Security Firm’s Scare Tactic May Kill More Betting Business Than It Brings

Written By Martin Derbyshire on September 9, 2019 - Last Updated on March 7, 2022

An internet security firm sent out a warning recently.It said the spread of legal online and mobile sports betting across the US and the kickoff of the NFL season could bring about an increase in fraud.

More than anything, Oregon firm iovation is using this scare tactic to try to drum up business for its new internet security software package. The software suite says it is designed to help US online gambling operators comply with state regulations and combat fraud, especially as business picks up with legal NFL betting sites.

But does anyone need it?

According to iovation co-founder Greg Pierson, the US is experiencing an “online gambling gold rush.” One that mirrors what happened 20 years ago in Europe when countries there began to legalize and regulate online gambling.

Apparently, iovation helped combat a lot of fraudulent activity back then.

Online gambling security issues

Now, with legal online sports betting in 11 states ahead of the NFL season, Pierson claims operators are “sprinting” to launch mobile sports betting apps and websites. As a result, he says they are rushing, and putting player acquisition ahead of some serious issues surrounding online gambling security.

Pierson says these issues include:

  • Age verification
  • Location verification
  • Self-exclusion
  • Credit card fraud, which iovation claims have risen 155% in online gambling outside the US since 2014
  • Bonus abuse, which iovation claims went up 287% from 2015 to 2018

Firstly, age and location verification are required by state law everywhere that has online sports betting. Legal US sports betting operators are free to hire iovation to help. However, they really should be doing it already.

According to iovation, the self-exclusion issue revolves around self-excluded players trying to set up new accounts. Or by others gaming the system by setting up accounts using a stolen credit card, depositing funds and self-excluding before the chargeback hits.

In either of these rare cases, it’s likely easy enough for operators to detect. Then they can notify the property authorities. This is part of what legal online gambling allows.

Online gambling credit card fraud and bonus abuse are real

Credit card fraud and bonus abuse are more troubling issues here. A firm like iovation may have software that can help US online gambling operators deal with it.

That said, the legal online gambling system inherently gives operators a partner in combatting this kind of fraud. They’re called state regulators, and they are already working with operators to fight these issues.

More states are legalizing online and mobile sports betting. That means more players are flocking to the apps and sites that provide these services. So, naturally, there’s bound to be an increase in just about everything, including fraud.

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You catch more flies with honey

Sending out a press release claiming fraud is on the rise as a security software sales tactic is a bad idea.

These kinds of issues might even scare off lawmakers in other new states considering passing internet sports betting legislation. A firm like iovation could be doing more to limit its potential market than sell to it.

Perhaps it should spend more time privately hawking its wares and stop killing the market. They could publicly laud what a good job operators and regulators are doing to combat fraud surrounding online sports betting instead.

After all, you catch more flies with honey.

Martin Derbyshire Avatar
Written by
Martin Derbyshire

Martin Derbyshire has more than ten years of experience reporting on the poker, online gambling, and land-based casino industries for a variety of publications including Bluff Magazine, PokerNews, and PokerListings. He has traveled extensively, attending tournaments and interviewing major players in the gambling world.

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