The 2019 Gambling Industry Report from iovation provides an alternative perspective on the state of the online gambling industry.
The report is based on an analysis of over 518 million transactions from more than 100 gambling operators and platforms. All are customers of iovation’s financial transaction security services.
“Following the money” offers insights that other gambling studies don’t have the granularity to see.
Diving into iovation study results
The report identifies three key themes for it findings:
- Mobile transactions skyrocket
- Game abuse and cheating increase but level out
- Credit card fraud continues steady climb
Iovation makes the case that using its services can:
- Provide a superior player experience as a market differentiator
- Assist operators to manage regulatory risk
- Integrate customer authentication with next-generation fraud prevention, to protect against both existing and emerging threats
Jon Karl, iovation EVP of Corporate Development and co-founder:
“… there are still some constants we can rely on. While fraudsters may have adapted their tactics over the years, at the heart of every online fraud attempt — whether through the web, an application or via a mobile browser — is a customer device.”
Mobile now 70 percent of online gambling transactions
The last five years are marked by the continuing expansion of mobile gambling. Not only are players using their mobile devices to gamble, they are using them to pay for their online gambling.
Back in 2012, the growth rate for mobile financial transactions compared to 2011 was just 6 percent. In 2018 the growth rate had soared to 95 percent.
Iovation found that 70 percent of all online gambling transactions are now made using mobile devices.
Growth rate for game abuse, cheating falls steeply
Game abuse and cheated are perennial problems for gambling operators.
The most prevalent problem is bonus abuse. In the past three years, iovation records bonus abuse rising by 287 percent. Operators are responding to the threat by enhancing their Know Your Customer (KYC) processes with predictive analytics.
This new technology not only helps operators monitor and forecast potential fraud. It also provides “better targeting for upsell opportunities and premium promotions.”
The report also notes that cheating continues to grow. In 2018, the growth rate was 12 percent. That’s still a high number, but much less than the 55 percent recorded in 2017.
Where iovation sees fraud potential
A particular risk that iovation identifies is organized fraud rings:
“Lone bad actors and serial cheaters aren’t going away, but a new class of organized fraud rings that are working collaboratively across the globe poses a major threat.”
“iGaming businesses must evolve their response to such threats. Innovative technologies such as device intelligence, device-based authentication and data analytics have proven essential in helping operators to distinguish threats from the mass of legitimate players.
In an environment where players expect payouts immediately, risk signals will have to be interpreted even faster with intelligence from disparate data sources integrated into dynamic decisioning rules.”
Iovation measures regulatory risk by growth of fines
Going outside its transaction data to provide context, iovation calculated that in the UK, regulatory fines against gambling operators rose from £1.6 million ($2.1 million) to £18 million ($23.6 million) between April 2017 and 2018.
A further round of fines in November 2018 totaled £14 million ($18.4 million).
One of the regulatory risks that can easily lead to fines is self-exclusion. The report found some disturbing statistics.
“During 2018, we saw nearly a million attempts by devices associated with self exclusion to access one or more of the digital properties in our network of iGaming clients — more than four times the 223,000 self-exclusion reports placed that year.”
If anything, US state regulators are even more sensitive to this issue than in the rest of the world.
2019 Gambling Industry Report free download
The report covers interesting areas such as GDPR compliance in Europe, and player privacy as well as a number of other areas of interest to operators and regulators.
A free copy of the report is available on the iovation website.