The global COVID-19 pandemic has wreaked havoc on the iGaming industry. Government actions to stem the spread of the virus — including stay-at-home orders, public gathering bans and retail operation limitations — caused serious economic fallout. Subsequently, gaming industry revenue has shrunk dramatically thanks to a combination of these restrictions, consumer financial hardship, and the loss of major live sports betting.
Like other industries, the recovery of the iGaming industry has been mixed. While land-based gaming has yet to fully recover, online gaming was a bright spot — digital transactions grew 19% over the past 12 months.1 Take the US, for example, where gross gaming revenue (GGR) for online gaming grew 203% year-on-year through August, compared to a 39% decline in the industry overall.2
Identity tends to be the prime source of fraud in online gambling. In fact, we saw an almost 43% increase in online gambling identity fraud over the past 12 months. In our new 2021 iGaming Report, we analysed the online gambling fraud trends that evolved in 2020 and are likely to continue to impact operators this year and beyond.
While overall risky transactions in online gambling grew 9% in 2020, the specific types of fraud varied by region. Each jurisdiction presents operators with dynamic regulatory requirements and unique fraud challenges as they strive to protect players, verify identities and secure transactions.
We see the broad challenges online gaming operators face while trying to grow their business globally, as evidenced by the variety of transactions with the highest reported fraud, including:
One thing the COVID-19 pandemic showed us is fraudsters move quickly to exploit new opportunities. We saw this in the UK where the Gambling Commission banned the use of credit cards on 14 April 2020, which resulted in a 16% drop in credit card fraud and a 169% increase in automated clearing house (ACH)/debit fraud.
To overcome the opportunity-driven nature of fraudsters and keep up with continuously evolving regulations, operators need to consider a more integrated approach to cultivating player trust and profitable growth.
Following a year of unprecedented disruption and growth, online gaming operators should consider investments that maximise their flexibility to grow while instilling trust with customers and regulators alike.
Despite the rollout of the COVID-19 vaccine, it may take all of 2021 (or longer) for land-based gaming to fully recover. That’s going to put enormous pressure on online gaming operators to maximise the opportunity of new players and those who may move online. Operators need to work as quickly as possible to implement identity verification and authentication solutions to onboard new players while avoiding friction that can lead to abandonment. Savvy, successful operators are going to be ready to capture new growth.
1, 3 TransUnion Consortium Data
2 A merican Gaming, American Gaming Association Commercial Gaming Revenue Tracker, August 2020
4, 5 The Economist Group, New Dimensions of Change: Building Trust in a Digital Consumer Landscape