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U.S. Gambling Expansion Causes Fraud Attempts To Surge

May 4, 2022
​​​​​​​There has been a surge in online gambling fraud attempts since several U.S. states legalized sports betting, according to data obtained by U.S.-based consumer credit reporting agency TransUnion.

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There has been a surge in online gambling fraud attempts since several U.S. states legalized sports betting, according to data obtained by U.S.-based consumer credit reporting agency TransUnion.

Suspected global online fraud attempts across all industries actually declined by 22.6 percent year-on-year in Q1 2022 and the overall rate of suspected fraud originating from the U.S. decreased by 23.1 percent from Q1 2021 to Q1 2022 across all industries.

However, the gambling industry saw a 50.1 percent global increase in online fraud attempts, making it the second fastest growing segment recorded by TransUnion.

In the U.S. specifically, online gambling fraud attempts increased by 27.2 percent year-on-year in Q1.

Shai Cohen, senior vice president of global fraud solutions at TransUnion, said fraudsters in general probe industries to see if their fraud attempts will be successful and turn to new ones when they are thwarted.

Declan Raines, head of U.S. gaming for TransUnion, told VIXIO GamblingCompliance the increase seen by the gambling industry is primarily caused by attractive bonus offers available to customers in the U.S., most notably in New York.

This “bonus abuse” ranges from individuals altering their identity to taking advantage of multiple sign up offers to people deploying bots targeting thousands of accounts, according to Raines.

Operators, therefore, have to make a business decision about what levels of fraud they will find acceptable in their business as they compete for new players in these U.S. markets.

TransUnion does not purely look at bonus abuse, it also looks for a range of other identifiers when it comes to monitoring suspected fraud online, including chargebacks, synthetic identities and account takeovers, which can be potentially lucrative when it comes to high-value player accounts.

When asked what regulations could help to protect operators from fraud, Raines said the ability in New Jersey for online players to use two-factor authentication could be key, as it introduces additional layers of security for player accounts.

Raines hopes other U.S. states will legislate in a similar way to New Jersey when they legalize sports betting or introduce some form of standardized regulations.

“When new states come online, they always attract a spike in fraudulent activity. On top of this, gambling is an event-driven industry. These big events, such as the SuperBowl, when they correlate with a new market opening, will increase fraudulent activity,” Raines said.

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