Mobile Gambling - Sportsbooks Face Growing Fraud

The sports betting industry has seen rapid digitalisation as punters increasingly use mobile devices as their go-to method of betting. However, their convenience, especially in live betting scenarios, exposes the industry to significant fraudulent activities.

Mobile betting remains the dominant method of online gambling in the UK. This is particularly true for younger people, with three quarters of 18-34 year old online gamblers using a smartphone to gamble compared to only 14% of those aged 65 and over (according to the The Gambling Commission.)

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This large audience makes it more likely that fraudsters will target sportsbooks, making it crucial for them to have a strategy in place for protecting bettors from fraud.

Non-genuine engagement and fraudulent activity is happening completely undetected, siphoning away campaign margins from sportsbooks and hindering growth.  Guarding against this fraud not only ensures campaigns reach their maximum potential, but also helps protect brand reputation. By taking a proactive stance, sportsbooks can prevent further funds from flowing through to fraud.

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Mounting Digital Threats

The mobile betting market is set to expand considerably over the next few years, with Market Research Future estimating the market size will reach $173.87 billion in 2032. This growth will further incentivise fraudsters to target the industry.

These fraudsters use invalid traffic (IVT) to exploit sportsbooks’ advertising campaigns with concerning levels of success. IVT consists of any activity originating from sources lacking genuine user interest. This includes ad fraud carried out by threat actors, typically by using bots. This adversely affects sportsbooks by artificially inflating impressions, so mobile advertising campaigns appear to be performing much better than they actually are. Not only does this waste ad spend for Sportsbooks, it also misleads them with fundamentally flawed campaign data on which they make future ad spend decisions.

Artificial Intelligence (AI) powered bots are also used by fraudsters regularly to create and carry out frequent attacks. These bots create masses of fake accounts, inflating campaign data and abusing sportsbook’s promotions. This significantly drains campaign resources, and our research shows on average around 5-7% of sports betting campaigns are affected.

Conventional anti-fraud tools deployed on mobiles don’t operate at the impression or click level, and therefore fail to identify IVT, leaving sportsbooks vulnerable to threats.

Non-genuine engagement from returning users also poses a challenge for sportsbooks, as loyal customers unintentionally drive-up costs. When these users attempt to navigate back to a website, they can end up clicking on paid brand advertisements. This inflates customer acquisition costs (CACs), and as these existing users won't generate new conversions, the sportsbook faces a loss. Without a strategy to manage their traffic and control non-genuine engagement, sportsbooks will continue to be vulnerable to fraud and optimising their campaign value will be even more difficult.

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Being Proactive In The Fight Against Fraud

To adapt to an evolving market, sportsbooks must embrace mobile betting. As most anti-fraud tools on mobiles lack the ability to identify more sophisticated threat methods, it’s crucial to develop a strategy to augment this vulnerability. This way sportsbooks can then reap the benefits of the mobile betting industry while protecting themselves and their users.

Here are some of the steps sportsbooks can take to mitigate campaign losses:

Traffic Monitoring: The biggest advantage fraudsters leverage is IVT’s ability to pass through systems unnoticed. It’s possible to circumvent this by regularly monitoring traffic. This provides valuable insights into campaign data, and sportsbooks can discover any indicators that fraudulent activity is occurring. This can then be swiftly dealt with and the threat to margins will be removed.

Install an Ad-Verification Platform:  Bots can be deployed in overwhelming numbers, making it increasingly challenging for teams to effectively monitor their traffic. To ensure fraudulent traffic doesn’t slip through the cracks, an ad-verification platform can be utilised to boost operational efficiency. These platforms can determine if traffic is legitimate by identifying its source in real time. Suspicious traffic can then be blocked, mitigating any threat to budgets.

Set Custom Verification Rules:  To control the number of times a user interacts with a campaign, sportsbooks can set custom verification rules. This limits the number of times a particular user can click on an ad as once they pass the set threshold, they’ll no longer see the advertisement. This prevents bots or other non-genuine forms of engagement from repeatedly attempting to engage with an ad. The result is significantly reduced cost-per-click (CPC) rates and budgets protected from bot spam.

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Staying Ahead Of Fraudsters

As the digital landscape continues to develop, fraud tactics are evolving, becoming increasingly complex to both identify and mitigate. If sportsbooks want to successfully reap the benefits of a booming mobile betting market, they have to ensure they’ve taken the right steps to protect themselves first.

Monitoring and verifying traffic can help prevent fraudulent activity from passing through systems and impacting budgets. With full transparency into their data, sportsbooks can make sure they are the only ones that get to enjoy their margins.

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Elie Shuggi is CPO at  TrafficGuard

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