How Powerful AI Strategies are Preventing iGaming Fraud

February 29, 2024

iGaming operators face the challenges of a double-edged sword. While legal online sports betting and casino gaming revenues are skyrocketing, operators are running neck-and-neck with fraudsters. 

Think about high-profile events like the Super Bowl, which attracts the most sports betting of any U.S. event. In 2023, the first time the game was played in a state with legal sports gambling, betting set records for sportsbooks—25% more than the previous year. 

Yet as operators amp up promotional offers, whether for big events or simply to entice players away from competition, they are increasingly at risk of fraud and the related losses.

While the rise of U.S. sports betting has provided customers with new ways to engage with their favorite sports, it’s also been hugely beneficial for online criminals, who have been able to target popular operators with highly effective campaigns.”

Sports Business Journal

How can operators fight back—without losing legitimate players? iGaming businesses can leverage the power of AI and machine learning (ML) to supercharge their fraud detection and help prevent losses.

Why More Sophisticated Fraud Prevention is Imperative

Cybercrime continues to escalate across every industry, but iGaming has become a prime target. It’s now one of the top three industries globally for digital fraud attempts, according to TransUnion

The FTC estimates that fraud in the gaming industry is growing 30% year over year. In Q2 2021 alone, some experts noted iGaming fraud attempts spiked 393% over the previous year.

In particular, fraudsters are using synthetic IDs to create multiple accounts that repeatedly take advantage of promotional offers, a tactic known as bonus abuse. Fake account registrations jumped 85% in Q1 2022 alone, notes cybersecurity experts Sumsub

Up to 15% of the iGaming industry’s gross revenue is lost to bonus abuse fraud.

Sports Business Journal

Another key concern for operators is chargebacks, which are often fraudulent in online gambling. Financial institutions already consider iGaming and online sports betting transactions to be high-risk and therefore, subject to higher processing fees. Add in the cost of chargebacks and penalties, and operators take a major hit to their bottom line. 

Worse, if chargeback rates get too high, operators could get blacklisted by credit card networks or card-issuing banks—and potentially lose players when their preferred payment method is no longer available.

Operators may need to take a hard look at the potential impacts of fraud. Could your business sustain growth if you experienced a 30% increase in fraud this year? It’s time to consider the strategic advantages of AI and machine learning.

Strategies for Using AI/ML to Prevent iGaming Fraud

While most operators have security and fraud detection technologies in place, those solutions may not be keeping pace with constantly emerging cyber threats. 

iGaming businesses may be trying to address the problem by simply hiring more staff for risk and fraud teams, but it’s not a scalable solution. As the fraud problem scales up, it’s cost-prohibitive to keep adding more overhead to deal with it. A potentially more powerful and cost-efficient approach is to integrate AI and ML to help operators reduce fraud and risk.

Consider a few key examples:

  • Identify potential threats before they happen. ML models can track patterns of payment behavior over time to identify players who may be most likely to commit ‘friendly fraud’ chargebacks or organized fraud schemes.
  • Flag unusual events faster than manual reviews. AI/ML can analyze large sets of payments data to detect issues substantially faster than an operator’s staff can do manually. The business can more readily identify risks and tighten rules to stop larger scale fraud schemes from gaining momentum.
  • Reduce fraud at scale. Operators can set rules and thresholds for deposits and withdrawals, which can help deter fraudsters, and enable the business to spot suspicious behavior faster. For operators entering a new market with no historical player data, this approach can make a significant difference. 

Stop Fraud at the Gate With AI-powered Solutions

Payments innovation is now intersecting with AI innovation in unprecedented ways, which can have significant impacts on how operators do business and what players expect.

Beyond optimizing the player payments experience, AI and machine learning can help operators streamline operations and strengthen fraud prevention. That’s a core part of our strategy as we continue to evolve PayNearMe’s MoneyLine™ payments platform, a powerful and scalable deposit and withdrawal solution for online sports betting and iGaming operators.

Our latest step forward to help operators prevent fraud and losses is our technology partnership with Accertify.

Enhancing Fraud Prevention with Accertify

Accertify’s integration into the MoneyLine platform enables PayNearMe clients to leverage machine learning to identify threats, help reduce fraud and deliver a better player experience.

“PayNearMe and Accertify can now empower our operators to proactively ensure their players are who they say they are, via intelligent access to Accertify’s global database which already protects many of the largest operators in the iGaming space.” 

John Minor, Chief Product Officer, PayNearMe

Along with extensive payment capabilities, MoneyLine gives operators an additional layer of risk protection, all through one vendor and one integration. operators can more effectively and cost-efficiently fight fraud, while also delivering a smoother experience for legitimate players.

For example, to quickly verify player identities and transactions, Accertify uses machine learning to analyze volumes of payments data and alerts the MoneyLine platform to take the appropriate action. For legit bettors, this approach can improve card acceptance rates and reduce deposit declines, and automate withdrawal approvals for faster payouts.

If the system identifies suspicious activity, the platform can dynamically tighten security measures to help protect against account takeovers and promotional abuse.

Operators can further mitigate risk with enhanced capabilities to improve chargeback win rates. They can dispute issues based on data-driven evidence, review analytics on top reasons for chargebacks and more—all within the MoneyLine platform.

Optimize Payments While Protecting the Business

As fraudsters continue to take aim at online sports betting and iGaming, it’s important for operators to keep a close eye on how fraud could impact their business—and how to minimize it. MoneyLine simplifies end-to-end money movement to improve the player experience, while safeguarding the business with sophisticated risk and fraud prevention capabilities.

Learn more about MoneyLine today: view an on-demand demo or schedule a call with one of our experts.

*Source: Accertify case study for Sportbet, client data 2023

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