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The growth of online gambling shot up during the pandemic. However, this promising spike for the industry has been a double-edged sword, as it coincided with a sharp increase in fraud targeting online gambling.
But with this influx of new players comes more concerted and ingenious schemes devised by online fraudsters to take advantage. The biggest headaches for iGaming operators are, without a doubt, meeting their online gaming responsibilities to prevent problem gambling, whilst blocking money laundering (AML) and bonus abuse.
Bonus abuse is a prevalent problem within the iGaming industry – a term used to describe operators of online casinos, sports betting, lottery providers, bingo sites and more. It is not as clear cut as payment fraud or chargebacks, making it harder for fraud analysts to detect.
It is essentially people taking advantage of marketing offers for new players by signing up for them multiple times. Often referred to as multi-accounting or gnoming it encourages fraudsters to create as many new accounts as possible, in extreme cases relying on stolen IDs, synthetic identity, and prepaid credit cards in order to bypass the know your customer (KYC) checks.
The iovation’s 2020 iGaming Report revealed that, for the third year in a row, bonus abuse was the number one reported fraud by its iGaming players, rising 72% from 2018 to 2019.
Another key trend in the report was the rise in self-exclusion. iovation received over 363,000 reports of player self-exclusion in 2019, a 63% increase from 2018. The iGaming operator is now legally obligated to ensure the player does not resume gambling activities.
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Playing games at online casinos has always meant to be purely for entertainment. However, some players go a long way to take advantage of the system and try to abuse casino bonuses to their advantage. Now, policies are stricter, and online casinos usually frown upon such practices.
iGaming platform operators might accuse inexperienced players of bonus bagging or bonus abuse and have their winnings confiscated without even knowing they did something wrong. In this article, we will do our best to explain the bonus bagging and bonus abuse terms, and how to avoid them.
Definition of Bonus Hunting
Bonus hunting is a concept that originated from the casino streaming niche that started with CasinoGrounds in 2016, attracting thousands of viewers when they go live. Bonus hunting is the act of taking advantage of these incentives, which usually involve some amount of cash, in order to gain the most profit from all the promotions available.
Bonus hunting (also known as bonus whoring or casino whoring) is one of the remaining ways how to beat casinos and actually make money by withdrawing bonus funds before players finish their wagering, this strategy has long been popular with online gamblers.
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Definition of Bonus Abuse
In a nutshell, this is using a tactic to gain a competitive edge over the casino to benefit and then repeating the process several times. Years earlier, due to the lack of limitations encircling bonuses, gamblers could get away with this.
Still, most of the online gaming platform now have mechanisms in place that can identify gamblers who misuse their bonuses. Sadly, some honest players become entangled in the trap as well. Unfortunately, these are usually inexperienced players who haven’t bothered to read the casino’s terms and conditions.
Bonus Abuse Seen Across Many Different Industry
As more consumers spend their time at home due to the coronavirus pandemic, there has been an overall increase in all online activities. While online businesses are seeing more new customers every day, bonus abuse fraud has become prevalent in many industries, including online gaming, streaming services, fintech, and more.
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Common Types of Bonus Abuse Happening in iGaming Sector
Bonus Abuse in Online Gambling and Betting – Online betting and gambling operators often offer sign-on bonuses as a way to entice new players. Fraudsters sign up en masse to either collect these bonuses, run collusive play, dump chips or increase their winning chances. This is done through arbitrage by placing multiple bets using the bonus.
Laundering Stolen Money in Online Gambling – Fraudsters also use online gambling sites to collude with one another. By sitting on the same table and one player purposely losing to another repeatedly, fraudsters effectively launder money using the platform. Digital, peer-to-peer payments apps — that typically offer instant sending and receiving of funds — are also used for bonus abuse purposes.
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The New Account Fraud and Abuse Continuum
One common thread in the bonus abuse examples listed above is that many of them could be committed by a normally law-abiding individual looking to play the system. Just as they could by organized fraud rings and professional fraudsters.
This highlights a key issue that plays out across all new account registration fraud prevention efforts. Differentiating between users and fraudsters is no longer a black and white issue.
Processes That Could Be Classified as Bonus Abuse
Making Several Accounts – This is among the most significant errors bonus offenders make. Somebody who is deliberately attempting to obtain bonuses will start making multiple accounts, each with a new email address, to claim the same reward numerous times. Nevertheless, this is a direct violation of most online casino terms of service, and for more than one rationale.
Failure to Meet Betting Requirements – It’s for the reason that there are wagering requirements. They must be met before your player can profit, and most players are well informed of this before accepting the bonus—those who don’t have either not read the terms and conditions or are flagrantly violating them. Players who attempt to withdraw from a casino before meeting these requirements may be labeled as bonus abusers.
Bottom line
While it might not be possible to be 100% bulletproof, there are a lot of ways to assure that the right bonuses are given to the right players. Your CRM and player segmentation must play together with your bonus tools to celebrate your valued players, without inviting the bonus abusers to the party.
Knowing what sort of games offer particular advantages when playing with bonus money is a must, and while the exclusion of such games certainly will do the trick, it also will negatively impact your valued players’ freedom to pick and choose. Being able to recognize exploit patterns and act on them is the best approach and it will allow you to include as many of your games in bonus offers as possible.
