Online Gambling Fraud

Using credit card to place a bet on mobile gambling app_CardinalCommerceOver time, online gambling has evolved into one of the most lucrative industries on the internet. Technological advancements in this industry have made online gambling games more widely available and easier to play. As a result, a growing number of first-time, unlikely gamblers have entered this ever-growing industry.

Whether it’s poker, mobile gambling, horse racing, the lottery, bingo, sports betting, or casinos, there’s something for nearly everyone in the online gambling world. The rapid rise of online gambling has also had an effect on online merchants. They have been forced to accept more forms of online payment. These include credit card payments, electronic checks, certified checks, wire transfers, Bitcoins and even money orders. With all these different payment options available, it’s no surprise that there’s a high rate of fraud within the industry.


Online merchants involved in the gambling industry must be aware of two main types of fraud: External and Internal fraud.

External fraud:

This type of fraud is perpetrated against established online gambling enterprises. Because of the rapid growth in the online gambling industry, a point of differentiation for many larger, global operations has been to market themselves as safe sites with no fraud issues. External fraud artists see through this charade. These are exactly the types of establishments that they target. They will prey on customers and subscribers through identity theft schemes, phantom-bounced transactions, card purchase cloning, time-delayed transactions, mirrored transactions and rolled card transactions even before the gamblers start to spend their money. The online gambling industry is no different than other rapidly growing industries: it’s highly susceptible to fraud, and is losing billions to external fraud.

Internal Fraud:

This type of fraud is less common, but it’s still damaging and can lead to huge monetary losses. It is perpetrated by someone within the company. An employee will take advantage of their knowledge of the company and the underlying system to create a scam. Any employee, with intent, could fraudulently create an entire organization that is set up to scam prospective gamblers. Alternatively, a group of employees within the company could conspire with an outside organization to join forces, and hit the company.  

Despite the initial costs, protection against online gambling fraud is vitally important to any business and is worth the investment. Online gambling fraud is growing at an uncomfortable rate for online merchants involved in this industry. These merchants must devise a plan, take precautions and ensure they are protected.

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