How AI Is Used to Detect and Prevent Gambling Fraud

Jessica Matabola25 July , 2025

South Africa’s online gambling industry is growing rapidly, offering convenience and excitement to millions of players. But with that growth comes a serious challenge: gambling fraud. From identity theft to match-fixing, criminals are finding increasingly sophisticated ways to cheat the system. To fight back, gambling operators are turning to Artificial Intelligence (AI), a powerful tool that’s transforming the way fraud is detected and prevented.

AI is now a core component of fraud management in many industries. In gambling, it’s helping to keep platforms safe, fair, and compliant with local laws. This article explores how AI works in the context of gambling fraud, the benefits it offers, and what it means for the future of online gaming in South Africa.

ALSO READ: The Role of Big Data in Predicting Gambling Outcomes

What Is Gambling Fraud?

Gambling fraud refers to any activity that manipulates a gambling platform for unfair or illegal gain. In an online setting, this can include:

Bonus abuse—claiming promotions using multiple or fake accounts.
Identity theft—using someone else’s details to register and play.
Payment fraud—using stolen credit cards or laundering money.
Match-fixing—influencing the outcome of a sporting event to profit from bets.
Bot use—deploying automated scripts to play or bet unfairly.

These tactics threaten the integrity of the industry, cost operators millions, and create an uneven playing field for legitimate users.

How AI Detects and Prevents Gambling Fraud

1. Real-Time User Behavior Monitoring

AI systems can analyze vast amounts of player data in real time. They learn what typical behavior looks like, such as betting patterns, time of day activity, and login locations. If something unusual happens, like a user suddenly making high-risk bets from multiple IP addresses, AI flags it instantly.

According to Sift, AI-based behavior monitoring reduces detection time dramatically, allowing platforms to act before fraud causes serious damage.

2. Advanced Identity Verification

One of the most common forms of gambling fraud is identity theft. Fraudsters use stolen IDs to register fake accounts or bypass legal restrictions.

AI-powered KYC (Know Your Customer) systems now use facial recognition, liveness checks, and document scanning to verify user identities. These tools are highly accurate and operate at scale, ensuring that only real, eligible individuals access gambling platforms.

South African operators like Betway and Hollywoodbets employ such technologies to comply with the National Gambling Act, which requires strict verification processes.

3. Detecting and Preventing Bonus Abuse

AI also combats one of the oldest forms of gambling fraud: bonus abuse. Fraudsters exploit free bets and welcome bonuses by creating multiple accounts under different names or using the same device to cheat the system.

Machine learning algorithms identify patterns such as repeated use of the same payment method, device fingerprinting, or geolocation overlaps. Once detected, operators can block access, freeze funds, or ban abusive users.

4. Secure Payment Fraud Detection

AI enhances the security of payment systems by analyzing deposits, withdrawals, and payment history in real time. For example, if a user suddenly makes a large deposit using a new card from a different country, the system can flag the transaction.

Platforms like Cellbunq use AI to scan for anomalies, helping operators prevent credit card fraud and money laundering before it escalates.

How AI Combats Match-Fixing

Match-fixing is one of the most damaging types of gambling fraud, especially in sports betting. It involves manipulating the outcome of a match to guarantee a betting win.

AI can detect potential match-fixing by analyzing unusual spikes in betting volume, changes in odds, and performance inconsistencies. Global firms like Sportradar offer AI-driven integrity services that monitor betting activity and send alerts when patterns suggest tampering.

In 2023 alone, Sportradar flagged over 1,200 suspicious sporting events worldwide, many of which were verified through their AI platform.

The South African Context

In South Africa, the adoption of AI in gambling fraud prevention is still evolving. However, local operators are increasingly using these tools to protect their platforms and customers. Regulatory bodies such as the National Gambling Board and Financial Intelligence Centre encourage the use of digital tools to comply with anti-money laundering and fraud prevention laws.

Moreover, South African data privacy regulations under POPIA require responsible handling of personal information, especially when AI systems are involved in identity verification or monitoring.

Benefits of Using AI in Gambling Fraud Prevention

AI offers multiple advantages:

• Real-time Detection – Fraud is identified as it happens, not after the fact.
Accuracy—Reduces false positives by learning from real data.
Scalability—Handles thousands of user interactions at once.
Compliance—Helps platforms meet legal and financial security standards.
Customer Trust – A secure platform increases player confidence and loyalty.

Challenges and Ethical Considerations

Despite its benefits, using AI in gambling has its challenges:

Privacy Concerns – Operators must be transparent about what data is collected and why.
Bias Risks – Poorly trained algorithms may unfairly target certain users.
Overreliance—AI systems should always be paired with human review to ensure fairness.

Responsible use of AI, backed by ethical standards and legal compliance, is essential to protecting both businesses and users.

The Future of AI in Responsible Gambling

Beyond fraud detection, AI is now being used to identify problematic gambling behavior. Systems can track indicators like increasing bet frequency, chasing losses, or sudden spending spikes. When flagged, platforms can offer self-exclusion tools or suggest responsible gambling resources.

This proactive approach benefits players while aligning with the South African National Responsible Gambling Programme’s goals.

As online gambling continues to grow in South Africa, so too does the risk of gambling fraud. Fortunately, artificial intelligence is giving the industry the tools it needs to fight back. From verifying identities to monitoring transactions and exposing match-fixing, AI is already making a significant impact.

For gambling operators, regulators, and players, embracing AI means a safer, more transparent future—one where fraud is detected early and fair play is preserved.