Online gambling and sportsbooks have exploded in recent years following the Supreme Courtโs May 14, 2018 decision in Murphy v. NCAA, which struck down PASPA under the anti-commandeering doctrine and opened the door to state-by-state legalization.
That boom also unleashed more sophisticated fraud and first-party misuse. This guide shows operators how to stop multi-accounting, bonus abuse, and friendly fraud at the source, with up-to-date card-network programs (Visa CE3.0, Mastercard First-Party Trust) and a modern pre-dispute and dispute strategy that ties directly to Justtโs platform and alerts.
Key takeaways
- Since the Supreme Courtโs 2018 Murphy v. NCAA decision opened the door to state-by-state legalization, iGaming and sportsbooks have surgedโand fraud has grown alongside record 2024 revenue.
- Fraud today spans multi-accounting and bonus abuse, collusive gnoming/chip-dumping, high-balance account takeovers, and classic card-not-present scams often followed by friendly-fraud chargebacks.
- The damage shows up as lost revenue and time, elevated chargeback ratios and network monitoring, higher fees, and even the risk of losing your merchant account.
- The fix is an end-to-end playbook: strong KYC and device/IP checks at sign-up, risk-based 3DS and BIN rules at deposit, gameplay analytics and automation hygiene, payout re-verification, plus pre-dispute tools and smarter fights using programs like Visa CE3.0 and Mastercard First-Party Trust.
- Justt ties this together by unifying alerts and RDR to deflect early, using AI-powered representment to structure winning evidence, and feeding insights back into policies so you prevent more and win more.
The massive scale of gambling fraud
The American Gaming Association reported U.S. commercial gaming revenue hit a record $72 billion in 2024, driven largely by the proliferation of mobile betting. The market continues to expand globally, and fraud is scaling with it.
Friendly fraud is especially relevant in gambling. Gamblerโs remorse and the heavy consequences of rapidly losing large amounts of money rapidly can lead individuals to claim they never placed the bet in the first place. While online gambling sites set clear rules and disclaimers stating all bets are final, there is still pressure mounting and fraud slipping through.
This comes at a time when Mastercard points to first-party fraud (friendly fraud) as responsible for the majority of online โfraudโ seen by merchants.
Fraud patterns to watch in iGaming & sportsbooks
Multi-accounting & bonus abuse (VPNs, device resets, synthetic identities)
Fraud rings spin up many โnewโ players to farm sign-up promotions, hiding behind VPNs, emulators, device resets, and thin or synthetic identities. Tell-tales include clusters of accounts sharing devices/IPs, recycled payment tokens, and rapid sign-upโdepositโwithdrawal loops. Clamp down with identity-bound bonuses, device/IP velocity rules, disposable email blocking, and withdrawal holds on first cash-outs; link accounts across brands/skins to stop cross-property abuse.
Gnoming/chip-dumping to launder promo value
Players collude, often across multiple accounts, to intentionally lose to a โcollectorโ account, converting promo credits into withdrawable cash. Look for repeated head-to-head pairings, out-of-pattern stakes, one-way money flows, and win-rate anomalies that defy odds. Counter with gameplay telemetry and graph analytics, promo-to-cash conversion caps, bet/market limits for new cohorts, and manual review on suspicious clusters before approving withdrawals.
Account takeover (ATO) on high-balance wallets and VIPs
Attackers use credential stuffing, phishing, or SIM swaps to hijack valuable accounts, then change payout rails and drain balances fast. Red flags: new device/location plus password reset, adding a new card/bank, failed MFA attempts, or midnight logins followed by high-risk bets or withdrawals. Protect with device binding, risk-based MFA (especially on payout changes and first withdrawals), session re-verification for VIP actions, and immediate lock/re-KYC on suspected compromise.
Classic CNP fraud (stolen cards, enumeration) + first-party misuse (friendly fraud)
Stolen cards and BIN/expiry โtestingโ drive rapid small deposits, AVS/CVV mismatches, and high decline velocity, often followed by a few successful top-ups. First-party misuse shows up as post-loss chargebacks (โI didnโt authorize itโ) despite good login/device evidence. Mitigate with risk-based 3DS on marginal deposits, velocity and device risk scoring, clear receipts/descriptors, and pre-dispute deflection (e.g., issuer data-sharing/receipts); retain device/IP/login and gameplay logs so you can fight eligible disputes effectively.
How fraud affects online gambling
Fraud significantly reduces online gambling profits and harms the reputation of merchants. High levels of fraud can even lead to the termination of merchant accounts. Many online fraud cases involve compromised credit cards belonging to third parties. When the third party discovers the unauthorized transaction, they file for a chargeback. For merchants, this means loss of transaction amount and incurring chargeback fees.
Generally, credit card networks track chargeback activities and require merchants with high fraud and chargeback rates to take steps to reduce the numbers. Merchants who fail to do so lose their accounts and are forced to deal with high-risk payment processors.
