iGaming Daily

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Fraud is a constant and evolving challenge that iGaming operators have to deal with. As technology develops fraudsters have more tools and the more they strike the more intelligent they become. So operators need to keep up and get ahead of these threats to prevent revenue leakage and fraud while remaining compliant. It's no mean feat. So how can operators face these threats and continue serving legitimate customers with fun and engaging betting content? Welcome back to iGaming Daily, supported by OptiMove, the creator of positionless marketing and the number one player engagement platform. And joining me, Charlie Horner, to go through all of this and more, is Stephanie Trinh, Senior Product Marketing Manager at SIFT. Stephanie, thanks very much for coming on the show. How are you doing? I'm doing great. Thank you so much for the opportunity to be on the show. No, not a problem. It's great to have you on board and get all of your expertise because, Fraud and risk and all of this is really important that operators get on top of this. So maybe just to get the ball rolling, could you quantify the scale of fraud challenges that our gaming operators face today and just tell us a bit about how it impacts both risk and growth? know, fraud used to be an acceptable approach to growth. uh What we're seeing now though is that bleed is becoming more more prolific in more and more places. And so part of the challenge is actually quantifying uh fraud for many reasons. One of them being that there are new vectors uh in terms of fraud that operators face uh that are growing. I saw a report that five years ago there was maybe three to five types of fraud and now it's like 10 plus growing. And so when I think about quantifying it, it's really about understanding where all the little bleeds are and not where all the big bleeds are. The big bleeds are usually the ones that get the most attention, like promo abuse. There's some stats out there that says 26 % of all accounts are actually fraudulent. 15 % of all annual gross revenue can be attributed to promo abuse. And when you look at the totality of the number, I think there was something floating out there like $1.2 billion. And so it's quite a painful thing and it's kind of like being ill. Sometimes you will stick with it uh for a while until it becomes a little bit handicapping because just the margins are starting to shrink. And what we're seeing in the operator space, in iGaming space, that because of the uh increasing number of vectors and the increasing sophistication and scale of fraud, we're getting to that point quite quickly. Yeah, $1.2 billion is not insignificant, is it? It's quite dangerous and that must stifle growth and reduce opportunities in the sector. How do these challenges affect an operator's ability to balance growth and compliance and player trust because player trust is at the core of this? Yeah, I would say I don't envy the folks that are trying to deal with this. What I'm seeing is that when you look at an operator, especially the ones that are um long standing brands, um is that they usually have a internal team that is quite manual. And so to keep up with the pace of the innovation in iGaming and the products that are being offered, the payment methods that are being added, and the promos that they have to push out, it's quite difficult. um what operators are usually kind of left with are kind of blunt force trauma tools. You either open the gate too wide because you're like, you know what, I will eat the cost. I just need folks to come in. or you shut the door too fast and too early on, and that'll stifle growth. And so what we kind of see is this wide open gate of allowing a whole bunch of folks to come in, and then it hits to a point where it's quite painful. It gets to whatever sea level and they kind of close the gate really fast. um And so what I think the march towards is trying to find refinement so that each department, whether it be compliance or fraud or payments, have more control further along the customer journey with tools that don't have to create such large scale blockages. Yeah, no, it's all about that balance, isn't it, of making sure that there's that, you know, the filter without being too invasive. So, It takes a certain level of intelligence to do that. And luckily, SIFT has the identity intelligence tool. How does that give operators a window into uh player intent? Yeah, I think there's a lot. Like I said, I don't envy the folks that have to deal with it. And I don't envy the folks that also have to buy the tools to deal with it because there's just a proliferation of fraud solutions out there from biometrics to really advanced KYC to all these different things. But when you take a step back, what we're really trying to understand is not just what the players are doing on your platform, but really why. And this is what we call player intent, is really understanding, can you trust this player? Will this player be profitable? And so our unique approach to kind of the next evolution of fraud prevention or responsible gambling is giving folks a window into the unknown uh by adding a level of global identity intelligence to understand who the player is on your platform in a detail that they hadn't seen before. But what's