The iGaming industry is projected to generate revenues of USD 187.7 billion by the end of 2023, indicating a 2.6% increase from the previous year. Despite its remarkable size and wealth, the industry, a hub for iGaming companies and operators, continues to attract new players and encourages existing operators to explore fresh markets, constantly fueling its global development. This growth not only reflects the sector’s resilience, but also its potential for expansion and revenue generation in new markets.
However, these rewards come with substantial risks, which GR8 Tech, as a leading iGaming provider, consistently helps its clients solve or avoid when they venture into new regions. One of the most pressing issues is the high fraud rate in iGaming, which can escalate up to 10-15% of the total number of active customers in some territories. This significant fraud risk underscores the importance of robust anti-fraud systems to protect against scams that can critically impact business success.
NAVIGATING THE COMPLEXITIES OF GLOBAL MARKET ENTRY
Entering new markets in the iGaming industry presents a unique set of challenges and risks for iGaming operators. They must navigate varying cultural nuances, understand distinct consumer behaviors, and grapple with complex and often divergent regulatory environments. These factors can significantly affect business operations and market acceptance.
In order to understand the complexities of global market entry in the iGaming industry, it’s crucial to recognize that iGaming platforms are intricate, with integrated systems comprising numerous components and tools. Central to this is the risk management system, which plays a pivotal role in fraud prevention and ensuring the security, reliability, and overall commercial achievement.
THE MULTI-FACETED ROLE OF RISK MANAGEMENT SYSTEMS
A risk management system in iGaming serves multiple functions, each one essential to maintaining the integrity of operations. Some of these advantages are: 1) Protection against risks. It identifies and manages various types of risk, including fraud, manipulation, and other fraudulent activities. This is essential for the security of operations and protection against financial losses; 2) Monitoring and analysis. This system analyzes vast amounts of data from various sources, responding to anomalies or suspicious activities. It requires meticulous monitoring and analysis to effectively identify potential threats; 3) Response and intervention. In the event of detected risks or suspicions, the system can autonomously intervene or alert relevant teams and operators. For instance, GR8 Tech’s risk & antifraud system encompasses a range of tools, allowing for flexible and high-quality management across clients, client groups, and systems. It includes functionalities like blocking or limiting customers, suspending processes such as payouts or bet acceptance, detecting affiliate fraud, and correcting events caused by errors in products, systems, and services. Additionally, risk KYC procedures, real-time monitoring of customer actions, and control and analysis of each customer action are integral to the system. These processes occur in automatic or semi-automatic modes, managed by antifraud operational teams; 4) Customization of parameters and strategies. The system offers customization options for various parameters and strategies to align with current needs and internal policies, providing flexibility in addressing specific challenges with iGaming fraud, and 5) Platform optimization. By analyzing and responding to risks, the risk management system enhances the platform’s operation and ensures its stability.
PREDICTING AND MINIMIZING LOSSES
Critically, risk management in iGaming is not about restricting business growth. Instead, it’s a tool for ensuring stability, security, and success. It’s about assessing and understanding risks to make informed decisions, allowing operators to maintain a dynamic yet secure environment conducive to business development and customer satisfaction.
From GR8 Tech’s experience, an effective risk & antifraud system can save an average of 1-3% of the monthly Gross Gaming Revenue (GGR), with potential peaks of 3-5% in certain regions at the start. It’s important to note, however, that while a risk management system significantly reduces and controls fraudulent activities, it doesn’t prevent iGaming fraud entirely.
Instead, it enables businesses to understand and manage the risks associated with this layer, predicting and minimizing losses effectively. Thus, a well-integrated RM system is not just a defense mechanism; it’s a strategic asset for informed risk management and sustainable business growth in the iGaming industry.