Use Multifactor Authentication in the Quest to Quell Fraud in Gaming

As new states legalize mobile sports betting and the multibillion-dollar industry becomes more competitive, brands continue to battle for new players. That said, the industry overall is still in its youth, making it a magnet for fraudulent activities — and leaving operators to grapple with challenges like bonus abuse, synthetic fraud, account takeover and money laundering.

Mitigating fraud starts at new account creation, which is a foundational step that enables operators to begin their relationships with players and streamline operational processes. However, new account creation is also one of the riskiest stages in the customer journey. In fact, according to our recent 2024 State of Omnichannel Fraud Report, 13.5% of all new accounts created were suspected of digital fraud. In the gaming industry where promotions and bonuses are widely offered as the US market grows — that risk is even higher.

From stealing credentials to creating synthetic identities, fraudsters today have become more creative and sophisticated than ever, often successfully bypassing identity verification checks. This results in them creating new accounts to commit fraud like credit abuse, promotional fraud, deposit fraud and much more. As a result, good players and operators are impacted in a significant way, including financial losses, regulatory fines and reputational damages.

The industry has largely prioritized the player's experience due to the risk of abandonment, but in many ways, that opens the door to fraudsters. The key is to ensure your identity proofing, fraud detection and user authentication capabilities all work together. As regulations unfold and fraud attempts increase, player stability technology is needed to ensure the industry continues to build trust with regulators and players.

Is the player who they say they are?

Gaming is inherently risky; that’s part of the thrill for players. But for operators, heightened risk can result in heavy losses, reduction in profitability, and potential damage to brand reputation. That means they must be sure the player attempting to create an account is a real person and their information is accurate. If the know-your-customer (KYC) process goes smoothly, the operator might have a long-term player. If there are problems or delays, the would-be player is likely to abandon and move to the competition.

To mitigate potential harm and retain good players, operators must identify and address risk without inconveniencing valuable players. The ability to gauge potential risk and intervene proactively — only when needed — improves player trust and protects the operator.

For example, with the right checks in place, players identified as no risk aren’t required to manually provide information that adds friction to their journeys. However, when a player’s activity triggers predetermined flags, identity and other types of data are needed to know when friction is appropriate.

Processes that indicate player stability

Automating KYC and identity proofing at the first touchpoint reduces time-consuming manual reviews, expedites onboarding, minimizes friction, identifies fraud and helps ensure compliance. It also assesses player stability and integrity without manual intervention. To expose risk earlier, it’s beneficial to verify player identities against a broad set of credit, non-credit and proprietary data sources, including:

• Homeownership, bankruptcies, evictions
• Age data for earlier decisioning on younger players (e.g., under 18 in some states)
• Household financial wealth data
• Delinquencies and bad debt
• Purchase history and other behavioral indicators
• Address stability and other geographic metrics

Connecting that disparate data establishes a single source of truth, and drawing from deeper data analytics allows for more accurate risk categorization and proactive response strategies. In general, incorporating an identity-driven approach delivers a more robust picture of players. Once this information is gathered, predictive modeling and anomaly detection tools are crucial for identifying patterns and reducing false positives.

Data-centric identify verification

A tool that aids in this process is the Player Stability eScore® which has outputs that include a score index based on weighted custom attributes related to the propensity of the individual to be suffering financial distress. It can help you:

• Expose risk by verifying identities against thousands of sources
• Use authentication methods to flag risk
• Reduce fraud and stay compliant
• Prevent bonus abuse
• Shut down fraud rings
• Keep charge-back levels low
• Combat identity theft
• Stop account takeover
• Support responsible initiatives
• Deliver seamless player experiences

Keep in mind, fighting fraud isn't a set-it-and-forget-it endeavor. After players are authenticated and onboarded, operators should always be evolving and improving their risk management practices. It’s important to continue enhanced due diligence throughout the lifecycle. For example, ongoing monitoring triggers an alert when something out of the ordinary occurs so you can reconfirm identity, source of funds, high-risk geography, crime associations and more.

Making trust possible between operators and players

Learning the truth about individuals in seconds puts more control in your hands, and employing effective fraud mitigation solutions goes a long way in protecting your business and players. Showing your commitment to do so ultimately helps you build player trust and loyalty.