An explosion of sportsbooks spreading through the U.S. as new states sign on. Ready to take bets from eager subjects. The flip side is a spike in illicit activities such as proxy betting, bonus abuse, and gambling rings, to name a few.
“Gaming is one of the top three industries globally for digital fraud attempts,” Declan Raines, head of U.S. gaming for TransUnion, told Sports Handle. “We’re seeing almost a 400 percent increase (between the second quarter of 2020 and the second quarter of 2021). Obviously, the growth of the U.S. market is the main factor behind that.”
For Raines, dealing with the dark side requires fraud prevention protocols, something as easy as a one-time passcode or answering a question known only to the account holder.
Bonus abuse is “the most common version of fraud in gaming,” said Raines. “Someone will sign up for multiple accounts” to access signup bonuses and then “engage in additional arbitrage activity, where they’ll take multiple bonuses from multiple books and place wagers on either side to guarantee a win.”
If you’re dealing with low-level fraud like proxy betting, the key sign is inexplicable movement of a device or account.
Danny DiRienzo, senior director of government relations for GeoComply, said authorities detect this when action is placed on an account in Washington and, five minutes later, the same account emanates from Tennessee.
“Fraud prevention starts at account registration,” said DiRienzo. “KYC (know your customer) in the digital world really needs to be elevated. Does their location make sense based on what their identity is?”
On the other end of the spectrum, are “sophisticated proxy schemes where they’re actually acting as a bookie,” DiRienzo said.
There are fraud rings that steal identities or create “synthetic” ones, which they’ll use to open not only new betting accounts, but also fraudulent bank accounts in which they can transfer and withdraw funds, Raines said.
“There’s a very broad spectrum of gaming fraud,” he said.
Before crossing the pond, Raines worked in sportsbook development in the U.K., a more mature market that he views as “somewhat of a looking glass into the nuances of the U.S. market,” where he expects fraud to “increase exponentially due to more states coming online.”
Along these lines, DiRienzo said, “The more states that go live, the numbers grow. Bur proportionately speaking, I don’t think we’re any different now than we were two years ago.”