Fraud 

Gambling bots, although not explicitly deemed illegal, are widely disapproved of by iGaming companies and fellow players. Online casinos, sportsbooks, and other service providers consistently specify in their terms and conditions that the use of betting bots is strictly prohibited. 

Undoubtedly, the utilization of these automated systems in gambling incurs significant financial losses for the iGaming industry.

Betting bots, also referred to as casino bots, gambling bots, or value-betting software, are scripts designed to automate actions on a betting website without direct human involvement. These bots are primarily used to expedite the process of placing bets on sports or other events by leveraging APIs.

However, more advanced bots have now infiltrated online poker tables and other multiplayer games.


There are four main types of betting bots, each varying in complexity and purpose:

  1. Scraping bots – which are specifically designed to gather data from websites. 
  2. Arbitrage bots – aim to generate profits by placing bets on two different outcomes for the same event, also known as “sure bets.” 
  3. Iceberg bots – operate by placing numerous small bets across multiple betting companies instead of a single large bet. 
  4. Artificial Intelligence (AI) bot – is the most advanced type of betting bot that utilizes algorithms to enable users to participate in online games.

Moreover, in the iGaming industry, the forms of fraud are constantly evolving, necessitating a vigilant approach to stay ahead.


In 2023, the following fraud trends demand close attention: 

  • Synthetic IDs are a growing type of fraud in the US, with fraudsters using fabricated identities to bypass KYC checks. Combining false information with genuine ID documents makes these profiles harder to detect. Synthetic ID fraud is increasing, with data breaches contributing to the accessibility of real ID documents on the darknet. 
  • Self-exclusion fraud is also a concern, with fraudsters exploiting iGaming companies by falsely identifying themselves as problem gamblers. 
  • Video deep fakes are another challenge, as fraudsters use them to deceive and manipulate, potentially bypassing video identification systems.

Staying informed about emerging trends is crucial for iGaming fraud detection.

We will now cover some of the effective online gambling fraud prevention methods you can implement to combat online gambling scams and internet gambling fraud.

How can merchants prevent and stop online gambling fraud?

Internet gambling fraud is a dynamic threat. Whenever a customer makes a large or unusual transaction or if they are in a high risk location, it is crucial to conduct the necessary checks. 

When implementing fraud prevention methods it is imperative to ensure exceptional customer experience and authenticate users.

While deterring fraudulent activities may cause some level of friction with customers, merchants must find a balance between authentication and customer experience by identifying negative and positive friction points.

Taking action now is vital because when regulators tighten controls, operators may be compelled to introduce fraud protection measures without delay. 

For instance, New Jersey and Pennsylvania have already announced new guidelines regarding multi-factor authentication. The Pennsylvania Gaming Control Board (PGCB) notified all online gaming operators that every PA online casino and sports betting app must have multi-factor authentication, starting from December 31, 2022.

That’s why merchants need to be aware of recent regulations and implement online gambling fraud prevention measures to avoid violations. 

Let’s take a look at some of the methods you can use to combat online gambling fraud:

ID verification + two-factor authentication

A strong deterrent against fraud is ID verification and selfie checks (scanning a driver’s license or passport and comparing it to a live selfie).  

While knowledge-based authentication, where personal questions about the first car, girlfriend, or address are asked, may seem outdated, it remains highly effective. Fraudsters struggle to find this information, and even though there are tools available on the dark web, they are not easily accessible. 

KYC orchestration is key in combating fraud. No single vendor can excel in all aspects, which is why working with multiple vendors to assemble the perfect set of tools is essential to cover all bases. 

Implementing good KYC practices could include using fraud detection software that aligns with KYC regulations and addresses risks specific to the online gambling industry. 

To ensure compliance and combat fraud, follow these steps during the onboarding process: 

  • Verify users’ identities using government-issued documents, as required by local legislation and verify users’ age. 
  • Conduct PEP checks and other mandated checks, such as screening relevant sanctions lists, watch lists, and crime lists.

During the signup process, you can assess users’ intentions and fraud risk using the following methods: 

  1. Device fingerprinting is a strong method to detect collusive behavior, such as bonus abuse and chip dumping. It is particularly effective against multi-account abusers who operate fraudulent accounts from the same device.

  2. Password hash analysis is effective in catching most fraudsters, except for the most sophisticated ones. Scaled multi-accounting abusers rarely create unique passwords for their fraudulent accounts.

  3. Analyzing users’ digital footprint can provide insights into their legitimacy. Legitimate emails and phone numbers are often associated with social media accounts and other online platforms.

  4. Analyzing the fraud score of IP addresses can reveal information about an individual’s internet usage, location, and potential for fraudulent activity.

  5. Conduct behavior and velocity checks, which examine users’ actions at different touchpoints and compare them over time. This helps identify suspicious patterns, such as a high number of users logging in with the same IP address. By implementing these measures, online businesses can enhance their fraud prevention efforts and ensure compliance with regulations.

Transaction analysis and account monitoring

To prevent criminal money laundering and financing of terrorism, transaction monitoring is crucial. Anti-Money Laundering (AML) regulations require due diligence to be carried out, with specific numerical thresholds for transactions associated with financial crimes. 

An AML-compliant automated process includes customizable transaction monitoring, labeling and logging of cash and foreign currency transactions, scalable internal processes, cross-checking names with relevant lists, and generating comprehensive audit reports and filing SARs. 

