Artificial Intelligence is transforming many industries, and as the technology continues to evolve, the potential seems endless. Enterprises are already using AI for a wide range of tasks, such as customer service, marketing, and even product development.
The technology is also a perfect match for gambling venues that use it to enrich their service and facilitate a safe and secure gaming environment. A lot of the focus is on fraud prevention. The following article explains how AI can prevent online gambling scams.
Online Gambling and AI Technologies
The world of online gambling is constantly evolving, and the financial performance data shows that the industry in the US enjoyed the most lucrative start to a year, earning $4.5 billion in January 2022. On the global stage, the figures are even more impressive, with the online gambling market generating $66.7 billion in revenue in 2020. According to the latest forecasts, the worldwide market will be worth more than $92.9 billion in 2023.
However, with so much money changing hands, the scale and severity of fraud attempts have only increased. Research by TransUnion shows a 36.2% spike in suspected fraudulent activities in 2021 and singles out license agreement violations as the most common type of fraud in the industry.
In addition to helping casinos improve the customer service experience, developing more engaging games, and preventing problem gambling, AI can be a great asset in identifying and preventing fraud in online gambling.
How Can AI Prevent Online Gambling Scams?
Some of the most common online gambling scams are multiple account fraud, credit card fraud, and chargebacks.
At a time when the popularity of online gambling is witnessing exponential growth, identity theft is on the rise. It occurs when someone steals your personal information, such as your name, Social Security number, or credit card details to commit fraud.
In the gambling industry, credit card credentials are the primary target. Fraudsters work to acquire these in a number of ways including phishing emails, before racking up costly transactions. Bad actors can also collect your personal details and use them to create an account without your knowledge.
Another common type of online gambling fraud involves the creation of multiple user accounts by the same person. To avoid detection, fraudsters use as many different devices and IP addresses as possible. If done successfully, the criminal can repeatedly take advantage of welcome bonuses for new customers or manipulate a poker game in favor of one account.
When it comes to chargebacks, they are a more subtle form of casino fraud and, thus, harder to identify. A chargeback is a returned payment to a card holder who disputes a transaction on their account statement.
When gamblers use credit or debit cards to make deposits and withdrawals at online venues, they may request chargebacks for a variety of different reasons, including claims that a transaction was the result of fraud. The bank investigates the claim, and if it concludes that the complaint is valid, the money is removed from the casino’s account and credited to the card holder. However, some gamblers who lose a lot of money have a tendency to file these claims under the pretext that the card was used without their knowledge or permission.
If an online casino isn’t using any AI fraud prevention tools, chargebacks can be costly for a business, as they involve not only the refunded amount but also a chargeback fee. In some cases, repeated chargebacks can lead to a business being blacklisted by its payment processor.
There are several ways AI can help:
One of the most important advantages of AI technology is that it eliminates the prospects of human error. Fraud prevention AI technology can be useful during the onboarding of new customers, helping in the online verification of personal documents, videos, and pictures. This enables online casinos to perform secure and detailed onboarding.
Fraudsters are increasingly trying to use stolen or breached credentials to gain access to online casino user accounts for malicious purposes. This can be done in a number of ways, such as hijacking an account through a phishing attack.
There are a few different ways that artificial intelligence can be used to prevent a casino account takeover. One way is by using AI to monitor user behavior and look for patterns that might indicate someone is trying to gain unauthorized access to an account. Another way is by using AI to automatically flag suspicious activity and block it before it can happen. Additionally, AI can be used to help verify the identity of users.
Like traditional casinos, online gambling venues are also struggling with cheaters. Thanks to AI technology, detecting cheaters is easier. For example, AI can be used to track betting patterns and flag suspicious activity in poker games. AI can also be used to monitor players’ facial expressions and body language for signs of cheating. While AI fraud prevention cannot completely eliminate cheating in online casino games, it can certainly help to reduce it.
Many online casinos are grappling with bonus abuse. And some have already turned to AI technology to prevent this type of fraud by identifying signs of potential manipulation, such as a quick succession of email addresses and credit cards being used to apply for bonuses. By collecting this information, the casino host can identify users who try to manipulate bonuses and block any future transactions from them.
Artificial intelligence can help identify devices that are being used for fraudulent activities. Thanks to machine learning in gambling, devices can be profiled for risk. One of the methods relies on using fingerprint technology and linking devices to suspicious accounts. This information can then be used to block the device from being used on gambling sites.
So far, AI has been shown to be particularly effective at identifying devices that are being used to place automated bets, known as bots.
Bots are often used by bad actors to place large numbers of bets quickly in the hope of making a profit before the odds change. By using AI to identify and block these bots, gambling sites can help to prevent fraud and protect their customers.
AI can help with detecting chargeback gambling transactions even before they are completed. AI can stop chargebacks by identifying patterns in customer behavior that may indicate fraud. The AI technology can be used to monitor transactions in real-time and flag suspected fraudsters. Finally, AI can identify account holders that requested chargebacks in the past, giving the casino host a clearer picture of the customer’s intentions.
Online gaming sites are always looking for ways to mitigate the risk of fraud. AI integration can help in this regard by providing a more sophisticated level of analysis and detection. By incorporating AI into their systems, gaming sites can identify patterns indicative of fraudulent activity. In addition, AI can also help to flag potential problem areas on the site that could be exploited by fraudsters. By using AI to help detect and stop casino fraud, online gaming sites can improve their overall security and protect their players from potential harm.