What is Gambling Fraud?
As we all know, the gambling niche is an incredibly lucrative one. Every year, betting companies make billions in revenue and the industry doesn’t seem to be slowing any time soon. During the pandemic, lots of people missed sport, but a significant portion of sports fans also missed betting on their favourite teams and events. Today, betting is a part of the whole sporting experience.
With so much money in gambling, it’s perhaps not surprising that some people are still trying to take advantage of the industry. Especially as gambling has moved online, betting companies have had to invest heavily in security and protect against hackers, dishonest players, and other threats. While some sign up using fake details, others use fraudulent banking methods.
In this guide, we’re going to learn the main types of gambling fraud, the importance of the Gambling Act of 2005, how gambling fraud works, and how the industry is working to put an end to the problem.
What’s Gambling Fraud?
We touched on it in the introduction, but what exactly is gambling fraud? Sadly, there are still criminals who wish to steal the identity of players and use betting websites in a way they aren’t designed to be used. As a player, it’s never been more important to use betting platforms that have the right licenses and security measures.
Over the years, the gambling industry has been the home to many different scams and fraudulent activities. In fact, you only need to watch something like Ocean’s Eleven or Now You See Me to learn how prominent the issue is in modern society. Though these scams are more common in physical casinos, scammers are now developing tools to achieve something similar online.
We’ve seen many examples of gambling fraud, and one is scammers using the accounts of others to gamble. Elsewhere, they use stolen money to bet, use AI to defraud websites, and match fix. With this last one, the regulatory bodies are clamping down on match-fixing, but there are still cases each year around the world. For instance, it might be a snooker player promising to lose a certain number of frames or a football player promising to get sent off in a particular fixture. With inside information, the criminals put lots of money on the outcome because they know it will happen.
For the Gambling Commission and other important organisations, they see all types of fraud and scams every single year.
Types of Gambling Fraud
Let’s dig a little deeper; what are the most common types of gambling fraud at the moment? In this section, we’re going to focus mainly on the online world. Although a problem, fraud in physical casinos and bookies is less likely to affect you as a player. On the other hand, we need to be careful when gambling online.
Traditionally, this would involve two or more people manipulating the markets to gain a favourable outcome. These days, there are just as many solo players trying to do the same thing with several accounts across different platforms. So far, it seems that fraudsters favour online poker for collusion, but this isn’t to say that other casino games and sportsbooks don’t have to contend with the problem.
As an example, they might create two different casino accounts and make one lose to the other continually until the wagering requirement of the welcome bonus is met. With a team of people all working together, they can all walk away with a healthy amount.
You may have seen the term ‘bonus abusers’, and it’s because of these people that we now have wagering requirements on welcome offers. As the name suggests, these are people who would sign up to a new platform, get the bonus, and then never use the platform again. Before wagering requirements, these people would essentially get free cash.
Though the introduction of wagering requirements has rendered this old system useless, there are still bonus abusers who create several accounts to enjoy a bonus more than once. At the same time, they can collude with others to ensure they walk away with a profit at the end.
If you’ve ever wondered why you can’t enjoy a welcome bonus after depositing through Neteller, Skrill, and other eWallets, it’s time to blame the bonus abusers again. Previously, they would take advantage of the low security on these services to open multiple accounts.
3. Card Fraud
Unfortunately, despite the millions spent on security, even the biggest companies succumb to data breaches. When cybercriminals obtain card details this way, they can top up their sportsbook funds and nobody is aware of what even happened (except the cardholder!). As we’re going to see later, the industry has clamped down on this issue with verification and by banning credit cards.
4. Chargeback Abuse
With this method, the account holder informs the bank that they didn’t make the deposit to the gambling platform. Normally, the card issuer will see this as fraud for the betting website because the vast majority are based abroad. As the bank reverses all charges, the betting company’s reputation decreases, and it weakens the relationships between the betting company and card company. Thankfully, this has also been helped by the removal of credit cards.
5. Stolen Money
Every year, a significant number of legitimate players are contacted by strangers and asked to place money on certain bets and selections. Put it this way, the fact that they can’t or don’t want to bet on their own account says everything you need to know. The betting industry has long been associated with money laundering and stolen money, so never accept these requests from strangers. Depending on the severity of the incident, the offenders could face prison or rehabilitation.
6. Match Fixing
Whenever this phrase is used, people assume that a sports star has taken money to throw an event. In some cases, it might just be inside information. Either way, acting on inside information is considered illegal, and it’s another type of fraud. Rather than making one big, obvious bet, some people are now working with lots of individuals to act on information through several smaller bets.
