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What are Gambling and Gaming Fraud and Why Do They Matter?

Gaming has steadily grown in popularity across all demographics alongside the emergence of more capable hardware. This has spurred new business models and approaches in the process. Mobile gaming has seen tremendous growth, with a full 54% of gamers choosing to play games on their mobile phones instead of consoles or desktop computers. Revenue projections for the industry as a whole top $100 billion by 2024 – a significant increase from 2021’s approximate mobile gaming industry revenue of $90.7 billion.

Virtual reality is also making waves in the gaming space with a projected market size for both VR software and hardware of $5.1 billion by 2023.

Moreover, online gambling platforms have taken a few cues from mobile game designs and effectively beaten out other forms of remote gambling in terms of popularity. The UK Gambling Commission found online casino games generated £4 billion in gross gambling yield (GGY) from 2020 to 2021 – almost double the figure generated by remote betting and bingo combined for that same period. Licensed gambling outfits will likely continue to leverage the reach provided by mobile platforms to grow in the coming years.

The industry’s vast potential for profit invites the attention of fraudsters and illegitimate customers looking for a quick way to scam someone out of their money. The repercussions of gaming fraud are extensive and they can break emerging companies at critical moments in their development.

Gaming and Gambling Fraud Defined

Gaming fraud can take many forms, depending on fraudsters’ interests, capabilities, and targets. Here are a few common manifestations of fraud in the industry:

Account Takeover

This form of gaming fraud is the cornerstone on which many other fraudulent schemes are often built. Attackers use any means necessary to gain access to accounts such as outright stealing login credentials, fooling call center personele, and even sending large volumes of phishing emails out to prospective targets in an attempt to glean user information from them. Armed with multiple accounts, fraudsters can engage in a wider variety of scams on gaming and gambling sites.      

Cheating/Manipulation

Online gaming is particularly susceptible to cheating as it can dramatically impact the user experience for legitimate players. Without identification, fraudulent players can use multiple accounts to manipulate the results they get and force other players out of the game altogether.

Whether sign-up rewards are at stake or, as is the case with online poker platforms, techniques like chip dumping are an option (using more than one account at a table to influence the direction of the game), fraudsters looking to make a quick buck will always make a move to circumvent the rules.

Chargebacks and Returns

Both chargebacks and returns are open to more than just professional criminals–customers can engage in so-called “friendly fraud” as well, demanding refunds for games purchased and fully enjoyed for no legitimate reason.

Returns are likely to harm smaller players in the industry more readily than major retailers and marketplaces. In the event that a customer returns a game purchased on Steam, for example, the loss is often transferred to the developer or studio by way of Steam offering a refund in         the form of Steam Wallet credit. This insulates the marketplace from risk but allows illegitimate customers to play games in their entirety before demanding a refund and moving on to the next.

Chargebacks carry the potential to affect the marketplace itself should they exceed a set amount. Payment card companies monitor chargeback activity closely and can harshly punish retailers with a high volume of chargebacks by ramping up processing fees, limiting or even disallowing their use of the payment card network to accept payments from customers.

Why Gaming and Gambling Fraud Matters

Gaming has found its place as a valuable tool for connecting with others, serving as a means of socializing. Perhaps this is why it’s seen significant growth across all ages and demographics, accounting for half of the US population.

Of course, considering people often turn to gaming platforms for safe fun and socialization, companies catering to online user bases must keep up with ID validation in an effort to combat non-compliance risks and the spread of criminality. For gambling organizations, this risk is expanded to account for potential money launderers as well as individuals attempting to play while residing in a state with laws against online gambling.

That’s why ensuring each user of your gaming platform is legitimate, the right age, and not engaging in criminal activity is absolutely necessary for companies in this industry.

Gaming Fraud Prevention

Online gaming fraud may be multifaceted, but it can be prevented in large part using a single solution–ID validation. Verifying that your customers are precisely who they claim to be is essential to protecting both them and your organization from bad actors.

Intellicheck’s ID validation platform produces subsecond results with industry-leading accuracy and can be deployed in under an hour. To embed ID validation deeper in your existing infrastructure and apps, Intellicheck’s API is the perfect solution.

Intellicheck is widely trusted across industries . In an industry that depends on real-time, low-lag interactions, the importance of a solution that is fast enough not to disrupt the user experience while still being accurate enough to keep out fraudsters is essential to your platform’s success.

KEEP YOUR GAME GOING

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