iGaming Affiliate Fraud and How to Prevent it—Complete Guide 2024

The online gaming market is vast and continuously expanding. According to Statista, iGaming market revenue is projected to reach 87.91 billion USD in 2023, with an annual growth rate of 9.02%, leading to a forecasted market volume of 124.20 billion USD by 2027. According to data presented by CasinosEnLigne.com, “the online gambling industry has more than doubled in the past four years, reaching 176 million users and over $95bn in revenue in 2023”.

As money continues to circulate within the industry drawing in more players, fraudsters are also enticed by the earning opportunities presented in iGaming.

The decentralized structure of iGaming introduces distinctive fraud vectors absent in traditional casinos, one of which is affiliate fraud. However, these new challenges also pave the way for innovative solutions.

Let’s dive into what iGaming affiliate fraud is, why it’s extremely harmful for the whole industry, and how to fight it.

What is iGaming affiliate fraud?

In iGaming, affiliate marketing is when third parties promote online games, like casinos, sportsbooks, poker rooms to earn a commission for each referred player. However, these affiliate marketing programs can often be misused, leading to affiliate fraud. 

Affiliate fraud can be harmful to iGaming operators, resulting in increased operational costs, financial losses, damage to reputation, legal claims, and fines imposed by regulators or other government bodies. In severe cases, it may lead to a license suspension. 

iGaming operators conduct strict due diligence on affiliates, implement stringent monitoring systems, conduct regular audits, and establish clear terms and conditions for their affiliate programs. Additionally, they may use fraud detection tools and collaborate with reputable affiliate networks to ensure the integrity of their marketing channels.

How affiliate fraud works in iGaming

iGaming affiliate fraud can take on various forms, including:

• Fake referrals. Affiliates may create fake accounts and claim commissions for these referrals. This can be done by using automated scripts or other methods to simulate genuine user activity.
• Bot attacks. This involves the utilization of automated bots to simulate visits to iGaming websites, creating the illusion of genuine Click-Through Rates (CTRs).
• Cookie placing. This involves placing affiliate tracking cookies on users’ devices without their knowledge or consent. This can result in affiliates receiving commissions for users who did not intentionally click on their referral links.
• Incentives. Some affiliates may offer incentives to users to sign up or deposit on gambling platforms, falsely inflating the number of referred players. This can violate the terms of service of the iGaming operators.
• Brand bidding. This is when a fraudster uses a business’s brand name as a keyword in paid search advertising to attract traffic to their own website or affiliate program. This can end up in false attributions and commissions paid to fraudulent affiliates.
• URL hijacking. Fraudsters can purchase domain names resembling legitimate websites with affiliate programs. 
• Identity fraud. Affiliates may use false or stolen identities to create accounts and generate commissions.
• Multi-accounting. Affiliates can create numerous accounts themselves or attract users who can create multiple accounts to claim welcome bonuses or launder money.
• Unlicensed advertisement. Sometimes unreliable affiliates don’t control the traffic they drive, bringing in players from jurisdictions where the iGaming company can’t operate. Regulators may consider this as an advertisement for a casino without the appropriate licenses.

Suggested read: Promo Abuse Fraud—How to Avoid It

Risks

Affiliate fraud poses risks to both operators and the integrity of the affiliate marketing ecosystem. Some of the key risks include:

• Financial losses. iGaming operators pay affiliates based on the revenue generated by referred players. If these players are fake or non-motivated , operators end up paying affiliates for referrals without receiving legitimate business in return.
• Operational disruption. Investigating fraudulent activities, terminating relationships with dishonest affiliates, and implementing measures to prevent fraud can disrupt business operations.
• Regulatory fines and/or license suspension. If one of its affiliates is engaged in wrongdoing, the iGaming platform may be on the hook for any resulting compliance violations, including e fines or even license suspension. 
• Loss of trust with ethical affiliates. Genuine affiliates who follow the rules and drive legitimate traffic to iGaming platforms may become reluctant to participate in affiliate programs if they perceive a high risk of iGaming fraud. This loss of trust can make it challenging for operators to establish and maintain productive relationships with ethical affiliates.
• Increased number of complaints. In the event that affiliates breach their code of conduct by transmitting misleading or false information to clients, pressuring them to register, or by using aggressive marketing tactics along with other inappropriate methods, clients could file a complaint or legal claim against the iGaming operator. This could easily lead to increased costs and reputational damage.
• Reputation damage and loss of clients/partners as a result. If players or partners discover that a platform is associated with fraudulent activities, it can erode trust and negatively impact the operator’s brand image. An undermined reputation may lead to a loss of customers and possible legal consequences.

How to prevent iGaming affiliate fraud

To establish a more secure and trustworthy marketing environment, iGaming operators should: 

• Implement robust fraud detection and prevention measures, such as a rule-based system that allows tracking whether players from a specific traffic source deposit less than the acquisition cost or if players from a particular traffic source come from the wrong country
• Conduct thorough due diligence checks on the background of the relevant affiliate. If the affiliate is a company, the background checks should be conducted on the company itself as well as its management body and shareholders. 
• Regularly review and analyze affiliate performance metrics, looking for unusual patterns, spikes in activity, or other indicators of potential fraud
• Establish clear terms and conditions for affiliate programs
• Conduct regular and ongoing audits
• Foster relationships with reputable affiliates and affiliate networks and encourage them to report any suspicious activities they encounter
• Share information with other industry players about fraudulent activities

FAQ

• What is fraud in iGaming?

  Fraud in iGaming refers to deceptive activities, such as identity theft, payment fraud, affiliate fraud, or manipulation of gaming outcomes, aimed at exploiting or compromising online gambling platforms for financial gain.

• What is an example of affiliate fraud?

  An example of affiliate fraud in iGaming is the creation of fake player accounts by affiliates to falsely inflate referral numbers and earn illegitimate commissions.

• How do you spot affiliate fraud?

  Sumsub’s full-cycle verification and fraud prevention solution can easily spot iGaming affiliate fraud. This involves monitoring for irregularities such as unusually high conversion rates, suspicious click patterns, or fraudulent player accounts.