The portrayal of AI in science fiction has often been negative, but in reality, AI serves as a tool to enhance human capabilities. With the ability to process and analyse information faster and more efficiently than humans, AI has taken on tasks that were once cumbersome, freeing up human time for more creative pursuits.
In the online gaming and gambling industry, AI is revolutionising the way payments are made and processed. With AI technology, payment transactions are now safer, faster, easier, and more cost-effective. The implementation of AI has proven to be a game-changer for the industry, providing improved security, speed, and user experience for both players and businesses.
With the rise of digital translations, the risk of fraud has also grown, leading to significant financial losses for businesses in this sector.
As per a recent estimate by PwC, worldwide losses due to fraud amounted to around $42 billion. And digital fraud analysis from TransUnion revealed a significant increase in suspected fraud in the gambling, insurance, and logistics industries in 2022 with a YoY growth rate of 50.1%. The gaming sector, which includes online role-playing games and video games, also reported a 6.9% increase in the same quarter compared to the previous year. As such, the ability to detect fraud is an essential aspect of protecting against financial loss and maintaining the integrity of the industry.
To mitigate these risks and safeguard their reputation and market share, businesses in the online gaming and gambling industry have started to rely on AI and its advanced algorithms. These AI-based systems use machine learning (ML) to scan through large volumes of transaction data, and effectively determine whether an unusual transaction is a result of fraud or simply a deviation from a person’s typical betting habits. Unlike traditional rule-based methods, AI-based algorithms can more accurately analyse individual spending patterns, making it a highly effective tool for preventing financial losses arising through fraud.
For online gamers and gamblers, this results in fewer frustrating experiences during transactions, significantly enhancing their overall brand experience. For gaming and gambling businesses, this has the potential to generate significant financial gains – an estimated 3% of annual revenue is lost due to incorrect credit card declines. Now consider adding that revenue back into your yearly budget using AI.
PwC estimated fraud amounted to losses of up to $42 billion worldwide
The online gaming and gambling industry is heavily regulated, with a focus on protecting players’ personal and financial information, as well as ensuring the fairness and transparency of online games and gambling activities. In addition to the General Data Protection Regulation (GDPR), Second Payment Services Directive (PSD2) and a range of anti-money laundering and counter-terrorist financing regulations. The industry is also governed by a raft of regional regulations – for example, Australia’s Interactive Gambling Act and America’s Unlawful Internet Gambling Enforcement Act – and regional associations, such as Canada’s Interactive Gambling Association, the European Gaming and Betting Association and Asia Gaming Brief.
While these regulations are needed to protect players and their data, compliance can be challenging for online gaming and gambling companies as they must navigate a complex landscape of rules and requirements. Those that invest in strong security and compliance systems can not only protect themselves from legal and financial risks but also gain a competitive advantage by demonstrating their commitment to player safety and security.
Similarly, the use of AI and ML tools can significantly improve compliance with regulations and minimise the risk of errors by automating the identity verification process – reducing the risk of fraudulent activity and increasing the speed of customer onboarding. These tools can also assist in the detection of potentially suspicious activity, such as money laundering, and can help companies stay in compliance with anti-money laundering regulations.
Moreover, AI and ML can streamline the process of detecting and preventing unfair play in online games. This can include monitoring player behaviour to detect any signs of cheating or colluding, as well as analysing game results to ensure that they are impartial and random. By using AI and ML to automate these processes, online gaming and gambling companies can not only improve the fairness and transparency of their games but also free up their human workers to focus on other areas of the business, such as improving the customer experience.
AI can also bring benefits when regulations are updated – which as an industry subject to changes can be frequent. It can be used to scan through large volumes of existing contracts and documents quickly to identify any changes that may be required, reducing the risk of non-compliance and saving time and resources that would otherwise be spent on manual review.
Additionally, AI can help to extract key information from complex sets of regulations and simplify them for those responsible for compliance. This can make it easier for online gaming and gambling companies to understand their obligations and ensure they are compliant with all relevant regulations. AI can also be used to provide regular updates on regulatory changes and ensure that relevant staff members are aware of any updates or changes to regulations.
An estimated 3% of annual revenue is lost due to incorrect credit card declines
AI and ML can also be used to help with cybersecurity by playing a crucial role in detecting malware and identifying potential security threats – thus preventing malicious activity and keeping player information secure.
By analysing vast amounts of data, AI can develop good-behaviour models that can help identify anomalous activities and detect malware signatures, making it easier for online gaming and gambling companies to respond quickly to security incidents. While manual analysis of the vast amounts of data required would be challenging for humans, AI can effectively detect anomalies such as unusual login attempts, abnormal data transfers to external hosts, and excessive resource usage, helping to protect the personal and financial information of players.
In addition, AI can be used to automate the process of data deletion – typically the responsibility of data controllers – ensuring that customer data is properly managed and not misused. This helps to reduce the risk of data breaches and ensure that companies remain in compliance with data protection regulations.
The online gaming and gambling sector is always evolving with the emergence of new technologies. AI is playing a significant role in transforming the industry by providing improved security, speed and user experience and by playing a crucial role in meeting the challenges of fraud, compliance and cybersecurity. As the sector grows and AI continues to advance and learn, it holds immense potential for further improving the way the industry operates, benefiting both businesses and players alike.