really exciting is how that player is linked to behavior in other operators. and other industries to really understand is this person going to be profitable or do damage? And it's accelerating that time to trust so that you can give players a chance and not have to stop them at the front door and you can make decisions with more confidence. So it's really about trying to take the guesswork about whether or not you can trust this player by giving a level or a layer of dimension, I would say. of who that player is outside of what you can see. And so for us, that's really kind of the next evolution of, you know, fraud prevention and um where iGaming can really drive that balance between growth and safety. I think data is key to this, isn't it? It's about having as much information so an operator can make as reasonable a decision or an as... reasoned decision that they can when it comes to each individual player. What's the advantage of managing fraud prevention and doing all this kind of work in just one single platform rather than relying on lots of different tools that might do brilliant things, but there's one here, there's one there. Yeah. And talking to operators, What I find is that sometimes when you present the opportunity to have so much data, it can be quite overwhelming, right? And in some sense, you may not actually want to see all those things because it's more complex. And uh I think what is happening is that sometimes it comes down to how a business is run. They may have different types of applications. at different places that have different types of data. And now you have all this type of data that is coming from different places. uh And you're trying to put that together, but you're really exasperating the whole evolution of where we see iGaming is, which is really understanding the totality of the player experience so that different departments can have more insight into the signals that may trigger trust or may trigger oh a fraudulent activity. And so you're actually creating these data lakes, you know, it's a little bit of a technical term I am in Silicon Valley here, but by having these different uh solutions, and I will say there is no one grandiose solution to cover it all. There are specialties and best of grade in what you need, but the ability to stitch them together is really, really key. And I say that because It's, you're seeing kind of the snowball of options for folks to deal with just not different parts of understanding the player, but different use cases. There are different solutions for different use cases, whether it be promo abuse or responsive gambling or AML or all these different things, and different departments may have access to it. But a lot of the times it's the combination of these different risk signals that really give a holistic understanding. of the player and what we call the player intent, right? And how trustworthy can they be along at what point of the platform? And the idea around having a centralized solution is kind of, it's common sensical in one way, but what folks kind of overlook is that it creates a level of simplicity that you may have access to quite powerful engines. But the simplicity of how you use it is really going to drive the effectiveness of the solution, whether it be best of breed or manual. And so I think for us at SIFT, providing that centralized point uh while understanding that there are instances where you do need best of breed. And so uh I think uh our march is towards the future of, I think, what iGaming growth is. m and what eye-gaming fraud prevention is. Indeed, yeah, that simplicity is really important from, I guess, the outside looking in because it's all well and good having that sheer volume of data and having so much that you can work with. But if you don't understand it enough to interpret it properly, then it's almost pointless. Yes. But look, the fraud space and the fraudsters, they evolve quickly, as I mentioned at the top of the show. How can operators utilize technology and perhaps automation and the ability to simulate rule changes to help operators uh stay ahead while keeping the player experience frictionless, as we said? Yeah, automation is scary. uh Automation is scary, and especially when you loop in the concept of AI. And I know that regulations are trying to also be very cognizant of AI and automation. But that really is the core to driving scale. And the problem with automation, though, is that it is risky because one change can impact so many interactions and really impact revenue. And it used to be that you would put a lot of resources into building this logic and it would take some time. And there's a little bit of fear of changing it, right? But you're in environment now where that really is just not a feasible way to grow. Just because we're having fraudsters and we do research on the dark web that are sharing TikToks and how to proliferate operators in so many different ways now, that speed is really the key um to automation. And so the ability to have control over an automation system that doesn't require a lot of engineering resources that are a little bit like Lego pieces where you can just pick and choose and then test that in a safe environment, I think is really, really key. Is minimizing the hurdles of engineering resources and technical resources and