The software provider should automatically update watch lists and protocols. Behavioral analytics should be tuned to flag unusual transaction behavior, indicating account takeover or bribery/corruption.

Collaborating with law enforcement

One risk factor to consider is if a user is from a high-risk country or on a PEP list. These countries are often associated with illegal activities.

Operators should carefully examine their transactions. AML regulations require monitoring of suspicious accounts. If a user from a high-risk country exceeds a certain monetary threshold, a Suspicious Activity Report (SAR) should be filed to avoid hefty fines. 

In the United States, this threshold is set at $5,000, but it may vary in different jurisdictions.

Operators are required to notify the appropriate authorities of any suspicious activities or transactions. This encompasses any atypical transaction that fails to meet designated financial thresholds or other criteria established by local regulations. In this regard, the utilization of automated systems capable of identifying suspicious transactions is recommended.

Operators may choose to implement additional scrutiny at different transactional points. To reduce risk, operators can temporarily pause a user’s activity for manual review. Based on this review, operators can decide whether to allow the user to continue or take further action. 

By being proactive in identifying users from high-risk countries, operators can protect their businesses from compliance issues, reputation damage, and financial penalties.

Combining device fingerprinting and geolocation to combat identity theft

Device fingerprinting is an excellent method to prevent account takeovers. By knowing the devices someone is using and detecting any changes, especially if it matches a device used in previous fraud attacks, we can quickly identify an account takeover. 

To combat identity theft, geolocation plays a critical role. While device fingerprinting may not be the most effective approach since it could be the first time encountering a particular device, it becomes valuable if we have evidence of fraud occurring from that location before. This gives us an advantage over the fraudsters. 

The combination of device fingerprinting and geolocation is crucial, and it strengthens the Know Your Customer (KYC) process. Currently, we ask for basic information such as name, address, and social security number as the first line of defense.

Key takeaways

Online gambling can be a risky industry, and preventing fraud is a major challenge. However, there are solutions available to help tackle this issue.

Online gambling platforms face a higher risk of fraud due to the anonymity and privacy they offer, as well as the large number of transactions and multiple accounts used for global money transfers. 

There are various types of online gambling fraud and casino scams, such as Multiple Account Fraud or Multi-Accounting, Bonus Abuse, Gnoming, Chip dumping, CNP fraud (Credit card fraud) or Chargeback fraud, and Bot Fraud. 

To combat these fraudulent activities, merchants employ several measures. These include ID verification and two-factor authentication, transaction analysis, and account monitoring. They also collaborate with law enforcement agencies and utilize techniques like device fingerprinting and geolocation to combat identity theft. 

To combat friendly fraud and money laundering attempts, gambling payment gateways provide risk and fraud management prevention methods such as PCI compliance. 

An ideal payment solution ensures the safety of customers’ personal information and handles money securely. They have enhanced security measures in place and by prioritizing top security, reduce the chances of clients requesting chargebacks.

Now, let’s talk about how a gambling merchant account by PayFasto can help you prevent online gambling fraud by offering a comprehensive fraud prevention solution.


How PayFasto helps businesses prevent online gambling fraud?

At PayFasto, we understand the importance of safeguarding your business against online gambling fraud. That’s why we prioritize the security of your customers’ personal information and ensure that their money is handled securely. 

With our advanced security measures in place, you can rest assured that the risk of friendly fraud and money laundering attempts is significantly reduced. By offering high levels of risk and fraud management, including PCI compliance, PayFasto provides a reliable solution for your gambling payment needs. 

Our commitment to top-notch security minimizes the chances of chargebacks, protecting gambling merchants from potential losses. 

Here’s how PayFasto can assist your business in preventing online gambling fraud:

Fraud Monitoring and Prevention System

We are dedicated to safeguarding our merchants and minimizing transaction fraud, including protection against DDoS attacks.

Transaction Security

Our gambling payment gateway is equipped with a comprehensive system for Chargeback Reporting, fraud monitoring, and prevention – ensuring the highest level of transaction security. 

Reliable and Flexible Commercial Transacting

In addition to transaction security, we also offer flexible commercial transacting options to enhance reliability and flexibility in your industry. These options include recurring payments with Real Time Account Updater Service, IVR, Tokenisation, Receipts, and other services.

24/7 Customer Support

When it comes to fraud and risk management for gaming and gambling operators, we understand the importance of reliable customer support. That is why our team is available 24/7 to provide assistance with any inquiries or concerns you may have.

Prevent Fraud with a Secure Gambling Payment Gateway

Let us handle your payment processing needs for your gambling business with our tailored solutions. Our expertise in payment processing for the gambling and gaming industry ensures that your unique requirements are met, allowing you to focus on providing top-notch gaming experiences to your customers.

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Dennis Pedersen
CEO & Founder of PayFasto. I have achieved a long time dream of helping advertisers with getting the processing setup they always wanted! This is something i wanted when i had my own offers.
Dennis Pedersen
CEO & Founder of PayFasto. I have achieved a long time dream of helping advertisers with getting the processing setup they always wanted! This is something i wanted when i had my own offers.


CEO & Founder of PayFasto. I have achieved a long time dream of helping advertisers with getting the processing setup they always wanted! This is something i wanted when i had my own offers.