In fact, according to Statista, iGaming fraud was estimated to cost the global gaming industry over $6 billion in 2023 alone, with bonus abuse fraud being a significant contributor.
The online gaming and betting industry is rapidly growing, with promotions, bonuses, and rewards key to attracting players. However, this growth has also led to increased fraud, particularly bonus abuse. This occurs when players exploit bonus offers unfairly, disregarding the promotion’s rules.
For operators, it’s crucial to understand the mechanics of bonus abuse fraud and implement strategies to prevent it, ensuring a fair and profitable gaming environment.
What is Bonus Abuse Fraud?
Bonus abuse fraud occurs when players take advantage of promotions and bonuses in ways that breach the rules and regulations set by operators. The goal of this fraud is to withdraw bonus funds without fulfilling the required conditions, such as wagering or gaming requirements.
This kind of fraud is very common in the iGaming industry, where bonuses and promotions are used to engage and retain players. This can include actions like making several accounts to get bonuses or betting in ways that go against the purpose of the offer. It ruins the fairness of the promotion and can cause the platform to lose money.
Common Types of Bonuses in Online Gaming
To understand bonus abuse it is important to understand the most popular types of bonuses in online gaming.
- Welcome Bonuses
A welcome bonus is a reward that is given to the new player when they join or sign up for a gaming site This bonus includes free spin, bonus money, or other benefit to start a game. - Deposit Bonuses
Deposit bonuses are rewards given to players when they add some money to their accounts.The site typically adds bonus funds based on a percentage of the deposit, providing players with extra money to use. - No Deposit Bonuses
No-deposit bonuses are rewards that players receive without having to deposit any money. These bonuses let players try the games for free with bonus funds or free spins. - Free Spins
Free spins are bonuses that allow players to spin the reels of a slot game without using their money. Any winnings from these spins are usually added to the player’s account. - Loyalty and VIP Bonuses
Loyalty and VIP bonuses are rewards given to regular players or those who spend a lot of time or money on a gaming site. These bonuses can include special offers, extra points, or exclusive prizes to show appreciation for their continued support.
6. Refer-a-Friend Bonus
A casino will reward you for introducing your friends as new customers. This bonus is sometimes called a refer-a-friend bonus.
Let’s Understand the Types of Bonus Abuse
Here are the most common types of bonus abuse fraud:
1. Account Churning (Bonus Whoring)
In this fraud, the player creates a multiple account to claim sign-up bonuses. They use different fake names, addresses, and payment methods to hide their identities and get the advantage of the new player bonus.
2. Fake or Manipulated Deposits
In this form of fraud, players make false deposits or use fraudulent methods to appear as though they’ve added money to their accounts, allowing them to claim bonuses or withdraw funds without actually investing.
3. Low-Risk Betting (Bonus Abuse via Risk-Free Betting)
Low-risk betting, also known as bonus abuse through risk-free betting, occurs when players place bets with little chance of losing in order to meet bonus requirements. They may use strategies like betting on both sides of an outcome, guaranteeing a win, or betting on odds that are almost certain to win, ensuring they can withdraw the bonus funds without taking real risks.
4. Exploiting Loopholes in Bonus Terms:
Exploiting loopholes in bonus terms refers to the practice of identifying and taking advantage of weaknesses or ambiguities in the terms and conditions associated with promotional bonuses, particularly in the iGaming and online casino industry.
These loopholes can arise from poorly drafted rules or oversight by the operator, allowing users to maximize the benefits of the bonuses in ways that were not intended by the company
The Impact of Bonus Abuse Fraud on iGaming Operators
Bonus abuse fraud can lead to serious problems for iGaming operators, including losing money and damaging their reputation. The biggest effects are:
- Financial Losses:
The most immediate impact is the loss of bonus funds, as fraudulent players withdraw money without fulfilling the required playthrough or wagering conditions, which causes a direct financial hit to the operator. - Reputation Damage:
If a platform is known for not addressing bonus abuse, it can lose the trust of many players. This leads to negative publicity, lower customer retention, and difficulty attracting new users. - Legal and Regulatory Risks:
In some regions, failure to properly manage bonus abuse can result in legal action, regulatory penalties, or fines. Operators could be closely examined by regulatory bodies for not implementing necessary safeguards, potentially leading to more serious legal consequences.
How to Prevent Bonus Abuse Fraud
To prevent bonus abuse, operators need to make different strategies, strong systems, and clear rules. Here are some key methods that operators can use to reduce risk and protect their business.
1. Implementing Strong KYC Procedures (Know Your Customer)
Implementing a strong KYC system can help operators verify players’ identities before awarding bonuses. Operators should request government IDs, utility bills, and bank statements to identify and address verification. Payment methods should match the player’s identity, and cross-checking systems can detect multiple accounts using similar details, like emails or IP addresses, ensuring better protection against bonus abuse.
2. Predictive Fraud Detection:
Use fraud detection systems that analyze past player behavior and predict future fraud risks based on current trends. These systems can automatically update risk levels in real-time and flag accounts showing suspicious activity, like unusually high bonus claims or excessive withdrawals linked to bonuses.
3. Device and Browser Fingerprinting
Beyond monitoring IP addresses, employ device and browser fingerprinting technology to identify players using multiple devices or browsers for bonus abuse. This allows operators to track players even if they use different IP addresses or VPN services. Fingerprints include unique identifiers from the device hardware, software, and browser configurations.
iGaming platforms like Affnook help in preventing bonus abuse fraud by filtering traffic from unknown devices and OS. So, that you can put your money only on real players and fine-tune your CRO strategy. It will eventually help you save your marketing budget and reputation.
4. Cross-Platform Tracking
Implement systems that allow you to track activity across multiple platforms (desktop, mobile, app-based) to prevent players from exploiting loopholes between different devices. This includes tracking users who jump from one device to another in an attempt to bypass restrictions on bonus claims.
5. Bonus Capping Based on Account History
Cap bonuses based on the player’s account longevity and deposit history. New or unverified accounts could receive smaller bonuses with higher playthrough requirements, while loyal customers might enjoy more generous but still carefully structured offers. This strategy reduces the potential for exploitation by transient or suspicious accounts.
6. Geo-Restriction on Bonus Access
Implement geo-blocking to restrict access to bonuses from specific regions or countries known for fraudulent activity. This allows for a targeted approach, ensuring that high-risk geographical areas do not exploit bonus schemes disproportionately.
Conclusion
Bonus abuse fraud is a serious issue for online gaming operators, but with the right prevention strategies, it is possible to significantly reduce its impact. By implementing strong KYC procedures, using advanced fraud detection systems, and maintaining clear bonus terms, operators can ensure a fair and secure gaming environment. Moreover, limiting bonus access for new players, monitoring accounts regularly, and collaborating with other operators are essential steps in safeguarding the integrity of the bonus system. By combining these strategies, operators can reduce the risk of fraud, protect their financial interests, and continue to offer attractive bonuses that benefit legitimate players.
