GamingInsider Magazine: Responding to the risk19-Nov-2015
Don Bush, vice president of marketing at Kount, believes there is room for improvement in gaming firms' approach to mobile fraud.
For the remote gaming industry, mobile is increasingly the platform of choice. In Q2 2014, mobile took 51% of the total global social casino revenue to become the largest platform for the industry.
By 2017, the total yield for global mobile gaming is predicted to be $100bn. With remote gaming attracting a misture of customers from serious bettors to opportunistic players who enjoy the occasional flutter, mobile gives the industry the ideal platform to allow gamers to play how and when they want.
This is something confirmed by our own figures. In May of this year, we published our annual Mobile Payments & Fraud Survey, a global survey examining fraud trends in a number of industries, including online gaming. Just under 1,500 fraud and payment professionals representing merchants, fraud and e-commerce service providers, acquirers, card issuers and card associations responded to the survey.
Our findings show that while the gaming industry leads the way in understanding the risks of fraud, there are concerns that the industry doesn't fully comprehend the risks attached to mobile gaming.
Mobile gaming is a well-established big-money sector
Of the gaming companies we spoke to, 78,6% had annual revenues above $50m. It is also a well-established sector, with 73.8% of gaming operators having been in the industry for over five years. A total of 84.5% of gaming operators actively support the mobile channel.
This is a booming industry for serious money. Yet, where money like this is in play, fraudsters closely follow. Given the risks of fraud and money laundering inherent in the industry it is of course highly regulated and this is something welcomed by responsible gaming operators. So the industry has a statutory duty to be aware of fraud and to tackle it.
How does the industry fight fraud?
The gaming industry is the unquestioned market leader in fighting fraud, even to the extent that fraud specialists from gaming companies are being regularly poached to work in other industries. Must of this is driven by the fact that the industry is highly regulated and with know-your-customer (KYC) and anti-money laundering (AML) legislation that requires operators to remain compliant. This has led to an industry highly adept at fighting fraud.
This was reflected in our findings. A total of 21.4% of gaming operators were concerned that fraud might be a barrier to increased mobile adoption. While this might seem a small number, it is the highest of all the verticals we studied. So, it is clear that remote gaming operators are alert to the dangers of fraud. This should come as little surprise to industry experts and it is something that is to be welcomed.
One of the most critical elements in fighting mobile fraud is knowing what platform a transaction is coming from. In the gaming industry, 50% of merchants thought this was very important and 50% thought it was somewhat important. This is reflected in the fact that 85.7% of remote gaming operators are able to detect mobile devices being used in transactions.
Despite this, the industry doesn't consider mobile to be an especially risky channel, with 63.4% seeing it as having the same risk as other online channels. However, our research indicates that the mobile channel is more than double the fraud risk of traditional e-commerce channels.
In terms of actual fraud fighting techniques, the two most common techniques used by mobile gaming operators are device ID and authentication, with 57% of respondents using these methods.
Is the industry getting it right?
Statistics on gaming industry fraud are hard to come by as, understandably, remote gaming operators are not willing to share this information with the world. Yet our research shows that they are at least approaching fraud in the right way.
Mobile is the most risky of e-commerce channels and knowing if a transaction is from a mobile platform is vitally important in risk awareness. The fact that almost 86% of mobile gaming operators known if transactions come from mobile is the first step to being able to tackle mobile fraud. However, the type of mobile device - a smartphone or tablet - being used can also provide critical indicators that can help determine between fraudsters and VIP customers. Only about 17% of respondents reported that they could identify the type of device transacting with them. That leaves a lot of room for improvement. Without this critical knowledge, gaming companies are fighting fraud with one hand tied behind their backs.
There is a concern about complacency too. Earlier this year, Kount was certified by the Nevada Gaming Commission to help fight fraud in online gaming, and we know that mobile is riskier than other e-commerce channels. Yet 63% of gaming operators don't agree with this.
One way to help keep your system up-to-date with the latest fraud tactics is an annual review of your fraud detection system. What was effective last year is simply not good enough for this year and what you are doing today won't be enough for next year. Fraudsters move quickly and operators need to move just as quickly to stay ahead of them.
Don joined Kount as director of marketing in October 2010 and became vice president of marketing in December 2012. Don has worked in several management roles within the technology segment for over 20 years with both hardware/software manufacturers and as a partner in two top technology marketing agencies. He has led product launches and marketing programmes for dozens of companies around the world such as Citi, HP, IBM, Kodak, Motorola and Weyerhaeuser.