being able to see what happens before you actually do it, I think is really kind of the spearhead into trying to get in front of this kind of fast-paced environment. surprised over and over again by just the lack of automation. And I really feel for, again, those frontline teams that have to deal with that. No, absolutely. Me too. The more we talk about this, the more I have that feeling as well. Stephanie, we'll go for a quick break and then we'll come back and continue the discussion. Welcome back to iGaming Daily. I'm joined by Stephanie Trinh, the Senior Product Marketing Manager at SIFT. Stephanie, look, beyond Just blocking fraud, we've talked about um SIFS solutions and how we can help fraud prevention on that front, but how else does SIFT help operators to grow acquisition and retention? uh Blocking acquisition, retention, really big words that hit the profit margin quite hard. And in a simple answer, would say it would take blunt force reactions and make them more intelligent uh by layering on AI and identity intelligence, which were really kind of amorphous words, into easy to use tools to drive automation. uh And when we think about friction, uh we sometimes think about it further up the player journey in the terms of block rights. But What we think about profitability, we think about it as net gaming revenue, as every single interaction that a player may have is an opportunity to drive margin. And so what we like to call friction is really, and it's a little bit of a tag word, but truly flexible friction by giving players the chance and not stopping them at the front door. But having the confidence, because now you have the tools and the insights, to drive and adjust friction based on your specific requirement without being overwhelmed with really fancy technology is really the simplicity of the automation across the player journey that we think about when we're trying to help operate, drive net gaming revenue. That leads me really nicely into my next question, really, which is all about balancing that friction with preventing revenue leakage really because m if you put too much friction onto things then you can maybe drive players away or it could go the other way where you accidentally allow false positives when you're blocking new accounts. um And then you've also got the problem of VIP players. How do you sort of segment them outside of all this? How do you approach this from a technical point of view and how does it work for operators, I guess? It's difficult. I think that's the theme of my takeaway is that I do know their job is quite difficult because they are, I think, uh now facing more and more pressure from different departments to kind of drive less friction across the player journey. what CIF's approach is, is really trying to give different departments real-time assessments based on their specific requirements to make calls on what friction to drive across the player journey. how does SIFT enable that frictionless of white glove treatment securely for and especially for those VIP players? Oh yeah, this is one of my favorite topics because the that ever this is preaching to the choir here, but we know that the IP players really drive the crux of the revenue. so at CIF, we really partner with um operators to develop features on how to drive the VIP. And so it's learning experience in which they were blocked and ideas that are on whiteboards over the last couple of years that have really come to fruition and really been tested. And so um what we end up doing is trying to make it really easy. to separate out those VIP players in the millions of fish that are occurring. And so I'll give you an example. During like a high season, let's say if you're sports betting, there's a big game going on, right? You may have, even if you use AI, you may have a risk assessment for two users. One is a fraudulent user and they have a really high score, and then one is your VIP player and they have a really low score. But what happens in these kind of high seasonality environments is that the behavior of the IEPs will mimic those fraudsters, whether it's withdrawal velocity, deposit velocity, gaming velocity. And so now you're looking at thousands and thousands of players that are potentially very profitable that look like the fraudsters. And so if you're automating, how do you differentiate that? And so we create really cool technology where we can actually segment out and allow those VIP users, even if they start to mimic the behavior and the scores of fraudsters, to kind of what I call VIP pass lanes, where you can, as an operator, very simply set time limits in which this group of people, despite whether or not they behave a certain way, to be... to be fast-tracked through your regular checks. And so it doesn't open the floodgates for perpetuity, but just for that specific part of time. The other things that we do that are really cool are making sure that the operation, if there are a need for manual reviews, they get queued correctly. Our case management is embedded. And so there's a really tight integration between what happens in the automation and how the users review. And so making sure that they are uh reviewed um quite quickly or have auto passes. And so really all these kind cool workarounds that we've developed with uh the operator brands to make sure