7. Other Methods
As time progresses, the industry has come under attack from artificial intelligence and other clever technology. As we turn to poker once again, one problem is fraudsters developing advanced AI bots to play poker at a higher standard than most players. Again, this is something the industry is fighting and it’s becoming rarer online as a result.
How the Industry is Coping with Gambling Fraud
As mentioned previously, the industry has been forced to adapt over the years and the UK Gambling Commission is at the forefront of these changes. For the commission, the priority is on providing a safe and fair environment for all players. With this in mind, they have handed out fines to even some of the biggest names. In 2019, there was a new record for fines; nearly £20 million. If you thought this was significant, over £7 million of this amount was a single fine for Daub Alderney.
If you missed the news last year, this is a casino operator with several different sites under the umbrella. According to the Gambling Commission, the company failed to protect vulnerable consumers and prevent money laundering. As well as the fine, extra attention is now paid to the activities of the company to ensure procedures improve in the coming months. The Executive Director of the Gambling Commission, Richard Watson, said that this was a serious ‘lapse’ and that all casinos and gambling companies MUST meet the requirements to protect all consumers.
In a year that saw Paddy Power, Betfair, and many other names merge to form Flutter Entertainment, they also received a heavy fine worth over £2 million. Why? For certain violations in the sportsbooks. Therefore, one of the first ways the industry is coping with gambling fraud is to fine companies that fail to follow the regulations. Back in 2018, William Hill learned this lesson the hard way after it was fined over £6 million after a handful of customers deposited money gained from criminal activity. Now, all players need to verify their identity. This way, players can’t bet money they can’t afford, nor can they bet with money earned from crime.
As if the fine wasn’t humiliating enough for such an experienced and reputable business, the Gambling Commission handed down some serious advice for the overall management of the company. For example, William Hill were encouraged to create stronger systems to eliminate the risk of money laundering and improve the record-keeping of all transactions.
With William Hill as an unfortunate example, other companies in the industry proceeded to improve their own systems. Now, brands know that the commission won’t hold back with advice, fines, and more. If a company suspects criminal money, they have a duty to report this according to the POCA (Proceeds of Crime Act). If they suspect that a player is using criminal money and fails to act, leaders in the business can actually be imprisoned for up to five years.
Furthermore, all gambling companies have a responsibility to complete a risk assessment when it comes to money laundering. Thanks to the 2017 Money Laundering Regulations, they need to perform a written assessment while carefully watching all players betting more than £2,000 across a single 24-hour period.
Why should companies follow these rules? For one thing, they want to protect customers and offer themselves as a reliable and trustworthy solution during this difficult time. However, they also want to prevent criminal activity on their platform. With both of these reasons combined, betting websites and casinos are continually improving their security measures.
The Importance of Technology
Until now, it has been a manual effort to protect players in both physical locations and on digital platforms. Fortunately, technology is now in a position to help. For example, machine learning and artificial intelligence can often spot fraudulent behaviour and act quicker than any manual process. Often, the problem with spotting fraudulent activity is that the criminal has already been active for a number of days or weeks. With machine learning, they’re shut down sooner and have less of an opportunity to take advantage of the platform.
In the future, this technology could play a pivotal role in helping gamblers with a problem. Using social profiling and other measures, we can recognise problem gamblers and remove their access from poker rooms, sports betting markets, and other betting tools.
As technology improves, betting companies can code algorithms into their software and spot peculiar activity even faster. Not only does this prevent crime, but it could also save those with the potential to drown themselves in debt. For now, all companies are adhering to the KYC (Know Your Customer) policy and this means requesting verification documents from customers before betting or withdrawing for the first time. As players, we might find this a little frustrating, but it’s the first step to a safer and more secure betting environment.
As you join a new betting website, you may be asked to prove your identity, age, and/or address. If you’re self-excluded from another platform, you may not get approval to bet on a new platform. Despite all these positive measures, some customers are still able to gain access to websites when they shouldn’t, and this is where the industry will continue to improve as time goes on.
What’s gambling fraud? It’s where a criminal uses a betting website or casino in a way that it hasn’t been designed. Examples include using stolen money, match-fixing, collusion, card fraud, and bonus abuse. The good news is that the Gambling Commission, with help from gambling companies, is making progress and it seems to be harder for criminals to perform gambling fraud online than in physical locations.
Eventually, the aim is to suffocate all criminals so that fraud is no longer an option in the gambling world!
Carl Hughes - Editor
Carl Hughes is a leading expert on sports and casino betting. Carl began his career with a BSc in Sport, Exercise and Health Sciences from the University of Birmingham before working within the industry for some of the bigger names (GVC and Bet365) and has been praised as being "a leading sports betting commentator".