Moreover, merchants with high levels of chargeback and fraud cases receive extra fines from card companies at standard and excessive levels. High-risk merchants are automatically placed at an โexcessiveโ level, which comes with higher fines and fees.
Your prevention playbook
Fraud prevention involves a choreography that follows the player from sign-up to cash-out, and then into pre-dispute and dispute handling. Use the stage-by-stage plays below to raise conversion for good customers while shutting down abuse fast. Where it makes sense, we note how Justt slots in so your policy decisions and dispute outcomes reinforce each other.
Onboarding: prove the person, not just the profile
Start with strong but low-friction KYC and build an identity graph from the first touch.
- Link signals across properties/skins: email, phone, device ID, IP/subnet, payment tokens, and behavioral hints (typing cadence, autofill). Use velocity checks across these fields to block repeat promo farming and synthetic identities.
- Device + network intelligence: fingerprint the device, score IP risk (VPN/proxy/TOR), and apply geo-fencing/residency checks for compliance and bonus eligibility.
- Promo integrity by design: tie welcome offers to the verified identity, not just the account. One identity = one bonus, even if the fraudster resets devices or rotates SIMs.
What good looks like: approval rates stay high for clean applications, while multi-account rings hit hard rate limits and identity-bound promo caps.
Step up security for deposits when risk calls for it
Treat deposits as a dynamic risk moment, not a hard wall.
- Risk-based step-up: challenge borderline transactions with a one-time 3DS prompt; let strong, low-risk customers glide.
- BIN and funding rules: tune limits by issuer/BIN risk, region, and new-account status; block prepaid/anonymous instruments where abuse clusters.
- Signal hygiene: suppress disposable emails and VoIP numbers; require payment-method persistence (same name, same account) before higher deposit tiers.
- AML + velocity: layer cumulative checks across top-ups to stop card testing and scripted enumerations without throttling genuine play.
What good looks like: fewer blanket declines, fewer false positives, and a sharp drop in small-value card testing that precedes bigger fraud.
Spot collusion and promo laundering in motion
You canโt prevent what you canโt observe; so instrument gameplay as carefully as payments.
- Behavioral baselines: track stake size, market selection, timing, and session flow; flag rings that move value in one direction (e.g., gnoming/chip-dumping).
- Graph analytics: connect accounts by device/IP/payment overlap and recurring matchups; alert when โnewโ players repeatedly face the same opponent, at the same times, with improbable win/loss asymmetry.
- Automation hygiene: investigate latency patterns and auto-bet scripts; cap promo-to-cash conversion and require additional verification when conversion rates spike.
What good looks like: collusion clusters are identified before withdrawal, turning risky cash-outs into blocked attempts rather than post-loss disputes.
Withdrawal: verify the payout, not just the player
Most real losses happen when money leaves the house. Treat withdrawals as a second KYC.
- First cash-out policy: short cooling-off/hold periods and a re-verification step (fresh device check + MFA) before first payout.
- Rail integrity: changes to payout rails trigger step-up; require consistency with deposit instruments and historical geo/device.
- Risk-tiered limits: higher limits unlock only after tenure + clean history; VIPs get concierge verification to keep experience premium and secure.
What good looks like: ATOs fail at the payout step, and friendly-fraud claims shrink because session/device evidence now cleanly ties the player to activity.
Pre-dispute & dispute strategy: stop the ratio hit, win what you fight
Even the best prevention wonโt get disputes to zero. The key is pre-dispute deflection and evidence-driven wins, with clear rules on when to refund vs. fight.
- Pre-dispute (deflection and resolution):
- Issuer alerts (Ethoca/Verifi): cancel fulfillment or refund quickly to prevent a chargeback from being created.
- Order-level data sharing: provide issuer-grade receipts and session details to resolve confusion-driven claims before they escalate.
- Rapid Dispute Resolution (RDR): auto-refund low-win, high-cost scenarios under explicit rules so they never land in your ratio.
- Dispute (fight smart, not everything):
- Visa CE3.0 for 10.4: where eligible, submit the required historical โfootprintsโ (e.g., device/IP matches on two prior non-fraud purchases, 120โ365 days old) to shift liability back to the issuer.
- Mastercard First-Party Trust: share enhanced signals (purchase history, device, delivery, identity) to reduce invalid disputes and improve outcomes.
- Operational excellence: assemble consistent evidence packets (login/device, geo, KYC, gameplay, receipts, communications), track issuer outcomes, and continuously tune which cases you fight.
Where Justt helps
Justt brings pre-dispute and dispute operations into one motion: it centralizes Verifi and Ethoca alerts alongside Rapid Dispute Resolution (RDR) to auto-deflect the right cases before they become chargebacks, and uses Dispute Optimizationโan AI-driven, ROI-based decision engineโto determine when to fight or accept a case so you net more from the process; for the cases you do fight, AI-powered representment structures evidence to network requirements (including CE3.0-compliant packages where eligible) and constant reporting closes the loop so policy changes upstream actually reduce future disputes.
Ready to reduce disputes and recover more revenue? Book a demo today.
