Fraud in Canadian Gambling Industry Rises 79.3% in First Half of 2024
Canada's gambling industry is facing an alarming rise in suspected digital fraud, with an increase of 79.3% in the first half of 2024 compared to the previous year, according to a recent TransUnion report. This surge has made the gambling sector the leading industry in Canada for fraud attempts, with 9.6% of all digital transactions flagged as suspicious.
The rise in fraudulent activity within online sports betting and poker is particularly concerning. Following the legalization of iGaming in Ontario in 2023, online gambling has grown rapidly, but this growth has attracted an increasing number of fraudsters, impacting both operators and players.
Gambling Industry Tops Fraud Charts
TransUnion’s analysis shows that the gambling industry had the highest rate of suspected fraud attempts in Canada during the first half of 2024, surpassing other sectors such as retail, which had a fraud rate of 9.2%, and government services, which saw 7.7%. Despite a global decline in digital fraud rates across many industries, the gambling sector in Canada experienced a striking increase.
On a global level, the average fraud rate in gambling was 7.2%, but Canada’s rate was much higher, underscoring the unique challenges the country faces in this sector. The dramatic rise in fraud has made the gambling industry a focal point for concerns about the security of digital transactions and the protection of consumers.
Impact on Canadian Businesses
This uptick in fraud has had significant financial repercussions. Canadian businesses across all industries reported losing an estimated 6% of their total revenue due to fraud in the past year—amounting to approximately $78 billion. For the gambling sector, which relies heavily on maintaining customer trust and a secure environment, this is a substantial concern.
TransUnion’s survey of 200 Canadian business leaders identified the leading causes of these fraud losses. Scam or authorized fraud, in which individuals are tricked into giving away personal information or money, accounted for 31% of losses. Account takeovers, where unauthorized individuals gain access to users' online accounts, were the second most common type at 19%, followed by synthetic identity fraud at 18%.
Gambling Sector Among the Fastest Growing for Fraud Attempts
The Canadian gambling industry not only saw the highest fraud rate but also one of the steepest year-over-year increases. Compared to the first half of 2023, suspected digital fraud attempts in the gambling sector grew by 79.3%. This was second only to the logistics sector, which saw a massive 172.9% increase. Video gaming also experienced a sharp rise in fraud attempts, growing by 67.8%.
These figures highlight how fraudsters are increasingly targeting the gambling sector as more people engage in online betting and gaming activities.
Need for Advanced Fraud Prevention Measures
Patrick Boudreau, Head of Identity Management and Fraud Solutions at TransUnion Canada, emphasized the need for companies to adopt more sophisticated fraud prevention strategies. He noted that while many businesses are already trying to combat fraud, the tactics employed by fraudsters are constantly evolving, requiring equally advanced countermeasures.
“Protecting customers and their businesses from fraud is essential to enabling safe and tailored consumer experiences,” Boudreau said. He recommended that businesses enhance their use of technologies such as identity verification, IP intelligence, device reputation analysis, and synthetic identity detection as part of a comprehensive fraud prevention strategy.
The surge in fraud attempts has underscored the importance of implementing robust fraud detection methods across the gambling sector to maintain trust and protect financial interests. As online gambling continues to grow in Canada, safeguarding against these types of attacks will be crucial for the industry’s long-term success.
Source: Canadian Gambling Sector Sees Alarming Surge in Suspected Digital Fraud Attempts, lcb.org, October 22, 2024.