Fraud in the online gaming sector has reached alarming levels, increasing by 175 percent between 2022 and the first quarter of the ongoing year, according to the . Fraud rates rose from 0.4 percent in 2022 to 1.10 percent by Q1 2024, pointing toward the escalating risks for iGaming operators and players alike.

iGaming industry in crosshairs

As the global iGaming market is expected to exceed $100 billion in revenue by 2024, fraudsters are seizing the opportunity to exploit vulnerabilities. “Fraud is growing at a consistently fast pace in iGaming, relative to other industries,” the report states, with average year-over-year growth of 64 percent.

Leading fraud trends include:

• Selfie mismatch and biometrics fraud: Nearly 80 percent of fraud incidents occur during biometric verification. Liveness bypasses—methods to trick biometric systems—are gaining popularity.

• Document forgery: Fake ID cards remain the most commonly fabricated documents, followed by passports and driver’s licenses. Forgery rates have remained consistent since 2023.

Fraud hotspots

Certain regions have emerged as fraud hotspots. According to the report:

• Bangladesh leads the world in fraud rates, with 8.5 percent of applicants identified as fraudulent.

• South Korea is the first developed country to rank among the top five fraud-heavy regions, reflecting the increasing sophistication of fraudsters.

Most common fraud schemes

The report identifies several fraud schemes plaguing the industry:

• Bonus abuse: The most prevalent form of iGaming fraud, accounting for nearly 70 percent of cases. Fraudsters misuse promotional offers such as sign-up bonuses by creating multiple accounts.

• Illegitimate chargebacks: Often referred to as “friendly fraud,” this involves legitimate players disputing transactions after incurring gambling losses. Chargebacks remain a major issue despite measures like rollback mechanisms and card-use restrictions.

• Money laundering: Fraudsters exploit the iGaming ecosystem to clean illicit funds. Indicators include mismatched geolocations, unusual account activity, and frequent changes to payment methods.

• Account takeovers: Hackers gain unauthorised access to legitimate accounts, draining funds and damaging operators’ reputations. This type of fraud often involves sudden changes in account activity, including new payment methods and unusual gameplay behaviour.

Industry impact

Fraud is taking a toll on the iGaming sector, with reported losses of $1.2 billion globally between 2022 and 2023. The financial impact is exacerbated by regulatory fines, license revocations, and reputational damage, particularly in markets with lax fraud prevention protocols.

Recommended prevention measures

The report advocates for a comprehensive approach to combating fraud. Key recommendations include:

Enhanced KYC processes: Incorporating advanced tools like behavioural intelligence and transaction monitoring to detect anomalies.

Biometric verification: Strengthening liveness detection to counteract the rising use of bypass techniques.

Real-time fraud monitoring: Using machine learning models to analyse betting patterns and flag suspicious activity.

Sumsub’s “Detect-Act” model is highlighted as a proactive solution, implementing additional checks when fraudulent signals are detected.

As fraudsters continue to evolve their methods, the onus is on operators to adopt robust prevention strategies. With global iGaming projected to grow at a compound annual rate of 6.2 percent through 2029, ensuring platform security will be critical to sustaining this momentum.

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