Bonus Abuse in Online Gambling

Ilija Jaksic December 27, 2023
Bonus Abuse in Online Gambling

Gambling platforms frequently use various bonus programs to attract and retain players. Some of these incentives include welcome bonuses, no-deposit bonuses, free spins, and loyalty prizes.

However, as the popularity of these bonuses grows, so does the problem of bonus abuse. Some players deliberately seek loopholes or opportunities to exploit these offers. This abuse might range from opening several accounts to betting tactics violating the bonus conditions, calling for a more in-depth understanding of the problem.

We detail what constitutes bonus abuse, its different forms, and, most importantly, how gambling establishments can defend themselves from such shady tactics.

What is Bonus Abuse?

Bonus abuse is a deceptive activity in which players exploit promotional incentives and leverage them in ways that were not intended, particularly for new players.

While bonus misuse is not illegal, it violates the terms and conditions of most online casinos. The user’s bonus money and earnings are confiscated when caught, and the deposit may be frozen.

Experienced fraudsters create new identities and IP addresses using technologies such as betting bots, virtual computers, and emulators. They use Socks5 proxies for this objective.

Reasons Why Fraudsters Target Online Gambling Platforms

The scale and continuing development of the sector provide appealing prospects for fraudsters aiming to exploit weaknesses for financial gain. The worldwide online gambling industry reached $95.05 billion by the end of 2023, with a CAGR rate of 8.54%. The answer lies in the following concerning stats:

  • Approximately one out of every four accounts generated on gambling sites is fake.
  • Around 4% of logins are account takeover attempts.
  • An inexperienced fraudster can make up to $20,000, while a skilled one can earn up to $600,000 monthly.

The process often begins with sign-up, where fraudsters utilize disposable email addresses, false identities, and stolen credit card information to avoid KYC checks. This is referred to as gnoming or multi-accounting.

Grifters create several accounts to circumvent the one-time limit attached to most incentives. Multi-accounting zeros in on promos such as free bets, no deposit, and other gambling bonuses that don’t require a deposit.

Main Bonus Abuse Methods Across Gambling Platforms

Bonus abuse in online gambling manifests in a variety of ways and carries specific consequences. Below, we’ll look at some of the most common types of bonus fraud and their effects on the industry.

Arbitrage Betting in Sports Betting

Arbitrage betting, or arbing, refers to taking advantage of disparities in odds given by several online sports betting platforms to ensure a profit regardless of the event’s outcome. While not prohibited, sportsbooks consider it bonus abuse when combined with bonus offers.

Betting syndicates are known to employ this tactic as a coordinated strategy. The collective approach significantly increases the scale of arbitrage betting, making it a more complex challenge for online betting platforms to manage.

Identity Theft

Identity theft in the context of online gambling is a fraudulent practice in which individuals create several accounts on gambling sites using stolen or fictitious identities. They employ modern technology to conceal IP addresses and use personal information to create credible profiles, evading basic detection measures.

Because they use actual personal information, opened accounts with stolen identities seem authentic. This appearance of legitimacy makes it difficult for online gambling platforms to distinguish them from real accounts.

Facial recognition software has emerged as a powerful weapon in the fight against online gambling identity theft. This technique entails biometric verification—identification by requesting users to upload a live photo or video for face recognition, discouraging efforts to create false accounts using images, videos, or masks.

Chip Dumping in Poker

Chip dumping occurs in online poker rooms and entails one player intentionally losing chips to move funds. It’s used to meet wagering requirements, unfairly leverage promotional offers, or launder money. For instance, a player could use a welcome bonus to acquire chips and dump these on a colluding player, who can meet the playthrough requirements more easily.

Chip dumping can be difficult to identify since it might emulate the natural flow of a poker game. It may go overlooked unless there’s a trend or the amounts are significant. Poker’s inherent unpredictability and element of bluffing make it an ideal setting for such techniques. For money laundering, it provides a seemingly legitimate way to win money at poker, thereby cleaning the illicit funds.

Malicious Affiliating

The complexity of malicious affiliating lies in its multi-layered approach. Fraudsters must understand affiliate programs’ workings but also need the technical knowledge to manipulate or generate traffic.

This scheme is present in various online betting markets, including standard gambling, gaming, fantasy sports, and sports betting platforms.

The tactics include manually entering fake leads into a gambling project’s CRM system or using bots to generate artificial traffic. These bots can register accounts and make deposits, using diversionary tactics to appear as legitimate users. Generating traffic can enable the following:

  • Commissions on cost per click (CPC);
  • Visitors to websites that pay out cost per thousand (CPM) commissions;
  • Leads exclusively interested in sign-up incentives to earn a cost per lead (CPL) commission.

How Can Gambling Platforms Safeguard Against Fraud?

Implementing protective measures is not just a matter of compliance but also a necessity for ensuring the integrity of operations and safeguarding players. By applying anomaly detection systems, machine learning algorithms, as well as IP and device tracking tools, gambling platforms can effectively identify and deter fraudulent activities, thus protecting both their players and their business.

Identity Check

KYC procedures are crucial for verifying the identity of players by checking government-issued IDs, proof of address, and other personal information. Incorporating facial recognition technology improves the KYC process and is particularly effective against identity theft and multi-accounting.

Funds Verification

Understanding and monitoring the flow of funds is essential in combating financial-related fraud like money laundering. AML procedures are designed to monitor and report suspicious financial activities, large transactions, and unusual patterns of deposits and withdrawals.

Continuous Client Surveillance

Ensuring a player’s legitimacy doesn’t end at account creation. Regular monitoring can help identify unusual behavior post-verification—recognizing patterns indicative of fraudulent activities, such as consistent large wins from a single source or frequent maxed-out withdrawals.

An Ongoing Battle Against Bonus Abuse

The issue of bonus abuse in online gambling is multifaceted, presenting unique challenges to players and operators. Each of the analyzed practices undermines gambling platforms’ integrity and poses significant financial risks.

To counter these threats, gambling companies adopt robust protective measures, stringent identity checks through KYC procedures and facial recognition technology, ensure funds verification with comprehensive AML protocols, and maintain continuous client surveillance to detect and address any irregularities post-account creation.

We can’t stress enough that engaging in bonus abuse is not advisable. Besides breaching the terms and conditions of online gambling platforms, it carries substantial consequences. Players caught indulging in such practices face severe penalties, including the confiscation of winnings, account suspension or permanent bans, and, in extreme cases, legal action. Furthermore, such activities can lead to a loss of trust in the online gambling community.

The fight against bonus abuse is a continuous one, necessitating adaptability on the part of operators. These platforms can offer a fair, safe, and entertaining experience for all genuine players by staying ahead of the curve with improved defensive measures and supporting responsible gambling behaviors.

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