Online gambling is incredibly popular and has seen massive growth over the past few years. The advent of lockdowns due to the Covid 19 virus was a particular driver of this type of entertainment, as gamblers could not engage in activities in their usual in-person environments, so they turned to the digital realm instead. 


Online casinos are big business, with offshore licensing options becoming a very viable option for those wanting to operate in this particular vertical.


But it is also a business that attracts criminal elements, with the risk of several different types of fraud, affecting both the business and its patrons. Let’s look at the various different types of fraud that can occur in online casinos:


Credit card fraud

Gaming websites have very high transaction volumes, often involving smaller amounts. This makes the environment a prime target for criminals to test out stolen card credentials. Criminals will try out stolen credit card information with a small amount to start, and if the transaction is successful they will then purchase virtual chips, possibly play a little with someone else’s money and then cash out. Once the legitimate cardholder discovers the charges they will file a chargeback and the merchant will lose out.


Account takeover fraud

Criminals use social engineering or other techniques to obtain passwords and then log in as a legitimate customer, use stored credit card information to play, and change the details of a recipient account for winnings. Again, once the legitimate cardholder discovers that their card has been used without their consent they will file a chargeback.


Multiple account fraud

This is a common way for fraudsters to try and give themselves an advantage in the games, using either stolen card credentials, or even genuine ones. The fraudster will create multiple user accounts with an online casino, using different devices and IP addresses to attempt to evade detection. Once these accounts are created, the fraudster can use them in various different types of scams:


Bonus abuse

Many online casinos offer attractive incentives to first time sign-ups, such as bonuses and coupons for free plays etc. While these can indeed be a great way to entice new players, the fraudster becomes the recipient of multiple bonuses. They will often withdraw funds and abandon the accounts once they have served their purpose.


Chip dumping

This is a common type of fraud in online poker. The fraudster will use multiple accounts to play at the same online poker table. As the scammer is pretending to be multiple people, they can manipulate the game in their favour, for example by driving up betting with legitimate players, knowing they have a likely winning hand. 



The fraudster can use multiple accounts to get around maximum bet limits, or to deliberately lose some hands to influence the winning of others.


Friendly fraud

So-called friendly fraud is anything but friendly. In these cases, the cardholder may become upset about losing, or may wish to hide losses from a spouse or other family member. The cardholder will simply claim that it was not they who made the transactions and declare that their card information was stolen and used without their consent. They will then file a chargeback that the merchant will have to dispute. Even if the merchant wins the case, they will still have to pay penalties and have their chargeback ratio increased.


All of these types of fraud have a negative effect on the merchant, either from resulting chargebacks or from loss of profit.


Merchants must take proactive steps to reduce instances of the various types of fraud that their online casino business may face. Here are some examples of practices that can mitigate the risks of chargebacks and other types of fraud


  • Have strong Know Your Client practices
  • Make use of Multi-Factor Authentication techniques for customer account logins and changes to account information
  • Use payment processing providers who use stringent security methods such as 3D Secure  or Strong Customer Authentication 
  • Use fraud prevention software tools that employ techniques such as velocity checking, address verification, device fingerprinting, risk scoring and post-transaction behaviour
  • Use Anti Money Laundering tools 
  • Make use of specialist game play monitoring software
  • Keep meticulous records to assist in fighting chargebacks
  • Use service providers who have excellent security practices and who are compliant with all necessary legal, regulatory and other requirements


At Baer’s Crest we know that the online casino business can be very lucrative, but is also full of potential dangers for merchants. We have a great deal of experience in helping high-risk merchants bring their businesses online, with multiple offerings ranging from secure payment options to assistance with offshore licenses. Our expertise allows us to provide high-quality and secure solutions at reasonable costs. Talk to us about the right options for your business.