Fraud prevention in iGaming: How operators are fighting back
Instant payouts may delight players, but they also open the door to faster fraud. In Part Three of our exclusive five-part SiGMA News series on real-time payouts in iGaming, we examine how criminals are adapting, why most fraud prevention in iGaming now occurs post-onboarding, and what operators must do to stay ahead.
The speed trap: When instant payouts empower instant fraud
Instant gratification has always been a selling point in iGaming. But as we explored in Part One and Part Two of this series, the push for real-time withdrawals is creating cracks that bad actors are quick to exploit. Fraud in iGaming isn’t a static threat. It moves fast, thinks even faster, and is increasingly driven by AI.
For operators, effective fraud prevention in iGaming now means building systems that think as quickly as attackers do and adapt in real time, rather than reacting after the damage is done.
George Pace, Senior Product Marketing Team Lead at SEON, puts it plainly:
“The most pressing threats include bonus abuse, account takeovers (ATOs), and chargebacks. Operators are seeing fraud rings using synthetic IDs and AI-generated documents at scale.”
It’s not just a front-door problem. Seventy-six percent of fraud now happens after onboarding, according to compliance firm Sumsub. That means identity verification alone won’t cut it. Fraudsters are waging the real war behind the login screen, targeting withdrawals, bonus systems, and dormant accounts.
New tactics, old weaknesses
Fraud detection once depended on static identity checks – a name, a document, or a selfie. However, the fraud rings of 2025 are more sophisticated than that. They understand how operator systems work. They know how to mimic legitimate player behaviour. And they move fast because they know speed is their best defence.
This is why modern fraud prevention in iGaming has shifted from static defences to adaptive intelligence. These systems learn, predict, and respond in real time.
Sumsub’s team explained the shift. “KYC used to be a box-ticking exercise. It’s now a fluid part of the player journey that needs to adapt in real time.
“One of the biggest evolutions is the move away from front-loaded KYC. Instead, we verify continuously, without killing the UX.”
That transition – from one-time checks to dynamic identity verification – is reshaping how operators manage risk. SEON, for instance, now uses device fingerprinting and behavioural monitoring to identify signs of synthetic identity use or coordinated attacks. Evidence from SEON’s public resources shows device intelligence used to combat multi-accounting, ATOs, and bonus abuse.
“We’re focusing more on device fingerprinting and behavioural monitoring. It’s not just about identity. It’s about intent,” said Pace.
Crypto, compliance, and the hidden fraud layer
Fraud visibility is more complex once crypto enters the system. The FATF Travel Rule is in force as a global standard, and the 2024 and 2025 targeted updates note uneven implementation and limited enforcement, so information sharing about originators and beneficiaries still varies by jurisdiction. Blockchain may be transparent on paper, but it does not give operators complete visibility of fund provenance or verified player identity. Within the EU, the revised Transfer of Funds Regulation (implementing the FATF Travel Rule) has applied to crypto transfers since 30 December 2024. MiCA, the EU’s unified crypto-assets framework, is also now in force on a phased basis, with core provisions live and further obligations phasing through 2025–2026. Together, they raise the disclosure bar, yet firms still face gaps whenever flows touch non-EU venues or unregulated intermediaries.
Regulatory gaps and compliance visibility
Operators describe patterns in which funds are transferred from an exchange account, wagers are placed, and withdrawals are requested to new wallets. The intent is to reduce the audit trail across on-chain and off-chain touchpoints. Controls need to map both worlds in real time. This manoeuvre can sidestep traditional AML triggers.
These laundering loops highlight how on-chain transparency doesn’t always translate into off-chain traceability. Compliance teams ensure effective fraud prevention in iGaming by connecting on-chain transparency with verified accountability in the off-chain environment. That challenge is echoed in policy circles, where Italy’s lawmakers are defining how digital assets should be overseen and secured. In a recent SiGMA News interview, Hon. Marcello Coppo outlined how Italy is balancing regulation, innovation and fraud prevention across the blockchain sector.