that these VIP users are able to maintain kind of that white glove treatment, even if in instances they look like they start to wear a Waldo situation. Yeah. Another really important aspect of this that I think is important to highlight is the responsible gambling edge of this. where do fraud prevention tools and responsible gamblings overlap and how can technologies help to support that as part of an operator's compliance initiatives? ah is such a great question. And um I think the answer kind of comes back to this concept of player intent. and department unification is that when we look at what is a fraudulent player and fraudulent player can mean a whole different things. And a lot of responsible gambling is about not just meaning compliance requirement, but what the operator themselves are tracking as possible risk. The key here is that these signals often overlap between what is being seen in fraud departments, what is seen in payment departments, and what is kind of coming down the pipe to the compliance departments. They could be withdrawal times, betting times. These signals uh are used across the different departments, and they're behavior signals that give an idea of whether or not this player is trying to game the system one way or the other. And so I think the key is for the departments to have an operational shift towards more unification and the speed of the communication. Now, this is entirely really not about innovation. think innovation fosters and breeds an environment where that speed can really be put into action. the tightness between the departments of what is going on and why and the ability to implement that I think is really, really key. And so they're looking at the same player and they're often looking at the same risk signals. um I think the shift is really trying to get all of them together to work in tandem and speed to track what may be um fraudulent, whatever the definition of fraudulent is. Brilliant. And Stephanie, just to round up really, I of want to put you on the spot. if you had the definitive answer to this, think the industry wouldn't have a problem. And you could say it's the $1.2 billion question, but how do you see these threats changing in the future? Because like we said, fraud does evolve. And then how is SIFT preparing operators to stay ahead of these threats? Oh, I think that Two key words in how they're evolving is uh complexity and scale. Is that, I think I said in the beginning, just the proliferation of new use cases is really going to be the future kind of headwinds that these operators are going to have to face. It's just completely different behaviors. as they are finding new ways to exploit kind of a digital environment. um And on top of that, I think what we call the democratization of fraud, like the TikTok of fraud, we see everyday credentials being sold. We see everyday folks sharing guides, right? The speed of these things is so fast. um they're getting better at it. And so tracking that behavior is becoming more difficult because it's not only different, it's going to be more nuanced, right? They're going to learn faster how to mimic behavior of good players uh or legitimate players. And the ability to track those nuances and scale the responses and speed up those responses are going to be really, really key. Now, I have two rules of thumb that I advise operators on when they are trying to adopt AI or automation system is do your best to catch the lowest hanging fruit. The amount of resources sometimes it takes to catch the lowest hanging fruit is something that technology can wipe her out quite quickly. And after that, you really want to triage the bleeding. And this is kind of common sense, it's really quite difficult to execute. um And so you almost want to take it a holistic look at all your use cases, lump them together, figure out where you can get the lowest hanging fruit, and then focus your efforts on the ones that um are going to be the most prolific. uh Because in some ways, when we think about fraud prevention, it's very different than other industries. In iGaming, you kind of want to open the door. You want to give that person that created two accounts a chance to play because you're really looking at profitability versus loss. And you're not looking at hard fraud necessarily. uh There's really stronger 3DS requirements that do a better job. I think in catching kind of payment fraud than it does in the US, while sounds great, it doesn't stop the fraudsters from finding new vectors. And that's really where I think iGaming, especially NMEA, um will be at the forefront of facing. And so you really want to catch the low hanging fruit and triage so that, hey, you may feel confident to let someone who um in the long run will be more profitable, took use of your promo. Going back to really, I think this march towards player intent, a holistic look at player intent and profitability. Excellent. Well, Stephanie, there's plenty for everyone to take away from this. It's been a great conversation. I've really enjoyed it. Stephanie Trinh, Senior Product Marketing Manager at SIFT. Thank you very much for your time. And thank you to the audience for listening and please do tune in tomorrow for another episode of iGaming Daily and keep up to date with all the latest developments for the global gambling sector.