Bonus Abuse in Gambling—How to Detect and Prevent It (2024)

According to Sumsub’s 2024 iGaming Fraud Report, bonus abuse accounts for 69.9% of all fraud in the iGaming sector. Despite this striking number, bonus abuse is often overlooked by companies, which can lead to huge losses. 

Unlike many other types of fraud, bonus abuse can be performed by both criminals and legitimate customers—which makes it harder to spot. At the same time, companies have to introduce new promotions in order to attract new customers and keep loyal ones happy. So, what should a company do to ensure their promos aren’t abused? 

We at Sumsub decided to answer this question by diving into bonus abuse and its most common types. We’ll also share some tips on confronting fraudsters while ensuring that promotions reach the intended audience.

What is bonus abuse in gambling?

Bonus abuse (otherwise known as promo, or promotional, abuse) is when customers misuse a company’s promotional materials. This can be referral bonuses, vouchers, sign-up bonuses, coupons, or discounts. While such campaigns aim to attract new audiences, certain individuals attempt to trick the system by taking more than their fair share—and, often enough, they succeed. 

In gambling and iGaming, bonus abuse refers to players exploiting promotional offers, such as welcome bonuses or free bets, in ways that aren’t intended by the casino or gaming platform. This often involves creating multiple accounts or using loopholes to maximize winnings unfairly, leading to significant financial losses for operators.

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How bonus abuse works

Both fraudsters and customers start from the same place, which is creating multiple accounts. The main difference is in scale and in the details. For example, a person can send a referral link to themselves or alternate between several accounts to continue free trials.

Popular bonuses in gambling and iGaming

There are popular promotions in gambling and iGaming that are often targeted for bonus abuse:

• Welcome bonuses: Generous signup bonuses meant for new players, often with a deposit match or free spins, can be exploited by creating multiple accounts.
• No-deposit bonuses: Bonuses given without requiring an initial deposit attract abuse, as players can cash out small wins without risking their own money.
• Cashback offers: Promotions that return a percentage of a player’s losses are sometimes abused by players who attempt to meet minimum betting criteria to qualify.
• Reload bonuses: Similar to welcome bonuses, these offer extra funds on subsequent deposits, which some players exploit by coordinating deposits and withdrawals.
• Free spins and free bets: These allow players to try games without spending their own money, sometimes exploited by players who use multiple accounts to maximize winnings.

There are ways to abuse all of these campaigns:

– Any customer can create several accounts to get one free trial period after another, never paying for the subscription. 

– Sometimes, fraudsters pay someone to complete the KYC process and create an account for them. The amount they pay is much smaller than the potential winnings they expect to earn using the new account. This scheme is nearly impossible to detect through KYC alone, making advanced monitoring systems essential to prevent it.

– People can also abuse loyalty rewards by taking over accounts and transferring the bonuses to themselves or changing billing addresses. All of this can financially damage a company and lead to lengthy court proceedings. 

Any campaign can be subject to bonus abuse. Therefore, companies have to take action.

Suggested read: Uncovering the Latest Fraud Tactics in iGaming: “What The Fraud?” Podcast 

Consequences

It might sound like a couple of customers getting an additional $10 or so from a giant promo campaign shouldn’t cause an issue. However, when this gets scaled to thousands of people simply taking money and not turning into actual customers, it’s a different story. Not only does this have a negative financial impact, but it also puts a company in a bad spot, as it diminishes its reputation and makes loyal customers feel less important. 

Bonuses often come with rules, like wagering requirements, to prevent abuse. However, these rules can make bonuses feel complicated or unfair to honest players, who might even think they’re scams—without realizing the restrictions are there to stop misuse. Casinos try to limit bonuses to prevent fraud, but honest players often see these bonuses as scams because they’re becoming so difficult to claim and use.

So, should companies just stop doing promo campaigns? Unfortunately, this isn’t the solution, as the very same campaigns prove to attract new customers and keep loyal ones happy. What companies should do is put more thought into protecting themselves. This can be done by tracing red flags, introducing stricter rules for campaigns and implementing security systems into their websites and apps. 

Bonus abuse red flags

Here are the warning signs of bonus abuse operators should pay attention to:

• Multiple accounts with similar details: Players creating multiple accounts with slight variations in personal information to repeatedly claim bonuses.
• Unusual betting patterns: Abnormally high bets with bonus funds followed by low-risk bets to meet withdrawal requirements.
• Rapid withdrawal requests: Players requesting withdrawals immediately after meeting the minimum play-through requirements without further activity.
• Use of VPNs or proxies: Players hiding their location to bypass regional restrictions or claim bonuses in multiple locations.
• Frequent sign-ups from the same IP or device: High numbers of accounts registered from the same IP address or device, indicating possible collusion or account farming.

These warning signs often signal attempts to exploit promotional offers rather than engage with the platform as genuine players.

How to prevent bonus abuse

When confronting bonus abusers, companies still have to keep legitimate customers happy. Therefore, companies need to find a solution that fits everyone. 

Method #1. Know Your Customer (KYC)

One approach is introducing an efficient Know Your Customer (KYC) solution, which will be able to help conduct proper identity verification. This may include address verification and document verification.

This way, companies will be able to spot multiple accounts created by the same person. Additionally, they can check digital footprints, device fingerprints, emails, and user behavior. This will allow companies to spot fraudsters who managed to present themselves as legitimate customers during the initial check. 

Companies should remember that too many checks will lead to drop-offs in new customers. To avoid this, they can separate the checks into several stages. For example, users can be initially onboarded using a pre-screening process like email and phone risk assessment, followed by document-free verification. Over time, the user can be put through additional checkpoints as they use the service.

Method #2. Make more complex promo rules

If all a person needs to get a bonus is register or simply click a link, there’s a huge risk of losses. Before organizing any campaign, companies should think of all the possible scenarios fraudsters and threat actors may use to abuse these bonuses—and create rules accordingly. For example, companies can award bonuses only after a customer makes their first purchase. 

Companies should put limitations on vouchers, as some users may use and re-use the same one for years. Therefore, it’s important to ensure that bonuses can be used only once. 

Finally, companies should use non-generic promo codes. For example, if your Christmas discount code is simply “X-Mas”, chances are that people will guess it and abuse your promo without adding any value to the company.

Method #3. Analyze links and track locations

Another way to spot promo abusers is to look at IP addresses and check location. If you see that several accounts were created from the same IP address, then there is a significant possibility that you are dealing with multiple accounts. The same goes for several accounts created using a VPN IP address. To analyze all of this, companies can use special tools such as device fingerprinting or determine proxy IPs using VPN solutions.

FAQ

• What is an example of bonus abuse?

  An example of bonus abuse is when a player creates multiple accounts to repeatedly claim a welcome bonus intended for new users only, thereby gaining unfair advantage and winnings.

• What is promotional abuse?

  Promotional abuse is the exploitation of marketing offers, such as discounts, free trials, or bonuses, in ways that violate the terms and intent of the promotion, often leading to financial losses for the offering company. “Promotional abuse” and “bonus abuse” are often used interchangeably.

• How can bonus abuse be prevented?

  Use an efficient KYC solution, create more complex promo rules and check IP addresses and location of gamers.