As discussed in Part Two, crypto’s ongoing regulatory fog compounds the challenge. Many jurisdictions still lack explicit AML frameworks for blockchain transactions, leaving compliance teams to interpret evolving guidance on the fly.
For Innokenty Isers, CEO of Paybis, the challenge lies in striking a balance between innovation and control.
“We’ve implemented AI fraud detection that now has a ninety-five percent approval rate. Speed, transparency, and safety can coexist if done right.”
But “doing it right” is expensive. It demands systems that adapt in real time, flag high-risk patterns, and maintain user trust without slowing down legitimate payouts. In short, Travel Rule alignment, MiCA scope and the EU funds-transfer regime narrow the gap, but cross-border flows still test consistency, which keeps real-time on-chain and off-chain reconciliation essential for fraud teams.
Friction versus protection: Who’s winning?
The danger now lies not just in failing to block fraud, but in creating so much friction that players churn before they can cash out. Striking the right balance is difficult, especially as regulators demand stricter affordability, AML, and source-of-funds checks.
Operator reports and CX research indicate that repeated or unclear verification at withdrawal increases churn risk and undermines trust, especially when payout timing is opaque.
This is the new reality of fraud prevention in iGaming, where protecting players must happen without undermining the very trust those checks are meant to preserve. Yet the friction-versus-protection trade-off extends beyond user experience into deeper ethical territory. When verification delays and opaque data use blur the lines of consent, the question shifts from efficiency to responsibility, especially for vulnerable players.
Kez Duxbury, Finance Lead at Press Box PR, underlined how this tension is playing out in real time.
“We are being reached by email, in-app ads, and secondary content. But regulators are still catching up.“
That lag creates gaps. And fraudsters are quick to slip through.
“I honestly don’t know what the rules are once you sign up for an app,” Duxbury added. “Can they just advertise to you left, right and centre? If so, this could cause end-users to sign up to games or third-party apps without fully understanding the terms and conditions, making them vulnerable to fraud or predatory practices from other firms“
The murkiness of consent and data use is just one layer. The bigger fear is that regulation will only sharpen after the damage is done.
“Unfortunately, it’s only then that we’ll hear these horror stories. People will get into financial trouble, lose their houses, or even take their own lives as we’ve seen as a result of other scams. And that’s when the regulator will be forced to act at speed“
Duxbury’s warning is direct but necessary. The industry’s current grey zones, he argues, risk producing hard-to-ignore consequences, from financial harm to severe personal distress, unless regulators act before crisis forces their hand. The EU AML package is now adopted, with AMLA (Anti-Money Laundering Authority) proposed to be based in Frankfurt. Authorities are rolling out operations through 2025–2026 and phasing obligations over several years, leaving many firms lagging behind the policy pace.
Where do we go from here?
Fraud prevention in iGaming is adapting faster than most systems can respond. Operators must now view compliance not as a box to tick, but as a live environment, one where fraud, privacy, UX, and regulation must coexist.
The next frontier goes beyond KYC – it is Know Your Behaviour (KYB). In iGaming, that means tracking real-time behavioural data: betting patterns, login rates, device changes, and withdrawal timing – operators who watch those signals closely spot risks early. A jump in bets or new accounts is often the first sign of chargebacks ahead. In short, KYB turns static identity checks into a living risk model that evolves with every player interaction.
As fraud grows more sophisticated, the challenge isn’t just detection. It’s deciding where regulation draws the line. Crypto adds another layer to that dilemma: it promises speed and privacy but complicates compliance at every turn.
In Part Four of our SiGMA News series, we’ll examine whether regulators can keep pace with crypto’s rapid adoption or if the industry is racing ahead into a grey zone.
If you missed part one and part two, catch up here:
- Read part one: The rise of instant payouts in iGaming
- Read part two: Crypto vs digital wallets in iGaming
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