Exposing the $5.2b Annual Loss in European iGaming Sector
Significant Fraudular Activities Led to a 10% Revenue Drop for around Half of European iGaming Market in 2024
The European iGaming market is grappling with hefty losses, according to a recently conducted survey by Sumsub. The research indicates that approximately half of compliance professionals in the sector reported losing over 10% of their revenue to fraud in 2024. This translates to potential annual losses of over $5.2 billion, considering the iGaming sector represents 40% of the $58 billion regulated European gambling market.
Shockingly, another 15% of respondents acknowledged that fraud had claimed more than 20% of their revenue last year.
Unveiling the source of Fraud
The roots of iGaming sector fraud are deeply entrenched in digital fraud, particularly during customer onboarding. Identity fraud (65%), money laundering (65%), and bonus abuse (64%) are identified as the primary sources of fraud. Despite iGaming companies implementing checks to deter fraudsters, these criminal elements have adapted by utilizing state-of-the-art deepfake technology to create almost undetectable false identification documents.
Consequently, 78% of compliance professionals reported a surge in AI-generated fake identities in 2024. However, these professionals find it increasingly challenging to spot the fakes before the crimes are committed.
Upgrading Fraud Prevention Tactics
In response to the escalating threats posed by increasingly cunning fraudsters, the iGaming sector must modernize its ineffective fraud prevention methods. Sumsub suggests replacing labor-intensive manual checks with automated monitoring to bolster fraud defenses. Studies show that manual checks can only thwart around 54% of fraud attempts, with approximately 31% of fraud professionals spending over 40 hours a month on fraud prevention.
Kris Galloway, Head of iGaming product at Sumsub, emphasized, "Fraudsters are growing smarter, better equipped, and more capable each day. For a sector so exposed to fraud, a multi-layered defense is the most effective deterrent. Security measures should be in place throughout the user journey, from registration to withdrawals. This includes KYC, behavioral analysis, device fingerprinting, and more."
Strategies to Combat Fraud in the iGaming Sector
- Advanced Fraud Prevention Technologies: Implement AI-driven analytics to detect and prevent fraud, including automated tools and behavioral biometrics.
- Multi-Layered Security Approach: Apply robust security measures such as KYC, device fingerprinting, behavioral analysis, and continuous real-time data analysis.
- Dynamic Friction: Employ dynamic friction measures and enhanced verification processes to scrutinize suspicious activity.
- Education and Communication: Educate users about the risks and consequences of fraud to inhibit dishonest play.
- Continuous Improvement: Regularly monitor, analyze, and refine fraud prevention strategies to stay ahead of evolving threats.
Combating Deepfake Technology
- Advanced ID Verification Tools: Implement tools that can detect deepfake-generated IDs and other forms of digital identity manipulation.
- AI-Powered Scam Detection: Leverage AI to detect patterns indicating the utilization of deepfakes or other AI-powered scams.
By adopting these strategies and staying vigilant, the iGaming sector can combat the evolving landscape of fraud and deepfake technology, ensuring a secure and honest gaming experience for all.
The European iGaming sector, currently experiencing significant financial losses, could benefit from enhancements in fraud prevention technologies, as manually-conducted checks only hinder around 54% of fraud attempts.
To strengthen their defenses and counteract the increasing sophistication of digital fraud, iGaming professionals should consider implementing advanced tools like AI-driven analytics and dynamic friction measures for better detection and prevention of fraudulent activities. Additionally, the adoption of cutting-edge ID verification tools and AI-powered scam detection can be instrumental in battling the rampant use of deepfake technology prevalent in the sector.
