Report: Fraudulent activities targeting gambling platforms in the US on the rise

A recent report from TransUnion highlighted the escalating threat of digital fraud within the online gambling industry, particularly in the United States.   

The study reveals that over 10% of online gambling transactions in the US were flagged as suspected of potentially fraudulent activities in 2023, representing a significant surge compared to previous years.  

The predominant fraudulent scheme  

The TransUnion report identifies promotion abuse as the primary form of fraud plaguing the gambling sector.   

Fraudsters are exploiting promotional offers and bonuses provided by online casinos and sports betting platforms, contributing to the rising incidence of fraudulent activities.  

Steve Yin, Senior Vice President and Global Head of Fraud Solutions at TransUnion highlights a shift in fraud tactics, with fraudsters increasingly resorting to the creation of new accounts using synthetic identities rather than compromising existing ones.  

Synthetic identities, pieced together from data sourced from numerous data breaches, have become a lucrative tool for fraudsters, fuelling the surge in fraudulent transactions.  

Impact of data breaches on fraudulent activities  

The study underscores the role of data breaches in facilitating digital fraud.   

The US witnessed a staggering 157% increase in the number of data breaches from 2020 to 2023, providing fraudsters with ample data to create fraudulent accounts and synthetic identities, posing a significant threat to the security of online transactions.  

Global trends and economic influence  

On a global scale, the retail sector surpassed the gaming industry, including online gambling and poker, in experiencing the highest suspected digital fraud rate in 2023, with an alarming 8.7% rate, marking a 21% year-on-year increase.   

Additionally, the telecommunications sector observed a notable 111% year-on-year surge in suspected digital fraud rate, reaching 4.5%.  

TransUnion’s research also sheds light on the influence of economic conditions on gambling behaviour.   

Despite the resilience of the US economy overall, factors such as declining consumer liquidity and low consumer confidence have dampened gambling activity.   

In the last quarter of 2023, a 10% decline in overall betting activity was observed due to decreased consumer liquidity, although millennials, with 77% reporting improved household finances, emerged as an exception.  

Strategies for operators  

Understanding the financial signals that distinguish resilient from distressed players is deemed crucial for operators seeking to attract high-value bettors, according to TransUnion.  

Despite the overall decrease in participation, strategies focusing on channel expansion proved successful in navigating the shifting gambling landscape.