Uncovering monumental losses in European iGaming
Significant Gaming Industry in Europe Faced Approximately 10% Revenue Loss due to Fraudulent Activities in the Year 2024
The European iGaming sector faced staggering losses last year, revealing a potential annual loss of over $5.2 billion, according to a new survey by identity-verification firm Sumsub.
Nearly half (47%) of the compliance professionals surveyed admitted to losing over 10% of their revenue to fraud last year. An additional 15% reported losses of more than 20% of their revenue in 2024.
Fraudsters on the rise
Fraudulent activities in the iGaming sector stem from various sources, mainly digital fraud. The primary concerns include identity fraud (65%), money laundering (65%), and bonus abuse (64%).
As iGaming companies attempt to outwit fraudsters, they now face a new threat: deepfake technology. Three-quarters (78%) of compliance professionals reported a surge in AI-generated fake identifications in 2024, making it increasingly challenging for fraud professionals to spot the fakes before the crime occurs.
Time for a change
To combat this rising threat, the European iGaming sector must update its ineffective fraud prevention tactics. Sumsub suggests replacing labor-intensive manual checks with automated monitoring. Currently, manual checks only prevent around 54% of fraud attempts, with approximately 31% of fraud professionals spending over 40 hours a month on fraud prevention.
Kris Galloway, Head of iGaming product at Sumsub, stated, "Fraudsters are becoming smarter, better equipped, and more capable by the day, making an annual security check-up insufficient to dealing with existing threats. For a sector exposed to high levels of fraud, a multi-layered strategy—including advanced verification, continuous monitoring, regulatory enforcement, and collaborative efforts—is the most effective defense."
Enhanced fraud prevention strategies
The most effective approaches to combat fraud in the European iGaming sector involve advanced verification, continuous monitoring, regulation, collaboration, technology investment, and user education. Here is a breakdown:
- Enhanced user verification and identity checks: Implement rigorous identity verification processes at the account creation stage, using biometric checks, multi-factor authentication, and cross-referencing multiple data sources. Use real-time data analysis and AI-driven tools to detect anomalies that may indicate fraud, such as deepfake-video attempts or synthetic identity creation.
- Continuous monitoring and risk analysis: Adopt a continuous improvement cycle involving regular monitoring, analysis, and refinement of fraud prevention strategies to keep pace with evolving fraud tactics. Develop custom risk rules to flag suspicious patterns and maintain ongoing surveillance of account activity to quickly detect and intervene in fraudulent behaviors.
- Regulatory enforcement and player protection measures: Strong regulatory frameworks, like Spain's Dirección General de Ordenación del Juego, play a critical role by blocking unlicensed operators, enforcing heavy fines on non-compliant entities, and collaborating closely with specialized gaming fraud units. Protective measures include mandatory alerts to players exhibiting risky gambling behaviors, credit card usage restrictions, and exclusion of vulnerable individuals from promotions to reduce fraud risks.
- Industry collaboration and technology investment: Collaboration between operators, regulators, and specialized police units is key. Sharing data and threat intelligence helps in the identification and shutdown of fraudulent accounts. Investment in advanced technologies such as AI-based fraud detection and machine learning models specialized in spotting deepfake content is increasingly important.
- User education and communication: Educating users about the risks of identity fraud and the consequences of fraudulent behavior helps create a more informed community less likely to engage in or fall victim to fraud.
By implementing these strategies, the European iGaming sector can effectively combat fraud, including emerging threats like deepfake-enabled identity fraud.
- In the light of escalating fraudulent activities, European iGaming businesses are called upon to shift from traditional fraud prevention methods to automated monitoring systems to better tackle the issue, as manual checks only prevent about 54% of fraud attempts.
- To counter the rising threat of deepfake technology, the European iGaming sector needs to invest in advanced verification, continuous monitoring, regulate more stringently, collaborate with industry peers, and educate users about identity fraud risks, employing a multi-layered strategy for enhanced fraud protection.
